Monoj Kumar Mukherjee, J. - (1.) - Ten Development Officers of Life Insurance Corporation of India ('Corporation' for short) for selves and in their representative capacity filed an application under Article 226 of the Constitution of India before a learned judge of this Court calling in question the legality and validity of the Life Insurance Corporation Development Officers' (Alteration of Remuneration and other Terms and Conditions of Service) Order, 1978 (hereinafter referred to as the '1978 Order') framed by the Government of India in exercise of the powers conferred on it by Sub-section (2) of Section 11 of the Life Insurance Corporation Act, 1956 ('Act' for short) and the Life Insurance Corporation of India (Staff) Sixth Amendment Regulations, 1978 (hereinafter referred to as the '1978 Regulations), made by the Corporation under Section 49 of the Act and praying, inter alia, for appropriate writ for quashing the same. On that application a Rule nisi was issued and an interim Order was passed staying operation of the impugned Order and Regulations. After hearing the parties at length the learned Judge ultimately discharged the Rule nisi and aggrieved thereby those Officers preferred the instant appeal.
(2.) Mr. A. P. Chatterjee, the learned Advocate appearing on behalf of the appellants, raised various contentions in support of the appeal for appreciation whereof it is necessary to notice the facts and circumstances that led to the passing of the impugned Order and Regulations.
(3.) To ensure absolute security to the policy-holder in the matter of his Life Insurance protection, to spread insurance much more widely and in particular to the rural areas, and as a further step in the direction of more effective mobilisation of public savings the Government of India decided to nationalise the Life insurance business in India. To implement that decision, the Government first promulgated an Ordinance in January, 1956 whereby pending the passing of a Bill to nationalise, the management of the life insurance business, which was then being carried on by about 240 companies, was vested in the Central Government. Thereafter the Act was proclaimed and brought into force on July 1, 1956. Under Section 3 of the said Act the Central Government was empowered to establish the Corporation with effect from such date as might be notified in the Official Gazette. This Corporation was to be a body corporate having perpetual succession and common seal. The primary function of the Corporation was to carry on Life Insurance Business in and outside India. Section 7 of the Act provided for transfer of assets and liabilities of existing insurers carrying on controlled business to the Corporation and for vesting of the said business in the Corporation on the appointed date, which was to be the date of establishment of the Corporation. To deal with transfer of service of whole-time employees of an insurer, whose controlled business was to stand transferred provision was made in Section 11 of the Act. Since substantial controversy in this appeal centres round the interpretation of this Section, we extract below its entire provision. "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 sub-section 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) 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 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 anything 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 things 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." (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, 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.";