SUSHIL KUMAR CHAKRABORTY Vs. LIFE INSURANCE CORPORATION OF INDIA
LAWS(CAL)-1983-5-15
HIGH COURT OF CALCUTTA
Decided on May 12,1983

SUSHIL KUMAR CHAKRABORTY Appellant
VERSUS
LIFE INSURANCE CORPORATION OF INDIA Respondents

JUDGEMENT

- (1.) IN the instant Rule, the order of the Government of India, Ministry of Finance (Department of Economic affairs) dated 19th December, 1978 relating to the service conditions of the Life insurance Corporation Development Officers and the Notification dated 19th december, 1978 amending the Life Insurance Corporation of India (Staff) Regulations, 1960 are under challenge.
(2.) THE petitioners are Development Officers of Life insurance Corporation, a statutory Corporation created under the Life insurance Corporation Act, 1956. It appears that initially the emoluments and salaries of the Development Officers were settled by negotiations and agreements between the administration of the Life insurance Corporation and the Association of the Development Officers viz. the national Federation of Insurance Field workers of India. It appears that on 19th november, 1971, a bilateral agreement was concluded between the said Federation and the Life Insurance Corporation of India and the Development Officers were finally integrated with the Life Insurance Corporation along with other staff. It was agreed that each Development Officer should produce through his organization a minimum scheduled first year premium income of not less than Rs. 25,000/- in each appraisal year with effect from 1st April, 1971, and to insure at least 100 lives in each year and with effect from 1st April, 1974 to produce a minimum scheduled first year premium income of not less than Rs. 30000/- and. to insure at least 125 lives in each appraisal year. It was agreed that if a Development officer could not reach the minimum norm in any appraisal year his case would be examined by a Joint Divisional Committee consisting of two representatives each of the Corporation and of the said Federation with the Divisional Manager as an umpire if the Committee could not come to an unanimous recommendation. It was provided for that if the Committee would decide that the Development Officer was not capable of giving work according to the schedule he would be absorbed in the administrative side in such post as may be available to him on the basis of his qualification: It appears that previously there was another agreement by which the scale of pay of the development Officer was revised upwardly to Rs. 230-760/- for Grade I. The petitioners contend that the said two Agreements viz. the earlier Agreement dated 25th september, 1970 regarding upward revision of scale and the subsequent Agreement dated 19th November, 1971 brought a sense of security among the Development officers and their sense of security and satisfaction were reflected in the increasing growth of the Corporation business. As the agreement on pay and allowances was for a period of 4 years from 1st April, 1969 to 31st March, 1973, the Federation submitted further proposal for revision of pay and allowances on 14th August 1973. The petitioners contend the proposed negotiation between the Federation and the management of the Life Insurance Corporation of India had been deferred from time to time on various pretext and the same was ultimately held on 31st May and 1st june, 1974 and the Management made an offer of upward pay revision and an offer was also made relating to method of fixation, dearness allowance, adjustment allowance, house rent allowance, city compensatory allowance and provident fund contribution. The said offer however was not implemented. But it was admitted by the minister in charge that the said offer on the basis of the tentative agreement had been receiving attention of the Government. According to the petitioners, despite solemn agreement between the Management and the Federation, the Management not only failed to implement its commitment but started issuing charge-sheets to the Development Officers on the allegations that they had not been keeping up their norms of performances and the Federation took a serious objection as to the issuance of charge-sheets contrary to the said agreement. The Corporation thereafter informed the Federation that the Chairman of the Life insurance Corporation had no authority to enter into the agreement and as such the said agreement had non-statutory validity. Thereafter an order was passed on 8th april, 1976 unilaterally fixing a norm of performance to the effect that the premium income procured for the Corporation by the development Officers must be in a ratio of about 20% of their salary including allowances. It was also provided for in the said order of April, 1976 that if such premium would not be given by the Development Officers then a re-fixation of the basic pay of the Development Officers, would be made first so as to bring down the expense ratio and if such re-fixation also would not make it economical to retain him, his service would be terminated. The said order of April, 1976 has been annexed to the writ petition being Annexure 'g'. It appears that the said order was issued under section 11 (2) of the Life Insurance Corporation Act, 1956. It appears that the Federation made various representations against the said order of 1976 and the validity of the said order was also challenged in courts of law. Thereafter the impugned order dated 19th December, 1978 was issued under section 11 (2) of the Life insurance Corporation Act again modifying the service conditions of the Development officers and the impugned notification dated 19th December, 1978 was also issued amending the Life Insurance Corporation of India (Staff) Regulations, 1960. As aforesaid, the said impugned order and the notification are under challenge in the instant Rule.
(3.) MR. Chatterjee, the learned Counsel appearing for the petitioners, has contended that the impugned order under section 11 (2) of the Life Insurance Corporation Act dated 19th December, 1978 ( Annexure 'g' to the writ petition.) and also the Notification dated 19th December, 1978 amending the Life Insurance Corporation of India (Staff) Regulations, 1960 are ultra vires. Mr. Chatterjee contends that power under section 11 (2) of the Life Insurance Corporation Act can be exercised only to bring about uniformity and integration of the transferred staff but the impugned order of 1978 not having done so, the same is ultra vires. For the purpose of appreciating the the contentions raised by Mr. Chatterjee, the relevant provisions of Section 11 (2)are set out hereunder: "11 (2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of remuneration and other terms and conditions of service applicable to employees of insurers whose controlled business has been transferred to, and vested in, the 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 and 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. ";


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