TMI Blog1984 (3) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners challenge the Notification dated 30th September, 1980 of the Ministry of Finance (Department of Economic Affairs) (Insurance) introducing what is called General Insurance (Rationalization and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme, 1980 as being illegal and violative of their fundamental rights under Articles 14, 19(1)(g) and 31 of the Constitution of India. Prior to 1972, there were 106 General Insurance companies Indian and foreign. Conditions of service of these employees were D, governed by the respective contracts of service between the companies and the employees. On 13th May, 1971, the Government of India assumed management of the general insurance companies under the General Insurance (Emergency Provisions) Act, 1972. The general insurance business was nationalised by the General Insurance Business (Nationalisation) Act, 1972 (Act 57 of 1972). The preamble of the Act explains the purpose of the Act as to provide for the acquisition and transfer of shares of Indian insurance companies and undertakings of other insurers in order to serve better the needs of economy in secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance 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 a new company by the amalgamation of two or more . Indian insurance companies; (b) the transfer to and vesting in the acquiring company of the undertaking (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 of the acquiring company and the issue and allotment of shares; (d) the constitution of a 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther employee of an Indian insurance company to the acquiring company shall not entitle any such officer or other employee to any compensation under that Act or other law, and no such claim, shall be entertained. by any court, tribunal or other authority. (6) The Central Government may, by notification add to, amend or vary any scheme framed under this section. (7) The provisions of this section and of any scheme. framed under it shall have effect notwithstanding anything to the contrary contained in any other law or any agreement, award or other instrument for the time being in force. 17. A copy of every scheme and every amendment , thereto framed under section 16 shall be laid, as soon as may be after it is made, before each house of Parliament. The object of any scheme under this chapter, according to the petitioners, was clear from the main part of Section 16(1) of the said Act, i.e. a scheme made under this chapter was only for the purpose of providing for the merger of Indian insurance companies, and this was made clear by Section 16(2) of the Act. Section 16(4) of the said Act, it was contend on behalf of the petitioners, implied that any scheme of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Company. The memorandum and the articles of association of the four Companies were also suitably altered by the said schemes. Thereafter there had been no merger or amalgamation of any insurance company. The petitioners stated that there had been no reorganisation of general insurance business either. This position is not in dispute. By a notification dated 27th May, 1974, the Ministry of Finance (Department of Revenue and Insurance Government of India, framed a 'scheme' called the General Insurance (Nationalisation and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Scheme, }974, and the preamble of the scheme stated that whereas the Central Government is of the opinion that for the more efficient carrying on general insurance business, it is necessary to do , therefore, in exercise of the powers conferred by Section 16(1)(g) of the aforesaid Act, the Central Government framed the 'scheme' to provide for the rationalisation and revision of pay scales and other terms and condition of service of employees working in supervisory, clerical and subordinate position under the insurers. The said scheme governed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report under the Industrial Disputes Act, 1947 to the Secretary, Government of India, Ministry of Labour, stating that there was failure to bring about amicable settlement of disputes. The petitioners contend that no further action was taken and according to them the conciliation proceedings were still pending. This, however, is not accepted by the respondents, according to whom there was failure report and the conciliation proceedings ended thereafter. The scheme mentioned hereinbefore, which is under challenge was issued thereafter. We will have to deal with the scheme in great detail as the same is the subject matter of challenge is these petitions under Article 32 of the Constitution. After the 1974 scheme, in 1976, the Board of Directors approved of promotion policy. On 1st June, 1976 another scheme by which there were amendments with regard to Provident Fund, was introduced. As mentioned before in 1977, major unions submitted charters of demands to the respondent No. 2, seeking revision in the terms and conditions of service of the employees with retrospective effect. Between 10th March, 1977 to 30th March, 1977, memorandum was addressed by the employees of all India Asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stagnation increments, retirement age and other increments had become worse than before and detrimental to the employees. While the employees were eagerly awaiting improvement in their service conditions, this notification had unilaterally altered the service conditions to their prejudice petitioners in their petitions had alleged certain facts by certain illustrations, which according to them, indicated that employees had been affected adversely, inter alia, in gross starting salary of different group of employees, salary on confirmation of assistants who are graduates etc. It was further stated that retirement age was 60 years for all the employees under the 1974 scheme. But under the new scheme, retirement age was reduced to 58 years for employees joining on or after 1st January, 1979. Clause 7 of the impugned notification prescribed different ages of retirement, though the employees were of the same class and similarly situated according to the petitioners. Para 12(1) of the impugned scheme - provided that an employee who was in service before the commencement of the said scheme would retire at the age of 60 years but provided that an employee joining the service on or after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with or not necessitated by the reorganisation of the. business or merger or amalgamation of the companies would not fall within Section 16(1)(g) of the Act. According to the petitioners, the only properly called schemes sanctioned under Section 16(1) are those four merger schemes of 1973 as would be evident from the preamble to the Act. The petitioners further contend that under the life Insurance Corporation Act, Banking Companies Act. etc. there were power to frame regulations independently of reorganisation. But there is no such power, according to the petitioners, under the General Insurance Business (Nationalisation) Act, 1972. The said notification therefore is without the authority of law. It is, further, submitted. that the present service conditions of the employees unrelated to reorganisation of general insurance business merger or amalgamation of insurance companies, could not form part of any scheme or notification under section 16 of the aforesaid Act. Section 16(7) of the Act would not come into play and the provisions or the Industrial disputes Act, 1947 including section 94 were applicable to the general insurance industry. Therefore if the companies wanted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rights of the employees to emoluments takes effect from 1st January, 1979. It was further urged that the protection of article 31 read with Ninth Schedule of the Constitution was not available to any scheme or notification much less the present one, The present notification, according to the petitioners, disregarded the directive principles enunciated in Article 43 of the Constitution. The petitioners therefore ask for quashing the said notification by these petitions under Article 32 of the Constitution. The second batch of Writ applications (Writ Petition Nos. 5434-37 of 1980) are on behalf of the employees as well as the General Insurance Employees All India Association challenge the - scheme of 1980 more or less on the same though not identical grounds mentioned in Writ Petition Nos. 5370-74 of 1980. Interim order was passed in the said application regarding payment of dearness allowance as would appear from the Court's order dated 25.8.1981. In the said order, directions were given for payment of dearness allowance payable under the old scheme from the beginning of 1981 with quarter April, as well as quarter beginning from July, 1981 within certain time mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited and the United India Insurance Company Limited. Sub paragraph (ii) of paragraph 2 of the said scheme defines 'Net monthly emoluments'. By sub- paragraph (ii), the amended definition of 'Revised terms', (Revised Scales of Pay) was inserted. By paragraph 3, adjustment of pay was stipulated on the coming into effect of operation of 1980 scheme. How the basic pay is to be fixed is provided by 1980 scheme. lt also makes detailed provisions as to how the adjustment allowance is to be dealt with so far as Dearness Allowance, overtime allowance, Contribution to Provident Fund and other retirement benefits are concerned. Paragraph 5 deals with the 'Increments. Paragraph 6 deals with Earned Leave and other Encasement of leave at the time of retirement and death. Paragraph 7 deals with 'Retirement' and' stipulates that an employee who was in service of the Corporation before the commencement of the scheme of 1980 should retire from service when he attains the age of 60 years. But an employee, who joins the service of the Corporation after the commencements of the scheme will retire on his attaining the age of 58 years. It further stipulates that an emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents power in law to introduce the 1980 scheme and if they have that power, have they exercised that power in any arbitrary and whimsical manner to deny to the petitioners any of the fundamental rights and whether the petitioners have been discriminated against? These, therefore, are the questions and it is not necessary, in our opinion, to detain ourselves with lengthy extracts from the scheme of 1974 and 1980 to examine which is better or which is detrimental and if so, to what extent. On these, there will be and are divergent views. The scheme of 1980 has been framed by the Central Government under the authority given to it by the Act under General Insurance Business (Nationalisation) Act, 1972. The scope of that authority has, therefore, to be found under Chapter V containing Sections 16 17 of the Act. We have set out hereinbefore the terms of Sections 16 17. Sub- section (1) of Section 16 authorises the Central Government, if it is of the opinion that for the more efficient carrying on of general insurance business, it is necessary to do so, may, by notification, frame one or more schemes providin for all or any of the matters enumerated in the different clauses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (excluding the Corporation) in existence and that they are so situate as to render their combined services effective in all parts of India. Sub- section (2), therefore, to a large extent circumscribes the amplitude of the power given under sub-section (1) of Section 16 of the Act As framing of the scheme is an exercise of the delegated authority by the Central Government, the memorandum regarding delegated legislation submitted to the Parliament along with the General insurance Business (Nationalisation) Bill, 1972 will provide. some guidance also. As we have noticed that clause 16 of the said Bill which later on became Section 16 of the Act explained the need for delegated authority and stated the object as 'to frame one or more scheme for the merger of one Indian insurance company with another or for the amalgamation of the two or more insurance companies and for matters consequential to such merger or amalgamation as the case might be'. Bearing in mind that this is a delegated legislation and keeping in mind that the authority to frame the scheme must be found within the object of the power given under Chapter V of the Act and reading the entire connected provisions tog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the object envisaged in sub-section (2) of Section 16 of the Act. In order to be warranted by the object of delegated Legislation as explained in the memorandum to the Bill which incorporated Section 16 of the Act, read with the preamble of the Act, unless it can be said that the scheme is related to sub-section (2) of Section 16 of the Act, it would be an exercise of power beyond delegation. The duty of the Court in interpreting or construing a provision is to read the section, and understand its meaning in the context. Interpretation of a provision or statute is not a mere exercise in semantics but an attempt to find out the meaning of the legislation from the words used, understand the context and the purpose of the expressions used and then to construe the expressions sensibly. There is another aspect which has to be kept in mind. The scheme is an exercise of delegated authority. The scope and ambit of such delegated authority must be so construed, if possible, as not to make it bad because of the vice of excessive delegation of legislative power. In order to make the power valid, we should so construe the power, if possible, given under Section 16 of the Act in such m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(1) of the Act. It is also true that incidental, consequential and supplementary matters as are necessary to give full effect to the scheme are also authorised under clause (j) of sub-section (1) of Section 16. It has also to be borne in mind that scheme and every amendment to a scheme framed under section 16 shall be laid as soon as may be after it is made before each House of Parliament. The last provision is indicative of the power of superintendence that the legislature maintains over the subordinate legislation of scheme framed by the delegate under the authority given under the Act. From that point of view, it is possible to consider as indeed it was argued on behalf of the respondents in this case, that having regard to the fact that one of the objects of the Preamble is regulation and control of general insurance business and other matters connected therewith or incidental thereto and having regard to the fact that rationalisation and revision of pay scales whenever necessary was one of the objects envisaged under sub-section (1) alongwith clause (j) of sub-section (1) of Section 16 of Section 16 read with the safeguards of section 17 as we have set out herein-before in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for securing the interests of the Life Insurance Corporation of India and its policy-holders and to control the cost of administration, it is necessary that revision of the terms and condition of service applicable to the employees and agents of the Corporation should be undertaken expendiously. That was the object of the Act in question. Unfortunately that is not the object indicated as the object of the power to frame scheme under Section 16 of the present Act. In view of that object mentioned in the said decision and for other reasons in the case of A.V. Nachane Another v. Union of India Another (supra), this Court held that the Act in question did not suffer from the vice of excessive delegation. In view of what we have stated herein- before, the scheme of 1980 so far as it is not related to the amalgamation or merger of insurance companies, it is not warranted by sub-section (1) of Section 16. If that be so, the scheme must be held to be bad and beyond authority. This being the position, it is not necessary to examine the various other contentions raised in this case. Various contentions have been made. Both sides relied on various decisions in support of their re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Life Insurance Corporation of India v. D.J. Bahadur Ors as well as the decision in the case of A.V. Nachane Another v. Union of India Another (supra). In the view we have taken, it is not necessary to examine these decisions in detail. In those cases, the question under consideration was the Life Insurance Corporation Act, 1956 and the subsequent amendments thereto as well as certain orders in respect of the same. The basis upon which the aforesaid two decisions proceeded were (a) a right had crystalized by the directions in D.J. Bahadur's case (supra) and this could not be altered or taken away except by a fresh industrial settlement or award or by relevant legislation and (b) the relevant legislation which was the subject matter of challenge in A. V. Nachane's case (supra) cannot take away the rights which had accrued to the employees with retrospective effect. As is evident from the facts of the case before us, the situation is entirely different. We are concerned here with the question primarily whether the scheme is authorised by the Act and if it is so authporised, the question is whether the Act in question is constitutionally valid in the sense it had tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oposed to be done under the scheme of 1980 without reference to the procedure for adjudication of these matters under the Industrial Disputes Act, 1947. Then the question had to be judged h by reference to sub-section (5) and sub-section (7) of Section 16 of the 1972 Act. Section 16 empowered the Government by notification to add to, amend or very any scheme framed under Section 16(1) Sub-section (7) provides that the provisions of this section, namely Section 16 of the 1972 Act and of any scheme under it shall have effect notwithstanding anything to the contrary contained in any other law or any agreement, award or other instrument for the time being in force. We have noticed the scheme of 1980. That scheme puts certain new conditions about retirement, about emoluments and other benefits of the employees. It may be noted that the application of Industrial Disputes Act as such in general is not abrogated by the provisions of 1972 Act, nor made wholly inapplicable in respect of matters not covered by any provisions of the scheme. This aspect is important and must be borne mind. Wrongful dismissal, other disciplinary proceedings, unfair labour practices, victimization etc. woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment for doing so. As mentioned hereinbefore if the scheme was held to be valid, then the question what is the general law and what is the special law and which law in case of conflict would prevail would have arisen and that would have necessitated the application of the principle . Gener alia specialibus non derogant . The general rule to be followed in case of conflict between two statutes is that the later abrogates the earlier one. In other words, a prior special law would yield to a later general law, if either of the two following conditions is satisfied. (i) The two are inconsistent with each other. (ii) There is some express reference in the later to the earlier enactment. If either of these two conditions is fulfilled, the later law, even though general, would prevail. From the text and the decisions, four tests are deductible and these are: (i) The legislature has the undoubted right to alter a law already promulgated through subsequent legislation, (ii) A special law may be altergated or repealed by a later general law by an express provision, (iii) A later general law will override a prior special law if the two are so repugnant to each other that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of each case. To that limited extent it could have been said That this right or power has been curtailed by the General Insurance Business (Nationalisation) Act, 1972, if the scheme was otherwise valid Having regard to the context in which the question now arises before us, in our opinion, there is no question as to whether the provisions of Industrial Disputes Act would prevail over the provisions of General Insurance Business (Nationalisation) Act. There is no industrial dispute pending as such. The General Insurance Business (Nationalisation) Act, 1972 has not abrogated the Industrial Disputes Act, 1957 as such. The question of the application of the principle of Generalia specialibus non derogant has been dealt with in the case of J.K. Cotton Spinning Weaving Mills Co. Ltd. v. State of U.P. Ors. Some of these aspects were also discussed in the case of U.P. State Electricity Board Ors. v. Hari Shanker Jain and Ors. Had it been possible to uphold the scheme of 1980 as being within the power of 1972 Act, it would have been also necessary for us to consider whether such a scheme or Act would have been constitutionally valid in the context of fundamental rights und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is true that sometimes there have been rise in emoluments with the rise in the cost of index in certain public sector corporations. The legislature however is free to recognise the degree of harm or evil and to make provisions for the same. In making dissimilar provisions for one group of public sector undertakings does not per se make a law discriminatory as such. It is well-settled that courts will not sit as super-legislature and strike down a particular classification on the ground that any under- inclusion namely that some others have been left untouched so long as there is no violation of constitutional restraints. It was contended that the application of the Industrial Disputes Act not having been excluded from the Nationalised Textile Mills, Nationalised Coal and Coking Coal Mines and Nationalised Banks but if and is so far as it excluded the application of the Industrial Disputes Act, in case of general insurance companies, the same is arbitrary and bad. In this connection reliance may be placed on the observations of the learned Chief Justice in the case of 'Special Courts Bill 1978'. The same principle was reiterated by this Court in the case of State of Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Industrial Disputes Act. Section 14 of the said Act statutorily recognises the special position of the workmen as contra- distinguished from the other employees by enacting separate provisions in this respect thereon. Further-more it has to be borne in mind that the aforesaid Act was concerned with the ensuring; augmentation of production and distribution of certain cloth and yarn which are commodities essential to the national economy being important consumer items Therefore the case of the employees of sick textile undertakings which has been mentioned by the petitioners and argued before us cannot be compared on similar lines in respect of this aspect with the present petitioners. We would have rejected this submission on behalf of the petitioners, had it been necessary for us to do so but in the view that has been taken, it is not necessary. Another item mentioned before us was the employees or Coking Coal Mines Nationalisation Act, 1972. lt has to be borne in mind that the object covered by the scheme of the Act was entirely different from the General Insurance Business (Nationalisation) Act, 1972. The Coking Coal Mines (Nationalisation) Act, 1972 was enac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d since 1950 on All India basis with the totality of the banks being involved therein. Several awards have been made treating them as such like Shastri Award, 1953. Shastri Award Tribunal was constituted with a view to settle the disputes of the workmen of the Banks with all commercial Banks (excluding Co-operative Banks etc.) on the one hand and the employees on the other. Desai Award, 1962 bipartite settlement between Indian Banks Association and the Exchange Banks Association on the one hand and All India Bank Employees Association and All India Bank employees Federation on the other, are some of the examples. As against this, prior to the Act in question before us, disputes between insurance companies and their workmen were settled on independent company basis with no All India projections involved. It may also be noted that unlike the case of some banks, there is no existing award or settlement with the petitioners employees of the general insurance companies and the four insurance companies. The financial resources, structures and functions of the Banks are different from those of the insurance companies. It may also be noted as was pointed out to us on behalf of the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the rationale justification and the genesis of the law of nationalisation being the creation of economic instrumentalities to subserve the constitutional and administrative goals of governance in a social welfare society, the running of public sector undertakings is neither for profit earning of the management nor for sharing such profits with the workmen alone but to utilise the investible funds available as a result of such ventures and undertakings for socially-oriented goals laid down by the governmental policies operating on the said sectors. In this connection reference was made before us to the decision in the case of State of Karnataka Anr. etc. v. Ranganatha Reddy Anr. etc Employment is the public sector undertakings enjoys a statuh. It was submitted that both historically as well as a matter of law, the public sector undertakings being the economic instrumentalities of the State and discharging the obligations which the State have, the employees of such undertakings in principle cannot be distinguished. from the employees in the government services. In this connection our attention was drawn to the case of Sukhdev Singh Ors. v. Bhagat Ram Sardar Singh Raghuva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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