1985 (5) TMI 258 - HC - Indian Laws

Issues Involved:
1. Scope and effect of Section 11(2) of the Life Insurance Corporation Act, 1956.
2. Validity of Ext. P2 order issued by the Central Government.
3. Validity of Ext. P3 Regulation issued by the Life Insurance Corporation.
4. Compliance with Section 9A of the Industrial Disputes Act, 1947.
5. Whether Exts. P2 and P3 are arbitrary and discriminatory.
6. Effect of Life Insurance Corporation (Amendment) Act, 1 of 1981 on the validity of Exts. P2 and P3.

Detailed Analysis:

1. Scope and Effect of Section 11(2) of the Life Insurance Corporation Act, 1956:
The Supreme Court in LIC v. Sunil Kumar Mukerjee (1964) and LIC of India v. D. J. Bahadur (1981) clarified that Section 11(2) of the Act is intended to standardize and rationalize the terms and conditions of service for transferred employees immediately upon and as part of the transfer process. It does not extend to altering the service conditions of employees for purposes unrelated to the transfer and integration process. The court held that Section 11(2) is confined to transferred employees and is related to their integration and standardization of service conditions.

2. Validity of Ext. P2 Order:
The court found that Ext. P2, which aimed to revise terms and conditions of service for Development Officers, overstepped the purpose of Section 11(2) as it was not related to the transfer and integration process. Therefore, Ext. P2 was beyond the competence of the Central Government under Section 11(2) and was declared invalid.

3. Validity of Ext. P3 Regulation:
The court examined whether Ext. P3, issued in compliance with Ext. P2, was valid. It was argued that the Corporation acted under the dictates of the Central Government. However, the court noted that the power under Section 49 of the Act is legislative in character and that the Corporation could issue regulations under policy directions from the Central Government under Section 21 of the Act. Therefore, Ext. P3 was not invalid solely because it was issued under the directions of Ext. P2.

4. Compliance with Section 9A of the Industrial Disputes Act, 1947:
The court found that Exts. P2 and P3 altered the conditions of service to the prejudice of the Development Officers without complying with Section 9A of the I.D. Act, which mandates notice before effecting such changes. The agreements of 1964, 1965, and 1971 formed part of the service conditions, and the changes introduced by Exts. P2 and P3 affected these conditions. Therefore, the non-compliance with Section 9A rendered Exts. P2 and P3 invalid ab initio.

5. Whether Exts. P2 and P3 are Arbitrary and Discriminatory:
The court rejected the argument that Exts. P2 and P3 were arbitrary and discriminatory. It held that Development Officers form a distinct class due to the nature of their duties and the conditions of their service. The determination of operational areas and expense limits based on population was not found to be arbitrary. The court also noted that other Development Officers in similar areas were able to perform better, negating the claim of discrimination.

6. Effect of Life Insurance Corporation (Amendment) Act, 1 of 1981:
The court considered the retrospective validation attempted by Act 1 of 1981, which deemed regulations and other provisions as rules made under Section 48(2)(cc) of the Act, effective from 19-12-1978. The court upheld the validity of Section 48(2)(cc) and Section 48(2C), which allowed for retrospective effect and validation of rules notwithstanding any judgment or provisions of the I.D. Act. Therefore, Exts. P2 and P3 were validated with retrospective effect from their date of promulgation.

Conclusion:
The court concluded that while Exts. P2 and P3 were initially invalid due to non-compliance with Section 11(2) of the Act and Section 9A of the I.D. Act, the Life Insurance Corporation (Amendment) Act, 1 of 1981, validated these instruments retrospectively. As a result, the Original Petition was dismissed.

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