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insurance Association of India Vs. State of West Bengal and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKolkata High Court
Decided On
Case NumberCivil Revision Case No. 5299 of 1960
Judge
Reported inAIR1965Cal294,69CWN57
ActsInsurance Act, 1938 - Section 64C and 64P; ;Insurance (Amendment) Act, 1950; ;Industrial Disputes Act, 1947 - Sections 2 and 10; ;Code of Civil Procedure (CPC) , 1908 - Section 11
Appellantinsurance Association of India
RespondentState of West Bengal and ors.
Appellant AdvocateA.C. Mitter, Standing Counsel and ;Rabi Ranjan Das Gupta, Adv.
Respondent AdvocateP.K. Banerjee, Adv. for No. 1 and ;Ramen Banerjee, Adv. for Nos. 3 and 4
DispositionApplication dismissed
Cases ReferredBharat Glass Works (Private) Ltd. v. State of West Bengal
Excerpt:
- .....association of india (calcutta regional council) is nothing but a species of the genus of all india insurance association of india which has been provided in the insurance act of 1938, as amended from time to time. it is clear, therefore, that it is a central subject and an insurance company as contemplated in section 2(a)(i) of the industrial disputes act and here the appropriate government is the central government who has got the jurisdiction to enter into the matter. i am inclined to think further that government of west bengal has got no jurisdiction into the matter and here by appropriate government, it does not mean the local government of the state. in view of the fact that our state government has no jurisdiction into the matter, the labour court of west bengal which is a.....
Judgment:
ORDER

D.N. Sinha, J.

1. The facts in this case are shortly as follows: 'The Insurance Association of India' is a body corporate which has been brought into existence by virtue of Section 64A of the Insurance Act, 1938 (Central Act IV of 1938) as amended by Act 47 of 1950 (hereinafter referred to as the 'Act'). Under that provision, all insurers carrying on insurance business in India at the commencement of the amending Act, 1950, all Insurers who may after such commencement begin to carry on insurance business in India and, if the Central Government, by notification in the Official Gazette, so declares, all provident societies carrying on insurance business in India, have been constituted a body corporate by the name of the Insurance Association of India', (hereinafter referred to as the 'Association') having perpetual succession and a common seal. Under Section 64C of the said Act, there shall be two Councils of the Insurance Association of India, namely, (a) 'the Life Insurance Council', consisting of all the members and associate members of the Association who carry on life Insurance business in India and (b) 'the General Insurance Council', consisting of all the members and associate members of the Association who carry on general insurance business in India. In this case, we are concerned with the general insurance business and not with the life insurance business. Under Section 64E of the said Act, the work of the General Insurance Council is to be carried on by the Executive Committee, the Tariff Committee and the other Committees thereof, constituted in the manner provided by the said Act Section 64P(1) of the said Act runs as follows:

'1. The General Insurance Council may constitute such Regional Councils as and when it deems fit for one or more of the prescribed regions.

2. Each Regional Council shall consist of seven persons elected by such groups of insurers carrying on general Insurance business in the region as may be prescribed.

Under Section 64Q of the said Act, the Regional Councils are to perform such functions as may be delegated to them by the General Insurance Council and a Regional Council may in the prescribed manner constitute such committees thereof as it may think fit. It will thus be seen that it is the 'Insurance Association of India' that is the statutory body which has been formed and it has the right to sue or be sued. 'The General Insurance Council' is only a body that can be formed by the Insurance Association of India for the convenience of carrying out its functions. 'The General Insurance Council' may in its turn form a Regional Council and delegate to it, some of its functions. Neither the 'General Insurance Council' nor the 'Regional Council', have any separate corporate existence of their own. In or about 1958, an industrial dispute arose between the Insurance Association of India (Calcutta Regional Council) and their subordinate staff and it was referred for adjudication to the Second Labour Court, West Bengal. The Issues that were referred for adjudication were as follows:

'1. Minimum basic pay fitting in the present employees.

2. Annual increment.

3. Free tiffin or tiffin allowance.'

2. Before the said Labour Court, a preliminary point of jurisdiction was taken. On behalf of the workmen appearing through their Union, it was contended that the Insurance Association of India was a company which was a statutory body constituted under Section 64P(1) of the said Act and that it employed in Calcutta about 67 workmen of whom 27 were subordinate staff. On the merits It was contended that the Union had placed a charter of demands before the company on 8th April, 1957 but the demands were rejected and all conciliation efforts failed. Thereupon, the said reference was directed for adjudication of the disputes that arose between the parties. On behalf of the Insurance Association of India (Calcutta Regional Council), which was described in the award as, the 'Company', it was contended that it was not an 'industry' within the meaning of Section 2(i) of the Industrial Disputes Act, 1947 and, therefore, there could not be any industrial dispute within the meaning of Section 2(k) of the said Act. It was further contended that according to Section 2(a) of the Industrial Disputes Act, the 'appropriate Government' for the purposes of the said Act, in relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government and an industrial dispute concerning an insurance company was the Central Government. It was argued that since the Association itself is a creation of an Act passed by the Central Legislature, the 'appropriate Government' for the purposes of the Industrial Disputes Act was the Central Government, and inasmuch as the order of reference was made by the Government of West Bengal it was void and inoperative for want of jurisdiction. The Labour Court went into this question of jurisdiction and came to certain findings. The first finding was that the 'appropriate Government' as contemplated in Section 2(a)(i) of the Industrial Disputes Act was the Central Government. The Labour Court said as follows:

'I should hold that this Insurance Association of India (Calcutta Regional Council) is nothing but a species of the genus of All India Insurance Association of India which has been provided in the Insurance Act of 1938, as amended from time to time. It is clear, therefore, that it is a Central subject and an Insurance Company as contemplated in Section 2(a)(i) of the Industrial Disputes Act and here the appropriate Government is the Central Government who has got the jurisdiction to enter into the matter. I am inclined to think further that Government of West Bengal has got no Jurisdiction Into the matter and here by appropriate Government, it does not mean the Local Government of the State. In view of the fact that our State Government has no jurisdiction into the matter, the Labour Court of West Bengal which is a creation of the State Government has automatically no jurisdiction to adjudicate into the matter. ... .It is clear, therefore, beyond doubt, that this Insurance Association of India, Calcutta Regional Council, is a part and parcel of the Central Insurance Association of India as has been provided In the Insurance Act of 1938, as amended from time to time and I see no reason why this should not be the Central subject. There is no amended Act of West Bengal so far as the Insurance Act is concerned and there is no rule for the Insurance Act for the State of West Bengal. It is a Central Act and a Central subject out and out and Calcutta Regional Council is a part of the All India Insurance Association.... Insurance Association of India, Calcutta Regional Council, is included in the Insurance Association of India as has been provided for in the Insurance Act of 1938 and is a Central subject within the meaning of Section 2(a)(i) of the Industrial Disputes Act. It is the Central body who regulates the Insurance business as has been provided under Section 64A, 64B, 64C, 64D, 64E, 64F and 64Q which definitely say that Regional Council shall perform such function as may be delegated to them by the General Insurance Council. I should, therefore, think that the appropriate Government under the Industrial Disputes Act is the Central Government and the State Government has no jurisdiction into the matter and for the matter of that, this Labour Court has got no jurisdiction to adjudicate into the matter'.

3. The Labour Court having decided that it had no jurisdiction, did not adjudicate upon the Issues referred to it.

4. As I shall presently show, the entire award is misconceived and the conclusions are wholly erroneous. Nevertheless, neither party has taken any steps for challenging the award which, I am told, is still in operation. I now come to the fact of the present case. The respondent No. 3 in this application was a workman employed at the Calcutta Regional Council of the Association. On or about the 23rd December, 1959 he was dismissed on the ground of misconduct. Thereafter, there were conciliation proceedings which failed. On the 3rd December, 1960 an order was made by the State Government referring an Issue for adjudication to the 4th Industrial Tribunal, West Bengal. The issue was as follows.

'Whether the dismissal of Shri JaggennathProsod Singh is justified? To what relief, if any, is he entitled?'

5. An application was thereupon made and the original petitioner was 'Messrs. Insurance Association of India (Calcutta Regional Council)', the respondents being the State of West Bengal, the workman Jaggernath Prosad Singh and the Insurance Association of India (Calcutta Regional Council Workmen's Union). When this matter came up for hearing before Banerjee, J., it was argued on behalf of the respondents Nos. 3 and 4 that the petitioner as described in the said application was not a body corporate, and was not entitled to ask for writs and orders as prayed for. Thereupon, the petitioner made an application for amendment of the cause-title and the amendment has been allowed and the petitioner now is 'The Regional Council situated at Calcutta, a body constituted by and under the provisions of the Insurance Act, 1938' and an additional ground was taken to the effect that since the dispute was between the Regional Council and its workmen, the order of reference as framed was erroneous and could not be maintained. This is the form in which the application has now come up before me for disposal. In my opinion, the reference order is not defective, but that the amendment made is misconceived and places the petitioner in rather a peculiar position, because 'the Regional Council' is not a corporate body and cannot maintain an application in its own name. In fact, the original frame of the application was quite in order and there was no occasion for making the amendment. However, as the application in any event fails on the merits I need not dispose it of on the preliminary ground alone. Coming to the merits, the learned Standing Counsel has argued two points. The first point is that the 'appropriate Government' under Section 2 of the Industrial Disputes Act, in the facts and circumstances of the present case, is the Central Government and, therefore, the order of reference made by the State Government, dated 3rd December, 1960 is invalid and not in accordance with law. The second point is that in any event this issue namely, as to which is the 'appropriate Government' has been decided by an award which is still binding on the parties namely, the award dated 25th April, 1959 of the Second Labour Court, West Bengal and, therefore, it is no longer open to the respondents to urge otherwise and the issue as to Jurisdiction must be decided in accordance with the said award.

6. It appears that throughout there has been a misconception as to the position in law and it is necessary to clear this up. The Insurance Act, 1938 was an Act to consolidate and amend the law relating to the business of insurance. It was intended to apply to life insurance as well as general insurance business. It is well-known that life insurance business has since been nationalised and is carried on by the Life Insurance Corporation, a statutory body. In this case, however, we are concerned with the other kind of insurance namely, general insurance. Section 2(8) of the said Act defines an 'insurance company', as any insurer, being a company, association or partnership which may be wound up under the Indian Companies Act, 1913, or to which the Indian Partnership Act, 1932, applies. Section 2(9) of the said Act defines an 'insurer'. Briefly speaking, it means any individual or unincorporated body of Individuals or body corporate, carrying on insurance business in India or having its principal place of business in India and also includes certain individuals having standing contracts with underwriters. Section 84A of the said Act brings into existence a corporate body known as the 'Insurance Association of India'. This includes all insurers carrying on insurance business in India or who may carry on insurance business therein, including certain provident societies as mentioned therein, carrying on insurance business. 'The Insurance Association of India' has a perpetual succession and a common seal and shall by the said name sue or be sued. The constituent insurers and provident societies arc all members of the Association, By Section 64C of the said Act, two councils have been constituted of the said Association namely the Life Insurance Council and the General Insurance Council. These councils are, however, not corporate bodies but are only bodies which are part of the corporate body namely, the Insurance Association of India. The General Insurance Council, with which we are concerned in this case, has an Executive Committee formed under Section 64F(2) of the said Act, and it has the right, with the approval of the Central Government, to make bye-laws for the transaction of any business at any meeting of the said Committee. These Executive Committees have a life span of three years from the date of its first meeting. (Section 64H). Section 64P is important and has already been set out above. Under Section 64Q(1) of the said Act the Regional Councils shall perform such (unctions as may be delegated to them by the General Insurance Council. The Regional Council has been given power of constituting committees. Section 64L of the said Act lays down the functions of the Executive Committee of the General Insurance Council. Under Section 64Q of the said Act the General Insurance Council may, by regulations made in this behalf and approved by the Central Government, control and regulate the rates, advantages, terms and conditions that may be offered by its members and associate members in respect of general insurance business. There are certain general powers which have been conferred on the General Insurance Council under Section 64R of the said Act. The Regional Councils brought into existence under Section 64P of the said Act, have no separate corporate existence and can only exorcise such powers as may be delegated to them by the General Insurance Council. We find, therefore, that the corporate body is the Insurance Association which may form a General Insurance Council which in its turn may constitute a Regional Council, merely delegating some of its own powers to such Regional Council. It is, therefore, difficult to understand the argument that the Regional Council is a statutory body and was, therefore, under the circumstances, the proper petitioner in the present case. That it has come into existence by reason of the Insurance Act, 1938, is obvious. But the provisions of the said Act did not confer upon it a corporate status and does not give it the right to sue or be sued in its own name. I also fail to understand the conclusions of the Second Labour Court to the effect that the Insurance Association is a 'company' brought into existence by reason of a Central Act and. therefore, its affairs constitute a 'Central subject'. The expression 'Insurance Company' has been defined In Section 2(8) of the said Act and it is not disputed before me that the Insurance Association does not come within the definition. The Insurance Association of India is a statutory body which has come into existence, as a result of the Insurance Act, 1938. Its powers and duties, its rights and disabilities are all governed by the provisions of the said statute and must be found within the four corners thereof. In my opinion, in such a case, the name and description of the petitioner as it originally appeared was the correct one. It is 'the Insurance Association of India' which is the statutory body and by putting the words 'Calcutta Regional Council' within brackets, in conjunction, it has been rightly emphasised that the dispute to be adjudicated upon related to the affairs of that Council as constituted under the said Act and the workmen working for the said Council. I now come to the very important question as to which is the 'appropriate Government' for the purpose of referring such disputes for adjudication under Section 10 of the Industrial Disputes Act, read with Section 2 thereof. Under Section 10 which is the appropriate section for reference of disputes to Courts or Tribunals formed under the provisions of the Industrial Disputes Act, 1947, the reference has to be made by the 'appropriate Government'. The expression 'appropriate Government' has been defined in Section 2(a) of the said Act the relevant part of which runs as follows:

'In this Act, unless there is anything repugnant in the subject or context,--

(a) 'appropriate Government' means-

(i) In relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government or by a railway company or concerning any such controlled industry as may be specified in this behalf by the Central Government or in relation to an industrial dispute concerning a banking or an insurance company, a mine, an oil-field, or a major port, the Central Government, and

(ii) in relation to any other industrial dispute, the State Government;'

7. The reasoning followed by the Labour Court was that the Insurance Association of India has been brought into existence by a Central statute and, therefore, it is a 'central subject' and consequently the Central Government was the 'appropriate Government' for reference of disputes to arbitration. That is an erroneous approach to the question. The word 'appropriate Government' has been defined as aforesaid and the definition must be rigorously applied to the facts of a particular case. In the case of an industrial dispute which was going to be referred for adjudication, the Central Government would be the 'appropriate Government' in the following cases:

1. An industry carried on by the Central Government.

2. An industry carried on under the authority of the Central Government.

3. An industry carried on by a Railway Company.

4. Concerning any controlled industry as may be specified in this behalf by the Central Government.

5. A dispute concerning a banking or an insurance company, a mine, an oil-field or a major port.

8. In the case of all other industrial disputes, the 'appropriate Government' is the State Government. Therefore, it is immaterial to consider whether the Insurance Association of India has been brought into existence by a Central statute or whether such statute Is concerned with a 'Central subject' or not. In order to conclude that the Central Government was the 'appropriate Government'' it must come within one or the other of the above-mentioned headings. If it does not, then the 'appropriate Government' is the State Government. This has been expressly laid down by the Supreme Court in Serajuddin and Co. v. The Workmen, (1963) 1 SCA 225 at p. 230. Let us, therefore, consider these headings in relation to the facts and circumstances of the present case. The learned Standing Counsel admits that it does not come under any of the headings excepting the second heading, namely, an industry carried on 'under the authority of the Central Government'. The question is whether it docs come within that heading. The circumstances under which an industry can be said to be carried on 'under the authority of the Central Government' were considered by a Division Bench of this High Court, Carsbad Mineral Water . v. P.K. Sarkar, : (1952)ILLJ488Cal . The facts in that case were as follows: The appellants were a limited company manufacturing soda water. They entered into an agreement with the Governor-General in Council, acting through the Chief Commercial Manager of the East Indian Railway Administration in Calcutta, by which they secured the catering rights of providing mineral waters on the East Indian Railway system. By the contract, (he Government had a right to fix maximum prices and to control to some extent the work of the appellants. An industrial dispute occurred between the appellants and their workmen, and the Government of West Bengal, by its order dated December 28, 1948 referred it for adjudication to an Industrial Tribunal. It was contended that the dispute could only be referred to for adjudication by the Central Government which was the 'appropriate Government', inasmuch as the appellants were carrying on business by authority of the Central Government. Harries C. J. said as follows:

The argument for the appellants is that as the appellants have entered into a contract with the Central Government to provide amenities for railway passengers which the railway would normally be called upon to provide, they are carrying on an Industry by the authority of the Government.

It seems to me that what is referred to in Section 2(a)(i) and Section 2(g)(i), is any industry owned by Government which is being carried on by Government itself either through a department or by some authority created by Government to carry on that industry. An industry carried on by or under the authority of Government is a Government industry which as I have said may be carried on directly by Government or by somebody or per-son nominated by Government for that purpose.

No business owned and carried on by a private person or a limited company can be a business carried on by or under the authority of Government.

It seems to me that the words 'under the authority' mean much the same as 'on behalf of'

9. This case was followed by me in Bharat Glass Works (Private) Ltd. v. State of West Bengal, : AIR1957Cal347 . That was really a case of a 'controlled industry'. The principle laid down by Harries C. J. was, however, discussed in that case. I have pointed out that a business which is said to be carried on by or under the authority of the Central Government, must be a Central Government business. Where others carry on business and are concerned with the profit and loss, it cannot be said to be a Government business, however much the Government may control it. For an industry, to be carried on under the authority of the Central Government, it must be an industry belonging to the Central Government, that is to say, of which it is owner, or at least part-owner. In this particular case, can it be said that the industry in which the dispute arose was an industry carried on by the Central Government or under the authority of the Central Government? If any business can be said to be carried on, it is the business of insurance. That is carried on by the 'insurer' or an 'Insurance Company'. What is 'General insurance business' has been defined in Section 2(6b) of the said Act and the expressions 'Insurance Company' and 'insurer' are defined in Sub-sections (8) and (9) of Section 2. The Insurance Association of India has been formed under Section 64A of the said Act and consists of members who carry on insurance business. The Association has a council, which has is turn an executive committee. The functions of the executive committee are prescribed in Section 64L. This consists of aiding and advising insurers carrying on general insurance business, in the matter of setting up standards of conduct and sound practice and in the matter of rendering efficient service to holders of policies; to render advice to the Controller in the matter of controlling the expenses of such insurers; to bring to the notice of the Controller the case of any such insurer acting in a manner prejudicial to the interests of holders of general insurance policies and matters incidental or ancillary thereto as may be notified. The General Insurance Council, under Section 64Q of the said Act, may make regulations and thereby control and regulate the rates, advantages, terms and conditions that may be offered by its members and associate members in respect of general insurance business. Whether these functions may be said at all to amount to the carrying on of an 'industry', is a controversial matter. But even if it is an industry, it cannot be said that the Central Government carries on any such business or industry. The Central Government has certainly a great deal of control. The Act Itself provides for the appointment of a 'Controller of Insurance Association', being an Officer appointed by the Central Government to perform the duties of a Controller under the said Act. The regulations made on behalf of the General Insurance Council have to be approved by the Central Government. The Central Government may prescribe the circumstances governing the holding of meetings by Executive Committees. Under Section 64S, the Central Government may exercise such powers as may be necessary for bringing the General Insurance Council or its Executive Committees into effective existence. Under Section 64T, the Central Government has power to exempt any insurer from the operation of all or any of the provisions of Part II of the said Act. But even if the Act confers sweeping powers of control by the Central Government, still the Association or its Regional Council cannot be said to be an industry carried on by the Central Government or under its authority or on its behalf. If any business is carried on, it it insurance business and it is not carried on by the Central Government, which does not participate in its profit and loss. The Act which is, of course, a Central Act, provides for regulation of the business. In the interests of the public-at-large, powers have been taken by the Central Government to regulate the carrying on of insurance business by insurers. That does not render the business itself being either, run by Government, or under its authority. That being so, the 'appropriate Government' in the present case, under Section 10 read with Section 2(a)(i) of the Industrial Disputes Act, is the State Government and not the Central Government The next point to be considered is as to whether the award made by the Second Labour Court dated 25th April, 1959 being still in force, the point as to who is the 'appropriate Government', is barred by principle analogous to res judicata. In my opinion, it is not. The award mentioned above was made by the Second Labour Court in respect of three disputes which have been enumerated above. It was held that, in spite of the reference for adjudication of the said disputes, the 'appropriate Government' was the Central Government. In the present case, the reference dated 3rd December 1960 relates to different disputes altogether. I have already shown above that the decision of the Second Labour Court is palpably wrong. But even if it is binding on the parties, what is binding is that the 'appropriate Government' for the decision of the three disputes which were referred for adjudication to the Second Labour Court previously, was the Central Government. That does not mean that it has been decided for all times that the 'appropriate Government' for the reference for adjudication of all future disputes should also be the Central Government. The plea of res judicata must be strictly applied. In order that its bar should apply, the party should be the same and also the cause of action should be the same. The cause of action in this case is not the same. Therefore, the plea of res judicata fails.

10. For the reasons given above, it must beheld that the order of reference dated 3rd December, 1960 is a valid order of reference and, therefore, this application falls and must be dismissed.The Rule is discharged. Interim orders, if any,are vacated. There will be no order as to costs.


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