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S. Vaidayanatha Iyer and anr. Vs. Life Insurance Corporation of India - Court Judgment

LegalCrystal Citation
SubjectService;Insurance
CourtChennai High Court
Decided On
Case NumberWrit Appeal Nos. 88 and 92 etc. of 1960
Judge
Reported inAIR1964Mad24
ActsLife Insurance Corporation Act, 1956 - Sections 5, 9, 11, 11(1), 11(2) and 49(2); Life Insurance Corporation (Amendment) Act, 1957; Field Officers' (Alteration of Remuneration and Other Terms and Conditions of Service) Order, 1957 - Rule 2
AppellantS. Vaidayanatha Iyer and anr.
RespondentLife Insurance Corporation of India
Appellant AdvocateT.M. Krishnaswami Aiyar, ;A. Balasubramaniam, ;K. Rajah Iyer, ;R. Rangachari, ;M.K. Nambiar, Advs. for ;K.K. Venugopal, ;V. Thiagarajan and ;M.A. Rajagopalan, Advs.
Respondent AdvocateAdv. General, ;K.C. Jacob and ;S.K.L. Ratan, Advs.
DispositionAppeal dismissed
Cases ReferredChristopher v. Life Insurance Corporation of India
Excerpt:
service - reinstatement - sections 9, 11 and 49 of life insurance corporation act, 1956 - petitioners officer of insurance company - insurance company merged with respondent - petitioners claimed for post of same rank as they were in insurance company - employees of insurance company do not have vested right to particular post as per terms of merger with respondent - employees cannot claim same rank as hold in insurance company. - - thus both under the ordinance as well as under the act ix of 1956, the management of the business alone vested with the government, the insurers being entitled to the beneficial interest in the business. by reason of the fact that the business of the several insurers in several places had to be brought under one set-up there was need for a change in the.....ramachandra iyer, c.j.1. the appellants in the above appeals are employees under the life insurance corporation of india and they have appealed from the judgment of rajagopalan, j. rejecting their applications under article 226 of the constitution for the issue of a writ of mandamus, directing the respondent (life insurance corporation of india, represented by its zonal manager) to reinstate them to the same office with all rights and privileges attached thereto respectively held by them in the various insurance units before their integration into the life insurance corporation of india. the appellants claim that they had been appointed by the various business insurance companies prior to their integration with the insurance corporation of india, as administrative and supervisory officers.....
Judgment:

Ramachandra Iyer, C.J.

1. The appellants in the above appeals are employees under the Life Insurance Corporation of India and they have appealed from the judgment of Rajagopalan, J. rejecting their applications under Article 226 of the Constitution for the issue of a writ of mandamus, directing the respondent (Life Insurance Corporation of India, represented by its Zonal Manager) to reinstate them to the same office with all rights and privileges attached thereto respectively held by them in the various insurance units before their integration into the Life Insurance Corporation of India. The appellants claim that they had been appointed by the various business insurance companies prior to their integration with the Insurance Corporation of India, as administrative and supervisory officers but that after the Corporation came into being they were demoted to the position of field officers contrary to the statutory guarantee contained in Section 11(1) of the Life Insurance Corporation Act (which will hereinafter be referred to as the Act). By the petitions out of which these appeals arise, the appellants prayed for reinstatement, to their original offices which according to them would entitle them to the emoluments and advantages of class officer of the Corporation. The appeals, therefore, raise a common question as to the power of the Life Insurance Corporation, of India to regulate and fit in officers of the various insurance companies which had become merged in the Corporation in the new set-up, by giving them different designations or assigning different duties. The transfer of service of the employees of 'he insurance concerns which were taken over by the Corporation is regulated by Section 11 of the Insurance Corporation Act. Before we refer to that provision it will be useful to advert briefly to the background events that preceded the enactment.

2. The first step towards nationalisation of the Life Insurance Business in India was taken, up on 19-6-1956, by the promulgation of the Life Insurance Emergency Provisions Ordinance, 1956. This Ordinance was followed by the enactment, India Act IX of 1956, containing almost identical provisions. Under the terms of the Ordinance and in the statute that followed, management and control of the business of the various insurers in the country became vested in the Central Government who appointed their nominees called custodians to take charge of the management of the various insurance concerns. These custodians, therefore, functioned under the direction and control of the Government of India. It is unnecessary in this connection to refer to the case of a few insurers who were allowed to continue their management but they too in so doing functioned as agents of the Government. Thus both under the ordinance as well as under the Act IX of 1956, the management of the business alone vested with the Government, the insurers being entitled to the beneficial interest in the business. This stale of affairs was changed on the passing of the Life Insurance Corporation Act, 1956, which after providing for payment of compensation to the various insurance corporation took over the business of the various insurers and integrated them into the State owned Corporation. The Act came into force on 1-9-1956 ' The magnitude of the task which the Corporation had to face is to some extent seen from the 'interim reports of the activities of the Life Insurance Corporation of India' submitted to the Government in August, 1957. There were 243 different units engaged in doing life insurance business in India and the total number of salaried employees were nearly 27000. Almost the first thing to which the Corporation had to devote its attention was, therefore, to achieve an organisational set-up with the twin object of preserving and expanding the old business and also of integrating the various businesses taken over by it. The interim report gives a picture of the problems before the Corporation, for example, in the city of Bombay it is stated that there were about 71 head or principal offices of the various insurers whose business had to be taken over. In several other places there were various companies doing similar business. All these had to be consolidated into one organisational unit if only for the proper effectuation of the purpose that the Corporation was constituted for and had in view. By reason of the fact that the business of the several insurers in several places had to be brought under one set-up there was need for a change in the administrative set-up as well. The. report states that there were considerable difficulties in assessing the relative claims of officers as to seniority and gradation; designation in companies did not in every case indicate the nature of duties or functions. They were not of the same level of responsibility in all cases. Even where the functions and level of responsibility were the same, the size of the company and the nature of its operations meant different degrees of training and experience. The integration of all the officers into a well-knit cadre with a well-recognised seniority had, therefore, been presenting difficulties. It is. inevitable that in any scheme of consolidation where duplicate officers are merged into a single one, the number of officers' posts in the Corporation should be smaller than the total number of posts carrying same or equivalent designations in all the insures put together. A number of persons holding executive positions in insurance companies, it is stated, had to be appointed, to positions carrying lower designations. Also in the process of fitting-in offices in the new grades of the Corporation, their emoluments were revised. The report further reveals that the integration of the services of supervisory clerical and subordinate staff presented more difficult problems. Besides, it appears that during the two years preceding nationalisation of the life insurance business, various insurers had appointed, a number of inspectors creating other classes of intermediaries under a variety of designations sometimes on a pro rata basis and on occasions on fixed salary. The report then, adds,

'that in addition to these categories of inspectors, many erstwhile branch managers, assistant branch managers, etc., who could not be fitted into the Corporation's cadre as officers, were appointed as inspectors. Several successful chief agents and special agents were also appointed as inspectors in fulfilment of an undertaking given to them that those amongst them who were considered suitable would be absorbed in the service of the Corporation.'

The appellants in these appeals claim that they: were, officers employed by the respective insurance units in administrative capacities and that the Corporation improperly reduced them to the post of field officers. It is necessary, therefore, now to refer briefly to the change brought about in the designation and emoluments of the appellants.

(1) Sri Vaidyanathan (appellant in W. A. No. 88 of 1960) was a wholetime principal senior officer charged with administration and development of business in the branch office of the Vanguard Insurance Co., Ltd., at Trivandrum, His salary was Rs. 300. per month and he was getting a fixed travelling allowance of Rs. 150. But it is stated that later on it was increased to Rs. 200. He was also given the use of a car owned by the company the salary of the driver Rs. 44 being borne by the company. Besides this, he was given free quarters. He continued in the same post as branch manager on the same terms till the company was integrated with the Life Insurance Corporation of India. Thereafter, he was appointed as an Inspector and subsequently as field officer. His salary continued to be Rs. 300/- as before and he was given a fixed travelling allowance of Rs. 175 per month. He was not, however, given the additional advantage like free quarters and the use of the company's car.

(2) Raju (appellant in W. A. 92 of 1960) was the life secretary of Jayabarat Insurance Co., which had a branch office at Bangalore on a salary of Rs. 400 per month. Under the Corporation, ho was made a field officer. By reason of the Field Officers' (Alteration of Remuneration and the Other Terms and Conditions of Service) Order 1957, to which we will have occasion to refer and by the categorization of his service, he became entitled. to a basic pay of Rs. 200 plus dearness allowance of Rs. 70 and a conveyance allowance of Rs. 25. In all, his emoluments were fixed at Rs. 365 per month. There was, however, no graded salary while he was in the service of the previous insurer, Under the Corporation there is a grade and his total emoluments were fixed at Rs. 380 per month from 1st September 1959.

(3) E. I. Philips (appellant in W. A. 40 of 1960) was the branch manager of the Asian Insurance Co. in charge of two offices, one at Madras and another at Allepey. His salary was Rs. 400 per month with a conveyance allowance of Rs. 125 per month. He was made a field officer under the Corporation; his salary being fixed at Rs. 250 per month; in addition he is paid dearness allowance of Rs. 70 and conveyance allowance of Rs. 150 his total emoluments comes to Rs. 470 per month.

(4) Chellam (appellant in W. A. 40 of 1960) was the divisional superintendent of the National Insurance Co., with headquarters at. Bangalore, on x salary of Rs. 300 per month together with conveyance allowance of Rs. 150. Under the Corporation he is made a field officer. His salary was fixed at Rs. 175 per month and in addition he would be eligible to dearness allowance of Rs. 65 and conveyance allowance of Rs. 175 per month.

3. Fixation by the Corporation of the salaries of the field officers it is stated was based on the volume of business procured during the period between 1-9-1956 and 30-9-1957, or between 1-1-1957 and 31-12-1957. It will be seen that the emoluments of the appellants under the Corporation has in all the cases been less than what they were getting under the insurers. They are, however, given a special allowance and there is a categorisation and a grade.

4. The appellants complain that the order of the Life Insurance Corporation of India which altered their services from an administrative post into a field officer's post and which had the effect; of reducing their emoluments is in contravention of Section 11 of the Act, and, therefore, this Court should direct the Corporation to restore them to the positions which they occupied before the companies in which they were working got merged into the Corporation. According to them, they would be entitled to such relief by virtue of Section 11 of the Act. Sub-section. (2) to that section underwent an amendment by Act XVII of 1957.

'Section. 11 : Transfer of service of existing employees of Insurers to the Corporation. (1) Every whole-time employee of an insurer whose controlled business has been transferred to and vested in the Corporation and who was employed by the insurer wholly or mainly in connection with his controlled business immediately before the appointed day shall, on and from the appointed day, become an employee of the Corporation, and shall hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same on the appointed day if this Act had not been passed, and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation;

Provided that nothing contained in this subsection, shall apply to any such employee who has, toy notice in writing given to the Central Government prior to the appointed day, intimated his intention of not becoming an employee of the Corporation.

(2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of remuneration and the other terms and conditions of service applicable to employees of insurers whose controlled business has been transferred to, and vested in the Corporation, it is 'necessary so to do, or that, in the interests of the Corporation and the policy holders, a reduction in the remuneration payable, or a revision of the other terms and conditions of service applicable, to employees of any class of them is called for, the Central Government may, notwithstanding anything contained in sub-section (1) or in the Industrial Disputes Act, 1947, or in any other law for the time being in force, or in any award, settlement or agreement for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of the service to such extent and in such manner as it thinks fit; and if the alteration is not acceptable to any employee, the corporation may terminate his employment by giving him compensation equivalent to three months remuneration unless the contract of service with such employee provides for a shorter notice of termination.

'Explanation : The compensation payable to an employee under this sub-section shall be in addition to. and shall not affect, any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service.

(3) If any question arises, as to whether any person was a whole-time employee of an insurer or as to whether any employee was employed wholly or mainly in connection with the controlled business of an insurer immediately before the appointed day the question shall be referred to the Central Government whose decision shall be final.

(4) Notwithstanding anything contained in the Industrial Disputes Act, 1947, or in any other law for the time being in force, the transfer of the services of any employee of an insurer to the Corporation shall not entitle any such employee to any compensation under that Act, or other law, and no such claim shall be entertained by any Court, tribunal or other authority.'

5. On 30-12-1957, the Government of Mia. purporting to act Under Section 11(2) of the Act issued Life Insurance Field Officers' (Alteration of Remuneration and Other Terms and Conditions of Service) Order, 1957. By that order, the Government has fixed the scales of pay and allowances of field officers and also formulated other conditions of their services. The term 'field officer' is defined in Rule 2(c) thus :

'Field officer means a person whether designated by an insurer as Branch manager, branch secretary, Assistant Branch Manager, Assistant Branch secretary, Zonal Agency manager, Superintendent of Agencies, Divisional Superintendent, Organiser or by any other name, who before the 1st day of September 1956 was wholly or mainly engaged in the development of new life insurance business for the insurer by supervising either directly or through one or more intermediaries the work of persons procuring or soliciting new life insurance business and who was remunerated by a regular monthly salary, and who has become an employee of the Corporation Under Section 11 of the Act, but does not include any persons now in the employment of the Corporation as assistant branch manager, branch manager or in any higher capacity.'

6. The above order will apply to all persons who were field officers prior to 1-9-1956 i.e. those who either wholly or mainly were engaged in the development of life insurance business whatever might have been their designation then. That excludes from its ambit persons who had been promoted to higher posts as branch manager, branch secretary, assistant branch manager, or assistant branch secretary, etc., by the Corporation. In order, therefore, to decide whether a particular employee of the Corporation is a field officer who would come within the terms of the Government order what would be relevant to consider will be the post held by the particular person prior to 1-9-1956. As we stated earlier, having regard to the various names by which the Insurance companies designated their officers previous categorisation as such cannot be taken as a safe guide for determining whether a particular person was functioning as a branch manager or field officer. The definition of the term 'field officer' shows that if he were wholly or mainly engaged in the development of new life insurance business for the insurer by supervising persons procuring or soliciting new life insurance business, he would be a field officer. But that definition will exclude persons who have been appointed to the designated (or enumerated posts as Rajagopalan, J. has referred to them) by the Corporation itself. Commenting on the definition Rajagopalan, J. observed :

'Leaving the proviso out of account for the present, what is relevant to decide whether a given employee is a field officer is the functions assigned' to him in the post he held before 1-9-1956 by whatever name that post was designated. It was a functional test that Rule 2(c) prescribed...... The proviso takes out of the scope of the definition the class of officers who on the date of the Field Officer's Order filled any of the enumerated posts in the Corporation, Assistant Branch manager, branch manager, or a post of high capacity...... The definition and the proviso both take into account only the factual position before and after 1-9-1956. ' Let me take the example of an employee whose designation under the old employer was that of a divisional superintendent. If his functions brought him within the scope of the definition of field officer, he would be outside the scope of the proviso even if the designation had not been changed. That he was designated as Inspector after 1-9-1956 could not alter his position. For the factual position before 1-9-1956 it was the function that mattered and not the label of designation of the post. If an employee was a field officer, though he had been called branch manager before 1-9-1956, he would continue to be a field officer whatever his designation be subsequent to 1-9-1956 unless he had been actually assigned one of the posts enumerated in the proviso and held it on the eve of the Field Officer's Order.'

7. We agree, with respect, with the interpretation put up by the learned Judge as to the class of persons to whom the Field Officer's order would apply. In other words, the position will be this:

Field Officers' order will apply to persons who were either wholly or mainly engaged in the development of new life insurance business prior to 1-9-1956, by supervising either directly or through one or more intermediaries the work of persons procuring new life insurance business and who were remunerated by a regular monthly salary. But those among them who had been given any one enumerated post by the Corporation will be excluded. This does not necessarily mean that the Corporation by merely picking and choosing employees would be able to apply the Field Officer's Order to any one of their choice. The posts such as branch manager etc., under the Corporation had specific duties attached to them. These posts are not field officers' posts or involve the field officers' duties. Therefore, what has to be considered with reference to orders was the nature of the duties performed by them by reason of the definition. It in the new set up certain persons occupied those enumerated posts, they would not be field officers. But the old employees who are not appointed to such posts if they functioned in substance as field officers in the various insurance units the order would apply to them.

8. On behalf of the appellants it is contended that Under Section 11 of the Act, there is a guarantee that they would hold under the Corporation the same office with its attendant benefits and advantages, and what the Corporation did was in effect to reduce their status to that of Inspectors or field officers and thereby reduce their emoluments as well. Thus there was a violation of Section 11(1) of the Act. The contention, therefore, is that the order designating them as field officers is invalid. Complaint is made that some inspectors have been made branch managers by the Corporation while several branch managers functioning as such under the various insurers subsequently taken over by the Corporation, were made only to act as inspectors. Rajagopalan, J. did not, however, consider it necessary to investigate into this complaint that what the Corporation did in regard to the appellants Was in contravention of Section 11(1) of the Act and he left it open to them to have the question whether they were doing the duties of field officer or holding one of the enumerated posts on 31st August 1956, for determination in other appropriate proceedings. But the learned Judge held that even assuming that what the Corporation did was contrary to Section 11(1) of the Act, it would not be open to this Court to issue a writ of mandamus so as to oblige the Corporation to act in contravention of the field officers' order. The learned Judge further held that Section 11(1) of the Act did not guarantee any specific post and that it created no right in any employee to any special post and that in that view even if the appellants were not given any of the enumerated posts, the order of the Corporation would not be a nullity. Further, as in point of fact the appellants were not occupying the posts under the Corporation as specified in the proviso to Rule 2(c) of the Field Officers' Order, there was no case for the issue of any writ of mandamus.

9. It will be noticed that the case of the appellants is that they who were originally occupying administrative posts were subsequent to 1-9-1956, made to function as inspectors and later appointed as field officers. The consequence of this in all the cases is that the appellants' salaries came to be fixed at a rate lower than what they were obtaining on the date when the Life Insurance Corporation took, over the business of the various insurers, the Government acting under powers vested in it Under Section 11(2) of the Act have fixed the salaries and other conditions of service of field officers. By means of the proviso to Rule 2(c) of the Field Officers' Order, 1957 the operation of it was excluded so far as officers appointed by the Corporation to the enumerated posts were concerned whether such officers had been functioning previously as field officers or not. It the Field Officers' Order is held to be valid there can be no doubt that reduction in the remuneration of the field officers would be valid,

10. Mr. M. K. Nambiar on behalf of the appellant first contended that the order of the Corporation posting the appellants as Inspectors and later on as field officers was in contravention of Section 11(1) of the Act and that, therefore, they would be entitled to receive all the benefits and advantages which they were enjoying from their respective former managements before the formation of the Life Insurance Corporation. Learned counsel invited our attention in this connection to the provisions of Section 9 of the Act which deals with the effect of vesting of the insurance business in the Corporation. That provision states that all contracts and agreements, etc. of whatever nature subsisting or having effect immediately before the appointed day when the Corporation. Act came into force shall have full force and effect against or in favour of the Corporation as the case may be and may be enforced or acted upon as fully and effectually.

11. From this, it is contended that the section will save all contracts of service which the insurer had entered into with their employees and that as by virtue of Section 9 such contract would be binding on the Corporation, the latter would be bound to provide for the posts which they were till then occupying and also pay them the same salaries and afford all benefits and advantages hitherto enjoyed by them under the previous set up. We are, however, unable to agree that Section 9 will have application to the contracts of service which the employees had with their previous managements. Section 11 deals specifically with the transfer of service of existing employees of the insurers to the Corporation. The former section being of a general nature capable of covering all contracts, a reasonable interpretation of its scope will be not to extend its application to subjects specially dealt with by the latter provision, namely, Section 11 of the Act. The latter provision deals with a separate subject which should alone apply to it; otherwise, there will be a conflict between Sections 5, 9 and 11, for example if the interpretation contended before us is to be accepted the power of the Government to fix the salaries Under Section 11(2) will be rendered (sic)ugatory. Section 11 covers a special branch of the contracts and there are no indications in the Act to show that it is subject 'to Section 9. Even apart from that consideration, a contract of personal service should obviously stand on a different footing from other contracts. Normally a transfer of business or change of employer will result in the termination of service of the employees serving under the transferor, unless there is a statutory provision to the contrary. In Nokes v. Doncaster Amalgamated Collieries Ltd. 1940 A. C. 1014, amalgamation of two companies was directed by an order of Court Under Section 154 of the English Companies Act. A question arose as to whether the contract of service existing prior to the date of amalgamation between the workmen and the transferor company became automatically a contract of service between the same workmen and the transferred company and that question was answered in the negative. Lord Atkin observed at p. 1206:

'My Lords, I confess it appears to me astonishing that apart from overriding questions of public welfare power should be given to a court or anyone else to transfer a man without his knowledge and possibly against his will from the service of one person to the service of another. I had fancied that ingrained in the personal status of a citizen under our laws was the right to choose for himself whom he would serve; and that this right for choice constituted the main difference between a servant and a serf. But if parliament has so enacted the result must be accepted'.

12. In this country there will be limits even for the Parliament enacting such transfer of service having regard to the fundamental rights enshrined in the Constitution. Section 11 of the Act no doubt states that an employee of a particular employer will automatically become the employee of the transferee but it will be open to the employee himself either to continue his service with the latter or to refuse to serve. If he wished to continue in service Section 11(1) safeguards certain of his rights for a limited period. That section states that :

'He shall hold his office with the Corporation by the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same on the appointed day if this Act had not been passed...........................'

13. If the Legislature intended to apply the provisions of Section 9 to contracts of service as well there will be no need to enact Section 11 at all. The effect of Section 11 is, therefore, not to create any statutory service, but to create a sew contract of service with the Corporation with certain rights in: the persons who have been employed in the various units. Except to the extent, namely, the employee's rights secured by Section 11 of the Act there would be no further right in the employees of the Corporation to fall back on the original terms and conditions of service under which they were serving their previous managements.

14. Mr. Nambiar next contended thus : Section 11(1) of the Act provides for continuity of service on the same terms and conditions as those which prevailed at the time when the services of the employees were transferred to the Corporation and therefore, it would not be open to the latter to reduce the cadre of position of the employees. In other words, the Corporation will have no power to alter to the employee's disadvantage any of the conditions of service, for example, a Branch manager cannot be placed a field officer. Every individual employee of the insurer whose business had been taken over by the Corporation would, therefore, be entitled to be protected in regard to his designation or post and while it may be competent; to the Government acting Under Section 11(2) of the Act to revise the pay scales with reference to employees in general or to any class of them, individual employee's rights to hold particular posts cannot be interfered with.

15. This contention is sought to be supported by reference to the decision in Christopher v. Life Insurance Corporation of India, : AIR1958Bom451 . In that case, the salaries of certain of the employees of the various life insurance companies were fixed by an award passed under the Industrial Disputes Act. The Insurance companies were then taken over by the Corporation. The Corpora1 ion then evolved a new pay scale system and imposed new conditions of service as applicable to such staff. The terms and conditions therein specified wore different and far more disadvantageous to the employees concerned. On an application filed by the employees to quash the revised order, Desai J. held that the Corporation had no unfettered power to alter the terms, and conditions of service of the employees whose, services have been transferred to the Corporation. The learned Judge held that the intention, underlying Sec, 11(1) of the Act was to provide for continuity of service on the same terms and conditions as those which prevailed at the time when the services of the employees were transferred to the Corporation and that it was not competent for it to alter the remuneration, etc., except in the same manner and to the same extent under which the previous companies whose life insurance businesses were taken could themselves do. It was further held that while the Central Government could under sub-section (2) alter the remuneration of the employees, it had no power to curtail other conditions of service.

16. Since this decision was rendered, the Life Insurance Corporation Act has been amended in regard to sub-section (2) bringing it to its present form. Section 11(2) of the Act empowers the Central Government notwithstanding anything contained in. the Industrial Disputes Act, 1947, or in any other law for the time being in force to alter by way of reduction or otherwise the remuneration and the other terms and conditions, of service to such extent and in such manner as it thinks fit. In addition a new sub-clause (bb) has been introduced to Section 49(2) of the Act, which; empowers the Corporation to make regulations providing for the terms and conditions of service of persons who have become employees of the Corporation under Sub-section (1) of Section 11. The result of the amendment is that it would be open to the Government to alter not merely the remuneration and the conditions of the services of the employees or a class of employee, but it would also be open to the Corporation to make regulations in that behalf, notwithstanding the fact that Section 11(1) statutorily preserves to the employees the same conditions of service as they were enjoying before. But it should be noted that the power Under Sections 11(2) and 49(2)(bb) of the Act can be exercised only generally and not in regard to any single individual. Mr. Nambiar, therefore, contends that so long as there has been no notification either by the Central Government or by the Corporation altering the conditions of service of the appellants as a class they will be entitled to the same posts and conditions of service as (hey were having prior to their transfer to the Corporation. The short answer to this contention is that Section 11(1) . on which reliance is placed, does not secure for the employees the same post or position as they wore occupying during their term of office with the previous employer. We have already referred to the fact that several of the posts newly created by the Corporation may not be of the same nature as those in the insurance companies taken over and that secondly the number of posts like the branch manager, etc., under the Corporation, would be very much less than the total number of posts of the various insurance companies put: together. There is nothing in the statute that obliges the Corporation to create an equal number of posts in the new set up. The legislature must have been aware that the scheme of integration envisaged by the Act would necessarily entail reduction of a number of administrative posts such as branch manager etc. Yet no specific provision has been made in regard to the posts held by the employees.

17. We have earlier referred to the fact that the administrative posts under the Corporation might not be the same as those under the various insurers. By way of example we may refer to the case of the appellant in W. A. No. 88 of i960. In this case, the appellant wrote to the Zonal Manager of the Corporation on 27-8-1956 stating :

'I. have been a field officer as well as administrative head of the Vanguard Insurance Co., since 1945, and as such, I have experience in both the departments'.

18. It is not very clear whether he held at. various times distinct posts as field officer and administrative officer or whether he combined in himself both the offices. In the latter case, it will be apparent that the mere fact that an employee was occupying a post designated as branch manager under an insurer cannot really mean that he was functioning only in an administrative capacity. It is, however, unnecessary to pursue that matter as there has been no investigation in the present case whether the appellants in the four appeals were occupying only administrative post or the combined posts of administrative and field officers or only that of field officers. It will be sufficient however to state for the present purpose as Rajagopalan J. has held, none of the employees had a guaranteed right to be appointed by the Corporation to any particular posts. Section 11(1) of the Act guarantees to the employee that he shall hold his office under the Corporation (i) by the same tenure (ii) on the same remuneration and upon the same terms and conditions and (iii) with the same rights and privileges as to pension and gratuity, and all other matters, as he would have held the same on the date when the Corporation took over the various businesses. The word 'tenure' means only the period of service and it has no reference to the post held by the employee. As regards the terms and conditions of service, sub-section (2) of Section 11 of the Act specifically confers a power on the Government to alter the same. Section 49(2)(bb) also invests a similar power on the Corporation, but neither the term 'remuneration' nor the expression 'terms and conditions' can refer to the post or designation of the employee held by him before his transfer. The rights and privileges referred to under the third head relate only to pension and gratuity and cannot obviously include any right to be continued in the same post as he was occupying with the insurer. We are, therefore, of opinion that the decision in : AIR1958Bom451 , which was concerned with the reduction of salary effected by the Corporation cannot be read as supporting the contention that Section 11(1) of the Act would include a guarantee to continue any particular employee in the same post that he held before the integration. Once it is held that Section 11(1) of the Act does not guarantee to the employee the same post which he held before, the provisions of the Field Officers' Order which prescribed the salary and conditions of service of the field officers, must be held to be valid.

19. But Mr. Nambiar contends that as the field officer's order applies only to a particular class of employees, it should be held invalid. The argument in support of the contention is put on a proposed basis (i) the employees who were functioning 'branch managers like the appellants herein were not given the same posts in the new set up and to that extent there was contravention of the provisions of Section 11(1) of the Act and (ii) even: if that were to be held as not to contravene that provision as rule 2 (c) of the field officers' order by its proviso excludes those employees who had subsequently been appointed to the enumerated posts, the field officer's order should be regarded as applying only to a section of a class and as the Government has power only to regulate for a class and not for a section thereof the notification must be held to be invalid.

20. We have already dealt with the question that no employee of an insurance company which has subsequently been taken over by the Corporation would have ' a vested right to any particular post. What Section 11(1) secures to him is continuity of service past salary and conditions of service, until such salary is revised Under Section 11(2) or Section 49(2)(bb) of the Act and their rights and privileges in regard to pension, gratuity etc. It was therefore competent for the Corporation which was entitled to organise its own business and the official machinery, to fit the various officers of the several insurance companies taken over into the new set up in such manner as it may consider proper, subject to the safeguards provided in Section 11 of the Act. We are unable to hold that rule (c) of the Field Officers' Order is any way unconstitutional. There is nothing discriminatory, about it. Rajagopalan J. did not decide the question whether any or all of the appellants actually functioned as field officers in the previous concerns or occupied only administrative posts. Nothing that we have said in this appeal would preclude the appellants from agitating that question before the appropriate authorities and obtain such reliefs as they may be entitled to. What all we are concerned in the present case is whether the appellants could say that they are entitled to be appointed as branch managers in the new set up as of right.

That question, we answer in the negative. The result is, that, the appeals fail and are dismissed. There will, however, be no order as to costs.


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