- (1.) THE Judgment of the Court was delivered by S. B. Sinha, J.- Jurisdiction of the Chairman of the Life Insurance Corporation of India (Corporation) to issue instructions in terms of Regulation 51 of the Life Insurance Corporation of India class I Officers (Revision of Terms and Conditions of Service) Instructions, 1996 is in question in this appeal which arises out of a judgment and order dated 29th september, 1995 passed by a Division Bench of the Kerala High Court in Writ appeal No. 32 of 2004.
(2.) WE may notice only the admitted facts herein. Respondent No. 1 is an Association of Officers who have retired from the services of the appellant-Corporation which is a statutory authority constituted and incorporated under the Life Insurance Corporation Act, 1956. During the period of 1 st August, 1992 and 31st July, 1994 a revision of scales of pay of the offices and employees of the Corporation took place. Different cut off dates were fixed for grant of different nature of allowances as also pay by the chairman of the Corporation in purported exercise of his power under Regulation 51 of the Regulations. Whereas 1st April, 1993 was the cut off date for revision of pay; 1st August, 1994 was fixed as the cut off date for the purpose of payment of gratuity on the basis of revised pay. However, so far as those employees who had retired prior to 1st August, 1994 are concerned, they were directed to be entitled to reduce gratuity based on the reduced scale of pay with effect from 1st April, 1993 only. The arrears of pay were directed to be paid only w. e. f. 1st April, 1993. Indisputably, whereas the Gujarat and Kerala High Court upheld the validity of the instructions issued by the Chairman of the appellant-Corporation, the karnakata High Court took a different view. The claim of Respondent No. 1 was allowed in part by a learned Single judge of the High Court by his order dated 8th July, 2003 holding : "a reading of Ext. P-3 (instructions issued by the Chairman for supplementary of revisionist in respect of class I officers and claimed IV will definitely go to show that it cannot operate as far as the claims for gratuity is concerned. It is admitted that at least certain officers, represented by the petitioner Association were deemed as having revised salary from April, 1993 onwards. In that view, at the time of retirement, they were deemed as getting a salary which alone could have been taken notice of for computing gratuity, if Regulation No. 77 has any application. It is definite that the restriction in Ext. P-3 and benevolence in Regulation No. 77 could not have co-existed because the Corporation is offering gratuity at the rate less than the amount an employee had notionally drawn at the time of their respective retirement. It is also pertinent to note that when powers were conferred on the Chairman under Regulation no. 51 (2), specific reference was there about the incidents of DA and other allowances. There is no reference to any alteration permissible in respect of gratuity. It leads to the position that the regulation did not permit the Chairman to disturb criterian for gratuity payment by exercise of powers under Regulation No. 51 (2 ). " It was further held : "there was no power on the part of the Bank Management in that case to disturb the settlement, and the gratuity was to be paid on the basis of last drawn pay. Likewise, in the present case, it would not have been permissible for the Chairman to unsettle the benefits that had been spoken to by Regulation No. 77 while issuing Ext. P-3 order. "
(3.) A Division Bench of the said High Court on an intra court appeal preferred by the appellants herein upheld the said findings. Mr. Parwalia, learned senior counsel appearing on behalf of the appellants, in support of this appeal, submitted : (i) Pension and Gratuity having two different concepts, the High Court committed a serious error in holding that the Chairman of the Corporation had no jurisdiction to issue the instructions. (ii) Sub-regulation (2) of Regulation 51 being of wide amplitude, the jurisdiction of the Chairman to fix cut off dates was not only applicable in respect of pay and allowances covered by Schedule II of the Regulations but also included "gratuity" as envisaged under Regulation 77, as the quantum thereof has a direct nexus with the payment of salary. (iii) An employer, subject to the applicability of the doctrine of reasonableness and non-arbitrariness, can fix a cut off date for the implementation of the revised pay and allowances. (iv) The amount of gratuity payable has to be calculated upon the permanent pay and once the gratuity has been paid, no further amount is payable only because the salary has been revised. ;