PADMA MENON Vs. GENERAL INSURANCE CORPORATION OF INDIA

JUDGEMENT

(1.) THE petitioner entered the service of the Cochin Divisional office of the General Assurance Society Ltd. , as a field officer with effect from 1. 10. 1969. One of the terms of appointment was that she should guarantee a minimum business of Rs. 35,000 in Fire, Motor, Marine and Miscellaneous Insurance and a minimum premium income of Rs. 3,000 per mensem. As part of her duty she has to organise an effective agency force and work in consonance with the provisions of the Insurance Act and the Rules. She was on probation for six months and during that period her appointment was terminable without any notice. She completed her probation successfully and her service was regularised in due course. While so in September, 1972 the General Insurance Business (Nationalisation) Act, Act 57 of 1972 was passed by the Parliament. By this Act the shares in the capital of every Indian Insurance Company was statutorily transferred to and vested in the Central Government. The Central Government was directed to form a Government company in accordance with the provisions of the Companies Act to be known as the Central Insurance Corporation of India for the purpose of superintending controlling and carrying on the business of general insurance. On such formation the shares in the capital of every Indian Insurance company which got statutorily transferred to and vested in the Central Government as above were transferred to the Corporation. Provision was also made enpowering the Central Government to frame one or more schemes providing for the merger of one Insurance company with another or for the formation of a new company by the amalgamation of two or more Insurance companies. On framing such a scheme the undertaking no any Indian Insurance company was to vest of the acquiring company. On such a merger the service of all officers and other employees of the Indian Insurance Company which ceased to exist by reason of the scheme were directed to be continued in the acquiring company on the same terms and conditions which they were getting or as the case may be by which they are governed immediately before the commencement of the scheme. A scheme called National Insurance Compane Ltd. , (Merger) Scheme, 1973 was framed by the Central Government which came into force on 1st January, 1974. General Assurancs Society Ltd. was one of the nine companiee which were merged with the National Insurance Company Ltd. , under this scheme. Clause 5 of that scheme provided that every whole time officer or other employee of the merged company shall from the date of merger become an officer of the transferee company and shall hold office on the same terms and conditions and with the same rights as to pension, gratuity and other matters as would have been admissible, to him if there had been no such transfer or merger and shall continue to do so unless and until his employment in the transferee company is terminated or until his remuneration, terms and conditions are duly altered by the transferee company or by any other scheme framed under the Act. Under this provision the petitioner became an officer of the National Insurance Co. Ltd. , Subsequently all officers of the National Insurance Co. were required to submit a bio data some time in 1975 by the respective units. The petitioner also filed a pro forma showing the details. Thereafter the petitioner was directed to appear before a committee for interview. Though she withdrew advance allowance to proceed to Madras and appear for the interview, she did not go, and according to her this was due to her illness. She wrote a letter on 11. 3. 1976 expressing her inability to reach Madras and a certificate from a Civil Surgeon was sent along with it. The interview was to take place on 12th March, 1976. On 17th March the Administrative Officer of the Divisional Office met the petitioner at her residence and informed her that her absence for the interview was not appreciated by the Divisional Office. The next day she received a letter from the Divisional Manager intimating her that her failure to appear for the interview will be seriously viewed and the Regional Office will be informed to take appropriate action. On 20th March, 1976 she received that communication. In the meantime she returned the amount drawn by her as advance. On 1st April, 1976 the petitioner received a letter from the Regional Manager informing her that her services have been terminated with effect from 30th March, 1976. Along with that letter a cheque representing payment of dues in lieu of one month's notice had also been enclosed. This order terminating her service is challenged in this petition.

(2.) IT is contended that with the transfer and vesting of shares of Indian Insurance Companies in the Central Government, the formation of a Government company known as the General Insurance Corporation of India and transfer to the Corporation of the shares in the Capital of the Indian Insurance Companies statutorily transferred and vested as above in the Central Government, the General Insurance Corporation and the other companies became "other Authorities" within the meaning of Article 12 of the Constitution; and the employees of various companies acquired the status of public employment. Alternatively, under Section 16 of the Act reads with the provision of the scheme framed by the Central Government to merge certain Indian Insurance Companies in the National Insurance Company Ltd. the whole time employees of the merged company acquire a statutory status. In either way before terminating the service of the petitioner an opportunity of being heard should have been given before the termination. It is also contended that the termination order in this case is in the nature of a punishment and before imposing that punishment no reasonable opportunity was given to the petitioner for being heard in the matter. Therefore, the order of termination is ultra vires and has to be quashed.

(3.) IN answer respondent, No. 1, namely, the General Insurance Corporation of India and respondent No. 3 the Divisional Manager, National Insurance Company Ltd. have filed affidavits. According to them even after the coming into force of the General Insurance Business (Nationalisation) Act, 1972 and the merger schemes framed under the Act the National Insurance Company Ltd. , continued to be a company governed by the companies Act and it is not "other authority" within the meaning of Article 12 of the Constitution. Further the merger scheme did not in any way affect the terms and conditions of the officers and other employees of the merged companies. They continue to be governed by the same terms and conditions existing before the merger. Consequently there is no element of public employment in the case of the petitioner or any other officer or employees to confer a status of public employment on them. Their relationship continued to be governed by the terms of contract of employment and general law of master and servant alone applies in the matter. Consequently the petitioner cannot claim any notice to show cause against the termination of her service. Nor is the termination of her service a punishment to attract the principles of observance of natural justice before such termination.