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iyper Vs. L.i.C. of India - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1976)IILLJ28Ker
Appellantiyper
RespondentL.i.C. of India
Cases ReferredMaritime Electric Company Ltd. v. General Oiaries Ltd. A.I.
Excerpt:
- - in what manner and in what sphere of activities the services of development officers could be more effectively utilised in the efficient policyholders servicing will have to be decided by joint consultations between the corporation and the federation as per ext. and if there were no extenuating circumstances for failure on the part of the concerned development officer, the divisional manager will inform him accordingly in writing; , that the number of lives insured and with respect to first year scheduled premium income, and directing the petitioner to submit in writing the reasons, if any, for his failure to fulfil the minimum norms as per ext. p4 it has not been stated that the petitioner failed on both the counts for the three consecutive years and that the joint divisional.....t. chandrasekaran menon, j.1. the petitioner who is a development officer, grade i, in the life insurance corporation of india, quilon branch, quilon, seeks a writ of certiorari or other appropriate writ, order or direction, to quash ext. p5 order passed by the divisional manager of the life insurance corporation of india, trivandrum-4, transferring him to the administrative side in the cadre of record clerk, and for a writ of mandamus for directing the respondents to treat the petitioner as grade i development officer and to give him all attendant benefits. the respondents in the op. are (1) the life insurance corporation of india, bombay-1, represented by its chairman, (2) the divisional manager, life insurance corporation of india, trivandrum and (3) the senior branch manager of the.....
Judgment:

T. Chandrasekaran Menon, J.

1. The petitioner who is a Development Officer, Grade I, in the Life Insurance Corporation of India, Quilon Branch, Quilon, seeks a writ of certiorari or other appropriate writ, order or direction, to quash Ext. P5 order passed by the Divisional Manager of the Life Insurance Corporation of India, Trivandrum-4, transferring him to the administrative side in the cadre of record clerk, and for a writ of mandamus for directing the respondents to treat the petitioner as Grade I Development Officer and to give him all attendant benefits. The respondents in the OP. are (1) The Life Insurance Corporation of India, Bombay-1, represented by its Chairman, (2) The Divisional Manager, Life Insurance Corporation of India, Trivandrum and (3) The Senior Branch Manager of the Life Insurance Corporation of India, Quilon.

2. The facts giving rise to this case are as follows:

The petitioner was appointed as Inspector under the Empire of India Life Assurance Company Ltd., which was having its head office at Bombay on 17-4-1952. On 1-9-1956 the business of the said company was transferred to and vested in the Life Insurance Corporation of India, hereinafter called the 'Corporation', with effect from 1-9-1956. On 13-12-1957 the Central Government, in exercise of the powers conferred on it by Section 11(2) of the Life Insurance Corporation of India Act, issued the L.I.C. Field Officers (Alteration of Remuneration and other Terms and Conditions of Service) Order, 1957, generally known as and hereinafter referred to as the 'Blue Order'. Ext. P5 order was passed at a time when the petitioner was working as Grade I Development Officer drawing a basic pay of Rs. 760 and his total remuneration at that time was Rs. 1,886.50 including D.A. and other allowances.

3. By virtue 'of Section 11 of the Life Insurance Corporation of India Act, 1956, for short the 'Act', the petitioner be came an employee of the Corporation automatically, since he had not given a notice intimating his intention of not becoming an employee of the Corporation as contemplated under Section 11(1) of the Act. In regard to the Inspectors of the Insurance Companies who subsequently were designated as Development Officers and who had become employees of the Corporation after the appointed day, the Blue Order provides a self-contained coda dealing with the material terms and conditions of service of the said Officers. According to the petitioner he is governed by the Blue Order.

4. While working as a Development Officer in the Thodupuzha area under the Palai Sub-Office the petitioner was transferred to the Quilon Branch as per order, dated 23-1-1974 of the 2nd respondent. He joined duty at Quilon Branch on 6-2-3974. According to the petitioner he was transferred to the Quilon Branch at the fag end of his appraisal year 1973-74.

5. Immediately after the nationalisation of the Life Insurance business and formation of the Life Insurance Corporation of India, an association of the Field Workers of the then existing companies had been formed in Kerala, as in other States of India. All these various local associations of Field Workers got themselves amalgamated into the 'National Federation of the Insurance Field Workers of India', hereinafter called the 'Federation. 'The Federation was recognised by the Corporation as the sole agent for collective bargaining for the Development Officers of the Corporation. It would appear that all agreements relating to the terms and conditions of the Development Officers throughout India were entered into with this Federation. On 10th March, 1964, there was a settlement between the Corporation and the Federation which was recorded in the Memorandum of Settlement. This settlement was reached as a result of the discussions between the representatives of the Corporation and the members of the Negotiating Committee of the Federation. Following are some of the important terms of settlement.

I. Scales of Pay:

(i) Scale of pay for Development Officers in Grade II: Rs. 130-10-180.

(ii) Scale of pay for Development Officers in Grade I: Rs. 180-10-230-15-305-20-405-25-605.

II. Dearness Allowance:

(i) Development Officers in Grade II.Basic Salary D.A.Rs. 130 to Rs. 150 .. Rs. 30Rs. 160 to Rs. 180 .. Rs. 35(ii) Development Officers in Grade I.Basic Salary D.A.Rs. 180 to Rs. 200 .. Rs. 40Rs. 210 to Rs. 245 .. Rs. 50Rs. 260 to Rs. 290 .. Rs. 60Rs. 305 to Rs. 345 .. Rs. 65Rs. 365 to Rs. 405 .. Rs. 75Rs. 430 .. Rs. 80Rs. 455 .. Rs. 85Rs. 480 to Rs. 505 .. Rs. 90Rs. 530 to Rs. 605 .. Re. 95The revised scales of pay and dearness allowance mentioned herein will be effective from 1st January, 1963.

* * * *

VII. Generally

* * * *

(2) N.F.I.F.W.I. has been demanding that the present system of appraisals should be ended and Development Officers be granted regular annual increments in the time scale of pay. The Development Officers have under certain appraisal formulae developed the organisation of business for the past eight years. The time has now come when the introduction of a regular annual increment in the time scale of pay may be considered. The L.I.C., therefore, agrees with N.F.I.F.W.I that introduction of a regular annual increment in the time scale of pay would be feasible as it gives a sense of security to Development Officers. Both sides agree that a regular annual increment in the scale of pay should ultimately but progressively result in greater efficiency in developing business of L.I.C. on sound and healthy lines. It is also agreed that in the meantime procedures will be worked out mutually as early as possible for settling the new system of working in any case by the end of June, 1964. The present system of appraisals will end as and from a mutually agreed date.

(3) This settlement shall be implemented only after the necessary changes in the L.I.C. Staff Regulations, 1960, the L.I.C. Development Officers (Alteration of Remuneration and other Terms and Conditions of Service) Order, 1957 as amended upto date and L.I.C. Provider Fund No. 1 Rules are sanctioned and made. Thereafter, these terms will be implemented with retrospective effect from 1st January, 1963 in respect of matters covered by items I, II, III(i), IV and V and from 1st August, 1963 in respect of matters covered by item VI of these terms of settlement, without in anyway affecting the appraisal of Development Officers on any date upto 31st March, 1964.

This Memorandum of Settlement is pro-produced in this case by the 2nd respondent and marked as Ext. R3. There were subsequent settlements between the Corporation and the Federation. As a result of negotiations held between the Corporation and the Federation from time to time on the issue of Work Norms a subsequent agreement was reached between the two sides on 19-11-1971. That agreement is produced in this case as Ext. R6. In what manner and in what sphere of activities the services of Development Officers could be more effectively utilised in the efficient policyholders servicing will have to be decided by joint consultations between the Corporation and the Federation as per Ext. R6. Exhibit R6 also contains a scheme of minimum norms for the Development Officers and a procedure for dealing with below the minimum norm performance. Those are herewith extracted.

II. Fresh Scheme of Minimum Norms for the Development Officers:

(a) With effect from the appraisal year commencing on or after 1-4-1971, each Development Officer will be required to produce through his organisation a minimum Scheduled First Year's Premium Income of not loss than Rs. 25,000 in each appraisal year and insure at least 100 lives in each appraisal year; and

(b) With effect from the appraisal year commencing on or after 1-4-1971, each Development Officer will be required to produce through his organisation a minimum Scheduled First Year's Premium Income of not less than Rs. 30,000 in each appraisal year and insure at least 125 lives in each appraisal year.

III. Procedure for dealing with below the Minimum Norm Performance:

The following procedure only shall be followed in the case of below the minimum norm performance.

(a) In the event of below the minimum norm performance of a Development Officer in any appraisal year, on both the counts, viz., premium income and number of lives mentioned in II(a) or II(b) above, as the case may be, his case will be examined by a Joint Divisional Committee. Such examination will take into account all relevant factors, namely, area potential, market conditions, agency force and other extenuating circumstances, if any, which might have resulted into below the minimum norm performance. The said Committee will include two representatives of the L.I.C. and two representatives of N.F.I. F.U.I. to be nominated respectively by both the parties. Unanimous recommendations of the said Committee will be accepted by the Divisional Manager. If the recommendations of the said Committee are not unanimous, the Divisional Manager will come to his own conclusion; and if there were no extenuating circumstances for failure on the part of the concerned Development Officer, the Divisional Manager will inform him accordingly in writing; and further, in the case of a Development Officer appointed before 1-10-1971, reduce his conveyance allowance to the amount of conveyance allowance mentioned in para 3(i) (a) of the Scheme of Revised Scales of Conveyance Allowance being the enclosure to the Circular Ref: DD/ZD/62/71, dated 4th October, 1971.

If such a Development Officer improves his performance to the level of minimum norm performance on either count mentioned in II(a) or II(b) above, as the case may be, the cut in the conveyance allowance will be restored from the month following the month in which he attains minimum norm performance required for the year.

(b) If the performance of a Development Officer for three consecutive appraisal years is below the minimum norm on both the counts, and if as per the procedure suggested above there are no extenuating circumstances he will be absorbed in the administrative side for such post for which he has the qualification prescribed for such post;

(c) On absorption in the administrative side, his pay shall be fixed by addition of one grade increment for every one year of completed service as a Development Officer to the minimum of the grade in which he is absorbed in the administrative side, excluding the conveyance allowance and entertainment allowance. On transfer of a Development Officer to the administrative side, his normal date of increment will remain unaltered. If such employee has, however, completed the age of 55 years or more on the date of such absorption, or if such absorption is because of his being incapacitated for service as a Development Officer an account of continued ill-health or accident he will be allowed a personal allowance to protect his total remuneration, excluding conveyance allowance and entertainment allowance.

* * * *

6. On 22-5-74 the petitioner received a letter from the Divisional Manager intimating him that it was proposed to review his case by the Joint Divisional Committee in terms of the agreement referred to earlier alleging that he had tailed on both the counts, viz., that the number of lives insured and with respect to first year scheduled premium income, and directing the petitioner to submit in writing the reasons, if any, for his failure to fulfil the minimum norms as per Ext. R6 agreement. According to the petitioner the first year scheduled premium income brought in by, the petitioner during the period from 1-4-1973 to 31-3-1974 was not intimated even though it was stated in Ext. P4 that the same would be intimated soon. It might also be noted that in Ext. P4 it has not been stated that the petitioner failed on both the counts for the three consecutive years and that the Joint Divisional Committee will review his performance for the three consecutive years. On 6-6-'74, petitioner sent a letter requesting time to submit the explanation. He submitted his explanation on 24-6-'74 wherein ha noted the following reasons for his failure to perform the minimum norms.

Regarding the performance I have to state that during the year 1971-72, I was transferred from Trichur to Thodupuzha, where I have not been allotted any agents considerably. The total allotted agents' business was less than Rs. 50,000 during the previous year. Moreover, you had been withdrawn my touring facilities also while others were given.

In the year 1972-73 my premium income was more than Rs. 25,000/- But you had not been given proper credit for S.S.S. & K.G.S.D. Policies.

In 1973-74 due to my transfer to Quilon, I could not fulfil the requirements.

For your information I might state that I am not a member of the National Federation.

The petitioner was asked to appear before the joint Divisional Committee for a joint interview on 5-7-1974. The Joint Divisional Committee was not held as scheduled in so far as the petitioner was concerned, and while the petitioner was interviewed and his case was reviewed, the representatives of the Federation were not present. According to the petitioner he was on privilege leave from 4-4-1974 to 15-5-1974 and he was compelled to take further extension of leave on account of his illness and the petitioner was duly sanctioned medical leave for the period from 15-5-'74 to 17-6-74. Exhibit P4 letter was served on him while he was on medical leave at his leave address. The petitioner, therefore, sent a letter to the 2nd respondent stating that he was on leave on medical grounds and he was not in a position to attend the meeting on 10-6-1974 as desired. Accordingly the meeting was postponed to 5-7-1974 and the petitioner attended the meeting on that day and, according to him he explained that he is a 'transferred employees' and he is not a member of the National Federation of Insurance Field Workers of India. Therefore, it is alleged that he is not required to fulfil the minimum norms as per the agreement entered into between the Corporation and the National Federation. The petitioner further submitted that his performance was a little crippled in 1974 on account of his transfer to a new area and the failure to allot agents in time and the agents allotted to him was inadequate and was not doing business as such as that of his agents in Thodupuzha. According to the petitioner, when he was interviewed the representatives of the Federation were not present, he explained the factors like area potential, market conditions, agency force and his transfer to a new common area to the representatives of the Corporation who alone were present.

7. It was subsequently that Ext. P5 was issued, which is dated 27-7-'74. It is stated therein that the performance of the petitioner as a Development Officer for the last three years has been reviewed by the Divisional Committee which has recommended to his transfer to the administrative side, and the recommendation has been accepted by the 2nd respondent. It was also stated that his transfer to the administrative side shall be to the cadre of record clerk. As shown earlier in Ext. P5 the revised monthly remuneration in the record clerk's scale is also given, According to the revised monthly remuneration the petitioner's basic pay is fixed as Rs. 390.00 and the total remuneration will be Rs. 920.40. From the figures given, it is clear that the petitioner's salary and allowances have gone down by a great extent by Ext. P5 and the said order is of drastic civil consequences as far as the petitioner is concerned. In the O.P. petitioner contends that Ext. P5 is arbitrary and mala fide. It is said to violate Articles 14 and 16 of the Constitution. It is stated that it has been passed in violation of the provisions contained in the Blue Order, and, therefore, illegal. There is no provision in the Blue Order which authorises the transfer of a Development Officer to the post of a record clerk. According to the petitioner he has not been served with a show cause notice before passing Ext. P5 order, and, therefore, it is violative of the principles of natural justice. Another contention that the petitioner has taken up is that he is not bound by Ext. R6 agreement but only governed by the Blue Order. Condition in Ext. R6 does not form part of Regulations and cannot bind employees not parties to Ext. R6. The petitioner's positive case is that he is not a party to Ext. R6. It is specifically stated that Ext. P5 order is in violation of Clauses 9 and 19(a) of the Blue Order. It is also contended on behalf of the petitioner that even assuming without conceding that Ext. R6 is applicable to the instant case, the 2nd respondent has not strictly complied with the procedure laid down in Ext. R6. It is stated that the Corporation is a statutory Corporation and the provisions in the Act do not authorise the Corporation to enter into any agreement, and therefore, Ext. R6 is ultra vires and void ab initio, and such a contract cannot become intra vires by reason of ratification, estoppel, labse of time, acquiescence or delay. It is stated that there is no alternative remedy which the petitioner can resort to redress his grievances.

8. These contentions are strongly controverted in the Counter-Affidavit filed on behalf of the 2nd respondent. It is stated that the purpose of Section 11(2) of the Act was solely to bring about uniformity in the, terms and conditions where variations existed and to provide for uniform scales of pay among the transferred employees. Section 11(2) was thus not meant at all for providing the terms and conditions of the employees of the Corporation. According to the 2nd respondent it was meant only to eliminate variations and to secure uniformity wherever differences and divergent practices existed. As the Central Government found there were wide variations in certain matters pertaining to the service conditions of Development Officers, they issued the Blue Order on 30-12-1957 bringing about uniformity and eliminating the differences in those matters. The 2nd respondent contends that the Blue Order was never purported to be nor was it meant to be a self-contained code regarding all the conditions of service of the Development Officers. It was not exhaustive of their service conditions. The Blue Order applied only in so far as matters covered by the same were concerned. The Blue Order was never meant to be a permanent piece of rules governing the terms and conditions of Development Officers, It is stated by the 2nd respondent that 16 years have elapsed and the Blue Order is now only of historical interest. It was merely transitory in character and was in due course over the years varied, modified, several provisions given up and new terms and conditions substituted in the place of what had been provided in the Blue Order. The Development Officers themselves entered into new agreements. The Corporation issued administrative instructions with respect to many service conditions to which the Development Officers had voluntarily acquiesced in and enjoyed the benefits. In other words, many of the provisions of the Blue Order had been, in course of time, given up or waived by the Development Officers and new terms and conditions substituted. Therefore, it is alleged that it is not open to any Development Officer at this stage to rely on the Blue Order to the exclusion of agreements and administrative directions varying, modifying or substituting the original provisions of the Blue Order. The performance of the petitioner since 1968-69 was unsatisfactory according to the 2nd respondent and the following figures of his performance is given in the counter-affidavit.

-----------------------------------------------------------------TotalAppraisal Basic remuneration Business Sch. 1st Costyear pay for appraisal No. completed year pre- ratiopurposes S.A. mium income %------------------------------------------------------------------Rs. Rs. Ps. Rs. Ps.------------------------------------------------------------------1-4-68 to 760/- 13,899.74 137 7,78,500 27,749.72 50.0031-3-691-4-69 to 760/- 15,292.38 149 9,39,280 30,432.88 50.2531-3-701-4-70 to 760/- 16.764.27 97 8,82,000 28,807.70 58.2031-3-711-4-71 to 760/- 18,975.56 77 6,08,500 22,244.65 85.3031-3-721-4-72 to 760/- 19,319.83 46 3,42,500 24,473.06 79.8431-3-73.------------------------------------------------------------------

It is stated that one of the criteria for assessment of a Development Officer's performance is the amount of premium income that he brings in during a period of 12 months of his appraisal year in relation to the remuneration he has received during the period. The petitioner was a Development Officer who was receiving a maximum basic pay of Rs. 760 in the time scale of pay for Development Officers, viz., Rs. 230-760. It is stated that his total emoluments in 1973 was at the rate of Rs. 1,495 per month. For the appraisal year 1972-73 it was Rs. 19,319.83. As against this remuneration the scheduled first year premium income brought in by him during the appraisal year 1971-72 was Rs. 22,244. 65 only and the premium income brought in by him for the appraisal year 1972-73 was only Rs. 24,473.06. It is said that for the appraisal year 1973-74 the premium income brought in was only Rs. 15.181.60. It is said that a Development Officer's unit can be considered as viable only if its cost ratio works to 20% or below. To show that the petitioner's unit was uneconomic, the following figures as has been given in the counter-affidavit, are as follows:

------------------------------------------------------------------ 1st Yr.Sch.N.B. com- S.A. Total No. premium CostYear pleted (in lakhs) of active income (in ratioNo. agents thousands) %-------------------------------------------------------------------1968/69 137 7.79 21 27.75 50.091969/70 149 9.39 20 30.43 50.251970/71 97 8.82 16 28.81 58.201971/72 77 6.09 9 22.24 85.301972/73 46 3.43 11 24.47 78.941973/74 58 4.51 13 15.18 139.42-------------------------------------------------------------------

The following figures were also given showing the month-wise business introduced by him from which it is said that even during the year of transfer his performance was equally unsatisfactory.

-------------------------------------------------------------------Business Introduced Cumulative total businessMonth introducedNo. Sum proposed No. Sum proposedApril 1973 1 8,000 1 3,000May 1973 5 30,000 6 33,000June 1973 2 15,000 8 48,000July 1973 6 42,000 14 90,000Aug. 1973 6 30,000 20 1,20,000Sept. 1973 11 40,000 31 1,60,500Oct. 1973 1 5,000 32 1,65,500Nov. 1973 3 55,000 35 2,20,500Dec. 1973 6 10,000 41 2,30,500Jan. 1974 1 2,000 42 2,32,500---------------------------------------------------------------------

It was because of this unsatisfactory performance at Palai it was felt that a change of place would help him to improve his work on both the counts, viz., number of lives insured and scheduled first year premium income. Therefore, it was said that in the larger interests of the Corporation and in his own interest that he was transferred from Palai to Quilon where he was allotted a better organisation than that he was having at Palai prior to his transfer. There was, therefore, nothing mala fide about the transfer. In regard to the allegation that the petitioner was not a member of the Federation it is said in the counter-affidavit that he was a very active member and an office bearer of the Federation closely associated with its Trichur unit. He was an elected representative of the Development Officers to represent the Trichur branch during the year 1965. It is said that like every other Development Officers he has also to fulfil the minimum norms required for Development Officers in general, working in the Corporation. There is no justification for him to claim any exception in this regard. He is bound by Ext. R6. It is also said in the counter-affidavit that after having reaped the fruits and enjoyed the benefits of the agreements between the Corporation and the Federation, the petitioner is estopped from contending that he is not governed by the agreement and that he is not bound to fulfil the minimum norms of business. The Blue Order, it is stated, does not justify such contentions on the part of the petitioner. It does not prohibit the Development Officers from entering into agreements with the Corporation nor does it prevent the Development' Officers either individually or collectively from waiving the provisions of the Blue Order and agreeing to those provisions to be substituted by subsequent agreements or new provisions. Exhibit P4 is said to be a show cause notice, and, therefore, there is no validity, according to the 2nd respondent, in the contention of the petitioner that he did not receive a show cause notice. It is alleged that the petitioner participated in the proceedings provided by the agreement dated 19-11-1971 and acquiesced in the Corporation's right to take action against him for poor performance as per the provisions of the agreement. It is said that the petitioner's representation was given anxious consideration by the joint Divisional Committee. The validity of Ext. P5 is reiterated in the counter-affidavit. It is said that all Development Officers against whom disciplinary proceedings for business performance were in progress were freed from such disciplinary proceedings on the basis of Clause (6) of the agreement dated 28th April 1970. The Blue Order conferred unfettered power on the management to take action against the Development Officers for unsatisfactory performance of duty or negligence and either reduce their remuneration or terminate their services as punishment. The subsequent agreements curtailed these powers of the management and provided that no such action can be taken, thereby rendering Clause (10) nugatory. This was a substantial and far-reaching benefit conferred on the Development Officers contrary to the provisions of the Blue Order and the Development Officers including the petitioner have been reaping the fruits of this benefit. The petitioner, it is said, had taken full advantage of Clause (6) of the agreement and escaped the rigour of the penalty of termination provided in the Blue Order. The petitioner was charge-sheeted for poor performance of work on 21-6-1969. An enquiry was ordered against him in September 1969. The petitioner then filed a suit for a permanent injunction restraining the Corporation from continuing the enquiry proceedings against the petitioner in respect of the charges framed against him on 10-11-1969. Thereby the Corporation was restrained from meeting out any punishment to him on the basis of the enquiry proceedings. In paragraph 13 of the plaint filed by the petitioner in the matter as O.S. 1074 of 1969, it has been stated that the Branch Manager, L.I.C. Trichur, was prejudiced against the petitioner as he was an active worker of the Federation. It was while the disciplinary action and the consequent suit filed by the petitioner were pending that the agreement Ext. R6 came into force which drastically curtailed or even took away the unfettered right of the management to take disciplinary action and also to proceed with disciplinary action already initiated against a Development Officer. The petitioner thereupon took advantage of the provisions contained in Ext. R6 agreement and requested the Corporation to drop the disciplinary proceedings initiated against him, through the Federation. (The Federation thereupon requested the Corporation to drop among other Development Officers the proceedings against the petitioner also. Therefore, the disciplinary action against the petitioner was dropped along with those against some others. It is alleged that what was left with the Joint Committee is only to see whether there are extenuating circumstances in the cases of the Development Officers who are failed to reach the minimum norms. It is stated that in the cases of all Development Officers whose work had to be reviewed, the Joint Divisional Committee consisting of 2 members of the Corporation and 2 members of the Federation reviewed their work and made their recommendations. In the case of the petitioner the two representatives of the Federation in the review committee expressed their reluctance to participate in the committee proceedings. Hence the committee without the Federation representatives took up the case of the petitioner and he was invited to represent his case personally. He was given an elaborate personal hearing. None of the grounds urged by him was found to be acceptable by the Committee as extenuating circumstances for his failure to reach the minimum norms. It was after anxiously considering the petitioner's case the Committee was found that the petitioner had not been able to give any valid reason for his failure during the last three years consequtively and a report was made. The report was considered by the Divisional Manager on its merits and it was ordered by him on 10-7-1974 that the petitioner should be transferred to the administrative side and fixed in the rank and remuneration he would be entitled to upon such transfer. The question of assigning him a suitable post in the administrative side then arose. (The agreement stipulated that such Development Officers have to be absorbed in the administrative side for such post for which he has the qualifications prescribed for such post. The petitioner was not a matriculate. Hence the post of an Assistant could not be assigned to him because the minimum qualification prescribed for an Assistant's post is a pass in the S.S.L.C. The only post to which a non-matriculate can be appointed on the administrative side is either of a Class III record clerk or that of a Class IV. Hence the petitioner was absorbed in the administration as a record clerk (Class III) and salary fixed as per Clause 3(c) of the agreement, dated 19-11-1971.

9. It is further averred by the 2nd respondent that this Court has no jurisdiction to interfere with the L.I.C. Management's right to take disciplinary action against its employees which are not covered by any statutory rules. The action was taken in this case after due show cause notice and hearing the petitioner. There was proper application of mind to the representations made by the employee. Therefore, it is said that this Court cannot interfere with the Management's action and a contract of personal service cannot be specifically enforced in any case.

10. In the reply affidavit filed to the counter-affidavit, the petitioner has reiterated his contentions as such in the O.P. He affirms his right to be entitled to the protection guaranteed under Section 11 of the Act. He contends that the Blue Order has not either been repealed or varied by the Central Government hitherto and there is absolutely no substance in the contention of the 2nd respondent that the Blue Order is only of historical interest. It is stated that the said order is not transitory in character as wrongly contended by the 2nd respondent. It is also stated that the conditions of service applicable to him do not provide for fixing the minimum norms and he being not a member of the Federation cannot be bound by the Agreement entered into between the Corporation and the Federation. The members of the Federation did not participate in the Joint Divisional Committee obviously because he was not a member of the Federation. He admits the filing of the civil suit in the Trichur Munsiff's Court. But, according to him, it is not correct to state that the disciplinary proceedings taken against him were stopped on account of the intervention of the Federation. He also submits that even assuming without conceding that the Agreement is applicable Ext. P5 order cannot be allowed to stand being not passed in compliance with the agreement, dated 19-11-1971. He also restates his contention that the Corporation is 'State' within the meaning of Article 12 of the Constitution.

11. A rejoinder has been filed to this reply affidavit by, the 2nd respondent producing some further exhibits in the case also. It is stated that even though the petitioner says that he resigned from the Federation in 1969, he never repudiated the agreements, but on the other hand, he has been acting in conformity with the agreements and reaping the benefits thereof. It is stated that in 1970 he withdrew the suit O.S. No. 1074 of 1969 of the Trichur Munsiff's Court in pursuance of the agreement dated 28-4-70 and got, himself freed from the disciplinary action. About his mode of work also, the allegations made earlier are reiterated and in support of the same the further exhibits have been produced. I might also state that there has been a further additional reply affidavit filed by the petitioner replying to the allegations in the counter-affidavit filed by the 2nd respondent. It is stated therein that the counter-affidavit filed by the 2nd respondent is so voluminous and while preparing the reply affidavit certain points were omitted to be answered inadvertently and, therefore, the additional reply affidavit had become necessary. It was to be treated as part of the reply affidavit filed earlier. The 2nd respondent also filed an additional counter-affidavit producing certain further documents, Exts. R23 to R27. These documents have been produced to prove that the petitioner caused the disciplinary proceedings initiated against him to be withdrawn taking advantage of Ext. R4 agreement dated 28-4-1970. It is stated that he withdrew the case filed by him only on account of the agreement. When the National Federation wanted the Corporation to drop the disciplinary proceedings against the petitioner in pursuance of Ext. R4 agreement the Corporation informed the Federation that it could be done only if the petitioner withdrew the case. It is alleged that it was on account of the implimentation of Ext. R4 Agreement and the intervention of the Federation that the petitioner withdrew the suit and the Corporation withdrew the disciplinary proceedings. The correspondence regarding this matter which are very relevant and useful evidence for an effective adjudication of the question, were produced along with this additional counter-affidavit of the 2nd respondent.

12. Though the pleadings are rather lengthy in the case, the questions involved are simple. The first question that has to be decided is whether the Corporation could be considered to be a 'State' coming with the ambit of the term in Article 12 of the Constitution. Article 12 of the Constitution reads as follows:

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.

The article, therefore, gives an inclusive definition of the words 'the State' and within these words of that Article are included, (i) the Government and the Parliament of India, (ii) the Government and the Legislature of each of the States, and (iii) all Local or other authorities. These are the only authorities which are included in the words 'the State' in Article 12 for the purpose of Part III, With regard to this question though a number of authorities were referred to by the counsel on both sides, the petitioner contending that the Corporation is a 'State' under Article 12 of the Constitution, while on behalf of the respondents that it is not a 'State', the matter is now covered by the decision of the Supreme Court reported in Sukhdev Singh and Ors. v. Bhagatram Singh Raghuvunshi and Anr. 1975-I L.L.J. 399 : (1975) 1 S.C.C. 421. There Chief Justice Ray speaking for the majority of the Judges said:

The Life Insurance Act is an Act to provide for the nationalisation of Life Insurance business in India by transferring all such business to the 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.

On the appointed day, viz., 1st July 1956, all assets and liabilities appertaining to the controlled business of all insurance became transferred to and vested in the Corporation. The service of existing employees of insurance was transferred to the Corporation. It became the duty of every person in possession, custody or control of property appertaining to the controlled business of an insurer to deliver the same to the Corporation forthwith. The Corporation was empowered to reduce the amounts of insurance under contracts of Life Insurance in such manner and subject to such conditions as it thought fit. In the discharge of functions under the Act, the Corporation is guided by directions in matters of policy involving public interest as the Central Government may give to it. If any question arises whether a direction relates to a matter or policy involving public interest, the decision of the Central Government shall be final.

The Corporation is to submit to the Central Government an account of activities during the financial year. The Corporation has the exclusive privilege of carrying on life insurance business in India. On and from the appointed day, none but the Corporation can carry on life insurance business in India. The sums assured by policies issued by the Corporation including bonuses shall be guaranteed as to payment in cash by the Central Government. No suit, prosecution or other legal proceedings shall lie against any member or employee of the Corporation for anything which is in good faith done or intended to be done under the Act.

The provisions of the Life Insurance Corporation Act amply establish that the Corporation has the exclusive privilege of carrying on life insurance business. The policies are guaranteed by the Central Government. If profits accrue from any business other than life insurance business then after making provision for reserves and the matters, the balance of profit shall be paid to the Central Government. The report of the activities of the Corporation is to be submitted to the Central Government.

The original capital of the Corporation is given as crores of rupees provided by the Central Government. The Central Government may reduce the capital of the Corporation. The Corporation may ask for relief in respect of certain transactions of the insurer whose controlled business has been transferred to the Corporation. The relief is granted by the Tribunal. The Tribunal is constituted by Central Government, (The Central Office of the Corporation shall be at such place as the Central Government may specify. In the discharge of functions under the Act, the Corporation shall be guided by such directions in matters of policy, involving public interest as the Central Government may direct. If any question arises relating to a matter of policy involving public interest, the decision of the Central Government shall be final. The accounts of the Corporation shall be audited by the auditors who will be appointed with the previous approval of the Central Government. The auditors shall submit the report to the Corporation and shall also forward a copy of the report to the Central Government.

If as a result of any investigation undertaken by the Corporation any surplus emerges, ninety-five percent of such surplus or such higher percentage thereof as the Central Government may approve shall be allocated to or reserved for the life insurance policy holders of the Corporation and after meeting the liabilities of the Corporation the remainder shall be paid to the Central Government or if that Government so directs be utilised for such purposes and in such manner as that Government may determine. If profits accrue after making provision for reserves and other matters, the balance shall be paid to the Central Government. The Central Government shall cause the report of the auditors, the report of the actuaries and the report giving an account of the activities of the Corporation to be laid before the Parliament. The provisions of the Companies Act do not apply to the Corporation with regard to winding up. The Corporation cannot be placed in liquidation except by an order of the Central Government.

The structure of the Life Insurance Corporation indicates that the Corporation is an agency of the Government carrying on the exclusive business of Life Insurance. Each and every provision shows in no uncertain terms that the voice is that of the Central Government and the hands are also of the Central Government.

* * *

The Life Insurance Corporation is owned by the Government. The life insurance business is nationalised and vested in the Corporation. No other insurer can carry on life insurance business. The Management is by the Government. The dissolution can be only by the Government.

* * *

In the background of the provisions of the three Acts under consideration, the question arises as to whether these Corporations can be described to be authorities within the meaning of Article 12 of the Constitution. In the Rajas-than Electricity Board (11) case it was said that the power to give directions, the disobedience of which must be punishable as a criminal offence would furnish one of the reasons for characterising the body as an authority within the meaning of Article 12. The power to make rules or regulations and to administer or enforce them would be one of the elements of authorities contemplated in Article 12. Authorities envisaged in Article 12 are described as instrumentalities of State action. On behalf of the State it was contended that the Oil and Natural Gas Commission as well as Industrial Finance Corporation was not granted immunity from taxation and, therefore, the liability to be taxed would indicate that the Corporation was not a State authoriy. Reference is made to Article 289 which speaks of exemption of property and income of a State from Union taxation. The liability to taxation will not detract from the Corporation being an authority within the meaning of Article 12. Article 289 empowers Union to impose tax in respect of trade or business carried on by or on behalf of a State.

* * * *

The Life Insurance Act provides that if any person lawfully withholds or fails to deliver to the Corporation any property which has been transferred to and vested in the Corporation or wilfully applies them to purposes other than those expressed or authorised by the Act, he shall, on the complaint of the Corporation be punishable with the imprisonment which may extend to one year or with fine which may extend to one thousand of rupees or with both. The Corporation also enjoys protection of action taken under the Act.

* * *

For the foregoing reasons, we hold that regulations framed by the Oil and Natural Gas Commission, Life Insurance Corporation and the Industrial Finance Corporation have the force of law. The employees of these statutory bodies have a statutory status and they are entitled to declaration of being in employment when their dismissal or removal is in contravention of statutory provisions. By way of abundant caution we state that these employees are not servants of the Union or the State. These statutory bodies are 'authorities' within the meaning of Article 12 of the Constitution.

* * *

In view of this unequivocal declaration by the Supreme Court, it cannot now be contended that the Corporation is not a 'State', and the contention raised on behalf of the petitioner in this matter has to be accepted.

13. The next question that has to be considered is whether the petitioner is bound only by the provisions of the Blue Order, and in the circumstances whether Ext. R6 agreement does not bind the petitioner. According to the petitioner. Ext. P5 order is violative of Clauses 9(2) and 10(a) of the Blue Order. Clauses 9(2) and 10(a) of the Blue Order are as follows:

g. Promotion of Field Officers:

* * * *

(2) Any Field Officer may, with his consent, be appointed to do administrative work as an Assistant or Section-Head on such terms as may be agreed upon between him and the Corporation.

10. Penalties and termination of service:

(a) In case of unsatisfactory performance of duties by a Field Officer or if a Field Officer shows negligence in his work or is guilty of misconduct or is otherwise incapable of discharging his duties satisfactorily, his remuneration may be reduced or his services may be terminated, after giving him an opportunity of showing cause against the action proposed to be taken in regard to him and after conducting such enquiry as the Corporation thinks fit.

* * * *

According to the petitioner these provisions are violated by Ext. P5 order. He points out the following passage in the decision of the Supreme Court reported in Sunil Kumar Mukharji's case--A.I.R. 1964 S.C. 847.

Subject to the provisions of Section 11(2), the provisions of the Order will prevail, because the Order had been issued by the Central Government by virtue of the powers conferred on it by Section 11(2) itself. The provisions of the Blue Order in law partake of the character of the rules framed under Section 48 of the Act. Thus next of the provisions of Section 11(2) of the Act will stand the provisions of the Order.

This decision was referred to by the Supreme Court in the Ware Housing Corporation's case reported in A.I.R. 1970 S.C. 1244 at paras 26 to 28. There Their Lordships distinguished the case in hand from Sunil Kumar Muhharji's case, and observed as follows:

Therefore, the employees had their right safeguarded by the Insurance Act read with the Order issued by the Central Government and it cast a statutory obligation on Life Insurance Corporation to adopt a particular procedure if the services of those employees were to be terminated.

* * * *

Therefore, it was not as if that the employees were there seeking to enforce a contract of personal service, but their grievances which was accepted by the Court was that the order terminating their services was a nullity as it had not been effected in terms of the statue.

According to the 2nd respondent the rights under the Blue Order, if the petitioner has got any, have been waived by his own conduct in the matter. The 2nd respondent has placed before me a decision of the Calcutta High Court in Debabrate Mukherjee v. L.I.C. (Appeal No. 234/1969 decided on 19-5-1971), an attested copy of which has been produced before me. It is pointed out by the counsel for the 2nd respondent that the Division Bench of the Calcutta High Court had clearly laid down therein after a review of the English and Indian authorities on the subject that the Blue Order even if it has a statutory force can be waived by employees to whose benefit it has been issued. He contended that no question of public policy is involved as is clear from the very purpose contemplated under Section 11(2) of the Act for issue of such orders, namely, to bring about uniformity in the scales of remuneration and other terms and conditions of service applicable to certain classes of transferred employees. The counsel for the respondents has also pointed out before me a decision of Justice Coloridge in Holmes v. Russell as well as the decisions in A.I.R. 1964 S.C. 1300, and A.I.R. 1947 Privy Council 197. In A.I.R. 1964 S.C. 1300, it was held that a judgment debtor could waive his right under Section 35 of the Bengal Money Lenders' Act. In A.I.R. 1947 P.C. 197, it was held that the mandatory provision of Section 80 CPC could be waived. The contention of the respondents is that Clauses 10(a) of the Blue Order was enacted for the purpose of protection and benefit of a class of employees of the Corporation, namely, Field Officers, and the said provision has nothing to do with public benefit or public policy or public interest. On the basis of the decision in A.I.R. 1971 S.C. 2213. the learned Counsel argued that a statutory provision for the benefit of individuals could be waived.

14. The petitioner's counsel, on the other hand contends that the provisions in the Blue Order cannot be waived. Waiver, it was argued on the basis of the various decisions, is an agreement to release or not to assert a right. Waiver is an intentional relinquishment of a known right. It was submitted by the counsel for the petitioner that Clauses 5 and 11 of the Blue Order leaves the determination of remuneration to the Corporation. The order was a self-contained code as regards the terms and conditions of service including disciplinary action except for the pay and allowances admissible to an officer. Therefore, it was argued that it, is competent for the Corporation to determine the pay and allowances and the Corporation is also competent to give higher scale of pay, higher rates of increments and other allowances. By granting higher scale of pay, higher rates of increments, etc., the Corporation is conferring , more benefits on the employee and it was not conditional or contingent. Therefore, the employees like the petitioner had no occasion to abandon or relinquish the rights conferred in respect of the disciplinary action and the petitioner had not agreed to relinquish or in fact relinquished any right conferred on him under the Blue Order. This in substance was the argument advanced by the counsel for the petitioner. It is also alleged by the counsel for petitioner that Clause 10 of the Blue Order is based on public policy and cannot be waived. He contended based on the decision in Maritime Electric Company Ltd. v. General Oiaries Ltd. A.I.R 1937 P.C. 114, that in the case of a statute enacted for the benefit of a section of the public, that is, on grounds of public policy, where the statute imposes a duty of a positive kind not avoidable by the performance of any formality, for the doing of the very act which the party suing seeks to do, it is not open to the opposite party to set up an estoppel to prevent it. Therefore, it is said that if a particular provision is based on public policy, it cannot be waived or a plea of estoppel can be set up by the opposite party. Clause 10 of the Blue Order is said to be based on public policy as it in substance guarantees what is contained in Article 311(2) of the Constitution. It is stated that the provision contained in Clause 10 and Article 311 embodies the universally accepted and recognised rule that no man shall be condemned unheard. Though it is in respect of a particular class of persons, namely, employees, it has to be taken as a Rule which is intended to protect the weaker class from the arbitrary and high-handed action by the employer like the respondents. Therefore, it is stated that the protection conferred under Clause 10 is based on public policy.

15. I do not consider it necessary in the circumstances of the case to decide whether the provisions contained in Clause 9(2) and 10(a) could be waived. Apart from the question of the waiver there is also much force in the respondents' contention that the petitioner had been once admittedly an active member and an office bearer of the Federation and as he was accepting all the benefits given to the Development Officers in pursuance of the various agreements he cannot circumvent the liability under Ext. R6, and this Court should not exercise its jurisdiction under Article 226 of the Constitution in his favour. But this argument also does not require a resolution in this case in view of the fact that even assuming that Ext. R6 binds the parties it has to be said that the provisions in the said agreement itself has not been followed in the case. Paragraph 3 of Ext. R6 lays down the provisions for the procedure for dealing with below the minimum norm performance. In the event of below the minimum norm performance of a Development Officer in any appraisal year, on both the counts, his case will be examined by a joint Divisional Committee. Unanimous recommendations of the said Committee will have to be accepted by the Divisional Manager. The Committee will take into consideration the extenuating circumstances for failure on the part of the concerned Development Officer and if there are no extenuating circumstances the Divisional Manager will inform him accordingly in writing. There it is provided that in the case of a Development Officer appointed before 1-10-1971, his conveyance allowance will be reduced as par the Scheme of Revised Scales of Conveyance Allowance and if he improves in the next appraisal year the cut in the conveyance allowance will be restored. And if his performance for three consecutive appraisal years is below the minimum norm performance, on both the counts, and if as per the procedure there are no extenuating circumstances, he will be absorbed in the administrative side. Therefore, it is abundantly clear from these provisions that the Joint Divisional Committee must sit and review the case of the Development Officers, in each appraisal year, who fail to perform the minimum norms prescribed by the Corporation. This is essential because, by the appraisal every year, the Development Officer is given the chance of being told of his defaults and given an opportunity to improve his work. The appraisal contemplated under Clause 3 of the agreement is to estimate and/or to value the work done by the Development Officer with reference to the extenuating circumstances. Therefore, unless the Joint Divisional. Committee meet every year and consider whether there are such extenuating circumstances for the failure there cannot be an appraisal. The Joint Divisional Committee has, therefore, to appraise the case of a Development Officer who fails to bring in the required minimum income every year and the work should be appraised in relation to the extenuating circumstances. This cannot be given the go-by. The contention taken on behalf of the respondents that in the event of a Development Officer falling below the minimum norms for any of the appraisal years beginning from 1971, two courses are open to the Corporation, namely, (1) they can just stop with giving the information that he has failed and leave him , to improve without further action and (2) they can take action against him and if they choose the latter, then the Joint Divisional Committee will have to sit and look into the extenuating circumstances to see whether the action is justified, is wholly unacceptable. That is not what is provided in Ext. R6. There is no case by the respondents that the annual appraisal has been done by the Joint Divisional Committee in respect of the petitioner. It is evidently clear from the pleading and the documents produced in the case that no annual appraisal was done in respect of the petitioner. According to the 2nd respondent it is not necessary. This is an entirely erroneous and illegal approach as would be clear from Ext. R6 itself which states that 'if the performance of a Development Officer for three consecutive appraisal years is below the minimum norm on both the founts, and if as per the procedure suggested above there are no extenuating circumstances he will be absorbed in the administrative side for such post' for which he has the qualification prescribed for such post (Clause III(b)--underlining mine). The underlined portion is clearly indicative and it could give rise to no other interpretation that the performance of the Development Officer has to be appraised for three consecutive years and it is then on the result of the appraisal in the three consecutive years it is found that the performance of the Officer is below the minimum norm, then alone action could be taken for his absorption in the administrative side. The procedure indicated above 'as stated in Ext. R6' is another positive pointer that the appraisal should be made every year as Clause (a) denotes that every year the appraisal has to be done. The word appraisal itself primarily means 'an act of estimating or evaluating' (as quality, status or character) (from Webster's III New International Dictionary). Appraisal year, therefore, means an year where estimation or evaluation has been done or has to be done. There cannot be, in the circumstances, an appraisal for three consecutive years together which is literally and in spirit against what is contained in Ext. R6. Therefore, Ext. P5 is invalid as the petitioner has been transferred to the administrative side in breach of the terms of the agreement, Ext. R6.

16. Exhibit R6 has been infringed in a more open manner in the matter of issual of Ext. P5. The appraisal as well as the recommendation has to be made by a Joint Divisional Committee which should include two representatives of the Corporation and two representatives of the Federation. If there is any unanimous recommendation of such a committee it shall be accepted by the Divisional Manager. If the recommendation of the said Committee is not unanimous the Divisional Manager will come to his own conclusion; and if there were no extenuating circumstances for failure on the part of the concerned Development Officer, the Divisional Manager will inform him accordingly in writing; and further in the case of a Development Officer appointed before 1-10-1971, reduce his conveyance allowance to the amount of conveyance allowance mentioned in para 3(i)(a) of the Scheme of Revised Scales of Conveyance Allowance, etc. Where it is said that the Joint Divisional Committee could evaluate or make the recommendation, it means the Joint Divisional Committee consisting of two representatives of the Corporation and two representatives of the Federation sitting together. Nowhere in Ext. R6 it is stated that in the absence of the Federation representatives the representatives of the Corporation alone could act. Such an acting will not be considered to be an action by the Joint Divisional Committee as such. IE Ext. R6 has to be followed that has to be strictly followed by the Corporation, The Divisional Manager has erred grievously in taking the recommendation of two representatives of the Corporation as unanimous recommendation of the Joint Divisional Committee. If it is a case of the Joint Divisional Committee being unable to meet, then either the provisions of the Blue Order could have been followed or at least a due enquiry with proper notice to the petitioner could be conducted framing proper charges against him for his inefficient working. As this is not done in the case Ext. P5 has to be considered to be illegal, invalid and violative of the principles of natural justice.

17. It is contended by the Corporation and the 2nd respondent that there is an acquiescence on the part of the petitioner in the matter of the decision taken by two members of the Corporation. this is not correct. It might be noted that in his letter Ext. R21 dated 24-6-1974 the petitioner has pointedly brought to the notice of the Divisional Manager that he is not a member of the National Federation. Petitioner has also stated in paragraph 3 of his affidavit that though he attended the meeting on 5th July, 1974 of the two members of the Corporation in the Joint Divisional Committee he explained to them he is a transferred employee, and, therefore, he is not required to fulfil the minimum norms as per the agreement entered into between the Corporation and the Federation. This would indicate that the petitioner has objected to the jurisdiction of the Joint Divisional Committee itself going into the question. There has been no acquiescence in the proceedings of the Committee as contended by the respondents. Apart from that a decision taken by two members of a committee which takes the decision without the; junction of the representatives, of the Federation is wholly without jurisdiction; in such cases consent cannot give jurisdiction. Therefore, I hold that Ext. P5 is illegal and invalid and wholly without jurisdiction. The transfer of the petitioner to the administrative side is effected not in compliance with the relevant procedure and, therefore, void and non est in law. The petitioner has to be deemed to continue in his original position as Development Officer. I will, therefore, issue a writ of mandamus directing the respondents to treat the petitioner as Grade I Development Officer and to give him all attendant benefits and also to treat that Ext. P5 has not, in any way, affected the petitioner in continuing in the post of Grade I Development Officer. The original petition is disposed of as above. But, in the circumstances of the case, I make no order as to costs.


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