Decided on August 07,1961



SINHA, J. - (1.) THE facts in this case are shortly as follows: The petitioner was employed by theMetropolitan Insurance Company Limited, as an Inspector since 1955. .In January, 1956, the Life. Insurance (Emergency Provisions) Ordinance (No. 1 of 1956) was promulgated, to provide for the taking over of the management of all the insurance business in thy Union of India, pending nationalisation of the same. It came into operation on January 19, 1956. From that date, all life insurance business in India became a 'Controlled Business' vested in the Central Government. This ordinance was eventually repealed on the 21st March, 1956 by the promulgation of the Life Insurance Corporation Act (Act 31 of 1956). On the 1st September, 1956 the Life Insurance Corporation of India was established and under Section .11 of the said Act, all employees of Insurers became employees of the Corporation. On or about the 25th July, 1957 the Life Insurance Corporation issued a letter to the petitioner a copy whereof is exhibit 'E' to the petition. It stated that the petitioner was to operate as an Inspector of Agencies under the Barrackpore Branch of the Corporation. His duties would be mainly to organise and develop the business of the Corporation and it subsidiaries, within the area allotted to him. He was to secure through his agents, a minimum life business of six lacs yielding a 'first year's schedule premium income of not less than Rs. 24,050/ -'. It was further stated that his categorisation would depend upon the business done. Such categorisation was to be made on or after the 1st October, 1957. In September and December 1957, two separate circulars were issued by the Managing Director of the Corporation, affecting the status of the employees. These circulars have been challenged as being of no legal effect, because the Managing Director had not himself the right of framing rules or regulations under the Act.
(2.) I now come to an order promulgated by the Central Government dated the 30th December, 1957. This is known as the 'Categorisation Order' and is also referred to as the 'Blue Order,' having been printed and distributed on paper of a blue kint, a copy whereof is exhibit H to the petition. This order was made by the Central Government in exprcise of powers conferred by Sub -section (2) of Section 11 of the said Act. Sub -section (1), of Section 11 lays down that after the appointed day, the employees, of all insurers were to be deemed to have become the employees of the Corporation, to hold office thereunder by the same tenure and en the same remuneration and upon the same terms and conditions as before. This was however a state of things contemplated for the time being only, that is to say, until the Corporation could stabilise its affairs. Sub -section (2) of Section 11 lays down that notwithstanding anything contained in Sub -section (1) or any contract of service, the Central Government may, for the purposes of rationalising the pay scales of employees of insurers whose ''controlled business' had been transferred to and vested in it, or for the purpose of reducing the remuneration payable to employees in cases where such reduction is called for, might make alterations in the remuneration and terms of service which must be accepted by the employee or he had the option of leaving the services of the Corporation, after getting due compensation. This categorisation order dated the 30th December, 1957 was therefore intended to alter the existing terms and conditions and remuneration of the employees, and laid down what was to be done in future. Under Clause (e) of paragraph (2) of the said order, a 'field officer' has been defined. In short, it includes within its ambit all employees excepting those who were merely entrusted with administrative work, like Branch Managers, or Assistant Branch Managers. An Inspector of Agencies would come under this definition. Under paragraph (5) of the said order, the scales of pay and allowances of the field officers were prescribed. It must be noted however that although the scale was fixed, it did not mean that all field officers came to have the same pay. In paragraph 11 it is provided that the actual pay and allowances admissible to any field officer within the scale specified in paragraph 5 would be determined in accordance with such principles as may be laid down by the Corporation, by Regulations made in this behalf under Section 49 of the said Act. I have already stated that in 1957, the Managing Director issued two circulars dealing with the terms and conditions of the services of the employees of the Corporation. This however is not in accordance with law and a regulation as contemplated in paragraph (11) was issued on or about the 24th May, 1958, a copy Whereof is exhibit 'J' to the petition. The point to be noted is Chat it includes as an annexure, one of the circulars issued by the Managing Director, namely, the circular of the 2nd December, 1957. Thus, although the said circular is by itself of no legal effect, it came to be of legal effect by being incorporated in this regulation. At a point of time, between the categorisation order and the coming into force of the regulations' that is to say, on the 14th February, 1958 the petitioner was notified by the Divisional Manager that, in accordance with the said categorisation order he was to work as a 'field officer' attached to the Barrack -pore Branch, until further orders. That he became a field officer is also admitted in the affidavit -in -opposition filed by Sri Asoke Ranjan Sen. senior Divisional Manager of the Corporation, affirmed on 26 -6 -1959. In paragraph 7 it is stated that the petitioner's service was transferred to the Corporation as an Inspector, which designation . Was subsequently changed to 'field officer'. By an order dated the 16th October, 1958 the services of the petitioner were terminated. The letter intimating this is annexure 'P' to the petition and the relevant part thereof is as follows : 'In terms of Section 5 of the Categorisation Circular of the 2nd December, 1957. your case was examined by the Special Committee appointed by the Board of the Corporation to review the cases of Ex -Branch Secretaries etc. In accordance with the recommendations of the Committee which have been accepted by the Corporation, it has been decided to terminate your services with immediate effect.'' You will be paid your emoluments upto the current month and one month's salary in lieu ofnotice.'
(3.) IT is this order of termination, against which this application is directed. The events which led to the termination are as follows : As I have already stated, the petitioner was entrusted with thetask of bringing and/or organising, additional business for the Corporation. It is stated' in the affidavitsthat his performance, instead of coming up to expectation, was nil. In the petition and in the main affidavit this position was not challenged. Subsequently, a supplementary affidavit has been filed by whichit appears that his total performance was not exactlynil but amounted to a small sum which however is grossly inadequate. It is for this reason: that the matter was placed before a Special Committee - whichrecommended that his services should be terminated and accordingly, the petitioner's services have beendispensed with. Now, the short point is as to whether this termination of service was done in accordance with the Rules promulgated by or containedin, the categorisation order. The relevant Rule is paragraph 10 (a) of the said order; which runs as follows: '10. Penalties and termination of service - - (a) In case of unsatisfactory performance of duties by a field officer or if a field officer shows negligence in his work or is guilty of misconduct or is otherwise incapable of discharging his duties satisfactorily, his remuneration may be reduced or his services may be terminated after giving him an opportunity of showing cause against the action proposed to be taken in regard to him and after conducting such enquiry as the Corporation thinks fit.' ;

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