1984 (3) TMI 419 - SC - Indian Laws

Summary

Issues involved:

1. Legality of the 1980 Scheme: Whether the Central Government had the authority to issue the 1980 Scheme under Section 16 of the General Insurance Business (Nationalisation) Act, 1972.
2. Violation of Fundamental Rights: Whether the 1980 Scheme violated the petitioners' fundamental rights under Articles 14, 19(1)(g), and 31 of the Constitution of India.
3. Discrimination: Whether the 1980 Scheme was discriminatory in nature.
4. Application of Industrial Disputes Act, 1947: Whether the provisions of the Industrial Disputes Act, 1947, were applicable and if the 1980 Scheme violated these provisions.

Summary:

1. Legality of the 1980 Scheme:
The petitioners challenged the Notification dated 30th September 1980, introducing the General Insurance (Rationalization and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme, 1980. They argued that the Central Government had no power to issue this notification u/s 16 of the General Insurance Business (Nationalisation) Act, 1972. The Supreme Court held that the authority under Section 16(1) must be related to the amalgamation or merger of insurance companies as envisaged in sub-section (2) of Section 16. The 1980 Scheme was not connected with any merger or reorganisation and thus was beyond the authority of the Central Government, making it ultra vires.

2. Violation of Fundamental Rights:
The petitioners contended that the 1980 Scheme violated their fundamental rights under Articles 14, 19(1)(g), and 31 of the Constitution. The Supreme Court found that empowering the Government to frame schemes did not, in the facts and circumstances of the case, affect or abridge the fundamental rights of the petitioners under Article 19(1)(g). However, since the scheme was held to be beyond the authority of the Central Government, the question of violation of these rights did not arise.

3. Discrimination:
The petitioners argued that the 1980 Scheme was discriminatory, particularly in the matter of dearness allowance and retirement age, violating Article 14 of the Constitution. The Supreme Court noted that differentiation is not always discriminatory. There was an intelligible basis for differentiation, and the legislature is free to recognize the degree of harm or evil and make provisions accordingly. The Court found no violation of Article 14 in the differentiation made by the Scheme.

4. Application of Industrial Disputes Act, 1947:
The petitioners argued that the terms and conditions of service could not be changed unilaterally without following the procedures prescribed under the Industrial Disputes Act, 1947. The Supreme Court noted that Section 16(5) of the 1972 Act excludes the operation of the Industrial Disputes Act, 1947, in respect of disputes arising on the transfer of the business of general insurance. Since the scheme was beyond the authority of the Central Government, the question of conflict with the Industrial Disputes Act did not arise.

Conclusion:
The Supreme Court quashed the 1980 Scheme as it was beyond the scope of the authority of the Central Government under the General Insurance Business (Nationalisation) Act, 1972. The Court allowed the application for intervention and directed that appropriate writs be issued quashing the scheme of 1980. The parties were directed to adjust their rights as if the scheme had not been framed, and no costs were awarded.