S VAIDAYANATHA IYER Vs. LIFE INSURANCE CORPORATION OF INDIA

JUDGEMENT

(1.) THE appellants in the above appeals are employees under the Life Insurance corporation of India and they have appealed from the judgment of Rajagopalan, J. rejecting their applications under Article 226 of the Constitution for the issue of a writ of mandamus, directing the respondent (Life Insurance Corporation of India, represented by its Zonal Manager) to reinstate them to the same office with all rights and privileges attached thereto respectively held by them in the various insurance units before their integration into the Life Insurance Corporation of india. The appellants claim that they had been appointed by the various business insurance companies prior to their integration with the Insurance Corporation of india, as administrative and supervisory officers but that after the Corporation came into being they were demoted to the position of field officers contrary to the statutory guarantee contained in Section 11 (1) of the Life Insurance Corporation act (which will hereinafter be referred to as the Act ). By the petitions out of which these appeals arise, the appellants prayed for reinstatement, to their original offices which according to them would entitle them to the emoluments and advantages of class officer of the Corporation. The appeals, therefore, raise a common question as to the power of the Life Insurance Corporation, of India to regulate and fit in officers of the various insurance companies which had become merged in the Corporation in the new set-up, by giving them different designations or assigning different duties. The transfer of service of the employees of 'he insurance concerns which were taken over by the Corporation is regulated by Section 11 of the Insurance Corporation Act. Before we refer to that provision it will be useful to advert briefly to the background events that preceded the enactment.

(2.) THE first step towards nationalisation of the Life Insurance Business in India was taken, up on 19-6-1956, by the promulgation of the Life Insurance Emergency provisions Ordinance, 1956. This Ordinance was followed by the enactment, India act IX of 1956, containing almost identical provisions. Under the terms of the ordinance and in the statute that followed, management and control of the business of the various insurers in the country became vested in the Central government who appointed their nominees called custodians to take charge of the management of the various insurance concerns. These custodians, therefore, functioned under the direction and control of the Government of India. It is unnecessary in this connection to refer to the case of a few insurers who were allowed to continue their management but they too in so doing functioned as agents of the Government. Thus both under the ordinance as well as under the Act ix of 1956, the management of the business alone vested with the Government, the insurers being entitled to the beneficial interest in the business. This stale of affairs was changed on the passing of the Life Insurance Corporation Act, 1956, which after providing for payment of compensation to the various insurance corporation took over the business of the various insurers and integrated them into the State owned Corporation. The Act came into force on 1-9-1956 ' The magnitude of the task which the Corporation had to face is to some extent seen from the "interim reports of the activities of the Life Insurance Corporation of india" submitted to the Government in August, 1957. There were 243 different units engaged in doing life insurance business in India and the total number of salaried employees were nearly 27000. Almost the first thing to which the corporation had to devote its attention was, therefore, to achieve an organisational set-up with the twin object of preserving and expanding the old business and also of integrating the various businesses taken over by it. The interim report gives a picture of the problems before the Corporation, for example, in the city of Bombay it is stated that there were about 71 head or principal offices of the various insurers whose business had to be taken over. In several other places there were various companies doing similar business. All these had to be consolidated into one organisational unit if only for the proper effectuation of the purpose that the Corporation was constituted for and had in view. By reason of the fact that the business of the several insurers in several places had to be brought under one set-up there was need for a change in the administrative set-up as well. The. report states that there were considerable difficulties in assessing the relative claims of officers as to seniority and gradation; designation in companies did not in every case indicate the nature of duties or functions. They were not of the same level of responsibility in all cases. Even where the functions and level of responsibility were the same, the size of the company and the nature of its operations meant different degrees of training and experience. The integration of all the officers into a well-knit cadre with a well-recognised seniority had, therefore, been presenting difficulties. It is. inevitable that in any scheme of consolidation where duplicate officers are merged into a single one, the number of officers' posts in the Corporation should be smaller than the total number of posts carrying same or equivalent designations in all the insures put together. A number of persons holding executive positions in insurance companies, it is stated, had to be appointed, to positions carrying lower designations. Also in the process of fitting-in offices in the new grades of the Corporation, their emoluments were revised. The report further reveals that the integration of the services of supervisory clerical and subordinate staff presented more difficult problems. Besides, it appears that during the two years preceding nationalisation of the life insurance business, various insurers had appointed, a number of inspectors creating other classes of intermediaries under a variety of designations sometimes on a pro rata basis and on occasions on fixed salary. The report then, adds,

(3.) FIXATION by the Corporation of the salaries of the field officers it is stated was based on the volume of business procured during the period between 1-9-1956 and 30-9-1957, or between 1-1-1957 and 31-12-1957. It will be seen that the emoluments of the appellants under the Corporation has in all the cases been less than what they were getting under the insurers. They are, however, given a special allowance and there is a categorisation and a grade.