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K.S. Ramaswamy and Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported in(1977)ILLJ211Mad
AppellantK.S. Ramaswamy And;m.R. Dass
RespondentUnion of India (Uoi) and ors.
Cases ReferredShama Rao v. Union Territory
Excerpt:
- ordermohan, j.1. this writ petition is for declaration declaring the life insurance corporation -development officers (alteration of remunerations and other terms and conditions of service) order, 197f, dated 8-4-1976 and the consequential life insurance corporation of india (staff) amendment regulations, 1976, dated 22-4-1976 as ultra vres of section 11(1)(2) and section 49 of the life insurance corporation act, 1956 and also as violative of the petitioner's fundamental rights guaranteed under article 16 of the constitution of india, in so far as it affects the petitioner.2. on 1-12-1955 the petitioner joined the service of the united india life assurance company, which was carrying on life insurance business as an organiser. under the terms and conditions of the services of the company,.....
Judgment:
ORDER

Mohan, J.

1. This writ petition is for declaration declaring the Life Insurance Corporation -Development Officers (Alteration of Remunerations and other Terms and Conditions of Service) Order, 197f, dated 8-4-1976 and the consequential Life Insurance Corporation of India (Staff) Amendment Regulations, 1976, dated 22-4-1976 as ultra vres of Section 11(1)(2) and Section 49 of the Life Insurance Corporation Act, 1956 and also as violative of the petitioner's fundamental rights guaranteed under Article 16 of the Constitution of India, in so far as it affects the petitioner.

2. On 1-12-1955 the petitioner joined the service of the United India Life Assurance Company, which was carrying on life insurance business as an organiser. Under the terms and conditions of the services of the company, he was a whole time employee. His functions as organiser were to recruit, guide and supervise the insurance agents who were appointed by the company on his recommendations and to see that maximum possible business is canvassed for the company through the agents.

3. On 1-9-1956, Parliament enacted the Life Insurance Corporation Act (hereinafter referred to as the Act). Under Section 11 of the Act, every whole time employee of an insurer (which was a company carrying on life insurance business in India) whose controlled business has been transferred and vested in the Corporation and who is employed by the insurer mainly in connection with his business immediately before the appointed day, shall on and from the appointed day become an employee of the Corporation. He shall hold his office on the same tenure, remuneration, terms and conditions, and with the same rights and privileges and shall continue to do so until his appointment in the Corporation is terminated or until the terms and conditions of service are duly altered by the Corporation. Section 11(2) enables the Central Government to pass orders in order to rationalise and bring about uniformity in the pay structure and other terms and conditions. Section 49(2)(b) empowers the Corporation to make regulations regarding the terms and conditions of persons who became employees under Section 11(1) of the Act. On. 1-91956, the appointed day, the petitioner was absorbed in the service of the Corporation. On 30-12 1956, exercising the powers under Section 1)(2) of the Act, the Government of India issued an order called the ' Life Insurance Corporation Field Officers (Alteration of Remuneration and other Terms and Conditions of Service) Order, 1957, popularly known as the 'Blue Order', After the passing of the 'Blue Order' the petitioner was required to work as a Field Officer in terms of the said order. Prior to this in 1956 the Corporation franied staff regulations which were amended in July, I960 for the effective application of the 'Blue Order'. By au agreement dated 10-4-1964 entered into between the Corporation and the National Federation of Insurance Field Works of India, it was agreed in principle that the increment should be op a regular annual basis without reference to the volume of business turned out by the Development Officer. The principle was implemented by entering into another agreement dated the 20th May, 1965. An interim agreement was entered into. On the 20th April, 1970 wherein it was agreed on principle that a minimum norm should be prescribed. By an agreement dated 19-11-1971 the details of the above agreements were worked out On 8-4-1976 the Government passed an order under Section 11(1) of the Act altering the terms and conditions of service irater alia making the remuneration of the Development Officer dependent upon the annual S.W. premium. This was followed by an amendment of staff regulations dated 22-4-1976 in accordance with the abovesaid order dated 8-4-1976. It is this order dated 8-4-1976 and the amendment of the staff Regulations that are attacked in this writ petition mainly on the following grounds:

(i) The power under Section 11(2) is a power which can be exercised at or immediately after the transfer since the power is intended only for the purpose of securing uniformity in the terms and conditions of service and also to bring about reduction in the salaty so as to provide uniformity of pay for the various employees who were transferred from as many as 238 insurers: The nature of the power is such that it can be exercised only once for the purposes mentioned above and gets exhausled after such exercise. Hence, it is submitted that the Central Government have no power to pass the order dated 8-4-1976 superseding the order dated 30-12-1957, an order passed under Section 11(2) of the Act for the purpose of bringing about rationalisation and uniformity of the terms and conditions of the various employees.

(ii) The order dated 8-4-1976 drastically altering the terms and conditions of the service of the employee including his remuneration and completely depriving him of the security of service is beyond the power of the Central Government under Section 11(2) of the Act.

(iii) The power under Section 11(2) can be exercised only once for the purposes stated therein and cannot be exercised again is evident from the fact that while Life Insurance Ordinance, 1956 provided that the power under Section 11(2) may be exercised 'from time to time' the Legislature deliberately omitted the expression 'from time to time in the Act. Hence, the order dated 8,4-1976 passed by the Central Government purporting to exercise power under Section 11(2) is beyond the jurisdiction of the Central Government,

(iv) In any event, the rationalisation having been achieved and uniformity in the terms and conditions of the various employees having been brought about by the order dated 30-12-1957 the power cannot in any event be exercised after 20 years unilateraly to the detriment of the employees. Even if it is assumed that there is power, the order dated 8-4-1976 is vitiated by reason of mula fides and abuse of power

(v) The order dated 84-1976 and the consequential amended staff regulations dated 21-4-1970 are violative of Article 16, in so far as they make the Development Officers alone working in the Development Department depending entirely upon the annual turnover while Class I Officers of the Development Department as well as some of the Assistant Branch Managers who are performing similar functions. This unequal treatment meted out to equals is violative of the petitioner's fundamental righis guaranteed under Article 16 of the Constitution and as such void.

(vi) Under Clause 5(c) of the order dated 8-4-1976 and Clause 7 of the Schedule to the amended staff regulations dated 22-4-1976, any reduction in the pay or non-increment in the pay or termination in accordance with the amended order or regulation would be deemed not to be a termination of service under Clause 39 of the staff regulations. This deeming provision is ultra vires the powers of the Central Government under Section 11 and Section 49(b) and (bb) of the Act.

4. In the counter affidavit filed by the Corporation, it is stated that the earlier history leading to the order dated 8-4-1976 and the amendment of the staff regulations dated 22-4-1976 is irrelevant. Concerning the various grounds, it is submitted that the power under Section 11(2) are two distinct powers which the Central Government is entitled to exercise. That power could be exercised if the Government was satisfied in the interest of the Corporation policy-holders, reduction in remuneration or the revision of other terms and conditions became necessary. It is not correct to state that the power under sub. Section 11(2) can be exercised only immediately after the transfer and only the sole purpose of Section 11(2) is to secure uniformity in the conditions of transferred employees.

5. The omission of the words 'from time to time' is of significance in view of the clear terms of Section 11(2). The words are obviously omitted as being redundant and unnecessary. The further averment contained in para 23 D that the power under Section 11(2) has been exercised after twenty years and is, therefore, mala fide and is an abuse of power is without any substance. As already submitted. Development Officers of the Corporation bargained for and obtained concessions not in keeping with the work they did and against the interests of the Corporation. It was also found that some Development Officers were drawing salaries and allowances out of all proportions to their work. It was found that the terms and conditions of service were uneconomical against tile interests of the Corporation and its policy-holders. Further the agreements themselves were illegal and unenforceable in so far as they were not approved by Government and were not Gazetted.

6. Section 40(1) prohibits the payment of any remuneration or commission to a person other than a licensed insurance agent. The person covered by Section 40(1) is a person who solicits or procures life insurance business. He must be paid a commission in accordance with the provisions of the Act. No person other than an insurance agent is entitled to be paid any commissioner or remuneration for procuring or soliciting life insurance business. The functions of Development Officers is to supervise and direct persons who procure and solicit life insurance business. These functions remain undisturbed under the, new order. They are not called upon to discharge different functions. They are not assigned different duties. Their functions and duties remain the same. That being so, there is no question of their coming within the terms of Section 40(1) of the Insurance Act as a result of the application of the new rules relating to their service.

7. There is no violation of Article 16. In terms of the provisions of the said 'Blue Order' as well as the various administrative instructions issued from time to time under the said (staff) regulations, Development Officers are required to perform duties which are distinctly different from there of other classes of employees. While the other classes of employees are engaged in administrative jobs, Development Officers are employed to develop and organise procuration of business through their agency organisations. Having regard to the nature and pattern of the work, there is absolutely no discrimination.

8. The Development Officers form a distinct and separate class themselves and as between the members of that class they are given equal treatment. It is wrong to compare them with persons differently situate and discharging different duties and functions. The agreement dated 19-11-1971 is invalid because the agreement was not made with the previous approval of the Government in view of the judgment reported in 1973 II L.L.J 288.. Employees' Assn. v. L.I.C. Higher Gr. Assts.' Assn. This agreement is not enforceable in law. For all the above reasons it is prayed that the writ petition may be dismissed.

9 The Central Government has also filed a separate counter-affidavit stating that the power under Section 11(2) can be exercised as often as is required merely because that power had been eserciscd while passing the 'Blue Order', It does not mean the same cannot be exercised over again. In other respects it takes the similar stand us that of the Corporation.

10. A reply affidavit has been filed reiterating most of the allegations in the affidavit and also countering the stand taken by the respondents.

11. Mr. K.K. Venugopal. learned Counsel for the petitioner makes the following submissions in support of the stand taken in the affidavit:

(i) The power under Section 11(2) of the Act can be exercised only once having regard to the fact that the section deals with persons who are deemed to become employees of the Corporation on the date of vesting, viz. 1-9-1956. That power having been exercised for both the purposes mentioned in that Sub-section, viz., for securing uniformity and in the interest of the Corporation and the policy-holders, when the 'Blue Order' was passed there was no further power left in the Central Government to make an order dated 8-4 1976. This is also evident from the fact that in the draft amendment of Section 11(2) the phrase 'from time to time' incorporated but later deleted. The Minister while deleting that phrase gave an assurance that it was to be applied only to the existing circumstances and not on a future occasion as seen from the parliamentary debate. These parliamentary debates can be referred to for the proper constrution of the statute.

(ii) The regulations made on 22-4-1976 cannot affect the prior agreements entered into because the Corporation is subordinate to Central Government. In support of the submission he relies on the decisions reported in State of Mysore v. R.V. Bidap : (1973)IILLJ418SC and Figu Show v. Slute of West Bengil : 1974CriLJ486 .

(iii) If the order dated 8-4-1976 is void, the 'Blue Order' would get revived, which 'Blue Order' is performance-oriented. Under Clause 5 of that order dated 8-4-1976 if for instance a premium of Rs. 30,000 per annum is secured in the previous year, 20 per cent of that would be Rs. 6,000 per annum which means an officer who was drawing a higher salary, under the 'Blue Order' will suddenly get only Rs 6,000 When Clause 5 of the order dated 8-4-1976 speaks of re-fixation of basic pay and allowances, it also provides for termination of service if the continuance in service of that Officer is likely to be uneconomical. What exactly is the basis for holding that his continuance is uneconomical is not explained. Hence this clause is arbitrary.

(iv) The order dated 8-4-1976 when it defines 'staff regulations' under Clause 2(g) it could only refer to regulations made in I960 and it cannot incorporate the regulations to be made in future. This is because under the law of incorporation, future legislation cannot be applied. The authority in support of this submission is Shama Rao v. Union Territory, Pondicherry : [1967]2SCR650 . Even otherwise, by applying the old regulation, Clause 5 relating to re-fixation of basic pay and allowances is rendered valid while applying the new regulation, Clause 5 is rendered invalid. Such a construction should not be made as laid down in the decision report-ed in Captain Ganapatt Singhji v. The State of Ajmer and Anr. A.I R. 1955 S.C. 188.

(v) The order dated 8-4-1976 is violative of Article 16 of the Constitution, since it is not only discriminatory but is not based on any rational basis. For instance, unequals are treated as equals. A Development Officei1 in Kodavasal is started on a par with an officer in the City. On the contrary, the classifications should be oft performance basis. The treatment of unequals on equal basis was held to be violative of Article 16 in the decision reported in K.T. Moopil Nair v. State of Kerala : [1961]3SCR77 .

(vi) The order does not take note of such disabilities like illness, calamity, etc. Further no notice is taken of the delay of the Life Insurance Corporation Office (a) in processing the new policies; (b) failure to settle the claims promptly; (c) not sanctioning the loans, which all have a direct bearing and affect the Development Officers. It ignores the long service or renewal premia which persons like the petitioner have earned through hard work. This again constitutes discrimination. In support of this, he cites the decision reported in Amarjit Singh v. State of Punjab : (1975)ILLJ228SC .

(vii) Under the regulations dated 22-4-1067 the right of representation is merely illusory. The reducdon in salary is performance-oriented while the same performance is not taken note of for the purpose of increment. The power to terminate under regulation is arbitrary. Then again the newly recruited officers will be governed by the new regulations which would mean two clauses are perpetuated and, therefore, it is violative of Article 16.

(viii) The order dated 8-44976 and the regulation dated 22-4-1976 are also opposed to Section 40 of the Insurance Act.

12. Mr. S.K.L. Ratan, learned Counsel appearing for the Life Insurance Corporation states:

The distinct powers are contemplated under Section 11(2):

(1) for securing uniformity in the scales of remuneration ; and

(2) in the interests of the Corporation and the policy-holders.

Those two distinct powers can be exercised for the alteration of remuneration and other terms and conditions of service. This is because of the disjunctive clause, viz., 'or' used in that Sub-section. Section 11(2) cannot and does not control S. 11(2) since the 'notwithstanding clause' is found under that section. There being no ambiguity, the parliamentary debates cannot be used to construe the scope of this section as laid down in the decision reported in Life Insurance Corporation v. Sunil Kutrar : (1964)ILLJ442SC .

13. Section 11 deals with the power of the Central Government to pass an order, under Section 49(2)(b)(bb) of the Act, the Corporation can make staff regulation concerning the transferred employees as well as the existing employees of the Corporation. In view of this, certainly it cannot be contended that the power of the Government is less than that of the Corporation. Moreover. if the power under Section 49 could be exercised as and when there is a need, the same would be the position concerning Section 11(2). Such & power is made available in view of S 14 of the Central General Clauses Act In support of this submission, the learned Counsel cites a passage from Maxwell on the Interpretation of Statutes, twelfth Edition, pages 50 and 51.

14. Even assuming there is no power under Section 11(2) for the Government, the 'Blue Order' which was passed by the Government, ran be varied or amended as the Government desire, in view of Section 21 of the Central General Clauses Act. The position of the employees of the Corporation, viz., their conditions of service having been held to be not governed by contracts but only by statutes and the regulations as seen from the decisions reported in Lift Insurance Corporation Higher Grade Assistants' Association v. Life Insurance Corporation : (1973)ILLJ87Mad . Employees' Association v. Like Insurance Corporation Higher Grade Assistants' Association 1973 XI L.L.J. 288; and C. Sankaranarayonan v. State of Kerala : AIR1971SC1997 . In such a case, therefore, a unilateral operation alteration is perfectly permissible as laid down in the decision reported in Roshan Lal v. Union of India : (1968)ILLJ576SC .

15. The agreements which are sought to be relied on by the petitioner are invalid since under Regulation (2) when it lists out the competent authority, it does not say as to who is the authority competent to enter into the agreement

16. The order dated 8-4-1976 and the regulations and the amendment, to staff regulations dated 22-4-19 6 became necessary in view of the report of Morarka's Committee which held that persona like the petitioners, viz., the Development Officers are intermediaries and they had to be, abolished, especially the Corporation being a business organisation as seen from Section 6(3) of the Act. Therefore, the business will have to be conducted as profitable as possible. In order to so conduct if a revision of remuneration is done it cannot be contended that the agreements which provided better terms must be continued, though the ('Blue Order') under Clause 7(2) laid down the basis for appraisal that was given up under the agreement of 1971. Under the agreement these Development Officers were treated as favoured few Under Regulation 8(2) dated 22.4-1976 all agreements have been superseded.

17. This is not a case to which Article 16 would ever apply at all, since in view of the recent Presidential Proclamation, Article 14 has been suspended and Article 15 being only an incident of Article 14 that also will remain suspended as seen from the decision reported in Stute of Mysore v. P. Narasinga Rao : (1968)IILLJ120SC . Even otherwise, these Development Officers form distinct category or class. In that class, all were treated alike.

18. It is not correct to contend that there is any discrimination The area of operation is only a myth. If really a Development Officer shows better business put-turn, he stands to benefit but the attitude of the petitioner seems to be without showing such out-turn he should be continued to be treated on favour able terms, which certainly is not possible. Therefore, a revision of scale becomes imperative.

19. Mr. T. Chengalvaroyan, learned Counsel appearing for the Central Government, supporting the arguments of Mr. S.K.L. Ratan urges by contending as follows :

20. The long title and the preamble of the Act clearly shows that this Act was passed to provide for the nationalisation of Life Insurance business by transferring all businesses to a Corporation. Section 7 speaks of the transfer of the assets and liabilities and the vesting on and from 1-9-1956. Section 11 deals with the transfer of service of existing employees of Insurance 10 the Corporation Section. 11(1) is a transitional provision. Section 11(2) contains two important foundations. One is uniformity and the other is the interest of the policyholders, No doubt, the blue order recites both these conditions, but it does not give any detail as to how it could relate to the interest of the Corporation or the policy-holders. Therefore, it has to be held that the power is left in tact. Further, merely because it is a part of a section, that does not mean the rigor of Section 11(2) nor the 'non-obstinate' clause occurring thereby could be whittled down. In support of this stand, the learned Counsel cites the decisions reported in Aswini Kumar v. Arabinita Bose : [1953]4SCR1 . The Domination of India and Anr. V. Shrinbai A. Irani and Anr. : [1955]1SCR206 , Kanwar Raj v. framed : [1955]2SCR977 , and lastly the passage occurring at page 216 in Craies on Statute Law. Seventh edition.

21. Under Section 49, the power to make a regulation is exercisable only with the previous approval of the Central Government. Therefore, it cannot be said that the Central Government had abdicated or abandoned its power.

22 In replying to these contentions Mr. K.K. Venugopal urges it is not correct to contend that the 'Blue Order1' did not bring about reduction. In fact, the scope of the 'Blue Order' came up for discussion in the decision reported in Life Insurance Corporation v. Sunil Kunar : (1964)ILLJ442SC , which states that it did bring about the reduction of scales of remuneration.

23. Hormonious construction would require the guarantee stated in Section 11(1) should not be taken away under Section 11(2), especially when Section 11(1) occurs as a sub. section. It must be held to be controlled by Section 11(1). It is so laid down in [1939] (4) All ER 464 The decision reported in Tahslldar Singh v. State of U.P. : 1959CriLJ1231 , also will go to establish that the non-obstinate clause is in the nature of the proviso.

24. The omission of the phrase a ' from lime to time' is significant, if contrasted with Section 15(2) of the Tamilnadu Act XXIX of 1954. Section 14 of the General Clauses Act cannot be any assistance to the respondents, since a different intention is clearly expressed.

25. In view of the decision reported in Fagu Shaw v. State of Went Bengal : 1974CriLJ486 , it is well-settled, the parliamentary debates can be referred to.

26. Merely because Article 14 is suspended, it does not follow that Art 16 also will be unavailable since Article 359 mentions 'such of the rights'.

27. Passing a regulation under Section 49 with the approval of the Government does not tantamount to exercise of power under Section 11(2) as laid down in Christopher v. Life Insurance Coproration of India : AIR1958Bom451 .

28. Having regard to the above arguments, two principal points arise for my determination, and answer to these points is necessary before the other supplemental points are decided:

(1) Scope of the power of the Central Govt. under Section 11(2) of the Act.

(2) Whether the order dated 8-4-1976 and regulations dated 22-4-1976 arc violative of Art. It) of the Constitution.

29. Point No. 1: The Act (Life Insurance Corporation Act of J956) is an Act to provide for the nationalisation of life insurance business in India by transferring all such business to a Corporation establish-ed for the purpose and to provide for regulation and control of the business of the Corporation and for matfers connected therewith or incidental thereto. By a notification this Act came into force on 1st July, 1956. By virtue of Section 3 of the Act, the Life Insurance Corporauon of India was established with effect from 1st of September, I9j6. The Corporation is essentially a business organisation is evident by a reading of Section 6 of the Act. By the application of Section 7 on 1-9-1956, a transfer of all the assets and liabilities appertaining to the controlled business of an insurer took place in favour of the Corporation and came to be vested in it. Under Section 9 the contracts and the agreements entered into by the insurers were taken over by the Corporation. Section 11(1) reads as follows:

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 toe 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 Sub-section shall apply to any such employee who has, by notice in writing given to the Central Government prior to the appointed day, intimated his intention of not becoming an employee of the Corporation.

A close reading of this sub-section brings out the following;

A whole-time employee of an insurer whose business has been taken over on and from l-V-1956 became the employee of the Corporation and was to hold/office on the same tenure, remuneration and terms. This would mean that whatever rights and privileges and accrued in his favour as an employee of the erstwhile insurer, those rights and privileges would continue to exist vis-a-vis the Corporation This position continues till the employment is terminated or until the remuueration, terms and conditions are altered by the Corporation. However, by virtue of the proviso, an option was conferred upon the employee not to become an employee of the Corporation. The validity of old Section 11(2) came up for decision in Christopner v. Life insurance Corporation of India : AIR1958Bom451 , wherein it was held that the Corporauon had no unfettered power to alter the conditions of service. Further, where the Corporation altered the pay scales and other conditions service applicable to the employee whose services were tranferred to the Corporation and subsequently obtained the approval of the Central Government for the change, the Central Government could not be deemed to have acted under Section 11(2). To get over this decisions, Section 11(2) was amended by the Central Act 17 of 1957.

30. The amended Section 11(2), which is a vital section for the purpose of this case, reads as under :

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 con. trolled business has been transferred to, and vested in, the Corporation, it is necessary so to do, or that in the interests of the Corporal ion and its policy-holders, a reduction in the remuneration payable or a revision of the ether terms and conditions of service applicable, to employees or 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 lime 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 service to such extent and in such manner as it thinks fit; and if the alteration is not acceptable to any employees 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 pay-able to an employee under this sub. section shall be in addition to, and shall not affect, any pension, gratuity, provident land money or any other benefit to which the employee may be entitled under his contract of service.

The Central Government can exercise a power of reduction is the remuneration or a revision of other terms and conditions of service. The non-obstante clause occurring in this sub-section enables the exercise of such power without reference to Section 11(1) Such a power under this sub-section can be exercised by the Central Government-

(1) for the purpose of securing uniformity in the scales of remuneration and other terms and conditions of service;

(2) in the interest of the Corporation and its policy-holders.

The disjunctive clause 'or' has to be noted.

31. If the alteration is not acceptable to the employee, the Corporation may terminate his employment by payment of three months' remuneration in lieu of notice or a shorter notice as the case may be. In exercise of this power, what was known as 'Blue Order' was passed on the 30th of December, 1957. That 'Blue Order' reads thus:

Whereas 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 certain classes of employees of insurers whose controlled business has been transferred to, and vested in, the Corporation, it is necessary so to do ; and that in the interests of the Corporation and its policy-holders a reduction in the remuneration payable and a revision of the other terms and conditions applicable to the classes of employees aforesaid are called for.

32. The scope of the 'Blue Order' came up for decision in Life Insurance Corporation Hon v. Sunil Kumar : (1964)ILLJ442SC , wherein it was held:

It is plain that the provisions contained in Section 11(2) of the Act are paramount and would override any contrary provisions contained in the Order or the Regulations. Subject to the provisions of Section 11(2) the provisions of the Order will prevail, because the Order has been issued by the Central Government by virtue of the powers conferred on it by Section 11(2) itself. The provisions of the Order in law partake of the character of the rules framed under Section 48 of the Act, Thus nest to the provisions of Section 11 of the Act will stand the provisions of the Order. Then we have the regulations issued by the Corporation under Section 49(1) of the Act. But it must be borne in mind that the power of the Corporation to make regulations is burdened with the condition that these regulations must not be inconsistent with the Act and the rules framed thereunder, so that if any of the provisions contained in the Regulations made by the Corpration under Section 49 are found to be inconsistent either with Section 11(2) or with the Order made by the Central Government under S 11(2), they would be invalid.

33. This order provides for the terms and conditions of service in matters governed by the order. In regard to remuneration it was left to the discretion of the Corporation to frame regulation in pursuance of the authority conferred under Clause II However, in regard to termination of service U. 10 contains a specific provision. Then followed the Life Insurance Corporation of India (Staff) Regulations of 1%0 made in exercise of the powers vested in the Corporation under Clause (b) and (bb) of Section 49 of the Act. An agreement was entered into on the 19'h of November, 1971, as a result of certain negotiations held between the Corporation and the National Federation of Insurance Field workers of India. That inter alia provides for the minimum norms for the Development Officers spelling out as the procedure for dealing with the below the minimum norms performance, efficiency bar was also provided.

34. A committee was constituted under the Chairmanship of Mr. R.R. Morarka. That Committee submitted a detailed report. At page 206, paragraph 8-9-11 reads :

It is, therefore, clear that the performance of Development Officers has been extremely disappointing from the point of view of the main function for which their cadre was created, viz., to develop new business. We regret to say that our examination of the results of their work has convinced us that their achievements have been extremely unsatisfactory and totally incommensurate with the generous terms and conditions and facilities given to them and the various 'incentive schemes' that the Corporation devised to induce the Development Officers to increase their efforts.

Paragraph 8-19-13 states :

We cannot, therefore, avoid the conclusion that a very large number of Development Officers has been inexcusably slack in their efforts. We accordingly recommend that the Corporation should fix suitable norms for the new sum assured that should be procured through Development Officers, and should strictly enforce the norms that they may decide to prescribe.

Page 209. Paragraph 8-20.6 runs,

When we are examining the costs incurred on an intermediary between the insurance agent and the Branch Manager of the Corporation, we have to remember, that, nationalisation and the elimination of competition have reduced the need for such an intermediary. This should have helped the Corporation to reduce the costs incurred on such an intermediary. Since the terms of remuneration of the various intermediaries, other than the Special Agents, in the prenationalisation days were so varying that one cannot have a precise idea of the norm in this regard, it may perhaps be safe to base our arguments on the remuneration payable to the Special Agents.

At page 215, paragraph 8-26-3 reads ;

In the earlier paragraphs of this Chapter, we have already described how the Development Officers have been given liberal terms with regard to pay, allowances and conditions of work, etc., and how in spite of all these, the performance of the Development Officers has been decidedly unsatisfactory from every conceivable angle. It is, therefore, difficult to imagine how it will be possible to improve the situation by continuing the institution of Development Officers.

Paragraph 8-26-6 states:

Our study has convinced us that the Development Officers have failed to fulfil the expectations that the Corporation had from their cadre. They have been treated most generously and given every conceivable facility and indulgence. Yet their performance has been poor and unsatisfactory. It in, therefore, clear to us that the malady is deep-seated and calls for a drastic remedy. One such drastic step can be the gradual abolition of the cadre of Development Officers by promoting those of proved competence to the higher grades, terminating the services of those who are chronically and hopelessly above the permissible cost ratio and giving the others the opportunity to prove or improve their competence through a scheme that would automatically adjust emoluments to the permissible ratio in the course of a period of 4 years.

35. It is in this background an order dated 8-4-19 6 was passed in the interest of the Corporation and the policy-holders bringing about reduction in the remuneration and also revising the other terms and conditions of service. Clause 5 provides for relaxation of basic pay and allowances of a Development Officer on apprisal of his performance. Closely on the heels of this order, regulations were made under Section 49 of the Act which was published on the 22nd of April, 1976 amending the regulations of 1S6X Clause 5 of that regulation deals with the termination of service stating if a Development Officer fails to bring in eligible premium equal to five times of his annual remuneration in three consecutive preceding years necessitating reduction in his basic pay oil each of the three relevant apprisal and the appointing authority may terminate his service after giving him one month's notice or one month's pay in lieu thereof. It is against these petitions of law the first point will have to be considered and that is the reason why I set out this background. Reverting back to Section 11(2), as already seen it contains a 'non-obstinate clause. No doubt, the preamble to the 'Blue Order' recites both the powers mentioned in Section 11(2). viz., to bring about uniformity and also in the interests of the Corporation and its policy, holders. Can it, therefore, be contended that once the power bad been exercised by passing the 'Blue Order', the Central Government became denuded of its powers and it cannot exercise its power on a later occasion. Mr. K.K. Venugopal would say in this connection, the deletion of the words 'from time to time' is of great significance and he would also refer to me the parliamentary debates. Though it is the contention of Mr. S.K.L. Ratan that the parliamentary debates cannot be looked into for a proper construction of this section, I am unable to accept the same in view of the categoric decision reported in Fagu Shaw v. State of West Bengal : 1974CriLJ486 . It is stated at page 628 as follows:

Since the purpose of interpretation is to ascertain the real meaning of a constitutional provision, it is evident that nothing that is logically relevant to this process should be excluded from consideration. It was at one time thought that the speeches made by the members of the Constituent Assembly in the course of the debates on the Draft Constitution were wholly inadmissible as extraneous aids to the interpretation of a constitutional provision but of late there has been a shift in this position and following the recent trends in juristic thought in some of the Western countries and the United States, the rule of exclusion rigidly followed in Anglo-American Jurisprudence has been considerably diluted. Crawford in his book on Saturator Construction points out at page 388:

The judicial opinion on this point is certainly not quite uniform and there are American decisions to the effect that the general history of a statute and the various steps leading up to an enactment including amendments or modifications of he original bill and reports of Legislative Committees can be looked at for ascertaining the intention of the Legislature where it is in doubt, but they hold definitely that the legislative history is inadmissible when then5 is no obscurity in the meaning of the statute.

This Court, speaking through Krishna Iyer, J., has also noted this change in the methodology of interpretation and recognized its validity in State of My ore, v. R.V. Bidap, C.M. No. 992 of 1972, D-3-9-1973: (reported in : (1973)IILLJ418SC . where after referring to the rule laid down in earlier decisions excluding reference to legislative proceedings for the purpose of interpretation, the learned Judge said:

This rule of exclusion has been critcised by Jurists as artificial. The trend of academic opinion and the practice in the European system suggest that interpretation of a statute being an exercise in the ascertainment of meaning, every-thing which is logically relevant should be admissible. Recently, an eminent Indian jurist has review -ed the legal position and expressed his agreement with Julius Stone and Justice Frankfurter. Of course, nobody suggests that such extrinsic materi Is should be decisive but they must be admissible. Author, ship and interpretation must mutually illumine and interest. There is authority for the proposition that resort may be had to these sources with great caution and only when incogruities and ambiguities are to be resolved. There is strong case for whittling down the rule of Exclusion followed in the British Court and for less apologetic reference to legislative proceedings and like materials to read the meaning of the words of a statute. Where it is plain, the language prevails, but where there is obscurity or lack of harmony with other provisions and in other special circumstances, it may be legitimate to take external assistance such as the object of the provisions, the mischief sought to be remedied, the social context, the words of the authors and other allied matters.

We may, therefore, legitimately refer to the Constituent Assembly debates for the purpose of a ascertaining what was the object which the Constitution makers had in view....

In my view, it may not be necessary to go that far to refer to the parliumertary debates, since the language in section is clear and unambiguous. The power, once if available, can be exercised a often and when required in view of Section 14 of the General Clauses Act (Central). I am unable to agree with. Mr. Venugopal that a contrary intention is manifested Nor again can the learned Counsel for the petitioner derive any assistance by the phrase 'from time to time' occurring under Section 15(2) of the Madras Electricity Supply Undertaking (Acquisition) Act, 1954. Lf may be necessary for the purpose of that section to have the phraseology. But as the Supreme Court has pointed out in State of My ore v. R.K Bid p. : (1973)IILLJ418SC , resort can be had to these sources with great caution and only when incongruities and ambiguities are resorted. No such situation arises in this case.

36. The marginal note to Section 11 reads?

Transfer of service of existing employees of insurers to the Corporation.

From that a question may arise that because this sub-section, viz., 11(2) occurs as a part of Section 11, could it be said that the power is any wav controlled by S 11(1). The answer should be 'no firstly because of the mm-clause contained under Section 11(2)'.

37. Mr. T. Chengalvaroyan, learned Counsel appearing for the Government of India has rightly relied upon the passage occurring at page 216 in Craies on Statute Law, Seventh edition :

Before l850 it was usual to preface each distinct portion of an Act by words of enactment, and the division into sections had no legislative authority. By Section 2 of Lord Brougham's Act, 1850 it was enacted that 'ail Acts shall be divided into sections if there be more enactments than one', which sections shall be deemed to be sustantive enactments without any introductory words. The portion in italics was repeated without re-enactment by the Interpretation Act, 1831 but without any red change in the law. It was, at must, a mere direction to drafts. men and parliamentry officials without any sanction. There is not, however, any rule as to how many different sentences, each containing a substantive enactment, may be comprised in one 'section' and it is clear, that whether an enactment , be printed as part of one section, or contained in another section, it can make no difference in the construction of the statute.

38. The reliance by Mr. M.K. Venugopal on [1932] (4) All ER 464, has no application since we are not dealing here with the scope of a proviso. On the contrary, the decision in Kanwar Raj v. Framed A.I.R. 1956 S.C. 100 in which the question arose as to the scope of powers of a custodian of an evacuee property to cancel a lease granted by him under Section 12 of the Evacuee Property Act came up for consideration is relevant. One of the contentions was that the power of cancellation cannot be exercised with reference to the contracts between the parties, it was held at page 108 as follows :

The operative portion of the section which confers power on the custodian to cancel a lease or vary the terms thereof is unqualified and absolute, and that power cannot be abridged by reference to the provision that it could be exercised 'notwithstanding anything contain. ed in any other Jaw for the time being in force'. This provision is obviously intended to repel a possible contention that Section 12 does not by implication repeal statutes conferring rights on lessees, and can. not prevail as against them at d has been inserted 'ex abundanti coutela.

This ruling supports the stand of the respondents, The decision reported in Tahsildar Singh V. State of U.P. : 1959CriLJ1231 , has no application to the facts of this case, since that case dealt with the scope of a proviso. Therefore, notwithstanding the deletions of the words 'from time to time' the power under Section 11(2) can be exercised as and when required. Added to this, it is also to be noted that, this power is exercisable for two distinct purposes, viz., (1) for securing uniformity; and (2) in the interest of the Corporation and its policy-holders; I hold these are two distinct powers because of the disjunctive clause 'or' occurring under this sub-section,

39 Even assuming for a moment that the power cannot be repeatedly exercised, yet in exercise of the powers under Section 21 of the General Clauses Art, the Central Government could amend or vary the 'Blue Order'. Mr. S.K.L. Ratan is well-founded in his contention.

40. It is necessary for me at this stage to advert to Section 49 of the Act. That enables the Corporation to frame regulations. Section 49(2)(b) deals with the power to frame regulation concerning the method of recruitment of employees and agents of the Corporation and the terms and conditions of service of such employees or agents. Clause (bb) of the said Sub-section deals with the terms and conditions of service of persons who have become employers of the Corporation under Sub-section (1) of Section 11. It had already been noted that by statutory operation under Section 11(1), the employee of the erstwhile insurers, became the employees of the Corporation Once they become the employees of the Corporation, the power under Section 49 to frame regulations concerning them cannot be denied to the Corporation because they newly absorbed employees cannot seek a more favourable treatment and, therefore, they will have to be dealt with as any other employee of the Corporation. The guarantee contained under Section 11(1) was only till the alteration of the terms and conditions of their service. That guarantee cannot be perpetual. Nor can it be limited to only one operation. This is precisely the interpretation which Mr. K.K. Venugopal wants to put and I am unable to see any warrant for such an extreme argument. It is worthy to note in this connection that Section 49(2)(bb) was introduced by the Amending Act 17 of 1957 with retrospective effect. If, therefore, the Corporation could make regulations as and when necessary concerning both its original employees and the employees of the erstwhile company who by statutory operation became employees of the Corporation, all the more so why the Central Government should have similar process. There is no reason why the Central Government should be denied such a power. Of course, this regulation making power is subject the conditions that (D they must be with the previous approval of the Central Government; (2) they must be notified in the Gazette of India; and (3) they cannot run counter to the provisions of the Act; this is because it being subordinate legislation.

41. Point No. 2: I will now proceed to examine how far the impugned order dated 8-4-1976 and the regulations dated 27-4.1970 are violative of Article 16 of the Constitution. The main contention urged by Mr. K.K. Venugopal is that there is no rational classification based upon the area of operation. The officers placed unequally are treated alike and is support of the same ho relies on the decision reported in K.T. Moopil Narv State of Karalla : [1961]3SCR77 .I may straightaway say that that decision has no application at all since that case related to a levy of flat rate o Rs. 2 per acre irrespective of fertility, but the position her is entirely different. If the order is performance-oriented it can hardly be contended by persons like the petitioner that without the minimum turnover they would be entitled to be paid, the same remuneration as they were hitherto getting. The Corporation is the best judge to decide how the area have to be classified and which area the Development Officer should be allotted after taking into consideration the potentiality of the locality. Without mores details, this Court cannot embark upon an enquiry as to whether, the order works inequitably against the petitioner.

42. Concerning the reduction in remuneration I cannot go into that question in detail, since the performance of the petitioner can be considered only at the end of the appraisal years on or after 1-1-1977 Till then, it will be a m re guess work. Added 10 this the appraisal year will also depend upon the date of the recruitment which certainly cannot be the same for all the Development Officers. I am unable to accept the contention of Mr. Venugopal that if the Development Officers do not procure sufficient business there are always S dealing with them by taking disciplinary action. Instead an order could not be passed so to drastically affect the remuneration. Where the Officer is sought to be 4ealt with individually, of course, disciplinary action can be taken, but where a business organization like the Life Insurance Corporation in the interest of the Corporation and the policy-holders, effects a reduction' of the salaries or the terms and conditions it deals with a class of persons and not individually.

43. The figures furnished in paragraph 21 of the affidavit in support of the writ petition show that it remained at the rate of Rs. 25,000 per year between 1955-58. This only shows that it had practically remained constant while his remuneration has increased several times. It is in this situation, the order dated 8-4-1976 laid down that the remuneration would increase if the volume of business or if the out-turn of business is increased by the Development Officer. Again it is cot correct to contend there is an arbitrary reduction in remuneration. Paragraphs 6 and 19 of the counter-affidavit of the Corporation would go to show that there petitioner was drawing a salary of Rs. 385 per month when he produced an out-turn of business of Rs. 26,000. In 1975 he was drawing Rs. 1,750 when he produced the business of Rs. 24,395. When the order dated 8-4-1976 is passed he produced business roughly for Rs. 40,000. Therefore, when the accent is laid more on volume of business it is only with a view to get better performance from these Development Officers, The Development Officers forme distinct class by themselves and they Cannot be compared with the other officers to make but a case of discrimination. Thus J' conclude there is no violation of Article 16 of the Constitution at all. Having regard to this conclusion,, it is wholly unnecessary tprmetogo into the question whether by f he suspension of Article 14 by the recent Presidential Proclamation, Article 16 is also unavailable. No doubt the Supreme Court has held in State of Mvsore v. P. Narasinga Rao : (1968)IILLJ120SC as follows :

The relevant, law on the subject is well-settled. Under Article 16 of the Constitution, there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State or to promotion from one office to a higher office thereunder. Article 16 of the Constitution is only an incident of the application of the concept of equality enshrined In Article 14 thereof. It gives effect to the doctrine of equality in the matter of appointment and promotion.

But that need not detain us, in view of what I have held above.

44. What exactly is the nature of employment of these persons by the Corporation came to be laid down in the decision reported in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi' : (1975)ILLJ399SC . At page 409 in paragraph 29 it was held that the regulations framed by the Corporation in exercise of the powers under Section 49 of the Act had the force of law and were not inconsistent with the provisions of the Act.

45. In A.I.I. Employees' Association v. L.I.C. Higher Grade Assistants' Association 1973 H L.L.J. 228, it was categorically laid down at page 299 that the conditions of service of the employees were not governed by contract but only by the provisions of the Act, the regulation, etc. If that be so it is open to the Corporation unilaterally to alter the conditions of service as laid down in Roshan Lal v. Union of India : (1968)ILLJ576SC , and the petitioner cannot claim a vested right. I am unable to agree with Mr. Venugopal that the right of representation afforded under the regulation is illusory, nor again the power to terminate the regulation could be characterised as arbitrary. That is because as I have observed above the accent is on performance. Under such situation if better performance is not turned out, necessarily the petitioners services could be terminated as provided for under Clause 5 of the regulation dated 22-4-1976.

46. Section 40 of the Insurance Act reads as follows:

(1) No person shall, after the expiry of six months from the commencement of this Act, pay of contract to pay any remuneration or reward whether by way of commission or otherwise for soliciting or procuring insurance business in India to any person except an insurance agent (or a principal, chief or special agent).

(IA) In this section and Sections (40A) 41 and 43, references to an insurance agent shall be construed as including references to an individual soliciting or procuring insurance business exclusively in (the territories which, immediately before th-3 1st November, 1956, were comprised in a Fart B State) notified in this behalf by the Central Government in the Official Gazette and holding a valid license as an insurance agent under the Jaw of that Part B State.

(2) No insurance agent shall,-be paid or contact to be paid by way of commission or as remuneration in any form an amount exceeding, in the case of life insurance business, forty per cent, of the first year's premium payable on any policy or policies, effected through him and five per cent of a renewal premium (payable on such a policy), or in the case of business, of any other class, fifteen per Capt of the premium :

Provided that insurers, in respect of life insurance business only, may pay, during the first ten years of their business, to their insurance agents fifty-five per cent, of the first year s premium payable on any policy or policies effected through them and six per cent of the renewal premium (payable on such policies). Provided further that nothing in this sub-section shall apply in respect of any policy of life insurance issued after; the 31st day of December, 1950,: or in respect of any policy of general insurance issued after the commencement of the Insurance (Amendment) Act, 1950.(2A) Save as hereinafter probvided, no insurance agent shall be paid or contract to be paid by way of commission or as remuneration It any form any amount in respect of any policy not effected through him.

Provided that where a policy of life insurance has lapsed, and it cannot under the terms and conditioira applicable to it be revived without further medical examination of the person whose life was insured thereby, an insurer, after giving by notice in writing to the insuranc' agent through whom the policy w3s effected (if such agent continues to be an agent of the insurer) an opportunity to effect the revival of the policy within a time specified in the notice being not less that one month from the date of receipt, by him of the notice, may pay to another insurance agent who effects the revival of the policy, an amount calculated at the rate not exceeding half the rate for commission at which the agent through whom the policy w% effected would, have been paid had the policy not lapsed, on the sum payable on revival of the policy On account of arrears premjiunjs, (excluding any interest oil side arrear premiums) and also subsequent renewal payable on the policy.(3) Nothing in this section shall prevent the payment under any contract existing prior to the 27th day of January, 1937, of gratuities or renewal commission to (any person, whether an insurance agent within the meaning of this Act or not) or to his representatives after his decease in respect of insurance business effected through him before the said date.

A reading of this section shows there is a prohibition against the payment of any remuneration to a person who is not a licensed insurance agent for procuring insurance business. The Development Officers function is to organise procurement of business and he does not procure business himself. Therefore, the form of remuneration cannot affect the function. Further, the remuneration is as per scale of pay and not in any way linked to the schedule premium income. Thus I disagree with the contentions of Mr. Venugopal that the order it in any way violate of Section 40 of the Insurance Act.

47. The 'Blue Order' may briefly be compared with the order dated 8-4-1976 to find out whether any inconsistency exists between the two.

(1) The remuneration in the 'Blue Order' was on a scale of Rs. 125-500 while under the order dated 8-4-1976 it is Rs. 250-850.

(2) The increments under the 'Blue Order' were granted only on appraisal of work during the 12 months preceding the date on which the increments fell due and inappraising the work the following considerations prevailed:

(a) volume of business; (b) rate of expenses and (c) agency force.

Under Clause 2 of the order dated 8-4 1976, the increment depended upon premium income, concerning which certain norms have come to be laid down.

(3) Relating to penalties both the 'Blue Order' as well as the order dated 8-4-1976 effected a termination of service in case of unsatisfactory performance The only distinction being some norms having been laid down under the later order dated 8-4-1976.

(4) Regarding fixations of pay under the 'Blue Order' the principles have to be laid down by the Corporation. Same is the position under order dated 8-4-1976, except that it is based upon certain criteria. Thus there is absolutely no inconsistency as contended by the learned Counsel for the petitioner.

48. It is not open to the petitioner to contend that the agreements before the passing of the order dated 8-4-1976 or the regulation dated 22-4-1976 ought to prevail since they were given effect to for a long time. By contending so the Development Officers want to dictate terms to the Corporation as to how it should run is business. On the contrary, the Corporation knows best how to secure the interests of the employees, at the same time securing its as well as the policy-holders' interests. Moreover, Clause 8 of the order dated 22-4.1976 says:

(1) The foregoing provisions shall apply to all Development Officers notwithstanding anything inconsistent therewith contained in any agreement, settlement, contract or administrative instructions.

(2) All agreements, settlements, contracts and administrative instructions in respect of or touching upon the subject-matter of this schedule shall stand revoked from the date of this schedule comes into force.

49. Concerning the applicability of the Rule of incorporation, to buttress the contention that future legislation cannot form the subject of incorporation, Mr. Venugopal relies upon the decision reported in Shama Rao v. Union Territory, Pondicherry : [1962]1SCR517 and it was laid down at para 10 thus :

In the present case it is clear that the Pondicherry Legislature not only adopted the Madras Act as it stood at the date when it passed the Principal Act but also enacted that if the Madras Legislature were to amend its Act prior to the date when the Pondicherry Government would issue its notification it would be the amended Act which would apply The Legislature at that stage could not anticipate that the Madras Act would not be amended nor could it predicate what amendment or amendments would be carried out or whether they would be of a sweeping character or whether they would be suitable in Pondicherry. In point of fact the Madras Act was amended and by reason of Section 2(1) read with Section 1(2) of he principal Act it was the amended Act which was brought into operation in Pondicherry. The result was that the Pondicherry Legislature accepted the amended Act though it was not and could not be aware what the provisions of the amended Act would be. There was in these circumstances a total surrender in the matter of sales tax legislation by the Pondicherry Assembly in favour of the Madras Legislature and for that reason we must agree with Mr. Dcsai that the Act was void or as is often said still-born'.

This decision has no application to the facts of this case because the Central Government passes the order under Section 11(2) while the details are to be filled in by the regulations framed by the Corporation. Obviously, the regulations made from time to time would govern the employees.

50. For all the above reasons, I hold this writ petition is without merits and is hereby dismissed with costs. Counsel's fee Rs. 200 one set.

Writ Petition No. 3931 of 1976 :

51. This writ petition relates to a case of a Field Officer who joined on 1-8-1970. He would contend by dint of hard work he was getting increments every year ever since he joined the service and he was able to reach the maximum limit of 14 years which normally could have been reached only in 23 years. He was transferred from Madukarai to Coimbatore and from Coimbatore to Namakkal. As a result of that transfer, his volume of business would get reduced and he would be affected.

52. The stand of the Corporation is that owing to certain charges against the petitioner peculiar to himself, the transfer came to be effected.

53. Since the arguments and the counterarguments made in W.P. No. 3720 of 1976 were adopted in this case, it is unnecessary for me to deal with them separately.

54. Applying the conclusions rendered in W.P. No. 3720 of 1976, ibis writ petition also will stand dismissed. However, there will be no order as to costs.


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