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TMI Blog1963 (11) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Co. Ltd., terminated the services of Mukherjee by an order passed on the 16th October, 1958. The respondent then moved the Calcutta High Court under Art. 226 of the Constitution and prayed for a writ of certiorari or other appropriate writ or order quashing the said impugned order of discharge passed against him. Sinha J. who heard the writ petition, allowed the petition and directed that a writ in the nature of certiorari quashing and/or setting aside the impugned order be issued. A further writ in the nature of mandamus was also issued directing the respondents to the writ petition not to give effect to the said impugned order. To the petition filed by the respondent, he had impleaded eight respondents, the principal amongst them being the appellant Corporation and the Union of India (UOI). 2. Aggrieved by the decision of Sinha J. the appellants preferred an appeal under the Letters Patent before a Division Bench of the said High Court Bose C.J. and Debabrata Mokerjee J. who heard the Letters Patent appeal substantially agreed with the view taken by Sinha J. and confirmed the order passed by him. The appellants then applied for and obtained a certificate of fitness from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On the 16th October, 1958, the impugned order terminating Mr. Mukherjee's services was passed. This order said that in terms of section 5 of the Categorisation circular of the 2nd December, 1957, Mr. Mukherjee's case was examined by the Special Committee appointed by the Board of the Corporation to review the cases of Ex-Branch Secretaries, etc., and it was added that in accordance with the recommendations of the Committee which had been accepted by the Corporation, it had been decided to terminate his services with immediate effect. Mr. Mukherjee was also told that he would be paid his emoluments up to the current month and one month's salary in lieu of notice. It is the validity of this order which has been successfully challenged by Mr. Mukherjee before the Calcutta High Court, and the learned Solicitor-General contends that the High Court was in error in upholding Mr. Mukherjee's plea. 6. The history of the nationalisation of the Life Insurance business in this country is well-known. On the 19th January, 1956, the Life Insurance (Emergency Provisions) Ordinance (No. 1 of 1956) was promulgated by the President for the purpose of taking over, in the public in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, notwithstanding any thing 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 time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms conditions of service to such extent and in such manner as it thinks fit, and if the alteration is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months' remuneration unless the contract of service with such employee provides for a shorter notice of termination. 8. Then follow an explanation and sub-sections (3) and (4) which are not relevant for our purpose. It would thus be seen that under s. 11(1), persons who were employed by an insurer wholly or mainly in connection with his controlled business before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at if the alteration made by the Central Government in the terms and conditions of his service is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months' remuneration unless the contract of service with such employee provides for a shorter notice of termination. It is thus clear that in regard to cases which fall under s. 11(2) if as a result of the alteration made by the Central Government any employee does not want to work with the Corporation, he is given the option to leave its employment on payment of compensation provided by the last part of s. 11(2). Thus, the scheme of the two sub-sections of s. 11 is clear. The employees of the insurers whose controlled business has been taken over, become the employees of the Corporation, then their terms and conditions of service continue until they are altered by the Central Government, and if the alteration made by the Central Government is not acceptable to them, they are entitled to leave the employment of the Corporation on payment of compensation as provided by s. 11(2). 11. After the Corporation took over the controlled business of insurers under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n categories of employees to which it is not necessary to refer. It is thus clear that the Order was intended to prescribe the terms and conditions of service in respect of Development Officers who had become employees of the Corporation under s. 11(1) of the Act. Clause 3 of the Order prescribes the duties of the Development Officer. Clause 4 prohibits the Development Officers from engaging themselves in certain activities. Clause 5 provides for the scales of pay and allowances. Clause 6 deals with the matter of leave and retirement, and provides that in the matter of leave and retirement, Development Officers shall be governed by the Life Insurance Corporation (Staff) Regulations, 1960, as amended for time to time. Clause 7 provides for increments, and clause 8 deals with new business bonus, while clause 9 refers to promotion of Development Officers. Clause 10 is relevant for our purpose and must be set out in full : 10. Penalties and termination of service : (a) In case of unsatisfactory performance of duties by a Development Officer or if a Development Officer shows negligence in his work or is guilty misconduct or is otherwise incapable of discharging his duties sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Corporation may think fit. If the Development Officer shows negligence in his work, or is guilty of misconduct, or is otherwise incapable of discharging his duties satisfactorily, the Corporation may reduce his remuneration or may terminate his service; but that can be done only after complying with the conditions prescribed by clause 10(a). 15. Clause 10(b) empowers the Corporation to terminate the services of the Development Officer without assigning any reason and without holding any enquiry or giving him an opportunity to show cause, provided, of course, the order terminating his services is passed with the prior approval of the Chairman of the Corporation. This power can be exercised without complying with clause 10(a) and is independent of it. Thus, in the matter of penalties and termination of service, two alternative powers are conferred on the authority and they are contained in sub-clauses (a) and (b) of clause 10. 16. As envisaged by clause 11 of the Order, Regulations were framed in 1958 by the Life Insurance Corporation under s. 49 of the Act read with clause 11 of the Order. These Regulations contain five clauses; the first gives the title of the Regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds of such Field Officers and decide whether they could be continued as Field Officers either as Probationers or on substantially reduced remunerations. In the case of those who cannot be continued as Field Officers, the Committee will examine whether any of them could be absorbed in administration and where this is possible, the Committee will fix the remuneration in accordance with the rules to be prescribed. Where the Committee decides that the poor performance of a Field Officer was not due to circumstances beyond his control or that he has made no efforts and not shown inclination or willingness to work, the services of such Filed Officers will be terminated. 18. It is clear that paragraph 4(h) deals with the cases of persons whose actual performance is less than 50% of the revised quota, and as such, who are regarded as ineligible for fitting in the employment of the Corporation. Their cases are required to be referred to the Committee specially appointed in each Zone, and on examining the record of these Officers, if the Committee comes to the conclusion that some of them cannot be continued as Field Officers, it may enquire whether any of them could be absorbed in adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also common ground that the impugned termination of their services has not been effected under clause 10(b) of the Order. The respondents' contention is that the termination of their services can be brought about only under clause 10(a) or 10(b) of the Order, and since it has not been so brought about, the impugned orders are invalid. On the other hand, the learned Solicitor-General contends that the power to terminate services conferred by paragraph 4(h) of the circular is independent of clause 10 of the Order, and the same can be, and has been, validly exercised in the present cases. 21. In considering the validity of these rival contentions, it is necessary to bear in mind the true legal position about the character of the relevant statutory provisions. It is plain that the provisions contained in s. 11(2) of the Act are paramount and would override any contrary provisions contained in the Order or the Regulations. Subject to the provisions of s. 11(2), the provisions of the Order will prevail, because the Order has been issued by the Central Government by virtue of the powers conferred on it by s. 11(2) itself. The provisions of the Order in law partake of the characte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs concerned would be liable to be terminated, and that means that the termination of the services of the said officers must be effected in the manner prescribed by clause 10 of the Order. That is how paragraph 4(h) and clause 10 can be reasonably reconciled. What we have said about para 4(h) is equally true about paragraph 5 of the circular. 23. In regard to the fixation of remuneration, however, the position is that clause 5 of the Order fixes the scales of pay and allowances and leaves it to the regulations to lay down the principles in the light of which each individual case should be judged. It was, therefore, perfectly competent to the Corporation to adopt the Circular issued by the Managing Director, and in consequence, lay down the principles which should be followed in fitting individual officers into the scheme prescribed by clause 5 of the Order. But it is necessary to emphasise that the scope and purpose of fitting the officers obviously is to treat the officers as continuing to remain in the category of Development Officers and prescribe their remunerations accordingly. The total amount of remuneration would undoubtedly be determined in the light of the principles p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulations as annexure thereto. 25. There is one more point which has yet to be examined. In regard to the case of Haridas Roy who is the respondent in C.A. No. 917 of 1963, the learned Solicitor-General has contended that the order terminating his services is valid either under para 4(h) of the circular or under s. 11(2) of the Act. Haridas Roy was originally employed by the Hindustan Co-operative Insurance Society Ltd., before the appointed day as an Inspector of Agents. After the Corporation took over the controlled business of the said Insurance Co., he was appointed as a Field Officer under the Order, and the order of his appointment was communicated to him on the 15th February, 1958. It appears that on the 9th August, 1958, he was told that his case had been considered by the Zonal Committee and it had been decided to absorb him in the office as an Assistant on the emoluments mentioned in the order. Haridas Roy declined to accept this assignment and stated that he wanted to continue as a Field Officer as before. Thereupon his services were terminated by an order dated the 18th September, 1958. In this letter, Roy was told that his case had been carefully considered by the Zo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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