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TMI Blog2001 (3) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... curing the principles specified in Article 39(c) of the Constitution and under Section 3(a) acquiring company has been defined as any Indian insurance company and where a scheme had been framed involving the merger of one or more insurance companies in another or amalgamation of two or more such companies means the Indian insurance company in which any other company has been merged or the company which has been framed as a result of amalgamation. Section 4 provides that on the appointed day all the shares in the capital of every Indian insurance company shall be transferred to and vested in the Central Government free of all trusts, liabilities and encumbrances affecting these. Section 5 provides for transfer of the undertakings of other existing insurers. Section 6 provides for the effect of transfer of undertakings. Section 8 provides for provident fund, superannuation, welfare or any other fund existing. Section 9 stipulates that Central Government shall form a Government company in accordance with the provisions of the Companies Act to be known as General Insurance Corporation of India for the purpose of superintending, controlling and carrying on the business of general insura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein are made without authority of the law. This contention found favour with this Court. On interpretation of the provisions it was held that the power under Section 16(1)(g) to frame scheme for rationalising the provisions regarding pay-scales and other terms and conditions of service of officers and other employees wherever necessary if unrelated to the object envisaged in sub-section (2) of Section 16 of the Act will not fall within the scope of exercise of powers and it would fall outside the same if the power exercised is beyond delegation and in view of the fact that the scheme of 1980 so far as it does not relate to the amalgamation or merger of the insurance company is not warranted by Section 16(1) of the Act. Ultimately, this Court held that the amended scheme of 1980 was bad as beyond the scope of the authority of the Central Government under the Act. Further it was also made clear that the parties will be at liberty to adjust their rights as if the scheme had not been framed and it was further made clear that this order will not prevent the Government, if so advised, to frame any appropriate legislation or make any appropriate amendment giving power to the Central Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been made applicable to the workmen of the GIC from 1970 onwards. On 30.7.1977, another scheme was published purportedly under Section 16(1)(g) of the 1972 Act amending the provisions regarding sick leave. The sick leave was available with full pay, but by the new scheme the same was reduced to only half pay. On 30.9.1980, the Central Government published another scheme to amend the 1974 scheme by which the existing employees would retire at the age of 60 years and those who joined the service after 1980 will retire at the age of 58 years. The ceiling on salary including basic, dearness allowance and special pay, if any, was imposed on Class III employees at ₹ 2,750/- per month and on Class IV employees at ₹ 1,600/- p.m. The graduation increment was withdrawn. Subsequently, the ceiling was increased to ₹ 3,500/- p.m. Class III employees and to ₹ 2117/- p.m. Class IV employees. However, there is no ceiling at all at present. After the decision in Ajay Kumar Banerjees case [supra] Ordinance 10/84 was promulgated to amend the 1972 Act by introducing Section 17A, retrospectively and modification of Section 16 of the 1972 Act. On 21.9.1984, the Central Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or variation in any scheme framed under this section, with retrospective effect from a date not earlier than the appointed day. (5) A copy of every scheme, and every amendment thereto, framed under this section shall be laid, as soon as may be after it is made, before each House of Parliament. (6) 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. (7) (1) Notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority or in any other law, agreement, award or other instrument for the time being in force, every scheme framed or purporting to have been framed with retrospective effect under sub-section (1) of section 16 of the principal Act and every notification made or purporting to have been made with retrospective effect under sub-section (6) of that section before the commencement of the General Insurance Business (Nationalisation) Amendment Ordinance, 1984 shall be, and shall be deemed always to have been, for all purposes, as valid and effective as if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The 1985 Amendment Act is unconstitutional being violative of Articles 14, 19 and 21 of the Constitution inasmuch as it confers unreasonable and unguided power on the Central Government to frame schemes affecting the conditions of service of the workmen without any scope for collective bargaining. 4 . In any event the retrospective effect given to the 1985 Amendment with effect from 2.1.1973 is arbitrary and violates Articles 14, 19 and 21 of the Constitution as it takes away vested rights. 5. Vide proviso to Section 17-A(7)(2), the Act makes discrimination vis- -vis the amendments to the Schemes made in 1976 and 1977 by specifically excluding the 1980 Scheme from the retrospective operation given to the 1985 Act. 6. The applicability of the Industrial Disputes Act to the workmen of the General Insurance Business is not excluded by the Nationalisation Act of 1972. Consequently, the view taken by the Industrial Tribunal in its award dated 1.8.1980 in ID No.17 of 1980 is liable to be reversed and the civil appeal remanded to the Industrial Tribunal for disposal in accordance with law. In elaboration of these submissions and in challenging the validity of Section 17A o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of powers in fields where binding principles of industrial law declared by this Court are the law of the land. The procedural and substantive benefits of this law cannot be taken away to throw the GIC employees at the mercy of the executive. 6. The Central Government is obliged to act on relevant facts ascertained in a fair enquiry or principles of law which are available to the employees in other industries, with guaranteed protection of binding law and justice from this Court under Article 136 of the Constitution. 7. Section 17A cannot be read down to control the powers of the Central Government not to violate the binding principles of relevant law enacted or declared by this Court. 8. The artificial classification of GIC employees has no rational differentia nor does it reasonable nexus with any constitutionally permissible object to justify the amendment in the GIC Nationalisation Act. 9. After nationalisation all industrial disputes can and must be dealt with under relevant industrial laws, and not in exercise of absolute power conferred on the Government. Section 17A imposes hostile discrimination on GIC employees singled out to be subjected to wage slavery. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act also deals with the scheme for reorganisation of general insurance business in Chapter V. The first step the Central Government took in this direction was to reduce the number of companies carrying on general insurance business, which was also the main object of Section 16(2). With this object in view, the Government decided to retain four companies and all other companies were merged into one or the other of the said four companies. To achieve this end, four merger schemes were framed and promulgated. All these schemes came into force with effect from the 1st day of January, 1974. Prior to the coming into force of the aforesaid schemes, the different companies, pending formal merger, had been merged into one or the other of the said four companies. Thereafter, the Government of India in exercise of powers under Section 16(1)(g) framed a scheme called the General Insurance (Rationalisation and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Scheme, 1974. As per this scheme, contribution to the provident fund was to be at the rate of 8 per cent of the basic salary and dearness allowance with an equal contribution by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees has been retained at 60 years and so far as the employees to be recruited after the notification are concerned, the retirement of age has been fixed at 58 years. Therefore, the alteration made does not take away any right of the existing employees and the Petitioners cannot make a grievance of the same in respect of the persons who have not yet been taken in employment of any of the insurance companies and the new recruits will be aware of the conditions of the service prevailing in the companies and will take up the employment subject to those conditions. So far as the ceiling on the maximum salary is concerned, it is submitted that the wage structure in the entire industry has become lopsided and has brought about grave inter se wage distortions reaching grave dimensions. For example, the emoluments (basic pay plus DA) on 1st July, 1984 of a Superintendent in Class III employed at the maximum of his grade, amounted to ₹ 4,082/- and this, if allowed to continue, would create further distortions while emoluments of a General Manager, amounted to ₹ 3,950/- and ₹ 4,450/- per month at the minimum and maximum of his grade respectively and the General Manager is se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, to certain limitations such as the legislature cannot delegate essential legislative functions which consist in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of conduct. The Legislature cannot delegate uncanalised and uncontrolled power. The Legislature must set the limits of the power delegated by declaring the policy of the law and by laying down standards for guidance of those on whom the power to execute the law is conferred. Thus the delegation is valid only when the legislative policy and guidelines to implement it are adequately laid down and the delegate is only empowered to carry out the policy within the guidelines laid down by the Legislature. The Legislature may, after laying down the legislative policy, confer discretion on an administrative agency as to the execution of the policy and leave it to the agency to work out the details within the framework of the policy. When the Constitution entrusts the duty of law-making to Parliament and the Legislatures of States, it impliedly prohibits them to throw away that responsibility on the shoulders of some other authority. An area of compromise is struc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But now the enactment itself specifically provides that every scheme framed or purporting to have been framed by the Central Government under Section 16(1) of the Principal Act and every notification made or purporting to have been made thereunder in so far as such scheme or notification provides for rationalisation or revision of pay scales or other terms and conditions of the officers and other employees of the Corporation are deemed always to have been for all purposes as valid and effective as made under Section 17A of the Act. The retrospective effect given to the scheme is only to overcome the difficulty pointed out by this Court in Ajay Kumar Banerjees case. That lacuna having been overcome it is not open to the Petitioners to contend that retrospective effect given is violative of Articles 14, 19 and 21 of the Constitution. Validation of invalid rule by amending the main enactment under which it is made is a well known legislative device approved by this Court. We may now consider whether in any event the retrospective effect given to the 1985 Amendment Act with effect from 2.1.1973 is arbitrary and violates Articles 14, 19 and 21 of the Constitution? The Legislature is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Industrial Disputes Act will cease to be applicable. Thus a separate class was sought to be made and having kept them out of the scheme their claims would be considered under the Industrial Disputes Act. It was noticed that the LIC Act as amended and the rules made after amendment placed the Corporation in the same position as other undertakings that the advantages being enjoyed by the employees of the Corporation which were not available to similarly situated employees of other undertakings have been taken away removing what was described as discrimination in favour of the employees of the LIC. Therefore, it was accepted that in the special features of the matter provision made therein cannot be stated to infringe Article 14 of the Constitution. Applying the same logic to the present case by reason of the impugned rules all that have been made is to achieve certain rationalisation. Thus the contention advanced by Shri Rao either as to retrospective application of the amendment or otherwise does not stand to reason. In the original Scheme issued under Section 16(1)(g) of the Act in 1974, there is an indication that the same has been issued after discussion and negotiati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government after the nationalisation. There was a pronounced disparity between one company and the other at all levels in the matter of remuneration and designations for similar posts. Employees of different companies were holding different designations and were paid differently for the same kind of work at the same station. Some companies gave very high sounding designations and paid salaries, which were not commensurate with the work. So the necessity for rationalisation of the entire structure of general insurance business, including designations, pay scales and other conditions of service arose. Section 16 of the Act dealt with this aspect of the matter. In framing schemes under Section 16(1) thereof, the object of the Central Government should 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. If the rationalisation or revision of any pay scale or other terms and conditions of service under any scheme is not acceptable to any officer or other employee, the acquiring company may terminate his employment by giving him compensat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half the aggregate of such basic pay, special pay and personal pay. It was also provided that any period of sick leave on half pay may be converted into sick leave on half pay at the option of the employees but in such cases twice the amount of sick leave was to be debited against the leave account of the employee. Provision was also made for the grant of special sick leave for serious ailments like cancer, leprosy, T.B., polymylitis and other serious diseases. The stand of the respondents is that amendments were made while the process of rationalisation of pay scales and other service conditions were still in progress and the process had not been finally completed to achieve uniformity and inter-se rationalisation in terms and conditions of service of different categories of employees of merged companies. In 1977 various labour unions presented a charter of demands in relation to revision of pay scales and service conditions. The scheme of 1974 contained a provision to the effect that the provisions of the scheme relating to scales of pay, dearness allowance etc. will continue to be in force till the Government modified the same. After considering the demands of the unions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in A.V.Nachanes case [supra] noticed the effect of the same. It was stated that Section 48(2-C) read with Section 48(2)(cc) authorises the Central Government to make rules to carry out the purposes of the Act notwithstanding the Industrial Disputes Act or any other law. This means that in respect of the matters covered by the rules, the provision of the Industrial Disputes Act or any other law will not be operative. The argument advanced is that this provision introduced in the Principal Act does not lay down any legislative policy or supply any guidelines as to the extent to which rule-making authority would be competent to override the provisions of the Industrial Disputes Act or other laws. This Court answered this question by stating that there are sufficient guidelines in the Act and an executive authority can be empowered by the statute to modify either existing or future laws but not in any essential feature and relied upon the decision in Rajnarain Singh vs. Chairman, (1955) 1 SCR 290. Though certain doubts have been expressed in Ajay Kumar Banerjees case as to the effect of the said provision that if there is any industrial dispute pending the same may be affected but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tifiable for the Petitioners to contend that the modification of the scheme in this regard will seriously or at all affect their rights. The scheme provides for the sickness leave but certain adjustments have been made in the manner it is made available. This modification has been made to bring out uniformity in service conditions in similar institutions. Such adjustment cannot seriously affect the Petitioners. Now we may briefly refer to some of the decisions adverted to by the learned counsel.@@ JJJJJJJJ (1) Shri Rao relied upon a decision of this Court in Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir Anr., 1980 (3) SCR 1338, to contend that the Directive Principles of State Policy in the Constitution had to be advanced or implemented with a view not to earn revenue but for the purpose of carrying out welfare scheme particularly for those deserving it. We fail to understand as to how this decision would be of any help to the learned counsel. Undoubtedly, constitutional scheme and, in particular the Directive Principles of State Policy provides for protection of the workers to the extent indicated in the Directive Principles of State Policy, that is, participatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut by the court with retrospective effect. (5) In cases where amalgamations or mergers take place question relating to manner in which the service rendered in the transferor bank for the purpose of promotions, seniority in the transferee bank which was fixed in the ratio of 2:1 were all challenged before this Court in New Bank of India Employees Union Anr. v. Union of India Ors., 1996 (8) SCC 407, and the scheme framed was held to be legislative in character. Contrary view of such provision had to be made when the entire matter was in the state of efflux for the purpose of rationalisation. Therefore, we find no substance in this argument. (6) This Court in Process Technicians and Analysts Union v. Union of India Ors., 1997 (10) SCC 142, has taken the view that the scheme as amended by the Bharat Petroleum Corporation Limited (Determination of Conditions of Service of Employees) was valid though made retrospective in effect. The challenge was that it had conferred upon the Government unguided powers. It was held that this power enabled the Government to make conditions of service of the employees comparable with those of other private sector companies. Therefore, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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