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The Life Insurance Corporation Higher Grade Assistants Association Vs. Life Insurance Corporation of India and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported in(1973)ILLJ87Mad
AppellantThe Life Insurance Corporation Higher Grade Assistants Association
RespondentLife Insurance Corporation of India and ors.
Cases ReferredRajasthan State Electricity Board v. Mohan Lai
Excerpt:
- ramaprasada, j.1. writ petition no. 825 of 1972 is by an association called the higher grade assistants association, in relation to the employees of the life insurance corporation of india. w.p. no. 826 of 1972 is by one thomas mathew, who is a higher grade assistant working in the southern zonal office of the life insurance corporation with headquarters at madras. he claims that he is not a member of the 2nd petitioner-association during the material period to which the writ petition relates, and was not a member thereof. as an individual in the category of higher grade assistants he is aggrieved. in both the writ petitions, however, common questions arise.2. in w.p. no. 826 of 1972 the request is to direct the national industrial tribunal, new delhi, to hear and determine certain.....
Judgment:

Ramaprasada, J.

1. Writ Petition No. 825 of 1972 is by an association called the Higher Grade Assistants Association, in relation to the employees of the Life Insurance Corporation of India. W.P. No. 826 of 1972 is by one Thomas Mathew, who is a higher grade assistant working in the Southern Zonal Office of the Life Insurance Corporation with headquarters at Madras. He claims that he is not a member of the 2nd petitioner-association during the material period to which the writ petition relates, and was not a member thereof. As an individual in the category of higher grade assistants he is aggrieved. In both the writ petitions, however, common questions arise.

2. In W.P. No. 826 of 1972 the request is to direct the National Industrial Tribunal, New Delhi, to hear and determine certain disputes which were left unresolved by it in a reference adjudicated upon under the Industrial Disputes Act, 1947. There is also the additional prayer that respondents 1 and 2, namely, the Life Insurance Corporation of India and the Zonal Manager of the Corporation at Madras, be restrained from enforcing certain new rules of promotion embodied in an agreement dated October 15, 1971 entered into by the Corporation with three associations other than the petitioner-association and given notice of under Section 9A of the Industrial Disputes Act.

3. Amongst the various classes and categories of posts in the Corporation there are two classes, class I and class 111, which consist of the following categories of posts:

Class I: Assistant Administrative Officer.

Class III: (a) Superintendents.

(b) Higher grade assistants.

(c) Section Head.

(d) Assistants.

Under the rules in force prior to October 15, 1971, section head was entitled to be promoted as higher grade assistant or superintendent; a higher grade assistant was entitled to be promoted under the rules as superintendent or as an assistant administrative officer; and lastly the superintendent could be promoted as assistant administrative officer. These promotions were popularly called two-tier promotions. Such promotions were made on a selection basis and after the eligibility of the candidate was tested in a departmental test, and were also based on merit and ability. In or about November, 1968, certain disputes which were by then pending between the employees of the Corporation, and the management of the Corporation were referred in an appropriate manner to the National Industrial Tribunal, the 6th respondent herein. Later some more items of dispute were also added to the terms of the reference. The first was numbered as N.I.T. 1 of 1969 and the second reference as N.I.T. 2 of 1969. In the second reference one of the disputes which was referred to the Tribunal for adjudication was rules regarding promotions. This was Item No. 7 therein. The Tribunal went into the disputes, but at one point of time the parties to the reference filed a memorandum of settlement in N.I.T. No. 1 of 1969, and prayed that the Tribunal may make an award in terms of the said settlement so annexed. The Tribunal, after applying its mind, passed an award in terms thereof. I may at once state that this memorandum of settlement was all inclusive and touched upon every point of dispute which was the subject-matter of reference. A similar memorandum of settlement was also entered into as regards the item of dispute covered by N.I.T. 2 of 1969 excepting Item No. 7 therein. Regarding Item No. 7 the memorandum of settlement stated thus:

Item No. 7. Rules regarding promotions.- The workmen withdrew this item from this reference. The management agrees to hold discussion before 31st December, 1970 with the representatives of the four parties representing the workmen in this reference for a review of the existing rules.

In the concluding paragraph, however, the memorandum stated:

All demands raised by the workmen before the Hon'ble National Industrial Tribunal which constitute the subject-matter of this reference are hereby fully and completely settled and disposed of.

On the basis of this memorandum of settlement the Tribunal gave what according to it was a composite award in N.I.T. No. 2 of 1969 as well in terms of the memorandum of settlement already referred to.

4. The subsequent events may briefly be noticed. Pursuant to the joint memorandum filed before the Industrial Tribunal in N.I.T. No. 2 of 1969 negotiations were held between the management and the four associations who were parties to the original references. The complaint of Thomas Mathew, who is the petitioner in W.P. No. 826 of 1972, and the Life Insurance Corporation Higher Grade Assistants' Association, who is the petitioner in W.P. No. 825 of 1972, is that the Higher Grade Assistants Association, hereinafter referred to as the association, though was originally consulted in the matter of the setting up of new rules of promotion, later was dropped out from the field of discussion and it appears that the Life Insurance Corporation, hereinafter referred to as the Corporation, finally arrived at a settlement in the matter of such rules of promotion on October 15, 1971 with the assistance of respondents 3, 4 and 5 which are representative bodies not including the higher grade assistants working in the Corporation. It is said that in the parleys with other associations the Corporation appears to have promised them certain concessions which seriously affect the rights and privileges of the higher grade assistants. In the words of the complaining petitioner the principal features of the new rules of promotion may be stated thus:

All the existing superintendents were to be placed in the cadre of assistant administrative officers (class I), subject to certain transitional arrangements. A new cadre called 'Special Assistants' cadre was to be formed, and all the section heads were to be upgraded as special assistants, subject to certain transitional arrangements. The higher grade assistants were to be merely redesignated as special assistants, that is to say, with one stroke of the pen all the section heads were promoted to the rank of higher grade assistants, and they were to enjoy the same privileges and rights as higher grade assistants. Similarly, superintendents, who were hitherto on par with higher grade assistants for the purpose of promotion, were to be forthwith upgraded as assistant administrative officers. In accordance with Section 9A of the Industrial Disputes Act a notice dated 15-10-1971 was given to all employees stating that new rules of promotion would come into effect from 6-11-1971.

5. In so far as a joint application was made to the 6th respondent for a settlement and that settlement was embodied in the award of the National Industrial Tribunal, the award is, in law, binding on all employees. The award binds the first petitioner also, although he was not a member of the 2nd petitioner association on the relevant date. Since it is now being represented that the settlement arrived at on 15-10-71 is pursuant to the so called settlement reported to the National Industrial Tribunal the management had taken the position that the new rules of promotion are valid, binding on all the employees and can be implemented forthwith.

6. The main grounds on which the award of the 6th respondent, namely, the National Industrial Tribunal, is said to be invalid and inoperative and also how the so called agreement dated October 15, 1971, which is the result of such an inchoate or illegal award has also to be ignored, are based upon legal contentions. It is said that a Tribunal enjoined with the duty to pass an award on a subject-matter which has been referred to it cannot avoid its duty and allow the parties thereto to settle one of the issues arising therein by negotiation as between themselves, his procedure would tantamount to abdication of judicial responsibility and, therefore, any discussion held between the Corporation and the three other associations referred to cannot bind both the petitioners in the writ petitions. The second contention is that the impugned settlement dated October 15, 1971 containing the new rules of promotion are violative of the award in N I.T. No. 1 of 1969 contrary to the provisions of the Life Insurance Corporation Act and the regulations made thereunder and violative of Articles 14 and 16 of the Constitution.

7. Contending contra the Corporation would state that as the award of the Tribunal recorded a settlement between the panics, that would operate as a valid disposal of the reference as each part of such a recorded settlement is consideration for the other. Regarding the contention that the supervening agreement runs contra to the terms of the award in N.I.T. No. 1 of 1969 it is said that the said award did not guarantee or preserve the categories of employees but merely awarded different pay scales for employees and so long as the new pay scales are not lower than the scales of pay which the so called affected persons are getting under the new promotion rules, they cannot be deemed to be aggrieved persons Notwithstanding the fact that superintendents are merged with administrative officers or higher grade assistants and section heads are together treated as special assistants, the Corporation was within its right in having negotiated with the majority of the employees and having arrived at the rules of promotion. It is said that the new rules of promotions do not strictly come within the purview of Section 49 of the Life Insurance Corporation Act and they have been framed in accordance with the oilier provisions of the Act and are binding on the employees. It is asserted that the scheme of promotions drawn up by negotiation are not rules and regulations, but administrative instructions and have been issued by the Chairman for the betterment of the prospects of the employees of the Corporation and such instructions are binding on all its employees. As long as the new rules of promotion have been arrived at and embodied in the settlement under Section 18(1) of the Act, it is binding on the petitioners and Ors. and the notice issued under Section 9A of the Industrial Disputes Act is valid. As regards the contention that the impugned settlement violates Articles 14 and 16 of the Constitution it is said that the Corporation is not a State and that the conditions of service are purely contractual and do not have statutory force and, therefore, no writ under Article 226, and much less a writ by way of mandamus as sought for, Can issue.

8. The petitioners in their reply would answer every one of the objections of the Corporation and would maintain that a writ would lie against the Corporation, that the settlement arrived at on October 15, 1971, of which notice has been given under Section 9A is an inoperative one and cannot be enforced against the higher grade assistants and that the rules of promotion themselves having been made in a manner not authorised by the provisions of the Act cannot be thought of for implementation. Factually it is said that the private settlement causes a serious prejudice to higher grade assistants and their quondam venue of promotion has to be given the go-by if the new settlement arrived at by the Corporation and other associations had to be implemented. With this background of the contentions of the parties I shall now discuss the merits of such contentions.

9. The rule of mandamus sought against the National Industrial Tribunal is based on the main contention that the Tribunal did not pronounce an award, which is its duty to do, and, therefor, there has been a failure of public duty. The scheme of the Industrial Disputes Act gives the clue as to what are the duties of an Industrial Court and when an award passed by it could be characterised as such. Under Section 2(b) of the Act:

'Award' means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal.....

The words 'interim or a final determination of any industrial dispute or of any question' necessarily involve an application of the mind of the Court or Tribunal concerned on the problem before it. Undoubtedly there is scope for such determination even in the interim stage, that is, whilst the enquiry into the dispute is in progress. But there should always be a determination of the dispute in the sense that it should not be left incomplete and unresolved. Even if the parties to a dispute come to a settlement by mutual discussions outside the field of industrial adjudication, even there the Tribunal cannot abdicate its duty to find out the process by which such a settlement has been arrived at and weigh the pros and cons of the same, apply independently its mind to it and thereafter determine the dispute or question in the light of such settlement. Mere mechanical adoption of a settlement reported by the parties to an industrial dispute as if it has been settled out of Court without any further probe into its propriety, the means by which such an end was reached and whether the settlement really has determined the dispute or question would not amount to a passing of an award even though the award would literally state that an award in terms of such a settlement is passed. In such circumstances it can only be said that the parties have finally decided the dispute or problem but not the Industrial Court. As a matter of fact, 'settlement' as defined in Section 2(1) does not take within its compass a settlement arrived at between the parties when an industrial dispute or any problem connected thereto is being enquired into after reference to an Industrial Court. Section 2(p) refers only to a settlement arrived at in the course of conciliation proceedings' and is meant to include a written agreement between the employer and the workmen arrived at otherwise than in the course of conciliation proceedings, It also prescribed the procedure as to the manner in which such an agreement can be effectuated. The definition of 'settlement' does not, therefore, take into its fold an agreement between the employer and the workmen in relation to a particular subject-matter when that subject-matter has to be adjudicated upon by an Industrial Tribunal. When that stage is reached, even though such an agreement is possible, it is the duty of the Industrial Court to exercise its mind on such a settlement and ultimately, though subjectively approved by it, adopt it as its own decision under the statutory name of an 'award'. Section 15 enjoins Industrial Courts to hold their proceedings as expeditiously as possible and on its conclusion thereof, submit its award to the appropriate Government. Therefore, the award which has to be finally passed and forwarded to the appropriate Government is necessarily the award of the Labour Court or Industrial Tribunal or National Tribunal. It cannot be a mere reproduction of a settlement arrived at between contesting parties aliunde and without reference to the presiding statutory Tribunal, hi fuci, therefore, if a settlement is arrived at over a subject-matter which has to be adjudicated upon by the Labour Court or Tribunal, such a settlement would not have the seal of effectiveness or enforceability unless it is a tripartite one and is not a bilateral settlement simplicitor. A bilateral settlement between the employer and the workmen without a third party, namely, the Tribunal, viewing the same and approving and accepting the same would create an incomplete situation. Incidentally I may also refer to Section 18 which also refers to settlements and which brings out the force of the observations made above. Section 18(1) speaks of a settlement arrived at by agreement between the employer and the workmen otherwise than in the course of conciliation proceedings; such a settlement shall be binding on the parties to the agreement only. On the other hand, the award of an Industrial Court which has become enforceable shall be binding on all parties to an industrial dispute and on other parties referred to, in sub-cls, (b), (c), and (d) of Section 18(3).

10. In the above conspectus of the statutory provisions it has to be considered whether the award passed by the National Industrial Tribunal in the instant case in N.I.T. No. 2 of 1969 is complete, valid and enforceable under the provisions of the Act. One of the subjects referred to the Tribunal was the codification of the rules regarding promotions. It is not in dispute that this term of reference is referable to and would have an impact on the higher grade assistants who were class III officers in the service of the Life Insurance Corporation. As regards this item, the workmen withdrew the item from the reference and as noted in the so-called award the settlement arrived at between the workmen and the management was to the following effect:

The workmen withdraw this item from this reference. The management agrees to hold discussions before 31st December, 1970 with representatives of the four parties representing the workmen in this reference for a review of the existing rules.

Period of settlement:

1st April, 1969 to 31st March, 1973, both days inclusive.

All the demands raised by the workmen before the Hon'ble National Industrial Tribunal which constitute the subject-matter of this reference are hereby fully and completely settled and disposed of.

On the basis of this the National Industrial Tribunal, which is the 6th respondent in the case, passed an award on the following terms: 'The settlements filed be recorded. I further give composite consent award in both the references in terms of the two settlements which have already been reproduced above and which need not be repeated.' I may at once state that in the award in N.I.T. No. 1 of 1969, there was a similar settlement over which the Tribunal applied its mind and passed its award.

11. The point is whether in the circumstances stated above, the National Tribunal has passed its award as enjoined in law and discharged its public duty.

12. There are three possibilities by which an award could be passed and such a pronounced award may become effective and complete in the eye of law. The first circumstance is when an award is made by an Industrial Court by itself and after hearing the parties and after deciding all the issues before it on merits. The second possibility is the award may prima facie appear to be incomplete in the sense that some of the issues in the enquiry were settled by the parties after mutual discussions between themselves. An award, however, might have resulted in the end of all the issues including the issues settled by the parties outside the precincts of the Tribunal. As regards those issues over which the parties have adjusted their differences, if it appears from record that the Tribunal has applied its mind to the nature of the settlement, the matter in which it was resolved and thereafter gives its seal of approval, then the totality of the impression gained in such circumstances is that the award of the Tribunal which inter alia accepted the, settlement between the parties over some of the issues which arose for adjudication is the Tribunal's award and not a mere adaptation, reproduction or reflection of the mind of the contesting parties on some of those settled issues. If such an impression is gained then the resultant award should be understood as an award passed by the Industrial Tribunal and consequently it is an effective and enforceable award. The third possibility is that the award is both introvertly and extrovertly incomplete. It is introvertly incomplete because some issues were discharged as between the parties outside the Tribunal's forum and settlement arrived and the Tribunal without being subjectively satisfied about the nature of such a settlement adopts the same without independently applying its mind thereto. Extrovertly an award may be incomplete if from the record it is obvious that the Tribunal warded off its duty, never tried the issues which arose for consideration and adjudicated on the disputes or the problems which were referred to it by the Government. In both cases the resultant award even if it is called or described as an award by the Industrial Court, it would cease to be an award because there has not been an official or statutory adjudication of the disputes which determination should be undertaken by the Tribunal undertaking an enquiry by itself or by making it appear that it has applied its mind on all the questions and finally approved of any outside arrangements entered into between the parties over some of the disputes referred to it for adjudication. Under no circumstances the Tribunal can fail in its duty to make an award after a full hearing or make an award after partial hearing, but after having been thoroughly and conscientiously satisfied that any settlement as regards some of the matters projected in the enquiry were satisfactorily settled as between the parties not only to their satisfaction but to the judicial satisfaction of the Tribunal itself.

13. The three possible channels by which an effective award or an ineffective award can be made having thus been enumerated I shall now consider the decisions cited before me by either side so as to find out whether the award passed in N.I.T. No. 2 of 1969 is complete, valid and effective in the eye of law.

14. The first case referred to by Mr. S. K. L. Ratan to sustain his contention that the award in N.I.T. No. 2 of 1969 is valid and complete is State of Bihar v. Ganguli : (1958)IILLJ634SC . In that case the Supreme Court whilst laying down the general principle that the rule of construction enunciated by S. 11 of the General Clauses Act, in so far as it refers to the power of rescinding or cancelling the original order, or reference made by the State Government under S, 10(1) of the Act, said that the said rule could not be invoked in respect of the provisions of Section 10(1) of the Act. The Supreme Court was of the view that the schema of the relevant provisions would prima facie seem to be inconsistent with any power in the appropriate Government to cancel the reference made under Section 10(1) of the Act. In that connection the Supreme Court at page 640 made the following observations:

It is true that the Act does not contain any provision specifically authorising the Industrial Tribunal to record a compromise and pass an award in its terms corresponding to the provisions of Order XXIII, Rule 3 of the Code of Civil Procedure. But it would be very unreasonable to assume that the Industrial Tribunal would insist upon dealing with the dispute on the merits even after it is informed that the dispute has been amicably settled between the parties. We have already indicated that amicable settlements of industrial disputes which generally lead to industrial peace and harmony are the primary objects of this Act. Settlements reached before the conciliation officers or boards are specifically dealt with by Sections 12(2) and 13(3) and the same are made binding under Section 18. There can, therefore, be no doubt that if an industrial dispute before a Tribunal is amicably settled, the Tribunal would immediately agree to make an award in terms of the settlement between the parties.

It may at once be noted that this was a case wherein all the issues were settled amicably and the Tribunal also applied its mind to the process of settlement and to the propriety of such settlement approved of by it and thereafter passed an award in terms thereto. That was not a case of partial settlement in the sense that one or two issues which arose for determination was approved of by the Tribunal. This case is more an authority for the earlier proposition cited rather than a pronouncement on the power of an Industrial Tribunal to pass an award in terms of settlement arrived at aliunde between the parties but without applying its mind to it,

15. Even so in Sir silk Ltd. v. Government of Andhra Pradesh : (1963)IILLJ647SC , a question arose whether a settlement arrived at between the parties after the Tribunal has passed an award in the normal course but before publication of the award could be given effect to. In such circumstances the Supreme Court said:

The reference to the Tribunal is for the purpose of resolving the dispute that may have arisen between employers and their workmen. Where a settlement is arrived at between the parties to a dispute before the Tribunal after the award has been submitted to Government but before its publication, there is in fact no dispute left to be resolved by the publication of the award. In such a case, the award sent to Government may very well be considered to have become infructuous and so the Government should refrain from publishing such an award because no dispute remains to be resolved by it.

The ratio decidendi depends upon the resolving of the dispute between the parties. Emphasis should be on the expression 'no dispute left to be resolved'. But if by passing an award the dispute referred to the Tribunal is not resolved completely then a mechanical adaptation of such a settlement by the Tribunal without an independent look into the subject-matter would mean that the dispute has been left unresolved,

16. Aluminium Factory Workers Union v. Indian Aluminium Co. Limited 1962 I L.LJ. 210, also cannot help the respondent because it does not directly touch the matter in issue and it was a case of a complete settlement in regard to the issues tried by the Tribunal. On the other hand the Supreme Court in Birla Cotton Spinning and Weaving Mills Limited, Delhi v. Its Workmen 1962 I L.L.J. 642, has made the position clear in so far as the problem before me is concerned. Effectively the Supreme Court approved of the proposition that if a Tribunal which is in seisin of certain matters fails to apply its mind and allows the parties to draft the issues and settle them later amongst themselves then that would mean that the Tribunal has left a part of the area of the dispute referred to it unresolved. That was one of the circumstances which was taken into consideration by the Supreme Court in that case and it directed that the case should be sent back to the Tribunal for a complete adjudication of the issues which arose therein and which were left without being resolved.

17. In Maharana Mill Kamdar Union v. N.L. Vyas 1959 II L.L.J. 172, a Division Bench of the Bombay High Court stated the rule very clearly. The contention therein was whether the orders passed by the Tribunal were awards within the meaning of the Act. Chainani, C.J., speaking for the Bench, spoke as follows :

According to the definition given in Section 2(b) an award must be (1) a determination, (2) the determination must be of an industrial dispute or any question relating thereto. Where a Tribunal allows a matter to be withdrawn in order that it may be referred to a private arbitrator for adjudication, there remains no dispute before it, on which it can be adjudicated. There is also no determination of the dispute itself: the disputes continues but instead of being decided by the Industrial Tribunal, it is to be decided by private arbitration. There is, therefore, no determination of the dispute in such cases, much less it is a determination by an Industrial Tribunal.

In Sital v. Central Government Industrial Tribunal 1969 XI L.L.J. 275 , the decision of the Bombay High Court was approved and the view expressed by the Kerala High Court in Krishnan Kutty Nair v. Industrial Tribunal, Trivandrum 1957 XI L.LJ. 45, was disapproved. Herein also the learned Judges after noticing the observation of Rama-Chandra Ayyar, J., in Coimbatore District Mill Workers Union v. Dhanalakshmi Mills Ltd., Tiruppur : (1960)IILLJ556Mad , reiterated the position that a mere formal acceptance of a settlement arrived at between the parties outside the forum of the Industrial Court cannot form the sole foundation for an award of the Court; but on the other hand such an adoption of a compromise entered into by the parties can be the foundation of the award if the Tribunal forms an opinion by itself that the compromise should be adopted as its own determination of the dispute and after subjectively at least being statisfied that the settlement is fair, just and equitable between the parties.

18. Thus in the present case the Tribunal without any such determination by itself of the issue in question and without applying its mind to the fairness or justness of the request made by the parties left one issue unresolved and consequently failed to discharge its public duty in not pronouncing an award hearing the parties on the subject and after exercising its mind thereto.

19. The second broad contention of the petitioners is that even if such a settlement was possible the resultant arrangement entered into between the Corporation and the three associations other than the petitioner-association and the member of the association is not only violative of the enforceable award made in N.I.T. No. 1 of 1969 but is contrary to the provisions of the Life Insurance Corporation Act and the regulations made thereunder. Incidentally it is alleged that it violates Articles 14 and 16 of the Constitution as well. The Corporation's case is that the award in N.I.T. No. I of 1969 did not guarantee or preserve the categories of employees but merely awarded different pay scales for employees and so long is the new pay scales are not prejudicial to the employees there is no inconsistency between the settlement arrived at on October 15, 1971 and the earlier award in N.I.T. No. 1 of 1969.

20. Factually it is seen that In N.I.T. No. 1 of 1969 different pay scales were fixed for different categories and classes of employees of the Corporation. The suggestion that the said award did not guarantee or preserve the categories of employees appears to be unsound. The argument of the Corporation goes that even though there is a merger of one class of employees with another class of employees the acid test is to see whether they are prejudiced in any way in the matter of pay and so long as there is no such affectation, the petitioners' argument is unsustainable. Under N.I.T. No. 1 of 1969 the pay for the employees as mentioned in the categories was revised. Therefore, a particular yard stick for the fixation of pay and for the classification of employee was unequivocally created in N.I.T. No. 1 of 1969. So long as that award is in force and which is undoubtedly in force till March 31, 1973 any attempt to dislodge the units of employees thought of in N.T.T. 1 of 1969 would result in an inconsistency. The category of employees or classification of employees and the pay scales with reference to such classified employees always act in conjunction with one another and adjudication of pay scales cannot be considered in vacuum, for it has always an impact and relation to the categories of employees. If, therefore, for a particular class or category a pay is fixed to shelve the category and to plead that the pay scales are not disrupted is a fallacious argument. In the instant case different scales of pay, a time scale too, have been fixed for different categories such as superintendents, higher grade assistants, and section heads. Under the private settlement dated October 15, 1971, the category of superintendents has been taken away and it is merged with administrative officers. Higher grade assistants and section heads together were classified into a newly named category as special assistants without consulting the Higher Grade Assistants Association. It cannot reasonably be said that there has been a fair adjudication on all the real and intricate problems which a higher grade assistant is likely to be faced with by reason of the effecting of the category as such. This Court is not inclined to enter into the intricacies of any prejudice which apparently appear to be possible by reason of such unilateral merger of one class into another. It is not the pay scale alone which looms large. There may be other considerations like independent promotions from that class to another superior category either on merit basis or on selection basis. There are other difficulties also which can easily be perceived. So it appears to me that the private settlement between one section of the employees who are connected with the interests of the higher grade assistants and the Corporation which prima facie is likely to affect the service of the higher grade assistants in the Corporation, is violative of the terms of the award in N.I.T. No. 1 of 1969. The second contention is that the impugned settlement and the incidental rules of promotion newly carved out are contrary to the provisions of the Life Insurance Act and the regulations made thereunder. It has to be considered whether the new rule of promotion and categorisation are matters which come within the purview of Section 49. Whilst the case of the Corporation is that it is a settlement arrived at under Section 18(1) of the Act, the general argument of the petitioners is that it is a subject which is covered by Section 49 and could only be made by the Corporation and not by its Chairman. It has also to be seen whether private settlements projecting various facets regarding pay, promotion, etc., are merely guide lines in the form of administrative instructions and would, therefore, bind all its employees.

21. It is fundamental that any settlement arrived at under Section 18(1) of the Act would only bind the parties thereto. The Higher Grade Assistants Association not being a party to the arrangement in question it follows that it would not bind them. But the contention is that the terms of settlement are in the nature of the administrative instructions issued by the chairman and, therefore, all the employees should necessarily come within its grip. It is to consider this argument that the provisions of the Life Insurance Act, 1956, have to be looked into. The relevant section is Section 49. This section deals with the power of the Corporation to make regulations not inconsistent with the Act and the rules made thereunder and they are intended to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act. But such regulations have to be made with the approval of the Central Government and they become effective after they are notified in the Gazette of India. It is common ground that the arrangements in question, which touched upon the terms and conditions of service of the employees of the Corporation, did not have the previous approval of the Central Government, nor are the arrangements being notified in the official Gazette. Sections 49(2)(b) and (bb) refer to such terms and conditions of the service of the employees as being one of the subjects on which regulations could be made in accordance with Section 49(1) of the Act. If, therefore, the arrangements in question are to be understood as having impact upon the terms and conditions of service of the employees of the Corporation, then such a settlement would be hit for non-compliance with the specific mandates prescribed in Section 49(1).

22. I may at once state that I am unable to agree with Mr. Ratan that the settlement dated October 15,1971, which contains new rules of promotion, shelving of categories of service in the Corporation, etc., are merely guidelines in the form of instructions issued by the Chairman for the promotion of the employee of the Corporation. Administrative instructions cannot be so overwhelming as to set at naught the existing conditions of service, the classes of service and the mode of promotions of employees in each of those classes or categories. It would be too wide a suggestion to say that such matters are to be taken as administrative instructions by the Chairman of the Corporation. The settlement in question obviously reflects a new mode of promotion from one category to another. It would, therefore, be idle for the Corporation to contend that 'such instructions' would bind every one of the employees of the Corporation no sooner a notice under Section 9A of the Industrial Disputes Act is given. Reliance was placed upon the decision in B. N. Nagarajan v. State of Mysore : (1967)ILLJ698SC . That was a case where the State acted under Article 162 of the Constitution in the absence of law or specific rules in the matter of recruitment to a particular service in the State of Mysore. The Government advertised the appointments and the conditions of service of the appointments and made selection after advertisement. There were, however, no rules framed under Article 309 of the Constitution for the said purpose. The recruitment was challenged on that ground. The Supreme Court said:

The words 'shall be as set forth in the rules of recruitment of such service specially made in that behalf in Rule 3 of Mysore State Civil Services (General Recruitment) Rules, 1957 do not imply that till the rules arc made in that behalf no recruitment can be made to any service. It is not obligatory under proviso to Article 309 of the Constitution to make rules of recruitment, etc., before a service can be constituted or a post created or filled. Secondly, the State Government has executive power, in relation to all matters with respect to which the Legislature of the State has power to make laws. It follows from this fact that the State Government will have executive power in respect of Schedule. 7, List II, Entry 41, State Public Services. There is nothing in the terms of the Article 309 of the Constitution which abridges the power of the executive to act under Article 162 of the Constitution without a law.

Rules usually take a long time to make, various authorities have to be consulted and it could not have been the intention of Rule 3 to halt the working of the public departments till rules were framed.

The ratio in this case is totally inapplicable to support the contention of Mr. Ratan. That was the case where the State exercised its powers under Article 162 of the Constitution when the law relating to the subject was silent about it.

23. The Constitution does provide an alternative mode of exercise of power and that was availed of. But in the instant case the Chairman cannot substitute himself for the Corporation and give certain administrative instructions so as to bind all the employees of the Corporation when he has no power under the Act to assume in himself such a power. Even otherwise, if a statute prescribes the manner in which a particular act has to be done so as to be binding on all those who come within its fold then it is fundamental that such an act has to be done in the manner so prescribed by the statute and not in any other manner. Regulations governing the conditions of service of the employees of the Corporation have to be framed in accordance with Section 49(1). That has not been done in this case. A conference was held between the Corporation on the one hand and some of the employees on the other and certain conclusions were arrived at and the said conclusions were codified as a settlement binding not only on the persons who were parties to such discussions but also others such as the petitioners in this case. The procedure adopted by the Corporation is not warranted. Factually the new rules are violative of the existing regulations. The existing categories of employees, which include the higher grade assistants, are classes of employees of the Corporation who were functioning under that regulations of service issued under Section 49. The settlement which embodies the so called guidelines or new rules abolishes the Same, with the result there has been an abrogation or repeal of the existing regulations which were made by the Corporation under the existing law and this has been done by the Chairman of the Corporation.

24. There is ample authority for the proposition that if an authority is created under a statute to do a particular act, it must do it by itself and subject to the conditions prescribed for the exercise of such power and if not done in that way the exercise of the power and the act resulting therefrom are ultra vires and equally unenforceable. Even assuming for argument's sake that the Chairman's approval of the settlement and the consequential issuance of administrative instructions to all its employees is legal, it is ultra vires of his powers. The doctrine of law is well settled that an action of a statutory Corporation may be ultra vires of its powers without being illegal and that when a statute confers an express power, a power ii consistent with that expressly given cannot be implied. Even so, the person or body vested with the authority to act in a particular situation can only act and not any other person since that other person has no authority to act. In the light of these well-known propositions I am unable to agree with the learned Counsel for the respondent that the Chairman had the power to accept the partial settlement and the present guidelines which are practically rules governing the conditions of service can be issued by the Chairman. No such power is available under the Act. The only power to alter such conditions of service is vested in the Corporation. Even then the regulations altering the rules of service can be done with the previous approval of the Central Government and after they are published in the Official Gazette. As these specific mandates have not been followed the settlement dated October 15,1971, which projects rules which are inconsistent with the existing rules of service, are ultra vires and could not have been made by the Chairman and, therefore, they are unenforceable.

25. Incidentally Mr. Nambiar also stressed on the point that as the so-called administrative instructions regarding rules of service are violative of Articles 14 and 16 of the Constitution, they cannot be upheld. Under the old rules, superintendents and higher grade assistants were equally eligible for promotion to the grade of administrative officers. Thus it is contended that equality of opportunity for promotion is denied. Again, section heads are eligible for promotion as superintendents, and not to the category of administrative officers. Now higher grade assistants and section heads have been combined into special assistants and, therefore, it is said that unequals are now made equals for promotion to administrative officers grade. When such is the broad argument that the new regulations of promotion affect certain provisions of the Constitution, the case of the Corporation is that the Corporation is not a State and that the conditions of service are purely contractual and, therefore, the alleged violation of the principles of the Constitution need not be noticed by this Court nor the argument be adjudicated upon. If, therefore, it is found that the Corporation is a State then the argument of Mr. Nambiar that the new rules of promotion are violative of Articles 14 and 16 of the Constitution has to be accepted in toto. Ex facie the settlement denied equal opportunity of promotion and by the creation of new classes not warranted under the existing regulations, unequals are made equals. In this sense Articles 14 and 16 are no doubt violated.

26. But the primary question is whether the Life Insurance Corporation is a State. Mr. Ratan relied upon the decision of the Supreme Court in U. P. State Warehousing Corporation v. Chandra Kiran Tyagi : (1970)ILLJ32SC , and Indian Airlines Corporation v. Sukhdeo : (1971)ILLJ496SC . The first one was a case which dealt with the United Provinces State Warehousing Corporation. The latter one was a case in which the Indian Airlines Corporation was a party. But whether a writ under Article 226 will issue against the Life Insurance Corporation of India is not res Integra so far as our Court is concerned. Rajagopalan, J., in Vaidyanatha Iyer v. Life Insurance Corporation oj India (W.P. No. 1016 of 1958), held that the Life Insurance Corporation of India was a State and that a writ under Article 226 can issue against it. This view was confirmed in W.A. 88 of 1960. Ismail, J., has taken a similar view in W.P. No. 1515 of 1968. The High Courts of Kerala, Patna and Allahabad have also taken a similar view. Finally, the Supreme Court in Rajasthan State Electricity Board v. Mohan Lai : (1968)ILLJ257SC , has definitely expressed the view that corporations like the Lite Insurance Corporation are States within the meaning of Article 12. There the question arose whether the Electricity Board of Rajasthan could be considered as a State within the meaning of Article 12 of the Constitution. In that case the Supreme Court said that the expression 'other authorities', in Article 12 will include all constitutional or statutory authorities on whom powers are conferred by law. At page 1863 the Supreme Court said:

It is not at all material that some of the powers conferred may be for the purpose of carrying on commercial activities......The State, as denned in Article 12, is thus comprehended to include bodies created for the purpose of promoting the educational and economic interests of the people. The State, as constituted by our Constitution, is further specifically empowered under Article 298 to carry on any trade or business. This circumstance that the Board under the Electricity Supply Act is required to carry on some activities of the nature of trade or commerce does not, therefore, give any indication that the Board must be excluded from the scope of the word 'State' as used in Article 12.

This is a clear pronouncement as to what are the ingredients to support the view that a particular corporation is a State or not. The decisions of the Supreme Court cited by Mr. Ratan were rendered in the peculiar circumstances of those cases in which the Supreme Court was of the view that the Warehousing Corporation or the Indian Airlines is not a State against which rules under Article 226 cannot issue. But in view of the abundance of authority of our Courts as well as the dicta of the Supreme Court in the Rajasthan Electricity Board case I am of the view that the Life Insurance Corporation should be treated and considered as a State. It is unnecessary for me to go at length on this question as I have already stated that the matter is not res integra in so far as our High Court is concerned, though certain other High Courts, the decisions of which have been cited by Mr. Ratan, have taken a different view.

27. If, therefore, the Life Insurance Corporation is a State then the amended rules of promotion which affect a particular class of employees who were not even consulted when the new rules were sought to be inducted and introduced, certainly offend Articles 14 and 16 of the Constitution when they are put into effect. I have already referred to this aspect.

28. In the view that I have taken it is unnecessary for me to go into the question whether factually what is the nature of prejudice caused to the higher grade assistants. Mr. Ratan tried to impress that under the new rules, if implemented, the petitioners are not likely to be seriously prejudiced. The question of prejudice or serious prejudice is one thing; but whether such prejudice which is said to be least harmful can be created at all and whether the Chairman had the power to usher in such a situation has already been dealt with by me. It is, therefore, not necessary to consider the want of serious prejudice even if the rules are implemented.

29. For all the reasons as above in W.P. No. 826 of 1972, a writ of mandamus shall issue directing the 6th respondent to hear and determine the dispute regarding Item No. 7 of the reference in N.I.T. No. 2 of 1969, relating to the rules of promotion after notice to all parties concerned and pass an award thereon in accordance with law. It, therefore, follows that a writ as prayed for in W.P. No, 825 of 1972, should also issue. Both the writ petitions are allowed. There will be no order as to costs.


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