Decided on July 26,1999

Prem Mehta Respondents


- (1.) THIS letter patent appeal arises out of problem connected with the integration of services consequent upon the nationalisation of general insurance business was vested in the Central Govt. pending nationalisation by the General Insurance (Emergency Provisions) Ordinance. The process of nationalisation was completed by the enactment of the General Insurance Business (Nationalisation) Act, 1972 providing for the acquisition and transfer of share of Indian Insurance Companies and Undertakings of other existing insurers. Section 9 of the Nationalisation Act provided for formation of a Government Company known as General Insurance Corporation and section 10 provided that all the shares in the capital of every Indian Insurance Company which stood transferred to and vested in the Central Govt. shall immediately stand transferred to and vested in the Corporation. Section 16 provided for the framing of one or more schemes by the Central Government for the more efficient carrying on of General Insurance Business. Section 16(1) (a) in particular provided for the framing of scheme for the merger in one Indian Insurance Company of any other Insurance Company, or the formation of a new Company by the amalgamation of two or more Indian Insurance Companies. Section 16(1)(g) provided for the framing of a scheme for the rationalisation or revision of pay scales and other terms and conditions of service of officers and other employees wherever necessary.
(2.) BEFORE nationalisation there were a large number of big and small insurance companies and undertakings which were carrying on the business of General Insurance. After the Nationalisation Act was passed the Central Government framed a scheme under Section 16(1)(G) by which the existing insurance companies were so grouped that only four companies remained to carry on the business of General Insurance. These were the Oriental Fire and General Insurance Company Ltd. The United India Fire and General Insurance Company Ltd. The New India Assurance Company Ltd. and the National Insurance Company Ltd. All the Insurance Companies undertakings were merged into one or the other of those newly formed Insurance Companies.
(3.) IMMEDIATELY after the merger the question of integration of the services of the employees of the former Indian Insurance Companies and other existing insurers arose. In exercise of powers conferred by Secton 16(1)(G) of the Nationalisation Act, 1972 the Central Govt. framed a scheme called the General Insurance (Rationalisation of Pay scales and other conditions of services of Officers) Scheme 1975 on Sept. 17,1975 and another scheme called the General Insurance (Rationalisation of Pay Scales and other conditions of service of development staff) Scheme 1976. Clause 3(1) of the Scheme dated Sept., 17, 1975 defined "officer" as meaning an employee appointed in India before the commencement of the scheme and serving whether in India or outside India in a position other than supervisory, clerical or subordinate position and categorised as holding any of the posts referred in the schedule but not including an employee declared as member of development staff by the Committee appointed by the Board. The scheme provided for the appointment of management committee by the Board of General Insurance Corporation for the categorisation of employees in the new set up. The lower management committee after considering the service particulars and biodata of the respondent who admittedly was a Branch Secretary in the General Assurance Society Ltd. at the time of Nationalisation categorised him as member of the development staff. This decision was communicated to him vide letter dated 20 -9 -75 followed by a circular dated 12 -10 -1975 issued by the respondents. He filed writ petition challenging the order categorising him as member of the development staff and designating him as Field worker on the grounds that he has been categorised as member of the Development staff under the 1976 scheme which was yet to be framed. That the appellants were not empowered under clause 5(1) under 1975 Scheme to categories him as member of development staff because the provisions applied only to the categorisation of officers (2) that neither any scheme nor rules framed under the Act empower the appellants to categorize an officer as member of development staff and (3) that since at the time of merger, he was working as Branch Secretary, the categorisation amounts to demotion and was thus illegal.;

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