Venkataramiah, J. - (1.) The question involved in these appeals by special leave which are filed against the judgment dated August 17, 1985 of the High Court of Allahabad in Civil Misc. Writ No. 6849 of 1984 relates to the constitutional validity of Regn. 19(2) of the Life Insurance Corporation of India (Staff) Regulations, 1960, (hereinafter referred to as 'the (Staff) Regulations, 1960'), as amended on 21-1-1977 by the Life Insurance Corporation of India (hereinafter referred to as 'the Corporation') which provides that an employee belonging to Class I or Class II appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age but the competent authority may. if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 50 years of age and at any time thereafter on giving him three months' notice or salary in lieu thereof.
(2.) Prior to January, 1955 there were more than 200 insurers carrying on life insurance business in India. As it came to the notice of the Government that the Indian life insurers. with a few exceptions, were virtual, controlled by few individuals who were utilising the funds of those companies to the detriment of the industry and the policyholders. the Government decided to nationalise the life insurance business. Pursuant to the said decision, the President of India promulgated the Life Insurance (Emergency Provisions) Ordinance, 1956, on January 19, 1956 providing for the vesting of the management of the life insurance business (which was called the controlled business under the Ordinance) which was being carried on by any insurer in India on that day in the Central Government and providing for its management. On the passing of the said Ordinance the management of the controlled business of all the insurers in India thus vested in the Central Government and pending the appointment of the custodians for the controlled business of any insurer the person in charge of the management of such business immediately before the passing of the Ordinance was required to be in charge of the management of the business for and on behalf of the Central Government. The Ordinance contained detailed provisions for the carrying on of the life insurance business by the Government for the time being. The Ordinance was replaced by the Life Insurance (Emergency Provisions) Act, 1956 which was:published on 21st of March, 1956. The said Act was followed by the Life Insurance Corporation Act, 1956 (Act 31 of 1956) (hereinafter referred to as 'the Act') which was published in the Gazette on 18th June, 1956. The Act, however, came into force on 1st July, 1956. The Act provided for the establishment and incorporation of the Corporation. The Corporation was accordingly established on 1st September, 1956. Under the Act the expression 'appointed day' is defined as the date on which the Corporation is established. The appointed day for the purposes of the Act is, therefore, September 1, 1956. By virtue of S. 7 of the Act on the appointed day all the assets and liabilities appertaining to the controlled business of all insurers the management of which (it) had been taken over earlier by the Central Government stood transferred to and vested in the Corporation. When the Corporation thus came into existence it had no employees of its own to carry on the vast business of the large number of insurers which had been taken over by it. It, therefore. became necessary to transfer the services of the existing employees of the insurers to the Corporation because without the services of those employee's it was almost impossible for the Corporation to run the life insurance business in India which involved management of the various offices situated in different parts of India, servicing of lakhs of insurance policies, the administration of the assets taken over from the insurers and several other activities connected with the life insurance business. The nature of the work of the Corporation was such that it required the services of the employees with sufficient experience and expertise in running the life insurance business. In order to meet the above need S. 11 of the Act came to be enacted. Section 11 of the Act originally stood as follows: "11. Transfer of service of existing employees of insurers to the Corporation - (1) Every whole-time employee of an insurer whose controlled business has been transferred to and vested in the Corporation and who was employed by the insurer wholly or mainly in connection with his controlled business immediately before the appointed day shall, on and from the appointed day, become an employee of the Corporation, and shall hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same on the appointed day if this Act had not been passed, and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation: Provided that nothing contained in this subsection shall apply to any such employee who has, by notice in writing given to the Central Government prior to the appointed day, intimated his intention of not becoming an employee of the Corporation. (2) Notwithstanding anything contained in sub-s. (1) or in any contract of service, the Central Government may, for the purposes of rationalising the pay scales of employees of insurers whose controlled business has been transferred to and vested in it or for the purpose of reducing the remuneration payable to employees in cases where in the interest of the Corporation and its policy-holders a reduction is called for, alter the terms of service of the employees as to their remuneration in such manner as it thinks fit; and if the alteration is not acceptable to any employee the Corporation may terminate his employment on giving him compensation equivalent to three months' remuneration unless the contract of service with such employee provides for a shorter notice of termination. Explanation:The compensation payable to an employee under this sub-section shall be in addition to and shall not affect any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service. (3) If any question arises as to whether any person was a whole-time employee of an insurer or as to whether any employee was employed wholly or mainly in connection with the controlled business of an insurer immediately before the appointed day the question shall be referred to the Central Government whose decision shall be final. (4) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any other law for the time being in force, the transfer of the services of any employee of an insurer to the Corporation shall not entitle any such employee to any compensation under that Act or other law, and no such claim shall be entertained by any Court, tribunal or other authority.
(3.) Sub-section (1) of S. 11 of the Act provided that every whole-time employee of an insurer whose controlled business had been transferred to and vested in the Corporation and who was employed by the insurer wholly or mainly in connection with the controlled business immediately before the appointed day, i.e., September 1, 1956, would on and from the appointed day become an employee of the Corporation, and would hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same on the appointed day if the Act had not been passed, and would continue to do so unless and until his employment in the Corporation was terminated and until his remuneration, terms and conditions were duly altered by the Corporation. The proviso to that sub-section provided that nothing contained in sub-sec. (1) of S. 11 of the Act would apply to any such employee who had by notice in writing given to the Central Government prior to September 1, 1956 intimated his intention of not becoming an employee of the Corporation. The whole-time employees of the erstwhile insurers whose services were thus transferred to the Corporation are hereinafter referred to as 'the transferred employees' of the Corporation. As mentioned earlier, there were more than 200 insurers whose controlled business had been taken over by the Corporation and we are informed that there were about 27,000 whole-time employees working in them. The conditions of service of these transferred employees of the Corporation whose services were transferred to the Corporation under S. 11 (1) of the Act were not uniform. It was naturally difficult to continue after the establishment of the Corporation in the cases of all the transferred employees, the conditions of service enjoyed by them when they were in the employment of the former insurers. The conditions governing the retirement of those officials with which we are concerned in these appeals were also diverse and different. In some cases the age of retirement had been fixed at 55 years. in some at 58 years and in some others at 60 years. In many cases the insurers had permitted their employees to continue in their service even beyond 60 years depending upon their efficiency and physical capacity. The conditions of service of employees and in particular the terms of remuneration prevalent in some of the former insurance organisations were also disadvantageous to the policyholders. It, therefore, became necessary to bring about uniformity in the conditions of service of the transferred employees. Parliament, therefore, enacted sub-s. (2) of S. 11 of the Act which provided that notwithstanding anything contained in subs. (1) of S. 11 or in any contract of service, the Central Government might 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 purposes of reducing the remuneration payable to those employees in cases where in the interest of the Corporation and its policy-holders a reduction was called for, alter the terms of service of the employees as to their remuneration in such manner as it thought fit and if the alteration was not acceptable to any employee the Corporation might terminate his employment on giving him compensation equivalent to three months' remuneration unless the contract of service with such employee provided for a shorter notice of termination. Doubts arose as regards the meaning of sub-s. (2) of S. 11 of the Act In Christopher Pimenta v. Life Insurance Corporation of India, AIR 1958 Bom 451 the High Court of Bombay opined that under S. 11(2) of the Act the Central Government could alter the terms and conditions of service of the employees only as to the remuneration and that the said sub-section had no reference to the other terms and conditions of the service. The above decision of the Bombay High Court was delivered on 16-4-1957. It is stated that there were cases pending in other Courts also questioning the scope and ambit of sub-s. (2) of S. 11 of the Act as it stood originally. Hence in order to remove all doubts the President of India promulgated an Ordinance (which was replaced by Act 17/1957) substituting a new sub-section in the place of the original sub-s. (2) of S. 11 of the Act making it more comprehensive and thus enabling the Central Government to alter suitably all conditions of service of the transferred employees. The new sub-s. (2) of S. 11 of the Act was further modified by Act 16 of 1957. Thereafter sub-s. (2) of S. 11 of the Act reads as follows: "(2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of remuneration and the other terms and conditions of service applicable to employees of insurers whose controlled business had 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 anything contained in sub-s. (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. Explanation - The compensation payable to an employee under this sub-section shall be in addition to, and shall not affect, any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service.";