- (1.) These appeals and transferred cases arise out of problems connected with the integration of services consequent on the nationalisation of general insurance business. The management of the undertakings of all insurers carrying on general insurance business was vested in the Central Government, 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 shares of Indian Insurance Companies and undertakings of other existing insurers. 'Existing insurer' was defined to mean 'every insurer the management of whose undertaking has vested in the Central Government under S. 3 of the General Insurance (Emergency Provisions) Act, 1971 and included 'the undertakings of the Life Insurance Corporation in so far as it related to the general insurance business carried on by it'. 'Indian insurance company' was defined to mean 'an existing insurer having a charge capital who is a company within the meaning of the Companies Act'. 'Corporation' was defined to mean 'the General Insurance Corporation of India to be formed under S. 9 of the Act.' S. 4(1) of the Act provided that 'on the appointed day, all the shares in the capital of every Indian insurance company shall, stand transferred to and vested in the Central Government'. S. 4(2) required the Central Government to transfer not less than ten shares of every such company to such persons as may be specified to enable the Indian insurance company to function as a Government company. S. 5(1), provided that on the appointed day, the undertaking of every existing insurer who was not an Indian insurance company shall stand transferred to and vested in the Central Government. S. 5(2) provided for the transfer of the undertaking to and vesting of it in more than one Indian insurance company in such manner as might be specified. S. 6 provided for the effect of transfer on undertaking. S. 7 provided for the transfer of service of existing employees in certain cases. Sub-sections (1)-and (2) of 8, 7 are important for the purpose of the present appeals and may, therefore, be usefully extracted : "7(1). Every whole-time officer or other employee of an existing insurer other than an Indian insurance company who was employed by that insurer wholly or mainly in connection. with his general insurance business immediately before the appointed day shall, on the appointed, day, become an officer or other employee, as the case may be, of the Indian insurance company in which the undertaking of that insurer or that part of the undertaking to which the service of the officer or other employee related has vested, and shall hold his office or service under the Indian insurance company on the same terms and conditions and with the same rights to pension, gratuity and other matters as would hove been admissible to him if there had been no such vesting, and shall continue to do so unless and until his employment in the Indian insurance company in which the undertaking or part has vested is terminated or until his remuneration, terms and conditions art duly altered by that Indian insurance company : Provided that nothing in this sub-section shall apply to any such officer or other employee who has given, in writing, notice to the Central Government or to any person nominated in this behalf by that Government before the appointed day intimating his intention of not becoming an officer or employee of the Indian insurance company in whom the undertaking or part thereof to which his service relates has vested. (2) If any question arises as to whether any person was a whole-time officer or employee, or as to whether any officer or employee, was employed wholly or mainly in connection with the general insurance business of the existing insurer referred to in sub-section (1) immediately before the appointed day, the question shall be referred within a period of two years from the appointed day and not thereafter to the Central Government which shall, after giving an opportunity of being heard to the person concerned in the matter, decide it in such manner as it thinks fit and such decision shall be final." S. 9 provided for the formation of a Government Company known as the General Insurance Corporation and S. 10 provided that all the shares in the capital of every Indian Insurance company which stood transferred to and vested in, the Central Government under S. 4, with the exception of the shares transferred under sub-section (2), shall immediately stand transferred to and vested in the Corporation. S. 16 provided for the framing of one or more schemes by the Central Government for the more efficient carrying on of general insurance business. In particular S. 16(1)(a) provided for the framing of schemes for "the merger in one Indian insurance company of any other Indian insurance company, or the formation of a new company by the amalgamation of two or more Indian insurance companies". S. 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." S. 17 provided that a copy of every scheme and every amendment thereto framed under S. 16 shall be laid as soon as may be after it is made, before each House of Parliament.
(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, in India. After the nationalisation Act was passed the Central Government framed a scheme under S. 16(1)(a) by which the existing insurance companies were so grouped together that only four companies . remained to carry on the business of general insurance. They were the Oriental Fire and General Insurance Company Ltd. The United India Fire and General Insurance Company Ltd., The India Assurance Company Ltd. and The National Insurance Company Ltd. The share capital of these four companies was vested in and controlled by the General Insurance Corporation. 'The insurance undertakings, other than Indian insurance companies were merged into one or other Indian insurance company.
(3.) Immediately thereafter the question of integration of the services of the employees of the former Indian insurance companies and other existing insurers arose.;