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K.D. Banerji Vs. Life Insurance Corporation of India - Court Judgment

LegalCrystal Citation
SubjectInsurance
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 290 of 1959 (Mandamus Appeal)
Judge
Reported inAIR1961Cal285
ActsLife Insurance Corporation Act, 1956 - Sections 11, 11(1), 11(2) and 49(2); ;Constitution of India - Article 14
AppellantK.D. Banerji
RespondentLife Insurance Corporation of India
Appellant AdvocateS. Acharya and ;Salil Kumar Dutt, Advs.
Respondent AdvocateS.M. Bose, Adv. General, ;E.R. Meyer and ;Prasanta Kumar Ghose, Advs.
DispositionAppeal dismissed
Cases ReferredChaturbhuj Lal Purayar v. Divisional Manager
Excerpt:
- .....comes up in appeal before us. the appellant is one k. d. banerji, assistant branch manager of the life insurance corporation of india.2. the appellant's case is, in effect, to ask for an order of mandamus in his favour directing the respondents to give him the scale of pay, motor car allowance, dearness allowance and basic salary as payable to the grade of assistant branch managers in the life insurance corporation.3. in order to succeed in this contention he has to satisfy this court that he has a legal right which can be enforced by the writ. that legal right so far as the particular statute is concerned can only be traced or claimed either under an order under section 11(2) of the life insurance corporation act, 1956 or under any regulations made under section 49(2)(bb) of the same.....
Judgment:

P.B. Mukharji, J.

1. This is an application under Article 226 of the Constitution which Sinha, J. dismissed. The matter now comes up in appeal before us. The appellant is one K. D. Banerji, Assistant Branch Manager of the Life Insurance Corporation of India.

2. The appellant's case is, in effect, to ask for an order of mandamus in his favour directing the respondents to give him the scale of pay, motor car allowance, dearness allowance and basic salary as payable to the grade of Assistant Branch Managers in the Life Insurance Corporation.

3. In order to succeed in this contention he has to satisfy this Court that he has a legal right which can be enforced by the writ. That legal right so far as the particular Statute is concerned can only be traced or claimed either under an Order under Section 11(2) of the Life Insurance Corporation Act, 1956 or under any Regulations made under Section 49(2)(bb) of the same Act. Neither any Order under Section 11(2) nor any Regulation under Section 49(2)(bb) of the Act has in fact been made applicable to the Appellant.

4. Before us the learned counsel for the appellant has really not pressed so much his case under Section 11(2) or Section 49(2)(bb) of the Life Insurance Corporation Act but has marshalled all his arguments to build up a case of discrimination. The short point made by the appellant's counsel is that the appellant has been discriminated against in the same class of Assistant Branch Managers of the Life Insurance Corporation. With a view to succeed even on this contention the appellant has to satisfy the Court first that all Assistant Branch Managers are of the same class or that no particular Assistant Branch Manager can be a class by himself having regard to his experience, nature of service and other considerations which were applicable to him before his service was taken over by the Life Insurance Corporation.

5. Before proceeding to discuss and determine these points it may not be out of place to briefly recount the essential facts of this case.

6. The petitioner was a Divisional Superintendent of the National Insurance Co. Ltd. from the1st January, 1955 drawing a fixed salary of Rs. 350/-per month without any grade, Rs. 80/- as clearness allowance and Rs. 170/- as motor car allowance, On the 19th January, 1956 the Life Insurance (Emergency Commissions) Ordinance, 1956 came into force nationalising Life Insurance business in India from the 20th January. 1956. After the nationalisation the petitioner continued as Divisional Superintendent under the Custodian appointed by the Ordinance. The Life Insurance Corporation Act, 1956 came into force on the 18th June, 1956, the appointed day being the 1st September, 1956. Section 11 of the Act made provisions for transfer of service of existing employees of insurance companies to the Corporation. Now on taking over, the Life Insurance Corporation put the petitioner into the category of an Inspector now called Field Officer. The petitioner complained that he deserved a better post and made an application to the Patna High Court under Article 226 of the Constitution, now reported as P. C. Goyle v. Divisional Manager, Life Insurance Corporation of India, : AIR1958Pat223 . Ramaswami, C. J. delivering judgment for the Division Bench of the Patna High Court with which Raj Kishore Prasad, J. agreed came to the conclusion that the rank of an Inspector of the Life Insurance Corporation was subordinate to that of a Divisional Superintendent in a controlled business which was transferred to the Corporation and that the terms and conditions of service of an Inspector were less advantageous than that of the Divisional Superintendent. In that decision it was held that the order of the Government of India No. 53 dated 1-6-57 made under Section 11(2) altering the remuneration and other terms and conditions of service of the employees applied only to those who were in supervisory, clerical or subordinate staff grades of the insurers on the 31st August, 1956 and that it had no application to officers and field workers of the insurers. It was, therefore, held by the Patna High Court that that order could not be relied upon to justify the reduction of a person who was working as a Divisional Superintendent to the rank of an Inspector under the Corporation. The Patna High Court, therefore, made the following order reported at page 227 of the report already cited:

'I further held that a writ in the nature of Mandamus should be issued requiring the respondents to deal with the application of the petitioner dated the 2nd July, 1957, claiming the post of Assistant Branch Manager (Development) and to decide and determine that application in accordance with law.'

There was a good deal of confusion that followed. The confusion was not without some trenchant aspects, which included proceedings in contempt brought by the petitioner, appellant against the Life Insurance Corporation and its Divisional Manager and others, and ultimately compromised.

7. On the 4th March, 1958 the Managing Director of the Life Insurance Corporation wrote to the petitioner informing him of his appointment, after the decision of the Patna High Court, on inter alia the following terms :

'Dear Sir,

You are now posted as Assistant Branch Manager (Development) in Jalpaiguri Branch.

Please note that the remuneration and other terms and conditions of your appointment as set out in the letters issued to you by 'National' remain unchanged.'

This is the end of the Patna episode. The venue now changes to Jalpaiguri in West Bengal and therefore to this Court.

8. Appellant's claim to the cadre and grade of Assistant Branch Manager's pay and allowances is based first on the Annual Report of the Lite Insurance Corporation for the period 1st September, 1956 to 31st December, 1957. He relies on the following statements, paragraph 75 at page 11 of the Report which is said to contain an admission that the task of integrating officers of different insurers into a well-knit cadre within the Life Insurance Corporation had been completed:

'This task has now been completed. The case of each officer was gone into carefully on the basis of the rank assigned to him in the lists annexed to the report of the 'Lall Committee' as well as the quality of work of the officer as ascertained from the confidential reports obtained for the purpose. As desired by Government, these decisions were submitted to them and their approval obtained before they were given effect to.'

Then he relies on page 43 of that Report to show that under Class I of the category of services is put among others the post of the Assistant Branch Manager showing the scale of pay as Rs 260-20-600. Secondly, the appellant's claim to the cadre and grade is based on what is called a circular letter dated the 30th July, 1958 addressed to all Assistant Branch Managers showing that the terms of remuneration mentioned in the provisional appointment letters were determined in accordance with the officers' 'fitting-in formula' under which the basic salary in the Assistant Branch Manager's grade was fixed having regard to the salary drawn on the 31st August, 1956 and the length of service in an executive capacity. It mentions a new formula which was annexed to that circular letter.

9. According to the post of the Divisional Superintendent which the petitioner had before his service was taken over by the Corporation it will be necessary to recall the terms which are :

(1) a fixed salary of Rs. 350/- per month.

(2) Rs. 80/- per month as deamess allowance and Rs. 170/- per month as conveyance allowance. What he now intends by this application lor mandamus is (1) to change the fixed grade of Rs. 350/-per month to the cadre of Rs. 260-20-600 as published in the Annual Report and (2) to claim dearne.fi allowance according to the new 'fitting-in' formula shown in the appendix to the circular letter dated the 30th July, 1958 appearing as annexure B to the petition and (3) to claim increased car allowance of Rs. 185/- + 25/- -- Rs. 210/- as appearing in annexures C and D to the petition as embodied in the Life Insurance Corporation's Extract of Rules relating to motor cars and conveyances.

10. The appellant's reliance on the Annual Report ending on the 3Ist December, 1957 cannot help him because his appointment as Assistant Branch Manager was subsequently made on the 4th March, 1958. The case of the Life Insurance Corporation is that at the time of talcing over various companieshad various designations for various officers employed by them and even the same designation did not mean either the same experience or same ability or even the same nature of duties in different insurance companies. Alter the Corporation took over they framed categories of officers and persons employed by the private companies and placed them in such different categories according to their abilities and experience and not on the sole criterion of the salary drawn on the 31st August, 1956. That was why the petitioner was first put in the category of an Inspector which is now designated as Field Officer although his designation was Divisional Superintendent with his old employers. The corporation says that as a result of the Patna High Court judgment his designation had to be changed to Assistant Branch Manager (Development) and his nature of work also was changed as such Assistant Branch Manager, but that his terms of pay and remuneration remained unchanged as were made clear in the letter of appointment dated the 4th March, 1958 quoted above. In other words, he was made an Assistant Branch Manager and given the work suitable to such Assistant Branch Manager, but the terms of his remuneration and pay remained what they were under his contract of service with the National Insurance Co. Ltd. The work of the Assistant Branch Manager can be gathered from an extract from the Life Insurance Corporation of India's Manual of Administration which inter alia says that such Assistant Branch Manager has to assist the Branch Manager in the active supervision of the field staff and to supervise the work of agents and inspectors in the territory allotted to him and he has to work under the general guidance and direction of the Branch Manager.

11. It will be necessary now to examine the Statute to see if the Appellant can found his claim to a legal right.

12. Section 11(1) of the Life Insurance Corporation Act, 1956 provides as follows :

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

There is a proviso to the Sub-section (1) of Section 11 of the Act which is not material for our present purpose The clear effect of Section 11(1) of the Act is that the existing tenure, terms and conditions, rights and privileges as to pension and gratuity and other matters are guaranteed in the sense that they remain the same unless either the employment is terminated or such terms and conditions are altered by the Corporation. The guarantee does not gobeyond this. The result of this construction, whenapplied to the facts of this appeal, is that as the Appellant's employment has neither been terminated nor its terms and conditions altered, he is only legally entitled to his pre-existing tenure, terms and conditions and no more. Sub-section (2) which was introduced by an Amending Act, XVII of 1957 goes on to provide :

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

It is followed by an explanation which is not material for the purposes of the present appeal. The effect of Sub-section (2) of Section 11 is that the Corporation is given the power to reduce the remuneration payable or revise other terms and conditions of service applicable. In other words, this sub-section makes clear provision expressly empowering the Corporation to alter the remuneration and the other terms and conditions of service to such extent and in such manner as it thinks fit. The sub-section also indicates that if the employee does not accept such alteration, then the Corporation can terminate his employment by giving three months' remuneration unless a shorter notice of termination is provided by the contract of service.

13. Section 11(2) is the only statutory provision making and granting an express power to alter remuneration and the terms and conditions of service taken over by the Corporation. The Corporation is given a free hand to alter them 'to such extent and in such manner as it thinks fit'. As there was a dispute as to the fact whether the Central Government had made any order under Section 11(2) of the Act, affidavit were called for and the supplementary affidavit of Amiya Lal Dutt, the Zonal Manager, Eastern Zone of the Life Insurance Corporation of India at Calcutta affirmed on the 6th July, 1960 clearly states that no order affecting officers like the appellant was passed by the Central Government under Section 11(2) of Act and therefore the suggestion implicit in the letter of the 27th December, 1956 addressed by the then Managing Director of the Life Insurance Corporation of India and the statement there to that effect must be held/ to be inaccurate.

14. The only other statutory method dealing with the terms and conditions of service is by making regulations under Section 49(2)(bb) of this Act. This power of making regulation was also introduced by Section 5 of the said Amending Act, XVII of 1957 which provides that the Corporation may with the previous approval of the Central Government, bynotification in the Gazette of India, make regulations not inconsistent with this Act and the rules made thereunder to provide for all matters for which provision is expedient to he made for the purpose of giving effect to the provisions of this Act and in particular, and without prejudice to the generality of such power, such regulations may inter alia provide for:

'(bb) the terms and conditions of service of persons who have become employees of the Corporation under Sub-section (1) of Section 11,'

15. The affidavit makes it clear, now on the record, that no regulation has, in fact, been madeunder Section 49 of the Life Insurance Corporation Act, 1956, regulating the terms and conditions of divisional Superintendents who had to be made Assistant Branch Managers such as the appellant.

16. The fact, therefore, is that neither is there an Order under Section 11(2) of the Act altering his terms and conditions nor is there a Regulation under Section 49(2)(bb) of the Act bearing on the subject. Hence the appellant has no legal or statutory right under these sections and his only statutory right is to rely on the guarantee provided in Section 11(1) of the Act which means, as I have said before, that his tenure, remuneration, terms and conditions, rights and privileges of his pre-existing service when it was taken over by the Corporation, shall continue. It is not the appellant's case thatsuch pre-existing terms and conditions, rights and privileges have been altered. In fact, they have been preserved expressly by the letter of appointment of the 4th March, 1958. The Annual Report or the Audit Report or statements made therein cannot take the place of Orders of the Central Government under Section 11(2) of the Act or Regulation 49(2Xbb) of the Act. I, therefore, hold that the Appellant has no legal right on which he can found his claim for the grade and scale of pay and allowances.

17. Mr. Acharya, the learned Counsel for theappellant, realised this difficulty and therefore, attempted to challenge before us the letter of ap-pointment of the 4th March, 1958 as being discriminatory against his client. He formulates the case of discrimination in this way. He says that the post of Assistant Branch Managers is a post expressly and tacitly recognised in the scheme so far approved by the Life Insurance Corporation and actually being operated by such Corporation. Then he says that this post of Assistant Branch Manager is shown to carry a grade of Rs. 260-20-600 and certain dearness and motor car allowances. It is, therefore, his case that while other Assistant Branch Managers will get the graded pay and the requisite dearness and motor car allowances, his client is continuing on his old fixed pay, dearness allowance and motor car allowance. This, in short, is his whole case ofdiscrimination. Prima facie, Mr. Acharya's arguments appear sound and plausible. On a closerexamination and consideration of the problem, the difficulties on his way appear to us to be insurmountable, both in law and in fact. I should like to clear the facts first.

18. The Annual Report ending on the 31st December, 1957, on which Mr. Acharya relied, refers to the Interim Report of August 1957 which in paragraphs 15 and 16 describes the difficulties of integration. Designations in Companies did not in every case indicate identical duties or functions involving the same level of responsibility. Even where the functions and the level of responsibility were the same, the size of the Company and the nature of its operations meant different degrees of training and experience. The integration of all the officers into one well-knit cadre with a recognised principle of seniority therefore presented considerable difficulties. There was a report of a Committee set up by the Central Government under the Chairmanship of Shri S. Lal), I. C. S. (Retired) for the purpose of studying the problem of seniority among officers of the Life Insurance Companies. Added to it, there was the further difficulty that the number of officers' posts in the Corporation was smaller than the total number of posts carrying the same or equivalent designations in all the Insurers put together. The result was that a number of persons holding executive positions in insurance companies had consequently been appointed to positions carrying lower designations and in the process of fitting in of officers in the new grades of the Corporation, their emoluments had also to be revised,

19. This consideration shows that a name of a post like the assistant Branch Manager does not indicate persons holding that designation have all equal experience, equal training, equal qualifications and equal seniority. Therefore, there could not be any hide-bound formula or inflexible regulation or order either under Section 11(2) or under Section 49(2)(bb) of the Act so far. Each case, although so far as designation was concerned was not easily solved but so far as the other conditions of service like pay, dearness and car allowance were concerned, was regulated by his existing contract until absorbed into more definite grades and shemes. The evidence on affidavits before us makes it clear that almost each case was taken up and adjusted according to the individual contract of acceptance and many accepted the changed conditions in good spirit. The result is that all Assistant Branch Managers, in spite of their designation being the same, are not in fact the same or equal in respect of seniority, experience, qualification or training or responsibility. In order to succeed in the case of discrimination the Appellant has to show that all Assistant Branch Managers are of the same status, conditions and terms of emolument and allowances. This the Appellant cannot show. Indeed as I have shown from the history of nationalisation of insurance services, the absorption of the insurer's employees into the service of the Corporation, the diversity of their service conditions notwithstanding similarity of nomenclature of the designation and the scheme of categorisation of officers, all Assistant Branch Managers are not and cannot be regarded of the same class with equal conditions of service in respect of emoluments and allowances.

20. The difficulty in law is also equally great. It will not be necessary here to discuss the series ofdecisions of the Supremo Court on Article 14 of the Constitution laying down the tests for classification, Jt will be enough here to say that beginning from the case of Chiranjit Lal v. Union of India, : [1950]1SCR869 down to the case of Ram Krishna Dalmia v. Tendolkar, : [1959]1SCR279 this much is clear that Article 14 of the Constitution permits a classification which is reasonable and even a single individual can be treated as a class by himself, if there are special circumstances Or reasons applicable to him alone and not applicable to others and that the difference which will warrant a different classification need not be great. It must be real and substantial and must bear some just and reasonable relation to the object.

21. In fact, the whole scheme of general integration was dealt with by the Corporation on individual basis having regard to the special terms and conditions prevailing in individual cases. In such circumstances, the learned trial Judge was right in saying that not enough materials were before the Court to come to a finding that there has been a discrimination. To sustain the contention of the appellant, it will be necessary to hold that every case of an Assistant Branch Manager of the Life Insurance Corporation of India comes under the general grade without any special features attached to it, a fact not established, and also to hold that the terms of experience, nature of service and seniority of the appellant are comparable with the other Assistant Branch Managers also a fact not established. Where there is no equality in fact pith and substance there is no scope for discrimination. We are unable to hold in favour of the appellant on either of these major facts in the appeal before us. This is all the more so because the Appellant's case stands oh a very special footing inasmuch as the Corporation thought that he could properly fit in the grade of Inspectors under the Corporation Scheme of integration having regard to appellant's nature of experience and seniority and service conditions, but had to be redesignated as Assistant Branch Manager by reason of the Patna High Court decision.

22. On this point, the view I am taking is supported by an unreported decision of the Patna High Court in Misc. Judicial Cases Nos. 164 and 778 of 1958 between Chaturbhuj Lal Purayar v. Divisional Manager, Life Insurance Corporation of India decided on 12-1-1960 by the learned Chief Justice of the Patna High Court sitting with Kanhaiya Singh, J. Delivering the judgment of the Division Bench, Kanhaiya Singh, J. made the following observations while discussing the point of Article 14 of the Constitution:

'I need hardly say that a classification is reasonable when it is not an arbitrary selection but rests on differences pertinent to the subject in respect of which classification is made. When numerous insurance Companies we're nationalised and brought under one administrative control, namely, the Life Insurance Corporation of India, it was impossible in the nature of things, to accord equal treatment in the matter of pay, remuneration or status to all the employees or to maintain them in the same scale of pay and in the same capacity as they had before nationalisation. Therefore, classification bad to be made having regard to the merits, of the individualofficers, their experience and the necessity of such officers, in the larger interest of the Corporation and the policy holders. This is exactly what the Government of India did after a thorough examination of the case of the different employees of the former insurers'.

23. The problem that the learned Judge was discussing there was simpler because it dealt with the case of Field Officers for which there was a specific Government order. But the principles enunciated there apply equally to the facts in the present case, namely, that the classification had to be made in this case also not on the basis whether a person is called by a particular name of Assistant Branch Manager but also on the basis of, his experience and the special and particular features of his service including his seniority as compared to others.

24. For these reasons, the appeal is dismissed. There will be no order as to costs. The interim injunction is dissolved.

Bose, J.

25. I agree.


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