TMI Blog1981 (12) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... nsurance Corporation was constituted under the Life Insurance Corporation Act, 1956 to provide for the nationalisation of life insurance business in India 'by transferring all such business to the Life Insurance Corporation of India. Under section 11(1) of the Act the services of the employees of insurers whose business has vested in the Corporation are transferred to the Corporation. Sub-section (2) of section 11 provides: 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, not withstanding 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 tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation and its class III and class IV employees. These were settlements under section 18 read with section 2(p) of the Industrial Disputes Act, 1947. The settlements were identical in terms; four of the five unions of workmen subscribed to the first settlement while the remaining union was a signatory to the second. The settlements cover a large ground including the claim for bonus. Clause 8 of each of the settlements was as follows: BONUS: (i) No profit sharing bonus shall be paid. However, the Corporation may, subject to such directions as the Central Government may issue from time to time, grant any other kind of bonus to its Class III and IV employees. (ii) An annual cash bonus will be paid to all Class III and Class IV employees at the rate of 15% of the annual salary (i.e. basic pay inclusive of special pay, if any, and dearness allowance and additional dearness allowance) actually drawn by an employee in respect of the financial year to which the bonus relates. (iii) Save as provided herein all other terms and conditions attached to the admissibility and payment of bonus shall be as laid down in the settlement on bonus dated the 26th June, 1972. Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge proposed was set out in the annexure to the notice which reads: AND WHEREAS for economic and other reasons it would not be possible for the Life Insurance Corporation of India to continue to pay bonus on the aforesaid basis; Now, therefore, it is our intention to pay bonus to the employees of the Corporation in terms reproduced hereunder: No employee of the Corporation shall be entitled to profit sharing bonus. However, the Corporation may, having regard to the financial condition of the Corporation in respect of any year and subject to the previous approval of the Central Government, grant non-profit sharing bonus to its employees in respect of that year at such rate as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility of such bonus. These notices were followed by a notification issued by the Corporation under section 49 of the Life Insurance Corporation Act on May 26, 1978 substituting a new regulation for the existing regulation No. 58 of the Staff Regulations. Simultaneously the Life Insurance Corporation (Alteration of Remuneration and other terms and Conditions of Service of Employees) order, 1957, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from June 20, 1979. Clause (cc) relates to the terms and conditions of service of the employees and agents of the Corporation, including those who became employees and agents of the Corporation on the appointed day under this Act. Three new sub-sections (2A), (2B) and (2C) were added to section 48. Sub-section (2A) says that the regulations and other provisions as in force immediately before the commencement of the ordinance with respect to the terms and conditions of service of the employees and agents of the Corporation shall be deemed to be rules made under clause (cc) of sub-section (2). Sub-section (2B) provides that the power to make rules under clause (cc) of sub-section (2) shall include (i) the power to give retrospective effect to such rules, and (ii) the power to amend by way of addition, variation or repeal the regulations and other provisions referred to in sub-section (2A) with retrospective effect, but not from a date earlier than June 2(), 1979. Sub-section (2C) reads as follows: The provisions of clause (cc) of sub section (2) and - sub-section (2B) and any rules made under the said clause (cc) shall have effect, and any such rule made with retrospectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances and other relevant factors. There is a proviso to this sub-rule which says that (i) no payment in lieu of bonus shall be made to any employee drawing a salary exceeding ₹ 1600 per month; and (ii) where the salary of an employee exceeds ₹ 750 per month but does not exceed ₹ 1600 per month, the maximum payment to him in lieu of bonus shall be calculated as if his salary were ₹ 750 per month. For the purposes of this sub-rule, salary was explained as meaning basic pay, special pay, if any, and dearness allowance. Sub-rule (3) of rule 3 rescinds regulation 58 of the Staff Regulations and all other provisions relating to the payment of bonus to the employee to the extent they are inconsistent with rule 3 Writ petition No. 501 of 1981 under Article 32 of the Constitution was filed in this Court on February 5, 1981 by Shri A.V. Nachane and the All India Life Insurance Corporation Employees Federation. Bombay, challenging the validity of the ordinance and the aforesaid rules. Similar writ petitions by other associations of the employees of the Corporation followed In the meantime the ordinance was repealed and replaced on March 17, 1981 by the Life Insura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions of service, the right to raise an industrial dispute in respect of matters dealt with by the rules will be taken away and to that extent the provisions of the Industrial Disputes Act will cease to be applicable. It was argued that there was no basis on which the employees of the Corporation could be said to form a separate class for denying to them the protection of the Industrial Disputes Act. The reply on behalf of the Union of India and the Life Insurance Corporation was that the remuneration that was being paid to class III and class IV employees of the Corporation was far in excess of what was paid to similarly situated employees in other establishments in the public sector. Some material was also furnished to support this claim though they were certainly not conclusive. The need for amending the Life Insurance Corporation Act, 1956 as appearing from the preamble of the Amendment Act and the ordinance is as follows: 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 conditions of service applicable to the employees and agents of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o section 48 of the Life Insurance Corporation Act, 1956 by the Amendment Act of 1981 was invalid because of excessive delegation of legislative functions and that if sub-section (2C) which is an integral part of the Amendment Act was ultra vires, the entire Amendment Act would be unconstitutional The Amendment Act introduced clause (cc) in section 48(2) authorizing the Central Government to make rules in respect of the terms and conditions of service of the employees and agents of the Corporation. Sub-section (2C) of section 48 provides inter alia that rules made under clause (cc) shall have effect notwithstanding anything contained in the Industrial Disputes Act, 1947 or any other law for the time being in force. The argument is that the rules made under section 48(2) (cc) can virtually repeal the Industrial Disputes Act and other laws to the extent they are inconsistent with these rules. Repealing a law, it was submitted on the authority of In re Delhi Laws Act (l) was an essential legislative function which had been delegated to the Central Government and that the delegation was therefore excessive. It is now well settled that it is competent for the legislature to delegate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng laws to carry out the purposes of the Life Insurance Corporation Act, 1956 as amended in 1981 Learned Attorney General relied on the decision of this Court in Harishankar Bagla and another v. State of Madhya Pradesh (3) This was a case under the Essential Supplies (Temporary Powers) Act, 1946. Section 3(1) of that Act says that the Central Government for maintaining or increasing supplies of any essential commodity, or for securing their equitable distribution and availability at fair prices, may by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. Sub- section (2) of section 3 states that without prejudice to the generality of the powers conferred by sub-section (1), such an order may provide inter alia for regulating by licences or permits or otherwise the production or manufacture and transport, distribution, disposal, acquisition; use or consumption of any essential commodity. Section 6 of that Act provides inter alia that any order made under section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than A that Act. In exercise of the powers conferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent of a repugnancy between an order made under section 3 and the provisions of an existing law, to the extent of the repugnancy, the existing law stands repealed by implication, it seems to us that the repeal is not by any Act of the delegate, but the repeal is by the legislative Act of the Parliament itself. By enacting section 6 Parliament itself has declared that an order made under section 3 shall have effect notwithstanding any inconsistency in this order with any enactment other than this Act. This is not a declaration made by the delegate but the Legislature itself has declared its will that way in section 6. The abrogation or the implied repeal is by force of the legislative declaration contained in section 6 and is not by force of the order made by the delegate under section 3. The power of the delegate is only to make an order under section 3. Once the delegate has made that order its power is exhausted. Section 6 then steps in wherein the Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than this Act. Parliament being supreme, it certainly could mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Life Insurance Corporation Act which requires that every rule made by the Central Government under this Act shall be laid before each House of Parliament and that if both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be. This Court in D.S. Grewal v. State of Punjab and another(supra) observed as follows in respect of a similar provision requiring the rules made by the delegated authority to be laid on the table of Parliament and making the rules subject to modification, whether by way of repeal or amendment on a motion made by Parliament: This makes it perfectly clear that Parliament has in no way abdicated its authority, but is keeping strict vigilance and control over its delegate. In view of what has been held in Harishanker Bagla and D. S. Grewal, both of which were decided by a larger bench, we do not find it possible to accept the contention that the Act is invalid on the ground of excessive delegation of legislative functions. It was contended on behalf of the petitioners that in any event the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing class III and class IV employees of the Corporation. The substance of this rule has been set out earlier in this judgment. Clearly rule 3 seeks to supersede the terms of the 1974 settlements relating to bonus. By virtue of rule 1(2), rule 3 'shall be deemed to have come into force on the Iast day of July, 1979 . The question is, can rule 3 read with rule](2) nullify the effect of the writ issued by this Court on November 10, 1980 in D.J. Bahadur's case ? In seems to us rule 3 cannot make the writ issued by this Court nugatory in view of the decision of the majority in Madan Mohan pathak v. Union of India ors. etc.(supra) to which reference has been made earlier. In Madan Mohan Pathak's case it was contended that since the Calcutta High Court had by its judgment dated May 21, 1976 issued a writ of mandamus directing the Life Insurance Corporation to pay annual cash bonus to class III and class IV employees for the year April 1, 1975 to March 31, 1976 as provided by the 1974 settlements and this judgment had become final, the Life Insurance Corporation was bound to obey the writ of mandamus and pay as ordered by the High Court. The court was dealing with the Life In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment. Nevertheless, the two could be viewed as separable sets of rights. If the right conferred by the judgment independently is sought to be set aside, section 3 of the Act, would in my opinion, be invalid for trenching upon the judicial power. I may, however, observe that even though the real object of the Act may be to set aside the result of the mandamus issued by the Calcutta High Court, yet, the section does not mention this object at all Probably this was so because the jurisdiction of a High Court and the effectiveness of its orders derived their force from Article 226 of the Constitution itself. These could not be touched by an ordinary act of Parliament. Even if section 3 of the Act seeks to take away the basis of the judgment of the Calcutta High Court, without mentioning it, by enacting what may appear to be a law, yet, I think that where the rights of the citizen against the State are concerned, we should adopt an interpretation which upholds those rights. Therefore, according to the interpretation r prefer to adopt the rights which had passed into those embodied in a judgment and became the basis of a Mandamus from the High Court could not be taken away in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 1977. That the settlements were to be operative from 1st April 1973 to 31st March 1977 did not mean that the settlements would cease to be effective peremptorily from 1- 4-1977 and, therefore, the annual cash bonus stipulated under the settlements would cease to be payable from that date onwards. The settlements would continue to be binding even after 31-3.1977 and would not be liable to be terminated by the issuance of a unilateral notice by the employer purporting to terminate the settlements. The settlements would cease to be effective only when they were replaced by 'a fresh settlement, an industrial award or relevant legislation'. This is the law and this was what the law was pronounced to be in Life Insurance Corporation of India v. D. J Bahadur(1) on a consideration of the relevant provisions and precedents. The attempt made to supersede the settlements, in so far as they related to the payment of bonus, by enacting the Life Insurance Corporation (Modification of Settlement) Act 1976 failed, firstly because the Act was held to violate the provisions of Article 31(2) of the Constitution and secondly because the Act could not have retrospective effect so as to abs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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