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J.C. Chakravarti Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKolkata High Court
Decided On
Judge
Reported in(1978)IILLJ139Cal
AppellantJ.C. Chakravarti
RespondentUnion of India (Uoi) and ors.
Cases ReferredIn Sukdev Singh v. Bhagatmm
Excerpt:
- s.k. dutta, j.1. the petitioner was appointed as an assistant manager, calcutta in the sterling general insurance co. ltd. (hereinafter also referred to as the sterling) by a letter dated march 17, 1971 with effect from april 1, 1971, by way of ' contractual appointment', for a period of 3 years ending on the 31st march, 1974. the letter of appointment provided that on the expiry of the contract period, i.e.,. march 31, 1974 the petitioner's service would stand automatically terminated unless renewed by mutual agreement on terms as would be agreed upon. it was further provided that either party would be entitled to terminate the employment by a month's notice in writing or on payment of month's salary in lieu thereof. the employer reserved his right to terminate the service without notice.....
Judgment:

S.K. Dutta, J.

1. The petitioner was appointed as an Assistant Manager, Calcutta in the Sterling General Insurance Co. Ltd. (hereinafter also referred to as the Sterling) by a letter dated March 17, 1971 with effect from April 1, 1971, by way of ' contractual appointment', for a period of 3 years ending on the 31st March, 1974. The letter of appointment provided that on the expiry of the contract period, i.e.,. March 31, 1974 the petitioner's service would stand automatically terminated unless renewed by mutual agreement on terms as would be agreed upon. It was further provided that either party would be entitled to terminate the employment by a month's notice in writing or on payment of month's salary in lieu thereof. The employer reserved his right to terminate the service without notice at any time on ground of misconduct, gross negligence, absence from duty without permission, breach of discipline, etc.

2. While the petitioner was working in the company on the basis of the said contract of service he was served with the following notice dated February 27, 1973 :

As you are aware you have crossed the age of 60 years. This is to inform you that your appointment in contractual basis shall stand terminated on 31st March, 1973. This letter may, therefore, be treated as a notice of termination of your contractual appointment. You will be relieved on 31st March, 1973 and your dues will be settled as on that date....

This letter was received by the petitioner on March 5, 1973.

The petitioner challenged the legal validity of the said letter and was informed by the company that the decision for termination of the contract of appointment had been taken in accordance with the general directive received from the General Insurance Corporation of India the respondent No. 5 herein.

3. The petitioner thereafter moved this Court by an application under Article 226 of the Constitution contending that in view of the legislation relating to nationalisation of general insurance b business in India, he was conferred a statutory status which did not provide for superannuating; further the order was mala fide and was passed in violation of the provisions of Articles 14 and 16 of the Constitution. On this application this Court issued a Rule on September 24, 1973 but no interim order was granted. The Rule was opposed by the respondent No. 4, the Senior Regional Manager of the Oriental Fire and General Insurance Co. Ltd., unit Sterling and it was disclosed in his affidavit-in-opposition that the Sterling General Insurance Co., Ltd. ceased to exist as its right, title and interest had vested in the Oriental Fire and General Insurance Co. Ltd., (hereinafter also referred to as 'Oriental') under the provisions of the General Insurance Business (Nationalisation) Act, (Act, 57 of 1972). It was stated that no writ lay against an existing company and the petitioner's service was duly terminated in accordance with terms of his contract of service while there was no infringement of any statutory right of the petitioner. The petitioner's service, it was further stated was terminated on one month's notice as provided in the contract of service, 'in pursuance of the general directives issued by the General Insurance Corporation' for effecting efficiency and proper running of the administration. It was also stated that a cheque for Rs. 5,463.18 p. was sent to the petitioner in full satisfaction of his dues which the petitioner had already taken recourse to legal proceedings for obtaining necessary relief. Further it was submitted that in any event the petitioner's service automatically stood terminated on March 31, 1974 and the Rule accordingly has become infructuous.

4. The petitioner thereafter made an application for addition of the Oriental as a party to the proceeding as respondent No. 6 which was duly allowed. The petitioner also filed an affidavit-in-reply reiterating the contentions made by him in his petition of motion.

5. Before we proceed to consider the respective contention of the parties it will be necessary to take into account the legislation relating to general insurance business in India which had till then been carried on by a number of Indian and foreign companies.

6. On May 13, 1971 the General Insurance (Emergency Provisions) Ordinance, 1971 was promulgated whereby on the said date the management of the undertaking of all insurers (which under Section 2(a) means an insurer as defined in the Insurance Act who carries on general insurance business in India) vested in the Central Government. The Ordinance was repealed on June 17, 1971 by the General Insurance (Emergency Provisions) Act, 1971 (Act 17 of 1971) which also provided for vesting or management of the undertakings of all insurers in the Central Government on and from the appointed day which was the 13th day of May, 1971, on which date the Act was to be deemed to have come in force. Both in the Ordinance and in the Act, it is provided that pending appointment of a custodian for the undertaking of an insurer, the persons in charge of the management of such undertaking immediately before the appointed day, shall on and from the said date, be in charge of the management of the undertaking on behalf of the Central Government. It is also provided therein that the Central Government may as soon as it is convenient appoint any person as custodian for the purpose of taking over the management carry on such management for and on behalf of the Central Government.

7. Under Section 3(3) Clause (f) of the said Act 17 of 1971, no insurer without previous approval of the person authorised by the Central Government enter into contract of service or agency or vary the terms and conditions of any such contract subsisting on the appointed day (May 13, 1971). Under Sub-section (4) of the Section 4 of the said Act, nothing in Sub-section (3) of Section 3 shall apply to any insurer the charge and management of whose undertaking has been taken over by the custodian.

8. On September 20, 1972 an Act called the General Insurance Business (Nationalisation) Act, 1972 (Act 57 of 1972) was promulgated. The preamble of the Act indicates its object in following terms:

An act to provide for the acquisition and transfer of shares of Indian Insurance Companies and undertakings of other existing insurers in order to serve better the need of the economy by securing the development of general insurance business in the best interests of the community and to ensure that the operation of the economic system does not result in the concentration of wealth to the common detriment, for the regulation and control of such business and for matters connected therewith or incidental thereto.

Sections of the Act, relevant for our purpose, are as follows:

Section 4(1). On the appointed day all the shares in capital of every Indian insurance company shall, by virtue of this Act, stand transferred to and vested in the Central Government free of all trusts, liabilities and encumbrances affecting them.

(2) Out of the shares so transferred and vested, the Central Government shall, immediately thereafter, by notification provide for the transfer of not less than ten shares of every such company to such person as may be specified in the notification to enable the Indian insurance company to function as a Government company...

Section 5(1). On the appointed day the undertaking of every existing insurer who is not an Indian insurance company shall stand transferred to and vested in the Central Government and Central Government shall immediately thereafter provide, by notification, for the transfer to and vesting in such Indian insurance company, as it may specify in the notification, of that undertaking.

(2) Any notification made under Sub-section (1) may provide that any of the under-takings aforesaid may be transferred to and vested in more than on Indian insurance company in such manner and subject to such conditions as may be specified in the notification, Section 9(1). As soon as may be after the commencement if this Act the Central Government shall form a Government company in accordance with the provisions of the Companies Act, to be known as the General Insurance Corporation of India for the purpose of superintending, controlling and carrying on the business of the general insurance.

(2) The authorised capital of the Corporation shall be rupees seventy-five crores, divided into seventy-five lakhs fully paid up shares of one hundred rupees each, out of which rupees five crores shall be the initial subscribed capital of the Corporation.

(3) Notwithstanding anything contained in the Companies Act, 1956, shall not be necessary to add word 'Limited' as the last word of the name of the Corporation.

Section 10. All the shares in the capital of every Indian Insurance Company which stand transferred to and vested in the Central Government by virtue of Section 4 (with the exception of the shares transferred to any person under Sub-section (2) of that Section) shall immediately after such vesting, stand transferred to and vested in the Corporation and every Indian insurance company shall forthwith given effect to such transfer of shares.

9. Section 11 provides for amount to be paid for transfer and vesting of shares of every Indian insurer and undertaking of every non-Indian insurer in the Central Government, by the Central Government to the Corporation for distribution to the share holders of each Indian insurer or each non-Indian existing insurer. Such amounts are specified against such company in the corresponding entry under column (3) of Parts A and B of the Schedule respectively. Sections 12 to 15 provide for manner of* disbursement of payment of such amounts.

Section 16 in excerpts and Section 21 are as follows :

Section 16(1)-If the Central Government is of opinion that for the more efficient carrying on of general insurance business it is necessary so to do, it may, by notification, frame one or more schemes providing for all or any of the following matters :

(a) the merger in one Indian insurance company, of any other Indian insurance company, or the formation of new company by, the amalgamation of two or more Indian insurance companies ;

(b) the transfer to and vesting in the acquiring company of the under-raking (including all its business, properties, assets and liabilities) of any Indian insurance company which ceases to exist by reason of the scheme ;

(c) the constitution, name and registered office and the capital structure if the acquiring company and the issue and allotment of shares ;

(d) the constitution of the board of management by whatever name called for the management of the acquiring company ;

(e) the alteration of the memorandum and articles of association of the acquiring company for such purposes as may be necessary to give effect to the scheme ;

(f) the continuance in the acquiring company of the services of all officers and other employees of the Indian insurance company which has ceased to exist by reason of the scheme, on the same terms and conditions which they were getting or, as the case may be, by which they were governed immediately before the commencement of the scheme ;

(g) the rationalisation or revision of pay scales and other terms and conditions of service of officers and other employees wherever necessary ;

(2) In framing schemes under Sub-section (1), the object of the Central Government shall be to ensure that ultimately there are only four companies (excluding the Corporation) in existence and that they are so situate as to render their combined services effective in all parts of India.

Section 21(1) Nothwithstanding anything contained in the Companies Act, or in the memorandum and articles of association on any Indian insurance company, on and from the appointed day and until a new board of directors of the Indian insurance company is duly constituted, the management of the company shall continue to vest in the custodian in charge of the management of the undertaking of that company immediately before the appointed day by virtue of the provisions contained in the General Insurance (Emergency Provisions.) Act, 1971, and the custodian shall be entitled, subject to such directions as the Central Government may issue in that behalf, to exercise all the powers and do all acts and things may be exercised and done by the company or by its board of directors....

10. It is obvious that after the vesting of the management of the undertaking of every insurer in the Central Government under the 1971 Ordinance and the 1971 Act following as also under the Act 57 of 1972 the service of employees of every Indian insurer continued on the same terms and conditions under the management Central Government through custodians though there is no statutory provisions in respect thereof. In respect of non-Indian insurers, there as a specific provision under Act 57 of 1972 Act in Section 7(1) for continuance of the service of their employees under the same terms and conditions in the Indian insurance company in which the undertaking of such foreign insurer has vested, till they are duly altered by the Indian company. The management of the undertaking of every insurer continued to vest in such custodian exercising all powers of the company or its Board, subject to directions of the Central Government until a new board of directors of the Indian insurance company is duly constituted.

11. By notification in the Gazette of India on November 24, 1972 the Central Government appointed January 1, 1973 as the appointed day for the purpose of the Act 57 of 1972. It appears that the Government of India, in the Ministry of Finance, Department of Revenue and Insurance, published a notification dated December 31, 1973 whereby in exercise of the powers conferred by Sub-section 1 of Section 16 of the General Insurance Business (Nationalisation) Act, 1972, the Central Government framed a scheme known as the Oriental Fire and General Insurance Company Ltd., (Merger) Scheme, 1973 which came into force on 1st January, 1974. By this scheme with effect from the said date the undertaking of every merged company which were named in the first schedule of the scheme stood transferred to and vested in the Oriental as the transferee or acquiring company. The undertaking of the merged company included inter alia all assets and rights as also liabilities and obligations of whatever kind then subsisting of such merged company. The merged companies in the said scheme included, amongst other companies, the Sterling General Insurance Co. Ltd. and such merged companies, under the scheme, stood dissolved without winding up on the first of January, 1974.

12. As a result of the aforesaid legislation and scheme thereunder it appears that the obligations and liabilities of Sterling, including the liability, if any, to the petitioner became the liability of the Oriental which is an existing Government company with the General Insurance Corporation if India as holder of all its shares except shares not exceeding ten as provided in Section 4(2). It is clear that if any writ or direction is to be issued by this Court in respect of the petitioner in this proceeding, in the events that have taken place, such writs and directions can only be issued on Oriental, which has been rightly added as respondent No. 6 in this proceeding as having the financial liability as may arise for complying with the writ, order or direction of this Court herein. It is also obvious that at the time the petitioner's service was terminated by notice dated February 27, 1973 received on March 5, 1973, the management of the undertaking of the Sterling General Insurance Co., Ltd. continued to be vested in its custodian who was empowered to exercise all the powers of the company or the board of directors of such company under his charge.

13. We shall now consider the elaborate arguments made at the bar by the learned Counsel of the parties in support of their respective cases.

Mr. Provat Kumar Mukherjee, learned Counsel appearing for the opposite party No. 4 raised a preliminary objection contending that no writ lies against an existing company incorporated under Companies Act, 1956. In support he referred to the decision in Praga Tools Corporation v. C.V. Imanual : (1969)IILLJ479SC , wherein the Supreme Court observed as follows :

Article 225 provides that every High Court shall have power to issue to any person or authority orders and writs including writs in the nature of habeas corpus, mandamus, etc, or any of them for the enforcement of any of the rights conferred by Part III of the Constitution and for any other purpose. But it is well understood that a mandamus lies to secure the preformance of a public or statutory duty in the preformance of which the one who applies for it has a sufficient legal interest. Thus an application for mandamus will not lie for an order or reinstartement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a company towards its workmen or to resolve any private dispute....The company being a non-statutory body and one incorporated under the Companies Act there was neither a statutory nor a public duty imposed on it by the statute in respect of which enforcementcanbe sought by means of mandumus, nor was there in its workmen any corresponding legal right for enforcement of any, such statutory or public' duty. The High Court was, therefore, right in holding that no writ petition for mandamus or an order in the nature of mandamus could lie against the company.

In Halsbury's Laws of England, Third edition Volume II page 90 Article 170 it is provided :

An order of mandamus will be granted ordering that to be done which a statute requires to be done and for this rule to apply it is not necessary that the party or corporation on whom the statutory duty is imposed should be a public official or an official body. In order, however, for an order of mandamus to issue for the enforcement of a statutory right, it must appear that the statute in question imposes a duty, the performance or non-performance of which is not a matter of discretion.... A mandamus will issue an official of a society to compel him to carry out the terms of the statute by which the society is controlled... and to command dock, railway and similar companies to carry out the duties placed upon them by the provisions of the Act authorising their undertakings.

In Corpus Juris Secundum Vol. 73 (1951) page 998, Article 7 it is provided :

A public utility has the duty to supply a commodity or to furnish service to the public. This duty exists independently of statutes regulating the manner in which it shall do business or of contracts with municipalities or individuals, and is imposed because the utility is organised to do business affected with a public interest and holds itself out to the public as being willing to serve all members thereof.

14. All these propositions of law were considered in Corporation of the City of Nagpur v. the Nagpur Electric Light and Power Co. Ltd. : AIR1958Bom498 , where on account of non-payment of bills by the corporation for supply of electrical energy for over Rs. 3 lacs, the electric company disconnected supply of electricity to public lamp in the city of Nagpur, The electric company purported to act under Section 24(1) of the Electricity Act which empowers the licensee to disconnect, on due notice, the service line when a person neglects to pay any charge for electric energy. On the writ application filed by the municipal corporation, the Court found that the dispute raised as to the quantum of the amount alleged to be due was bona fide and recourse could not be had to the provisions of Section 24(1). On a consideration of the above principles, Mudholkar, J., speaking for the Court, held that a writ could issue at the instance of any consumer to a public utility concern for its failure to perform its duty under the Electricity Act or under its licence. A writ was issued commanding the company to continue the supply of electrical energy to the petitioner for public lights.

15. From a conspectus of laws on the subject, the position appears to be as follows :

(a) a writ or order in the nature of mandamus is not normally available against a company incorporated or deemed as incorporated under the Companies Act, 1956, as such company is a non-statutory body and there is neither a statutory nor public duty imposed on it by the statute incorporating it in discharge of its functions which could be enforced by mandamus.

(b) Mandamus lies to secure the performance of a public or statutory duty imposed by a statute on a public utility conferring a right on the public for its enforcement. As such mandamus will issue to a public utility to perform duties and obligations to the public imposed under the statute authorising and regulating the discharge of such functions by the public utility undertakings, whether such public utility is created by or in terms of a statute, or a society, corporation or a company, incorporated under a statute.

(c) Even if a public utility is a company incorporated under the Companies Act, 1956, an application for mandamus will not lie for an order to secure performance of obligations owed by a company towards its workmen or to resolve any private dispute more particularly when an alternative remedy is provided for breach of an obligation or duty created by a statute.

16. We may now refer to certain decisions in which the Court was concerned with the question of issuance writ to companies. In Sudhir Chandra Neogy v. Calcutta Tramways Co Ltd. : AIR1960Cal396 , Sihna J. (as his lordship then was) held that if it could be shown that the company was violating any provisions of law for which there in no other adequate remedy provided, in that event a writ would lie against the company. In Abant Bhusan Biswas v. Hindustan Cables : AIR1968Cal124 . D. Basu. J., was of the view that, as the certified standing orders have the force of law, even a private party or a company may be compelled by mandumus to perform the duties imposed upon it by statute. Relief was however refused as the Industrial Employment (Standing Orders) Act provided adequate remedy. In Prafulla Chandra Sarma v. Oil India Ltd., A.I.R. 1971 Assam 19, it was held that in view of the Government declaration under the Industrial Disputes Act, 1947 that service in any oil field is a public utility service, the company was rendering public utility service and thus doing public duty. A writ of mandamus may accordingly issue against such company directing it to perform some statutory or public duty but in view of the specific alternative remedies provided therein for violation of standing orders, the relief by issue of writ was refused.

17. Learned Counsel for the petitioner relied on the unreported decision of Sabyasachi Mukherjee, J., dated August 28, 1975 in C.R. No. 2006 (W) of 1971, Sudhanshu Mukherjee v. Union of India, In this case the petitioner was appointed an Inspector for the probationary period of one year in the Sun Alliance London and Clive Insurance Group with effect from February 1, 1971. The terms inter alia provided liberty to the either side to terminate the service of one month's notice. The General Insurance (Emergency Provisions) Ordinance, 1971 came into force on May 13, 1971 when the management of the undertakings of the insurers vested in the Central Government. The Ordinance was followed by the General Insurance (Emergency Provisions) Act promulgated on June 17, 1971 but with effect from May 13, 1971. Under the provisions thereunder the custodian was appointed for management of the undertaking of insurer who was empowered to carry on the business of the management on behalf of the Central Government. The petitioner continued in service while the custodian took over the management and his service was terminated by the Manager, Calcutta Branch, with effect from January 31, 1972 as his continuance in service was not approved by the custodian. This termination, it was held, was in breach of contract of service as the terms of such contract according to the provision of Section 3(3) (though its operation was excluded by Section 4(2) in cases where a custodian had been appointed) could only be varied by the competent authorised person, while the Manager terminating the service was not such an authority. The order of termination was accordingly quashed by the said judgment and appropriate writs were directed to be issued.

18. It is to be noted that the provisions of General Insurance (Emergency Provisions) Act, 1971 continued to have operation even after the appointed day, i.e., January 1, 1973 under the General Insurance Business (Nationalisation) Act, 1972. Under the provisions of Section 5(1) of the 1972 Act the undertaking of every existing insurer who is not an Indian insurance company shall stand transferred to and vested in the Central Government and the Central Government shall immediately thereafter provide, by notification, for the transfer to and vesting in such Indian insurance company, as it may specify in the notification, of that undertaking. It is thus obvious that the liabilities and obligations to the petitioner, if any, in respect of his service could only be enforced against the Indian insurance company, a company incorporated under the Companies Act, in whom the undertaking of his erstwhile employer had vested in the meantime by operation of law under the aforesaid provisions, The writ accordingly had also to be issued in the above case against such Indian insurance company which having the financial obligation arising from the illegal termination of service of the petitioner was a necessary party, the absence whereof would be fatal to the proceeding as was held in the Administrative Officer, Head Quarters, Eastern Command v. Paresh Chandra Gupta, (1975) L & I Cases 538 and also in Ranjeetmal v. General Manager, Northern Railway : [1977]2SCR409 . The Indian insurance company was not made a party to the Rule when its hearing took place in August, 1975 and the further question would then arise as to the issuance of writ against a company incorporated under Companies Act. Unfortunately these facts were not brought on record nor was the attention of the Court drawn to the subsequent events that took place by operation of law,

19. A suggestion was made that a Government company stands on a different footing and should be considered as a statutory body in which the Government is interested as owning 51% or more shares in the company, In Heavy Engineering Majdur Union v. State of Bihar : (1969)IILLJ549SC , referred to by Mr. Mukherjee, the Court was concerned with the dispute between the Heavy Engineering Corporation Ltd., Ranchi and its workmen. It was held that an incorporated company has a separate existence and the law recognises it as a juristic person separate and distinct from its members even though it is controlled wholly or partially by a Government department. This new personality emerges from the moment of its incorporation and its rights and obligations are different from those of its shareholders. Action taken against it does not directly effect in shareholders, and, the company in holding its property and carrying on business is not the agent of the shareholders. The Court further held that the liability of the individual member is not increased by the fact that he is the sole person beneficially interested in the property of the corporation and that the other members have become members merely for the purpose of enabling the corporation to become incorporated and possess only nominal interest in its property or hold in trust for him. It was further observed that though the entire share capital of the Heavy Engineering Corporation Ltd., Ranchi was contributed by the Central Government and the fact that all its shares were held by the President and certain officers of the Central Government do not make any difference. The company and the shareholders being distinct entities the fact that the company's shares and affairs are controlled by the Central Government does not make the company an Agent either of the President or of the Central Government.

20. The General Insurance Corporation of India, a Government Company holds all shares of every Indian insurance company including those of the Oriental Fire and General Insurance Co. Ltd., subject to exception under Section 4(2) of the General Insurance Business (Nationalisation) Act, 1972 providing for transfer of shares not exceeding ten to such persons as may be specified in the notification. Even so, though a Government Company under the control of the Central Government it cannot be said that General Insurance Corporation or the Oriental is an agent of the Government, or a statutory body created by a statute as either of them is a company incorporated under the Companies Act, 1956.

21. In view of the aforesaid position it is clear that the obligations and liabilities if any arising out of the employment of the petitioner has since devolved on the Oriental Fire and General Insurance Co. Ltd., a company incorporated under the Companies Act against whom a writ will not lie in ordinary course. The business of general insurance is vitally linked with all industrial undertakings and is carried on by the General Insurance Corporation of India in monopoly right (Section 24(1)) so that such business may be said to be a public utility. Even so the writ prayed for does not relate to the performance of a public or statutory duty imposed by a statute conferring a right on the public for its enforcement. As has been held in the decision in Praga Tools case, a writ cannot be issued on a company to secure its obligation to its workmen or to resolve any private dispute. The dispute we are concerned in this case, relates to a private dispute affecting one of the employees of the company which as indicated above may not be enforced by writ proceeding in absence of other compelling circumstances.

22. Mr. Bhattacharyya, learned Counsel for the petitioner contended that by statutes ultimately resulting in the nationalisation of general insurance business, the service of employees of the erstwhile insurers, under provisions of law, were continued in the transferee companies on the same terms and conditions. As a result, it is said, the petitioner was conferred statutory status in respect of his service, so that a termination in breach of the conditions of service with statutory status is amenable to the writ jurisdiction.

23. The General Insurance (Emergency Provisions) Ordinance, 1971 and the General Insurance (Emergency Provisions) Act, 1971 repealing the Ordinance provided for the appointment of custodian for taking over the management of the undertaking of every insurer carrying on business of general insurance. There is no express provision regarding the employees of such general insurers other than those of the management so that it could be said that the service contracts of the employees, other than those relating to management, were to continue on same terms and conditions under the coustodian who was acting for and on behalf of the Central Government. The General Insurance Business (Nationalisation) Act, 1972, which was promulgated on September 20, 1972 and came into force on January 1, 1973 provided in Section 16(1) for framing of a scheme and Clause (f) thereof contained provisions for continuation of the service of officers and employees of the Indian insurance company, which ceased to exist by reason of the scheme in the acquiring company, on the same terms and conditions subject to, under Clause (g), rationalisation or revision of pay and other terms and conditions of service. The scheme under Section 16(1) merging the Sterling General Insurance Co. Ltd., including other companies with the Oriental Fire and General Insurance Co. Ltd. was brought into force on January 1, 1974 so that it cannot be said that when the petitioner's service was terminated with effect from March 31, 1973 there was then any statutory guarantee for continuation of the service of the petitioner in Oriental. Even so we proceed to examine the position in the light of judicial authorities on the subject.

24. In considering the implications of Government service, it was pointed out in Roshanlal v. Union of India : (1968)ILLJ576SC as follows :.the orgin of Government service is contractual. There is an offer and acceptance in every case. But once appointed to his post or office the Government servant acquires a status and his rights and obligations are no more determined by consent of both parties, but by statute and statutory rules which may be framed and altered unilaterally by the Government. In other words the legal position of a Government servant is more one of a status than of contract. The hallmark of status is the attachment to a legal relationship of rights and duties imposed by the public law and not by mere agreement of parties.

The relationship of a Government servant with the Government as employer is governed by statute or statutory rules and is thus a status, the breach of the mandatory provision whereof may entitle such a servant to a declaration that the repudiation of the contract of service is a nullity and of no effect, even though it is not possible otherwise to enforce a contract of personal service.

25. Apart from any workmen governed by Industrial Disputes Act, 1947, another category of cases relates to services under the statutory corporations where the relationship between the employer and the employees is governed by statute or subordinate legislation conferring statutory status. In case of a termination of service by such statutory corporation, if such action is outside the power of such corporation or in breach of a mandatory obligation imposed in it by or under statutory rules or regulations such termination would be a nullity and the employee having the statutory status will be entitled to such declaration, resulting in consequence to the position that he is still to be deemed in service. Such declaration, it is not well-settled, is available in appropriate cases regarding a public servant who has been dismissed from service in contravention of Article 311 or other statutory rules a dismissed workman whose reinstatement may be directed by the Industrial Courts under the Industrial Disputes Act, and also regarding a dismissed employee of a statutory corporation when it has acted in breach of a mandatory provision imposed by or under statutory rules or regulations. These three cases are exceptions to the general rule that no declaration to enforce a contract of personal service should be granted. In Vaish Degree College v. Lakshminamyan 1976-II L.L.J. 163, Bhagabati, J., in his concurring judgment is of the view that three exceptions noted above are not intended to be and cannot be exhaustive. It was further observed by his Lordship at p-184) as follows :

The categories of exceptions to the general rule should not be closed, because any attempt at rigid and exhaustive formulation of legal rules- any attempt to put law in a strait-jacket formula-is bound to stifle the growth of law and seriously cripple its capacity to adapt itself to the changing needs of society. In fact, Ray, J., as he then was, speaking on behalf of this Court in Sirsi Munisipality v. Cecelia K. Francis 1973-I L.L.J. 226, pointed out that the third expression applied not only to employees in service of ' bodies created under the statutes' but to those in the employment of ' other public or local authorities'. It may be a possible view - and some day this Court may have to consider it that where law as distinct from contract, imposes a mandatory obligation prescribing the kind of contract which may be entered into by an employer and the manner in which alone the service of an employee may be terminated, any termination of service effected in breach of such statutory obligation would be invalid and ineffective and in such a case the Court may treat it as null and void.

Taking the view as indicated above that the three exceptions are not exhaustive, in Calcutta Electric Supply Corporation Ltd. v. Ramratant : (1974)IILLJ106Cal , the dismissal of an employee in breach of a certified standing orders by a company was declared a nullity but the decision was set aside on appeal (78 C.W.N. 628) holding that the exceptions to enforcement of personal contract of service are confined to the three cases mentioned bove and no statutory status was conferred by the certified standing orders.

26. In Sukdev Singh v. Bhagatmm : (1975)ILLJ399SC , it was laid down that the rules and regulations framed by statutory corporations have the force of law and their employees have a statutory status. Accordingly they are entitled to a declaration of being in employment when their dismissal or removal is in contravention of statutory provisions. It appears obvious that when a person is entitled to a court declaration in respect of his service being held under a status conferred by law, a writ for enforcement of a legal right of an employee under a statute or rules and regulations framed thereunder and in the instant case by the Central Government, will also be available in law.

27. In this case we are concerned not with any statutory corporation but with the General Insurance Corporation of India and some companies carrying on the business of general insurance in exclusive right as provided in Section 24(1). In a developing country as ours with expanding industry, trade and commerce, the general insurance business has great importance for public benefit and the business is also controlled by the Central Government as provided in Sections 19 and 23. Such companies thus constitute a distinct type of organisation unlike the usual type of Government companies and other companies incorporated under the Companies Act, 1956.

28. Section 16(1) of the General Insurance Business (Nationalisation) Act provides, as we have seen, for schemes to be framed by the Central Government for merger of one Indian insurance company in another Indian insurance company. The scheme of merger is to provide for transfer to and vesting in the transferee company the undertaking of the merged company. As we have already seen, the Central Government framed a scheme known as the Oriental Fire and General Insurance Company Ltd. (Merger) scheme. Under this scheme the undertaking of the Sterling General Insurance Co. Ltd. as also those of some other companies mentioned in the schedule were merged with the Oriental Fire and General Insurance Co. Ltd. with effect from January 1, 1974 when the merged companies dissolved without winding up. Under Clause 6 of the Scheme every whole time officer of the merged company is to hold his office or service in the transferee-company under the same terms and conditions with the same rights as to pension, gratuity and other matters until termination or until his remuneration, terms and conditions are duly altered by the transferee-company.

29. It is thus obvious that every whole time officer of the erstwhile insurers were given a statutory guarantee and status in respect of their service transferred to the transferee company under Section 16(1) Clause (f) and the statutory scheme thereunder. If, therefore, there is a termination of service contrary to the provisions of the statutory scheme, the concerned employee may, as it appears, be entitled to obtain from Court a declaration that the impugned order is a nullity.

30. We have seen that a writ may issue on a public utility, even though it is a company, commanding it to perform its duties in discharge of its functions under the statute regulating such functions. If an employee is given by the Act and the scheme framed thereunder by the Central Government, a statutory guarantee in respect of his service in the transferee-company converting his service beyond the scope of contract to status, there is no reason, as it appears, why, in absence of any other remedy, under the relevant statute, the aggrieved employee will not be entitled to more the High Court under Article 226 of the Constitution for issue of appropriate writ commanding the company to perform its statutory obligations, putting the relationship between the parties back to rails. It is, however, not necessary to express any final opinion on the point in view of the nature of controversy between the parties in this case as the petitoner's service terminated before the scheme relating to Sterling General Insurance Co. Ltd. was framed..The decision of termination of your contract appointment has been taken in accordance with the general directive received from the General Insurance Corporation.

The letter candidly states that the termination was made in accordance with the provision to that effect in the contract which was kept for exercise in cases where necessary though in the same letter there was appreciation of the petitioner's service. The directive stated to have been issued by the Corporation was, however, not produced before the Court.

31. The termination of service of the petitioner was apparently on the basis of a month's notice as per contract of employment, though it could not be so on account of delayed service. The real reason for such termination was expressly stated in the first sentence of the letter of termination which was the crossing of age of sixty years by the petitioner in variation of the terms of contract of service which did not provide for superannuation. Such termination cannot be accepted as a simpliciter termination on a month's notice according to contract and it finds support in the letter of March 17, 1973 issued by the Sterling General Insurance Co. Ltd. on the representation of the petitioner. The letter states :

32. As we have seen, the management of the undertaking of the Sterling General Insurance Co., Ltd. at the material time in February/ March, 1973 was with the custodian in the charge of the management and the General Insurance Corporation of India had become the holder of all shares except shares not exceeding ten in the company. The function of the Corporation under Section 18(1) include the carrying on of any part of the general insurance business and also aiding and advising the acquiring companies in matters of setting up of standards of conduct and sound practice in general insurance business, service to policy holders, controlling of expenses and the like. The function of every acquiring company is to carry on general insurance business and to develop the same to the best interest of the community and such companies in discharge of its functions shall be guided by any directions as may be issued by the Corporation (vide Section 19). The 'acquiring company' has been defined in Section 3(a) as any Indian Insurance company and where a scheme has been framed, it means the Indian insurance company in which other companies have been merged. It is clear that the General Insurance Corporation is competent in law to issue directives for purposes referred to above and the acquiring companies has to comply with such directives as provided in law.

33. We have quoted earlier Section 21(1) which contain interim provisions for management of India insurance companies. The custodian appointed under the Ordinance of 1971 and the Act of 1971 is to continue to be in charge of management of such company in his charge exercising powers of the Board or the company till a new Board of Directors is duly constituted. During this period when the custodian is in charge and prior to the merger of Sterling with the Oriental, there is no statutory protection guaranteeing the existing terms and conditions of the whole time officers or employees of the company as our study of the relevant provisions of law indicates, though obviously the service continued under the same terms and conditions. In absence of any statutory status or protection, the breach of the conditions of service cannot be remedied by a court declaration of nullity or by issue of appropriate writs. The termination of service, though in breach of contract of service, on superannuation for crossing the age of sixty years or on insufficient notice, could not accordingly be amenable to writ jurisdiction of the High Court as this would amount to enforcing a personal contract of service which had no statutory guarantee or status. In this state of affairs, there is no escape from the conclusion that the petitioner is not entitled to any relief in this proceeding in absence of statutory protection, the presence of which protection otherwise would entitle the petitioner to the remedy sought for herein, even though the employer is a company incorporated under the Companies Act, 1956,

34. The Rule accordingly fails and is discharged. There will be no order as to costs in the circumstances and all interim orders, if any, are vacated.


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