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Promode Ranjan Roy Vs. Chairman, Life Insurance Corporation of India and ors. - Court Judgment

LegalCrystal Citation
SubjectService
CourtKolkata High Court
Decided On
Case NumberCivil Revn. No. 1780 of 1959
Judge
Reported inAIR1961Cal108
ActsConstitution of India - Articles 226 and 311; ;Life Insurance Corporation Act, 1956 - Sections 11, 11(1) and 49; ;Life Insurance Corporation of India (Staff) Regulations, 1956 - Rules 9, 20(2), 41 and 41(1)
AppellantPromode Ranjan Roy
RespondentChairman, Life Insurance Corporation of India and ors.
Appellant AdvocateRam Kamal Sanyal, Adv.
Respondent AdvocateS.M. Bose, Adv. General, ;P.K. Ghosh, Adv. for Opposite Party Nos. 1-4 and ;D.P. Pal, Adv. for Opposete Party No. 5
Cases ReferredK. P. C. Menon v. Divisional Manager
Excerpt:
- .....of not less than rs. 25,000/-. the life insurance corporation act, 1956 which nationalised all life insurance business in india, came into force on the 1st september, 1956 as a result of which, the petitioner became an employee under the life insurance corporation of india, in accordance with the provisions of the said act. on the 21st november, 1956 it was intimated to him by a letter, a copy of which is annexure 'b' to the petition, that he was designated as 'inspector', and would operate within the calcutta postal zones. the letter contained the following direction:'the categorisation of field staff into different grades having been kept in abeyance till 31st august 1957, you are having at your disposal sufficient time to organise the business on the pattern of the corporation......
Judgment:
ORDER

Sinha, J.

1. The facts in this case are shortly as follows: The petitioner was appointed with effect from the 10th January, 1956 as Chief Inspector of the Asiatic Government Security Lite and General Assurance Co. Ltd. He was on probation for a period of not less than one year from the date of his joining. The appointment was based on an annual contract of Rs. 10,00000/- completed business yielding a first year's premium income of not less than Rs. 25,000/-. The Life Insurance Corporation Act, 1956 which nationalised all life insurance business in India, came into force on the 1st September, 1956 as a result of which, the petitioner became an employee under the Life Insurance Corporation of India, in accordance with the provisions of the said Act. On the 21st November, 1956 it was intimated to him by a letter, a copy of which is annexure 'B' to the petition, that he was designated as 'Inspector', and would operate within the Calcutta Postal Zones. The letter contained the following direction:

'The categorisation of Field Staff into different grades having been kept in abeyance till 31st August 1957, you are having at your disposal sufficient time to organise the business on the pattern of the Corporation. The first review of your performance will be made as at 31st December 1956, the second review as at 31st March 1957 and the third review as at 30th June 1957.....

It shall be my pleasure to see you qualifying for the highest category you deserve when your case will be taken up for categorisation'.

2. On the 11th September, 1957 the petitioner accepted the terms of appointment under the Life Insurance Corporation, a copy of which is exhibit 'A' to the affidavit in opposition filed by Asoke Ranjan Sen, affirmed on the 1st April, 1960. Under this he was to be an 'Inspector of agencies', and the terms and conditions of his employment are all contained in that letter. The letter inter alia contained the following term :

'You are required to secure through your agents a minimum Life business, of Rs. 4.85 lacs yielding First Year's schedule premium income of not less than Rs. 19,500/-. We hope that you will be able to exceed this figure, as your actual categorisation to be made after the expiry of the period fixed will depend upon the quantum of business as also on your satisfying the other criteria which will be taken into account in judging your results,

The above terms of emoluments have been given to you now with a view to give you an opportunity of showing the best possible results and your work will be reviewed from time to time. Your actual categorisation will be made on and after 1st October, 1957, and this will mainly depend on the type of success you make of your present appointment and the criteria on which the results will be judged will be the quantum and quality of new life business introduced and completed till 30th September 1957,

The Corporation reserves the right to terminate your appointment if the results achieved by you within the first six months and thereafter are not to our satisfaction.'

3. Thereafter, from time to time departmental rules were framed for categorisation and ultimately the employees had the option to be categorised on the basis of their performance during the 13 months ending on 30-7-57 or the 12 months ending on 31-12-57 whichever was more favourable to them. The petitioner could not be categorised owing to his poor performance during the 1st period, i.e., from 1-9-56 to 30-9-57, and accordingly, he had the option to be categorised on the performance for 1-1-57 to 31-12-57. The petitioner's work continued to be unsatisfactory and several warnings were given. Instead of the performance being 50% as was expected, his actual performance was 4.73% in the first period and 6.84% in the second period. The petitioner's case was, accordingly, referred to the Zonal Committee, which reviewed the matter and came to the conclusion that the petitioner's services should be terminated. Accordingly, on the 1st August, 1958 the Divisional Manager issued a letter, a copy whereof is annexure 'E' to the petition. By that letter, it was stated that the petitioner's performance, ever since the commencement of his service under the Life Insurance Corporation, had been poor and less than 50% of the revised quota allowed to him. His case had been carefully considered, and no extenuating circumstances were found to excuse such a poor performance. Accordingly, it had been decided to terminate his services with immediate effect. He was offered his salary for the current month and one month's salary in lieu of notice. On the 12th August, 1958 the petitioner wrote the following letter;

'Dear Sir,

I hereby return one copy of my termination letter duly signed by me. Please arrange to make payment of two months' salary as mentioned in your letter.

Thanking you'.

4. Thereafter, the petitioner was paid two months' salary including one month's salary in lieu of notice, and he accepted the same. An application has now been made challenging the order dated 1st August, 1958 mentioned above. The ground urged on behalf of the petitioner is that he has been removed from his post without being given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. A further point was argued namely that the Divisional Manager was not competent under the Life Insurance Corporation Act, 1956 to dismiss the petitioner.

5. Before I proceed to deal with these points, it is necessary to examine some provisions of the said Act and the regulations framed thereunder. The Life Insurance Corporation Act, (Act XXXI of 1956) was passed on the 18th June, 1956 and came into force from the 1st September, 1956. Under Section 11(1) of the said Act, every wholetime employee of an insurer whose controlled business has been transferred to, and vested in, the Corporation, and who was employed by the insurer for his controlled business immediately before the appointed day, became an employee of the Corporation on the same terms and conditions upon which he was holding office. Under Sub-section (2) of Section 11, the Central Government was empowered to revise the terms and conditions of service for the purpose of securing uniformity in the scales of remuneration and the other terms and conditions of the service of employees whose employment had been transferred to the Corporation. The Corporation however had the power to recruit its own employees, on such terms and conditions as it may think fit. Under Section 49 of the said Act, the Corporation may, with the previous approval of the Central Government, make regulations inter alia for the method of recruitment of employees and agents of the Corporation, and the terms and conditions of service of such employees or agents. In exercise of such power the Life Insurance Corporation has framed regulations called the Life Insurance Corporation of India (Staff) Regulations 1956 which came into operation in January, 1958. Rule 2 lays down that the regulations will apply to every whole-time employee of the Corporation, including salaried field staff, except where otherwise provided. Clause (a) of Rule 5 defines the 'Corporation' to mean the body Corporate known as the Life Insurance Corporation of India acting through any of its duly authorised officials. Rule 7(1) in Chapter II lays down the classification of staff. Salaried Field Staff (Inspectors) other than Probationary Inspectors belong to class II. Rule 9 prescribes the authorities empowered to appoint. The particular provision that applies to the petitioner's case is Rule 9(III)(c) and the appointing officer is the Divisional Manager within whose jurisdiction the branch functions, Rule 20(2) runs as follows :

'20(2). The Corporation may determine the service of any employee at any time after the expiry of the period of his probation on giving him,

(a) three months' notice or pay in lieu thereof if he is an employee in Class I; and

(b) one month's notice or salary in lieu thereof if he is an employee in any other class:

Provided, however, that the period of notice will be double in the case of employees who have served for 10 years or more.

The power to determine the service of an employee shall be exercised by the authorities empowered under Regulation 9.'

6. Thus, the authority empowered to determine the service of the petitioner, would be the appointing authority under Rule 9 namely the Divisional Manager. In fact, the petitioner was appointed, and his letter of appointment issued on the 11th September, 1957 by the Divisional Manager. The letter terminating his service has also been issued by the Divisional Manager. I now come to Rule 41(1) which lays down that without prejudice to the provisions of other Regulations, an employee who commits a breach of the Regulations of the Corporation, or who displays negligence, inefficiency etc. shall be liable to several penalties, including dismissal. Sub-rule (2) lays down that no employee shall be subjected to, inter alia penalty of dismissal, except by an order in writing signed by the appointing authority and no such order shall be passed without the charge or charges being formulated in writing and given to the said employee so that he shall have a reasonable opportunity to answer them in writing or in person, as he prefers.

7. The position, therefore, is as follows : The petitioner was originally employed by an insurer, whose business vested in the Corporation. Under Section 11(1) of the said Act, the petitioner automatically became an employee of the Corporation on the same terms and conditions as before. However, this did not continue because on the 11th September, 1957 he accepted an appointment on certain terms and conditions which were not identical to his previous terms and conditions, and these new terms came to regulate his conditions of service. The terms themselves contain a provision empowering the Corporation to terminate the appointment of the petitioner if the results achieved by him were not satisfactory. Secondly, such right is clearly granted under the (Staff) Regulation 1956, by Rule 20(2) mentioned above. What is stated is that an as much as the complaint against the petitioner was of inefficiency, therefore, it came under the scope of Regulation 41 and there should have been a charge-sheet formulated and reasonable opportunities should have been given to the petitioner to answer the charges before he could be dismissed. In brief, the argument is that the petitioner's case could not come under Regulation 20(2) but must come under Regulation 41. Admittedly, no charge-sheet was served and no enquiry was made. Consequently, if the petitioner's contention is correct then the order of dismissal was in violation of the Regulations. Before the matter is considered further, it is necessary to consider a preliminary point. The learned Advocate General has argued that the petitioner is estopped from challenging the order of dismissal because he has accepted his dismissal and drawn two months' pay which was offered, including one month's pay in lieu of notice, which would never have been payable, except under a valid order determining the services of the petitioner under Clause (b) of Sub-rule (2) of Regulation 20. After having received the sum, it is not open to the petitioner to challenge the order determining his services, and in any event, he cannot come to this Court by way of an application under Article 226. In my opinion, this preliminary objection is well-founded. After all, an appointment by the Corporation is primarily a matter of contract and if the termination of the contract is accepted by an employee, who takes the benefit offered, it is impossible for him afterwards to challenge the validity thereof, and in any event, he cannot be heard to make such objections in a court of equity. This preliminary point would be sufficient to dispose of this application. I shall, however, also deal with the merits. As I have stated above, the first point taken is that the petitioner ought to have been charge-sheeted and given an opportunity of showing cause before the order of dismissal was passed. The second point raised is that the Divisional Manager was not the dismissing authority of the petitioner. As I have shown both these points are covered by the Regulations and Sub-rule (2) of Rule 20 and the order determining the service of the petitioner passed by the Divisional Manager after payment of one month's salary in lieu of notice, was in accordance with law. The learned advocate on behalf of the petitioner has referred me to an order issued by the Central Government dated 30th December, 1957. It is called the Life Insurance Corporation Field Officers (Alteration of Remuneration and other Terms and Conditions of Services) Order, 1957. This order has been made in exercise of power conferred by Sub-section (2) of Section 11 of, the said Act. it was made for the purpose of securing uniformity in the scales of remuneration and, other terms and conditions of services applicable to certain class of employees of insurers whose controlled business had been transferred to, and vested. In, the Corporation. In that order, it has been laid down that in case of unsatisfactory performance of duties or negligence or misconduct, the services of a Field Officer may be terminated after giving him, an opportunity of showing cause against the action, proposed to be taken in regard to him and after conducting such enquiry as the Corporation thinks fit. The present case, however, is not covered by this order. in the present case, a fresh contract of service was entered into between the petitioner and the Corporation. Therefore, his services would be regulated by the (Staff) Regulations, 1956. So far as the (Staff) Regulations, 1956 is concerned, the petitioner's services were properly determined. This has also been held in a Madras decision, K. P. C. Menon v. Divisional Manager, Life Insurance Corporation of India, Coimbatore, : (1960)IILLJ424Mad . In that case also, the petitioner was employed as an inspector by the Life Insurance Corporation of India. Before nationalisation, he was the Branch Manager of an insurer known as the General Assurance Society and was in charge of the Coimbatore Branch. Thereafter, the life insurance business of the insurer vested in the Corporation and the petitioner became an employee of the Corporation. By an order dated 16-8-56 the petitioner was appointed as an inspector at the branch office at Coimbatore. By a notice served on him on 13-7-57 by the Divisional Manager at Coimbatore, the services of the petitioner were terminated upon a month's notice. It was this order of termination which was challenged. it was also urged there that the termination was in substance under Rule 41 of the (Staff) Regulations, 1956 and as such should have been preceded* by the framing of a charge, the holding of an enquiry and the finding of guilt. it was a common ground that no charges were framed and no enquiry held before the petitioner's appointment was terminated. The Corporation proceeded on the basis that the termination was under Rule 20 of the said Regulation, under which the services of an employee other than an employee in class I could be terminated on a month's notice. It was held that the services of the petitioner were legally terminated under the provisions of Rule 20 of the said Regulations. The argument of the learned counsel for the petitioner was that there was a complete dichotomy between Rule 20 and Rule 41 and that in case of established misconduct and inefficiency, it was Rule 41 that applied, and that the services of such an employee could not be terminated by notice under Rule 20. The argument was not accepted. in the present case, the facts are even stronger. While in the Madras case it might have been argued' that the (Staff) Regulations of 1956 were not intended to apply to those employees who were covered by either Sub-section (1) or Sub-section (2) of Section 11 of the said Act, no such point arises here. Although the petitioner was appointed by an insurer prior to the date of vesting, he entered into a fresh contract of service after the date of vesting and came under the purview of the (Staff) Regulations, 1956. The terms of service themselves contain a term empowering the Corporation to terminate the petitioner's services at any time, if the results were not satisfactory. Under the terms, even a notice of one month is not necessary.

8. The result is that this application fails andmust be dismissed. The Rule is discharged. Interim orders, if any, are vacated. There will be no order as to costs.


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