vil Appeal No. 10761077 of 1987.

From the Judgment and Order dated 17.8.1985 of the Allahabad High Court in C.M.
Writ No. 6849 of 1984.
K. Parasaran, B. Datta, P.P. Rao, K.L. Hathi, Anil Nauriya, S.R. Aggarwal, Y.
Ramachandran, U.J. Rana, R.P. Srivastava, Hem 188 ant Sharma, P. Parmeshwaran, Ms.
Sushma Suri and C.V. Subba Rao for the Appellants.
M.K. Ramamurthy, C.S. Vaidyanathan, section Ravindra Bhatt, Mohan, S.R. Setia and
Probir Choudhary for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH J.
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
Miscellaneous Writ No. 6849 of 1984 relates to the constitu tional validity of
regulation 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 pro vides 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.
Prior to January,.
1955 there were more than 200 insur ers carrying on life insurance business in
India.
As it came to the notice of the Government that the Indian life insur ers, with a
few exceptions, were virtually 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 busi ness.
Pursuant to the said decision, the President of India promulgated the Life
Insurance (Emergency Provisions) Ordi nance, 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 immedi ately 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 insur
ance business by 189 the Government for the time being.
The Ordinance was replaced by the which was published on 21st of March, 1956.
The said Act was followed by the (Act 31 of 1956) (hereinafter referred to as 'the
Act ') which was published in the Gazette on 18th June, 1956.
The Act, howev er, 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 de fined 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 section 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 Govern ment, 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 employees
it was almost impossible for the Corporation to run the life insur ance business in
India which involved management of the various offices situated in different parts
of India, serv icing 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 section 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 privi leges as to pen
190 sion 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 employ ment 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 ap pointed
day, intimated his intention of not becoming an employee of the Corporation.
(2) Notwithstanding anything con tained in sub section (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 remuner ation payable to
employees in cases where in the interest of the Corporation and its policyhold ers
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 ' remuner ation unless the contract of
service with such employee provides for a shorter notice of termination.
Explanation: The compensation payable to an employ ee 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 (14 of 1947), or in any other 191 law
for the time being in force, the transfer of the serv ices 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.
" Sub section (1) of section 11 of the Act provided that every whole time employee
of an insurer whose controlled business had been transferred to and vested in the
Corpora tion 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 Corpora
tion, and would hold his office therein by the same tenure, at the same
remuneration and upon the same terms and condi tions 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
remunera tion, terms and conditions were duly altered by the Corpora tion.
The proviso to that sub section provided that nothing contained in sub section (1)
of section 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 Corpo ration 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 employ ees of the Corporation whose
services were transferred to the Corporation under section 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 insur ers.
The conditions governing the retirement of those offi cials 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 192 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 section (2) of section 11 of the Act which
provided that notwithstanding anything contained in sub section (1) of section 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 remu
neration payable to those employees in cases where in the interest of the
Corporation and its policyholders a reduc tion 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 '
remuner ation unless the contract of service with such employee provided for a
shorter notice of termination.
Doubts arose as regards the meaning of sub section (2) of section of the Act.
In Christopher Pimenta and Others vs Life Insurance Corporation of India, the High
Court of Bombay opined that under section 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 section (2) of sec tion 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 section (2) of section II 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 section (2) of section 11 of the Act was further modi fied by Act 36 of
1957.
Thereafter sub section (2) of sec tion 11 of the Act read as follows: "(2) Where
the Central Government is satisfied that for the purpose of securing uniformity in
the scales of remuner ation and the other terms and conditions of service applica
ble 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 interest of
the Corpora tion and its policy holders, a reduction in the remuneration payable,
or a revision of the other terms and 193 conditions of service applicable, to
employees or any class of them is called for, the Central Government may, notwith
standing anything contained in sub section (1), or in the , or in any other law for
the time being in force, or in any award, settlement or agree ment 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 employ ment by
giving him compensation equivalent to three months ' remuneration unless the
contract of service with such em ployee 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.
" Section 49(1) of the Act conferred powers on the Corpo ration to make with the
previous approval of the Central Government regulations not inconsistent with the
Act and the rules made thereunder.
It provided for making regulations to provide for all matters for which provision
was expedient for the purposes of giving effect to the provisions of the Act.
Clause (b) of sub section (2) of section 49 of the Act in particular conferred
power on the Corporation to make regulations as regards the method of recruitment
of employ ees and agents of the Corporation and the terms and condi tions of such
employees or agents.
It was felt that clause (b) of section 49(2) of the Act was not in terms applicable
to the transferred employees who became the employees of the Corporation under sub
section (1) of section 11 of the Act but only referred to the employees and agents
of the Corpo ration who were employed after the Corporation was estab lished, that
is, after 1st September 1956.
To remove the above doubt by Act 17 of 1957 section 49 of the Act was amended by
introducing clause (bb) in sub section (2) of section 49 of the Act which expressly
conferred power on the Corporation to make regulations with the previous approval
of the Central Government as regards 'the terms and condi tions of service of
persons who have become employees of the Corporation under sub section (1) of
section 11 '.
The above clause was introduced into the Act with retrospective effect along with
the new sub 194 section (2) of section 11 of the Act.
It is this to be seen that the conditions of service of the transferred employees
were to be regulated by the provisions of the Act, by an order made by the Central
Government under section 11(2) of the Act and the regulations made under clause
(bb) of sec tion 49(2) of the Act.
Even before clause (bb) was actually introduced into the Act with retrospective
effect by Act 17 of 1957 the Corporation had promulgated the Life Insurance
Corporation of India (Staff) Regulations, 1956 (hereinafter referred to as 'the
(Staff) Regulations, 1956 ').
Under regulation 21 of the (Staff) Regulations, 1956 provision was made regarding
superannuation and retirement of the employ ees of the Corporation.
Regulation 21 reads as follows: "21.
An employee shall retire at fifty five years of age provided that the appointing
authority may at its discretion extend the service every year upto 60 years of age.
Provided, however, that in respect of some of the employees of insurers who are
allowed to continue in service beyond age 60 because of the terms and conditions of
employ ment having not 'been favourable in the past, the Executive Committee may at
its discretion extend their service every year upto age 65.
Provided further that during the three years, beginning from 1st September, 1956,
the Executive Committee may, at its discretion, extend the service of a class I
employee, who has completed sixty years of age for such period as may be specified
but not exceeding one year at a time if such extension is considered necessary in
the inter est of the Corporation.
Explanation Notwithstanding anything contained in this Regulation, where an
employee has privilege leave earned but not availed of as on the date of retirement
as prescribed in the above Regulation he may be permitted to avail of the leave and
in that case the employee will be deemed to retire from service at the expiry of
the leave.
" The above regulation fixed the age of retirement of an employee at 55 years while
empowering the authority to extend the service of an employee, at its discretion,
every year upto 60 years of age.
The first proviso to regulation 21 of the (Staff) Regulations, 1956, however, 195
authorised the Corporation to allow some of the employees of insurers who were
allowed to continue in service beyond the age of 60 years for the reasons mentioned
therein.
The above regulation thus made a distinction between an employee who entered the
service of the Corporation after it was estab lished, i.e., after 1st September,
1956 and the transferred employees insofar as the age of retirement was concerned.
Pursuant to the power conferred on it under sub section (2) of section 11 of the
Act the Central Government issued an order on 1.6.1957 called the Life Insurance
Corporation of India (Alteration of Remuneration and other Terms & Conditions of
Service of Employees) Order, 1957 which came into force retrospectively from 1st
September, 1956.
This order is called the 'standardisation order '.
This Order applied to all transferred employees who had become employ ees of the
Corporation under section 11(1) of the Act and who were in supervisory, clerical
and subordinate grades (now classified as Class III and Class IV employees) of the
erstwhile insurers on 31st August, 1956.
Clause 13 of the above Order, which related to the age of superannuation read as
follows: "13.
Retirement: The normal age of retirement shall be 60.
But the Corporation may require any employee who has attained the age of 55 to
retire if his efficiency is found to have been impaired.
" Clause 13 of the above Order, therefore, modified regu lation 21 of the (Staff)
Regulations, 1956 to the extent indicated therein with effect from the commencement
of the Corporation.
After the promulgation of the Order the trans ferred employees to whom it applied
were entitled to contin ue in the service of the Corporation till they attained the
age of 60 years subject to the Corporation exercising its powers to retire a
transferred employee on his attaining the age of 55 years if his efficiency was
found to have been impaired.
In the case of the other employees who joined service subsequent to 1st September,
1956 regulation 21 of the (Staff) Regulations, 1956, which prescribed the age of
retirement at 55 years subject to the appointing authority at its discretion extend
the age of retirement to 60 years as provided therein, continued to apply.
This Order applied to the members of the staff of the Corporation belonging to
Class III and Class IV categories.
As regards the trans ferred officers belonging to the Class II category, 196
namely, the Field Officers, a standardisation order was made under sub section (2)
of section 11 of the Act on 30th December, 1957.
Clause 6 of that order originally read as follows: "6.
Leave and retirement In the matter of leave and retire ment, Field Officers shall
be governed by the same regula tions as are applicable to Class I officers of the
Corpora tion.
" The above clause 6 was substituted by a new clause on 25.11.1962 which read as
follows: "6.
Leave and retirement In the matter of leave and retire ment, Development Officers
shall be governed by the Life Insurance Corporation of India (Staff) Regulations,
1960, as amended from time to time.
" It may be noted that the Field Officers referred to in the former clause 6 had
been redesignated as the Development Officers before it was substituted by the
later clause 6 of the standardisation order.
Insofar as the transferred offi cers belonging to Class I were concerned, the
question of determination of their age of superannuation was taken up for
consideration by the Services and Budget Committee of the Corporation on 20th
November, 1959.
Para 9 of the office note circulated amongst the members of that committee gave a
true picture of the conditions prevailing then.
It read thus: "9.
As regards retirement, the Government has mentioned that the Department of
Expenditure has objected to raising the date of superannuation to 58 years of age
on the ground that other statutory Corporations are also demanding the same benefit
on the analogy of the Life Insurance Corporation 's proposal.
Standardisation Order provides that an employee shall retire at 60 years of age,
but the competent authority may require an employee to retire at any time after 55
years of age if his efficiency is found to have been impaired.
In the amended Regulations approved by the Board, this provi sion of the
Standardisation Order was incorporated as far as employees in Classes III & IV are
concerned but in the case of transferred officers and Field Officers, the
retirement age was fixed at 55 extensible to 58 with a further proviso that in
special circumstances only the competent authority may extend the services 197
beyond age 58 and upto 60 years of age.
The Board has also decided that administratively we shall grant exten sion upto 60
liberally till the end of 1963.
Most of the insurers permitted their officers to continue in service upto 60 years
of age and even beyond, depending upon their efficiency.
There is no reason why there should be distinc tion between officers and staff in
this matter as both of them had similar privileges with regard to retirement in the
past.
There is thus a strong case for extending the provi sions of the Standardisation
Order regarding retirement to the transferred officers also.
As regards new recruits, it was thought that there was no justification to bring
down the retirement age from 60 to 55 all of a sudden nor was it considered
necessary to maintain any distinction between officers and staff.
All the employees have often represented that the age of retirement should be
raised to 60.
A compro mise was, therefore, struck by fixing the age at 58.
In the light of the above it is suggested that the provisions of the
Standardisation Order may be extended to transferred officers and the retirement
age may be retained at 58 for persons recruited on or after 1st January 1959.
It may be added that this would mean a modification of the earlier decision of the
Board in this matter.
" After the matter was duly considered by the Services and the Budget Committee and
by the Corporation, regulations were framed under clauses (b) and (bb) of section
49(2) of the Act prescribing the ages of retirement of the employees of the
Corporation belonging to different categories with the previous approval of the
Central Government and were incorporated in the (Staff) Regulations, 1960 made by
the Corporation which came into effect on July 1, 1960.
Regula tion 19 of the (Staff) Regulations, 1960 dealt with the subject of
superannuation and retirement of the employees of the Corporation.
It reads thus: "Superannution and Retirement: 19(1).
A transferred employee shall retire on completion of age 60; but the appointing
authority may direct such employ ee to retire on completion of 55 years of age or
at any time thereafter, if his efficiency is found to have been im paired.
(2) An employee appointed to the service of the 198 Corporation on or after 1st
September, 1956 shall retire on completion of 58 years of age; but the appointing
authority may direct such employee to retire on completion of 55 years of age or at
any time thereafter, if his efficiency is found to have been impaired.
. . . . . . . It is seen from the above regulation that the cases of all
transferred employees were dealt with by sub regulation (1) of regulation 19 and
the cases of employees appointed to the service of the Corporation that year after
1st Septem ber, 1956 were dealt with by sub regulation (2) of regula tion 19.
All the transferred employees were entitled to remain in service till they
completed 60 years of age but the appointing authority was empowered to retire any
such transferred employee on completion of 55 years of age or at any time
thereafter if his efficiency was found to have been impaired.
All employees appointed to the service of the Corporation on or after 1st
September, 1956 were required to retire on completion of 58 years of age but the
appointing authority was empowered to retire any such employee on completion of 55
years of age or at any time thereafter if his efficiency was found to have been
impaired.
This regula tion was made in supersession of all other earlier regula tions.
In the case of the transferred employees the regula tion was in conformity with the
standardisation order passed in respect of Class III and Class IV transferred
employees in whose case the age of retirement was fixed at 60 years.
The result was that the regulation made a clear and distinct classification of all
the employees of the Corporation belonging to all classes into two groups
transferred em ployees and the employees appointed after 1st September, 1956, for
purposes of the age of retirement having regard to the historical reasons.
It would appear that an industrial dispute arose between the Class III and Class IV
employees who entered the service of the Corporation on or after 1st September,
1956 and the Corporation and one of the points of dispute related to the age of
retirement.
These employees demanded that their age of retirement should also be fixed at 60
years as in the case of Class III and Class IV employ ees belonging to the category
of transferred employees.
The dispute ultimately ended in a settlement which was incorpo rated in the
Memorandum of Settlement arrived at under section 2(p) and section 18(1) of the and
rule 58 of the Industrial (Central) Disputes Rules, 1957 dated 29th January, 1965.
The relevant part of the settlement arrived at between the parties to the said
industrial dispute as regards the age of retirement of class III and class IV emp
199 loyees who entered the service of the Corporation on or after 1st September,
1956 read as follows: "1.
Retirement age for new employees: There will be no distinction between Class 111
and Class IV 'transferred employees ' and Class III and Class IV employees who
entered the service of the Corporation on or after 1.9.1956 in regard to retirement
age which shall be 60" After the above settlement was arrived at regulation 19 of
the (Staff) Regulations, 1960, which had been brought into force with effect from
July 1, 1960, was suitably amended to bring it in conformity with the settlement.
The relevant part of the amended regulation 19 which was noti fied on 19.6.1965
read thus: "19(1).
An employee belonging to Class III or Class IV and a transferred employee belonging
to Class I or Class II shall retire on completion of age 60; but the appointing
authority may direct such employee to retire on completion of 55 years of age or at
any time thereafter, if his efficiency is found to have been impaired.
(2) 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 appointing authority may direct such employee to retire on
completion of 55 years of age or at any time thereafter, if his efficiency is found
to have been im paired.
(2A) Notwithstanding what is stated in sub regula tions (1) and (2) above, an
employee may be permitted to retire at any time after he has completed age
55. . . . . " On account of the settlement arrived at between Class III and Class
IV employees, who were appointed subsequent to 1st September, 1956 and the
Corporation, which was followed up by the amendment of the (Staff) Regulations with
effect from 19.6.1965, the employees of the Corporation were divid ed both
longitudinally and latitudinally insofar as the age of superannuation was
concerned.
The longitudinal division of the employees was as follows.
All the transfer 200 red employees belonging to Class I and Class II became
entitled to continue in service till they attained the age of 60 years subject of
course to the power of the Corpora tion to retire any of them prematurely on
completion of 55 years of age if his efficiency was found to have been im paired
and all the Class I and Class II officers appointed to the service of the
Corporation on or after 1st September, 1956 had to retire on completion of 58 years
of age subject again to the power of the Corporation to retire any such employee on
completion of 55 years of age or at any time thereafter if his efficiency was found
to have been im paired.
The employees of the Corporation were divided lati tudinally into two groups.
All the employees belonging to Class III and Class IV irrespective of the fact
whether they were transferred employees or employees appointed after 1st September,
1956 were entitled to continue in service till 60 years of age, but the employees
belonging to Class I and Class II, who were appointed to the service of the Corpora
tion on or after 1st September, 1956 had to retire on the completion of 58 years of
age subject to the usual clause relating to premature retirement.
Sub regulation (2) of regulation 19 which affected the employees belonging to Class
I and Class II appointed to the service of the Corpo ration on or after 1st
September, 1956 was substituted by a new sub regulation which was notified on
September 3, 1966.
This new sub regulation (2) of regulation 19 read as fol lows: "(2).
An employee belonging to the Class I or Class II ap pointed to the service of the
Corporation on or ' after 1st September, 1956 shall retire on completion of 58
years of age, but the appointing authority may at its discretion, extend his
service for one year at a time upto 60 years of age.
The appointing authority may, however, direct an em ployee to retire on completion
of 55 years of age or at any time thereafter if his efficiency is found to have
been impaired.
" The modification made by the new sub regulation (2) of regulation 19 empowered
the appointing authority to extend at its discretion the service of any employee of
the Corpo ration belonging to the Class I or Class II categories appointed to the
service of the Corporation on or after 1st September, 1956 for one year at a time
upto 60 years of age.
Since the Corporation found that the discretion conferred on the appointing
authority to extend the services of Class I or Class II officers beyond 58 years of
age at its discre tion was not being exercised satisfactory but very often abused,
sub regulation (2) was again amended on 21.1.1977 withdrawing the power to extend
the service of 201 employees belonging to Class I and Class 11 appointed to the
service of the Corporation on or after 1st September, 1956 beyond 58 years of age.
It also provided that in the inter est of the Corporation, the Corporation could
retire an employee after completion of 50 years of age.
The relevant part of regulation 19 amended on 21.1.1977 reades thus: "19(1).
An employee belonging to Class III or Class IV and a transferred employee belonging
to Class I or Class II shall retire on completion of age 60; 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 55 years of
age or at any time thereafter, on giving him three months ' notice or salary in
lieu thereof.
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 or at any time thereafter on giving him three months ' notice or
salary in lieu thereof." The 1st Respondent S.S. Srivastava entered the service of
the Corporation as a Class III employee on 22.3.1957 on which date he was appointed
as an Assistant in the Corpora tion.
From the said Class III post he was promoted to the Class I post (since there was
no necessity to pass through a Class II post before entering a Class I post) on
8.10.1963 and was appointed as Assistant Branch Manager (Admn.).
From the post of Assistant Administrative Officer he was promoted to the post of
Administrative Officer in June, 1971 and was further promoted as Assistant
Divisional Manager on 18.7.1978.
Since he was born in the month of June, 1926, notice was issued in February, 1984
to Respondent No. 1 of his retirement which was due on 30th June, 1984 on his
completing the age of 58 years.
Before the date of his retirement, he instituted a writ petition out of which these
appeals arise in Civil Miscellaneous Writ No. 6849 of 1984 on the file of the High
Court of Allahabad questioning the validity of regulation 19(2) of the (Staff)
Regulations, 1960 as it stood then and praying for the issue of a writ in the
nature of mandamus to the Corporation not to retire him before he completed the age
of 60 years.
The High Court 202 issued 'an interim order of stay of his retirement on May 22,
1984.
Hence, he was not retired on the 30th June, 1984 as originally notified and allowed
to continue in service.
The Writ Petition was allowed striking down regulation 19(2) as being violative of
Articles 14 and 16 of the Constitution of India and the Corporation was directed
not to retire the 1st Respondent before he attained the age of 60 years.
By virtue of the judgment of the High Court, the 1st Respondent continued in the
service of the Corporation till he complet ed 60 years of age.
He was retired from service on 30th of June, 1986 during the pendency of these
appeals.
In the Writ Petition filed by the 1st Respondent it was contended that there was no
justification to prescribe two different ages of retirement one for the transferred
employ ees belonging to Class I and Class II categories and the other for the
employees who joined the service of the Corpo ration after 1st September, 1956 and
who also belonged to Class I and Class II categories.
It was also contended that whatever may be the position in respect of persons who
were appointed directly to any post belonging to Class I or Class II category after
1st September, 1956, as regards those who joined the service of the Corporation on
being appointed to a Class III post after 1st September, 1956 there could not be
any reduction of the age of retirement from 60 years to 58 years on their being
promoted to a Class I post or Class II post.
In other words the contention of the 1st Respondent before the High Court was that
since he had the fight to continue in service if he had remained in Class III only
till he attained the age of 60 years as a Class III employee by virtue of the
settlement and the amendment of the regula tion 19 in the year 1965, the age of
retirement in his case could not be reduced to 58 years only because he had been
promoted to a Class I post.
The Writ Petition was contested by the Corporation and the Union of India.
It was urged on behalf of the Corporation and the Union of India that the
transferred employees and the employees who joined the service after 1st September,
1956 belonged to two distinct and separate classes which had been treated
differently throughout for valid reasons.
It was pleaded by them that on the establishment of the Corporation under the Act
it became necessary to continue the services of the employees of the erstwhile
insurers whose life insurance business was taken over by the Corporation to run the
business of the Corpora tion because the Corporation had no employees of its own in
the month of September, 1956 when it was established.
Since as regards the age of retirement there was no uniformity in the
establishments in which the transferred employees were working prior to the
nationalisation of the life insurance business 203 and as in some cases the age of
retirement had been fixed at 55 years, in some other cases it was 58 years, in few
other cases at 60 years and in many cases there was no age of retirement and the
employees could continue as long as they were found to be physically and mentally
fit, it became necessary to fix the age of retirement of the transferred employees
on a fair, equitable and just basis.
The Central Government and the Corporation felt that 60 years of age could be a
proper age of retirement in the circumstances in respect of the transferred
employees and that was the reason why by regulation 19 and the standardisation
order issued earlier in the case of certain classes of transferred em ployees under
section 11(2) of the Act the retirement age was fixed at 60 years and this was done
with a view to retaining the services of the experienced employees of the erstwhile
insurers.
It was pleaded on behalf of the Corpora tion and the Union of India that in the
circumstances the classification of the employees into two categories, namely,
transferred employees and others who joined the service of the Corporation on or
after 1st September, 1956 for the purposes of the age of superannuation was a valid
classifi cation and Articles 14 and 16 of the Constitution of India had not been
violated.
It was further pleaded that the discrimination made between the employees belonging
to Class I and Class II on the one hand and the employees belonging to Class III
and Class IV on the other in the matter of the age of superannuation was not
invalid since they belonged to two distinct categories of employees who were
governed by different conditions of service as regards pay, perquisites,
allowances, administrative powers etc.
After heating the arguments of both the sides the learned Judges of the High Court
allowed the Writ Petition.
The High Court did not find any unconstitutionality in a rule or regulation
providing the age of retirement at 60 years of employees who had been absorbed from
the service of the erstwhile insurers and to that extent it observed that one could
say that the grouping being reasonable the Court might not travel into the domain
of legislative policy.
It, however, found that when once a transferred employee belonging to Class III and
an employee appointed after 1st September, 1956 by the Corporation to a Class III
post are promoted to Class I the distinction of transferred employee and direct
appointee could not be maintained as on promotion they became persons belonging to
the same category of employees enjoying the same conditions of service.
Hence the age of retirement should be the same in the case of both such promoters.
It accordingly held that the 1st Respondent was entitled to continue till he
attained the age of 60 years as other Class I employees belonging to the category
of transferred employees.
Aggrieved by the judgment of 204 the High Court the Corporation and the Union of
India have filed these appeals by special leave.
It should be stated at the outset that some of the questions raised before us are
already covered by pronounce ments made by this Court.
The object of enacting section 11 of the Act is dealt with in.
detail by this Court in the Life Insurance Corporation of India vs D.J. Bahadur &
Ors., ; which unfortunately was not brought to the notice of the High Court.
Krishna Iyer, J. at pages 1098 1099 has observed in the course of the said decision
thus: "The Corporation, to begin with, had to take over the staff of the private
insurers lest they should be thrown out of employment on nationalisation.
These private compa nies had no homogenous policy regarding conditions of serv ice
for their personnel, but when these heterogenous crowds under the same management
(the Corporation) divergent emolu ments and other terms of service could not
survive and broad uniformity became a necessity.
Thus, the statutory transfer of service from former employers and standardization
of scales of remuneration and other conditions of employment had to be and were
taken care of by section 11 of the Life Insur ance Corporation Act, 1956 (for
short, the LIC Act).
The obvious purpose of this provision was to enable the Corpora tion initially to
absorb the motley multitudes from many companies who carried with them varying
incidents of service so as to fit them into a fair pattern, regardless of their
antecedent contracts of employment or industrial settlements or awards.
It was elementary that the Corporation could not perpetuate incongruous features of
service of parent insur ers, and statutory power had to be vested to vary, modify
or supersede these contracts, geared to fair, equitable and, as far as possible,
uniform treatment of the transferred staff.
Unless there be unmistakable expression of such intention, the ID Act will continue
to apply to the Corporation employ ees.
The office of section 11 of the LIC Act was to provide for a smooth take over and
to promote some common conditions of service in a situation where a jungle of
divergent contracts of employment and industrial awards or settlements confront ed
the State.
Unless such rationalisation and standardiza tion were evolved the ensuing chaos
would itself have spelt confusion, conflicts and difficulties.
The functional focus of section 11 205 of the LIC Act will dispel scope for
interpretative exer cises unrelated to the natural setting in which the problem
occurs.
" Pathak, J. (as he then was) in his judgment in the same case observed at pages
1134 to 1136 thus: "The first question is whether the new clause (9) of the
Standardisation Order succeeds in defeating the claim of the workmen.
To determine that, section 11 of the Corporation Act must be examined.
Sub section
(1) guarantees to the trans ferred employee the same tenure, at the same
remuneration and upon the same terms and conditions on the transfer to the
Corporation as he enjoyed on the appointed day under the insurer, and he is
entitled to them until they are duly altered by the Corporation or his employment
in the Corpora tion is terminated.
The sub section envisages alteration by the Corporation.
Sub section
(2) of section 11, by its first limb, confers power on the Central Government to
alter the scales of remuneration and other terms and conditions of service
applicable to transferred employees.
Predictably, when the transferred employees of different insurers were brought
together in common employment under the Corporation they would have been enjoying
different scales of remuneration and other terms and conditions of service.
The power under this part of sub section
(2) is intended for the purpose of securing uniformity among them.
The second limb of sub section
(2) is the source of controversy before us.
It empowers the Central Government to reduce the remuneration payable or revise the
other terms and conditions of service.
That power is to be exercised when the Central Government is satisfied that the
interests of the Corporation and its Policy holders require such reduction of
revision.
The question is whether the provision is confined to transferred employees only or
extends to all employees generally.
In my opinion, it is confined to transferred employees.
The provision is a part of the scheme enacted in Chapter IV providing for the trans
fer of existing life insurance business from the insurers to the Corporation, and
the attendant concomitants of that process.
There is provision for the transfer of the assets and liabilities pertaining to the
business, of provident funds, 206 superannuation and other like funds, of the
services of existing employees of insurers to the Corporation and also of the
services of existing employees of chief agents of the insurers to the Corporation,
and finally for the payment of compensation to the insurers for the transfer of the
busi ness to the Corporation.
They are all provisions relating to the process of transfer.
Sub section
(2) of section 11 is a part of that process, involving as it does the integration
of the Corporation 's staff and labour force.
While the first limb of the sub section provides for securing uniformity among the
transferred employees in regard to the scales of remu neration and other terms and
conditions of service, the second limb provides that if after such uniformity has
been secured, or even in the process of securing such uniformity, the Central
Government finds that the interests of the Corporation and its policy holders
require a reduction in the remuneration payable or revision of the other terms and
conditions of service applicable to those employees, it may make an order
accordingly.
It is true that the words "em ployees or any class of them" in the second limb are
not prefaced by the qualifying word "transferred" or "such".
But that was hardly necessary when regard is had to the mosaic of sections in which
the provision is located.
Admittedly, the first limb of sub section
(2) relates to transferred employ ees only, and it must be held that so does the
second limb.
Both provisions are intended to constitute a composite process for rationalising
the scales of remuneration and other terms and conditions of service of transferred
employ ees with a view not only to effecting a standardisation between the
transferred employees but also to revising their scales of remuneration, and terms
and conditions of service to a pattern which will enable the newly established
Corpo ration to become a viable and commercially successful enter prise.
The standpoint of the second limb of the sub section, as its language plainly
indicates, is provided by the inter ests of the Corporation and its policy holders.
For that reason, it is open to the Central Government under sub section to ignore
the guarantee contained in sub section (1) of section 11 in favour of the
employees, or anything contained in the , or any other law for the time being in
force or any award, settlement or agree ment for the time being in force.
Benefits conferred there under on the employees must yield 207 to the need for
ensuring that the Corporation and its policy holders do not suffer unreasonably
from the burden of such benefits.
The need for such a provision arises because it is a burden by which the
Corporation finds itself saddled upon the transfer a burden not of its own making.
Unless the statute provided for such relief, the weight of that burden could
conceivably cripple the successful working of the Corporation from its inception as
a business organisation.
It is a situation to be distinguished from what happens when the Corporation,
launched on its normal course, voluntarily assumes, in the course of its working,
obligation in respect of its employees or becomes subject to such obligations by
reason of subsequent industrial adjudication.
Like any other employer, the Corporation is then open to the normal play of
industrial relations in contemporary or future time.
That the two provisions of sub section
(2) are linked with the process of transfer and integration is further indicated by
the circumstances that the power thereunder is vested in the Central Government.
The scheme of the sections in Chapter IV indicates generally that Parliament has
appointed the Cen tral Government as the effective and direct instrumentality for
bringing about the transfer and integration in the different sectors of that
process.
There is no danger of an order made by the Central Government under the second limb
of sub section (2) in respect of transferred employees being struck down on the
ground that it violates the equality provisions of Part 111 of the Constitution
because similar action has not been taken in respect of newly recruited employees.
So long as such order is confined to what is necessitated by the proc ess of
transfer and integration, the transferred employees constitute a reasonably defined
class in themselves and form no common basis with newly recruited employees."
(underlining by us) emphasis supplied Pathak, J. also observed at Page 1136 thus:
"Another point is whether the power under the second limb of sub section
(2) of section 11 can be exercised more than once.
Clearly, the answer must be in the affirmative.
To effectuate the transfer appropriately and completely it may be necessary to pass
through different stages, and at each 208 stage to make a definite order.
So long as the complex of orders so made is necessarily linked with the process of
transfer and integration, it is immaterial that a succession of orders is made.
I am not impressed by the circumstances that the original Bill moved in Parliament
for amending sub section
(2) of section 11 contained the words "from time to time" and that these words were
subsequently deleted when enact ment took place.
The intent of the legislative provision must be discovered primarily from the
legislation itself.
" We have given extracts from the above decisions which are fairly long since they
relate to the identical provi sions of law and also cover a large part of the
arguments urged before us.
Having regard to the different conditions of service that were prevailing in the
various establishments whose business was taken over by the Corporation it can
hardly be disputed that the fixation of age of superannuation is one of the
essential parts of the process of transfer and inte gration to which sub section
(2) of section 11 of the Act is applicable.
The fixation of 60 years as the age of superan nuation in the case of transferred
employees cannot be considered to be unreasonable in view of the history of this
case.
The observation made by Pathak, J. in the course of his judgment that "there is no
danger of an order made by the Central Government under the second limb of sub
section (2) in respect of transferred employees.being struck down on the ground
that it violates the equality provisions of Part III of the Constitution because
similar action has not been taken in respect of newly recruited employees" is
signifi cant.
A discrimination made by a State between the employees who are directly recruited
to the service of the State and the employees whose services are taken over by the
State on the taking over of the institutions where they were working has been held
to be not unconstitutional by this Court in Ram Lal Wadhwa & Anr.
vs The State of Haryana & Ors., ; The facts of that case were these.
There were some schools run by municipal boards and district boards in the then
State of Punjab which were taken over by the Punjab Government with effect from
October 1, 1957.
The teachers then employed in those schools, thus became State employees.
Those teachers called 'provincialised ' teachers were to be given the same grades
of pay and other allowances as were given to their counterparts in Government
employment.
The teachers in Government employment were governed by the Punjab Educational
Service Class III School Cadre Rules, 1955.
On February 13, 1961, the Punjab Government promulgat ed under the proviso to
Article 309 of 209 the Constitution, the Punjab Educational Service (Provincia
lised Cadre) Class III Rules, giving them retrospective effect from October 1,
1957.
By these Rules the provincia lised teachers were treated as failing under a Cadre
sepa rate and distinct from teachers in the State Cadre governed by the 1955 Rules.
The 'provincialised ' Cadre was to be a diminishing cadre to become extinct in
course of time.
There was to be no further recruitment to that cadre and all vacancies arising in
that cadre were to be replenished by direct recruitment to the State cadre.
The transfer of such posts to the State cadre was to be done by splitting up such
vacant posts into blocks of 7 and 6 by rotation.
Consequent ly, the selection grade of 15% in the State cadre progres sively
increased in strength which was determined by the total cadre strength while the
selection grade in the pro vincialised cadre progressively decreased.
Thus those re cruited to the State cadre had a progressively larger chance of
getting into the selection grade.
In State of Punjab vs Joginder Singh, [1963] Supp. 2 S.C.R. 169 this Court upheld
the validity of the 196 1 Rules repelling challenge under Articles 14 and 16 of the
Constitution.
In the view of the majority in that case the two cadres started as independent
services, they were never integrated into one service and, therefore, the
dissimilarity of the treatment by the Rules was not a denial Of equal opportunity.
But, the Punjab Government never implemented the Rules at any time.
On the reorganisation of the erstwhile Punjab State into Punjab and Haryana on
November 1, 1966, the Haryana Government put the 1961 Rules into operation.
The petitioners in the above case, i.e., Ram Lal Wadhwa & Anr.
vs The State of Haryana & Ors., (supra) appointed in the local bodies Schools
before 'provincialisation ', challenged the validity of the 1961 Rules.
Their complaint was that the Rules created, without any valid justification, two
cadres, the State cadre and the provincialised cadre, the former including not only
the Government School teachers but also those recruited after October 1, 1957 and
posted in the provincialised schools; that by reason of having two cadres and
providing for both a uniform 15 per cent for selection grade posts, coupled with
making the provincialised cadre a diminishing one, the result had been that
teachers deemed to have been appointed to the State cadre with effect from October
1, 1957 and even those recruited thereafter had been promoted to the selec tion
grade, while those in the provincialised cadre, though senior in service and
performed identical duties and had identical scales of pay, remained in the
ordinary grade.
According to the petitioners in that case these Rules and their implementation
contravened Articles 14 and 16 of the Constitution.
The petitioners in that petition contended that the earlier decision of this Court
in State of Punjab vs Joginder Singh, (supra) required reconsideration.
In the 210 course of its decision this Court while rejecting the con tention of the
petitioners observed thus at pages 635 636: "The principles on which discrimination
and breach of articles 14 and 16 can be said to result have been by now so well
settled that we do not think it necessary to repeat them here once again.
As already seen, ever since 1937 and even before, the two categories of teachers
have always remained distinct, governed by different sets of rules, recruited by
different authorities and having, otherwise than in the matter of pay scales and
qualifications, differ ent conditions of service.
This position remained as late as February 13, 1961.
On that day whereas the State cadre teachers were governed by 1955 Rules, rules had
yet to be framed for the provincialised cadre a diminishing one and bringing about
ultimately through that principle one cadre only in the field in a phased manner.
If through historical reasons the teachers had remained in two separate catego
ries, the classification of the provincialised teachers into a separate cadre could
not be said to infringe article 14 and article 16.
It was also not incumbent on the Government to frame the 1961 Rules uniformly
applicable to both the cate gories of teachers, firstly, because a rule framing
authori ty need not legislate for all the categories and can select for which
category to legislate, (see Sakhawat Ali vs State of Orissa, ; Madhubhai Amathalal
Gandhi vs The Union of India, ; and Vivian Joseph Ferreria vs The Municipal
Corporation of Greater Bombay, , and secondly, because it had already come to a
decision of gradually diminishing the provincia lised cadre so that ultimately only
the state cadre would remain in the service.
That was one way of solving the intricate difficulty of inter se seniority.
There can be no doubt that if there are two categories of employees, it is within
Government 's power to recruit in one (and) not re cruit in the other.
There is no right in a government em ployee to compel it to make fresh appointments
in the cadre to which he belongs.
It cannot also be disputed that govern ment had the power to make rules with
retrospective effect and therefore, could provide therein that appointments made
between October 1, 1957 and February 13, 1961 shall be treated as appointments in
the State cadre.
That had to be done for the simple reason that 211 the provincialised cadre was
already frozen even before October 1, 1957 and Government had decided not to make
fresh appointments in that cadre since that cadre was to be a diminishing one.
" It has to be observed in the case before us also that the transferred employees
belong to a diminishing cadre.
When the Corporation was established they were about 27,000 in number and we are
informed today that there are only about 22% of those employees in service.
Already 30 years have elapsed from the date of the establishment of the
Corporation.
All the transferred employees who have already retired have retired only after
completion 60 years.
The remaining transferred employees are likely to go out of office within a short
period.
Thereafter only the employees who are directly recruited by the Corporation who are
about 54,000 in number would continue to remain in its service.
The observation made by this Court in Ram Lal Wadhwa & Anr.
v The State of Haryana & Ors.
, (supra) clearly applies to the case before us also.
As this stage we should refer to another aspect of the case presented before us
which relates to 16 persons who were appointed as the employees of the Corporation
by virtue of an Order dated March 15, 1966.
There was a department in existence in the year 1963 called Department of
Insurance.
The Government and the Corporation felt that the services 16 persons who were
working in the Department of Insurance were required by the Corporation.
Accordingly, the President of India agreed to release 16 persons from the service
of the Government of India to enable the Corporation to appoint them in its service
by the Order of the Central Government dated 25th February, 1964.
The resignation of those 16 persons from the service of the Government of India was
accepted on 15th March, 1966 and from that date those per sons became the employees
of the Corporation.
Out of those 16, 13 have already retired from service on attaining the age of 60
years.
Only three of them are now in the service of the Corporation.
One of them is no longer an employee of the Corporation since he is holding the
post of the Chairman of the Corporation.
The second of them is due to.retire within 2/3 months and only one of them would
continue in the service of the Corporation for about a period of two years more.
In the case of those 16 people the Corporation passed a separate order fixing their
age of retirement as 60 years having regard to the negotiations which had taken
place between the Corporation and the Government before the taking over of their
services by the Corporation.
They again belong to a different category altogether and 212 the fixation of the
age of retirement in their case at 60 years cannot be challenged by those who were
directly re cruited by the Corporation after September 1, 1956 as there is no
similarity between them and the said 16 officers.
The next question for consideration is whether the fixation of 58 years as the age
of superannuation in the case of the employees who entered the service after 1st
September, 1956 is unreasonable.
While dealing with this question, the Court can take judicial notice of the differ
ent ages of retirement prevailing in the several services in India.
In almost all the public sector corporations, Central services and State services
58 years age is considered to be a reasonable age at which officers can be directed
to retire from their service.
So, the determination of 58 years as the age of superannuation by itself cannot be
considered to be arbitrary.
We do not also find much substance in the contention of the 1st Respondent that
there cannot be any discrimination as regards the age of retirement between the
employees belonging to Class I and Class II on the one hand and Class III and Class
IV on the other.
It is true that originally employees belonging to Class III and Class IV categories
amongst the transferred employees were given the benefit of retirement at the age
of 60 years but the employees belong ing to Class III and Class IV categories
recruited after 1st September, 1956 were required to retire on the completion of 58
years of age.
In the Settlement which was arrived at between the management and the Class III and
Class IV em ployees recruited after 1st September, 1956 it was agreed that there
should be no discrimination as regards the age of retirement between the employees
belonging to Class III and Class IV categories amongst the transferred employees
and the Class III and Class IV employees recruited after 1st September, 1956.
It was pursuant to the said settlement that regulation 19 was amended with effect
from 19.6.1965.
Having regard to the lower emoluments and other benefits which the employees
belonging to Class III and Class IV are entitled to get from the Corporation and
the higher emoluments and other benefits to which officers belonging to Class I and
Class II are entitled and also the nature of their work and the powers enjoyed by
them we are of the view that fixation of different ages of retirement to the
different classes of employees would not by itself be violative of Articles 14 and
16 of the Constitution.
In Tejinder Singh and Another vs Bharat Petroleum Corporation Ltd. and Anr., [1986]
4 S.C.C. 237 this Court has observed at page 239 thus: 213 "This Court in Workmen
vs Bharat Petroleum Corpn.
Ltd., directed the retirement age of the clerical staff of the Refinery Division of
respondent 1 to be fixed at 60 years.
Petitioners have contended that the disparity in the age of retirement between two
groups of employees gives rise to discriminatory treatment.
This stand is not tenable for more than one reason.
Clerical staff and officers of the manage ment staff belong to separate
classifications and no argu ment is necessary in support of it.
Petitioners have not contended and perhaps could not legitimately contend, that the
two classes of officers stand at par.
In the Workmen case itself, this Court did not extend the benefit of super
annuation at the age of 60 to all clerical staff but limited the same to that
category of employees working in the Refin ery Division, Bombay.
Classification on the basis of reason able differentia is a well known basis and we
are of the view that the petitioners are not entitled in the facts of the case to
seek support from Article 14 for their claim.
" It was, however, contended on behalf of the 1st Respond ent that since he had
been recruited originally into the Class III post and he would have had the benefit
of retire ment at the age of 60 years if he had remained in that Class, the said
benefit cannot be denied to him on his promotion to the Class I category.
We do not find any merit in this contention too.
When the 1st Respondent was promoted to the Class I post in 1963 the age of
retirement of offi cers in the Class I post had been fixed at 58 years and was not
different from the age of retirement of Class III em ployees.
It was only in 1965 under the settlement the age of retirement of employees in
Class III and Class IV who joined service after September 1, 1956 was raised to 60
years.
If he felt that the conditions of service of Class I officers were likely to be
prejudicial to him he could have refused the promotion offered to him.
Having accepted the promotion along with the higher benefits flowing from it he
cannot contend after several years that he had been prejudicially affected by the
condition relating to the age of retirement applicable to Class I officers
appointed after September 1, 1956.
That apart the higher emoluments and other perquisites to which Class I employees
may be entitled to and the better conditions of work which are enjoyed by them
substantially compensate the effect of the lowering of the age of retire ment from
60 years to 58 years.
We do not find any substance in the argument urged on behalf of the 1st Respondent
rely ing upon the judgment of this Court in Roshan Lal Tandon vs Union of India; ,
which lays down that when employees are 214 recruited to a lower grade from two
sources no favourable treatment should be extended to recruits from one source on
their promotion to the higher grade.
In the decision, re ferred to above, the facts were these.
Vacancies in grade 'D ' of Train Examiners were filled by (a) direct recruits,
i.e., apprentice train examiners who had completed the prescribed period of
training, and (b) promoters from skilled artisans Promotion from grade 'D ' to 'C '
was on the basis of seniority cum suitability.
In October, 1965 the Railway Board issued a notification by which it was provided
that eighty percent of the vacancies in grade 'C ' were to be filled up from
apprentice train examiners recruitment.
or after April 1, 1966 and the remaining twenty per cent by train examiners from
grade 'D '.
The notification further provided that apprentice train examiners who had already
been absorbed in grade 'D ' before April, 1966 should en bloc be accommodated in
grade 'C ' in the eighty per cent of the vacancies without undergoing any selection
and with regard to twenty per cent of the vacancies, reserved for the other class
promotion was to be on selection basis and not on the basis of seniority cum
suitability.
The petitioner in the said case who entered Railway service in 1954 as a skilled
artisan and was selected and confirmed in grade 'D ' chal lenged that part of the
notification which gave favourable treatment to apprentice train examiners who had
already been absorbed in grade 'D ' as arbitrary and discriminatory anti violative
of Article 14 and 16 of the Constitution.
This Court held that when once the direct recruits and promoters were absorbed in
one cadre they formed one class and they could not be distinguished again for the
purpose of further promotion to the higher grade 'C ' The Court further ob served
that before the impugned notification was issued there was only one rule of
promotion applicable to both direct recruits and promoters but by the impugned
notifica tion discriminatory treatment was made in favour of the apprentice train
examiners who had already been absorbed in grade 'D '.
The Court, therefore, held that the notification was discriminatory.
This decision has no relevance to the present case although the High Court has
relied on it in deciding this case.
We have already shown that the Act itself made a distinction between the
transferred employees and the employees recruited to the service of the Corpora
tion after 1st September, 1956 by making amendments in section II and in clauses
(b) and (bb) of sub section (2) of section 49 of the Act.
In the (Staff) Regulations, 1956 and the (Staff) Regulations, 1960 there was again
a distinction made between the transferred employees and employees re cruited after
1st September, 1956.
We find that the distinc tion between the two classes is recognised by Parliament
even as late as 1981 when it amended section 49 of the Act by deleting clause (bb)
of sub section (2) thereof and by 215 amending section 48 of the Act by introducing
clause (cc) in subsection (2) and the new sub section (2A) in it.
After the amendment, the relevant part of section 48 reads thus: "48.
(2) . . . . . . . (cc).
The terms and conditions of service of the employees and agents of the Corporation,
including those who became employees and agents of the Corporation on the appointed
day under this Act, . . . . . . (2A).
The regulations and other provisions as in force immediately before the
commencement of the Life Insurance Corporation (Amendment) Act, 1981, with respect
to the terms and conditions of service of employees and agents of the Corporation
including those who became employees and agents of the Corpo ration on the
appointed day under this Act, shall be deemed to be rules made under clause (cc) of
sub section (2) and shall, subject to the other provisions of this section, have
effect accordingly." (underlining by us) empha sis supplied Clause (cc) of section
48(2) of the Act, however, has been given retrospective effect from 20th June,
1979.
Sub section (2A) of section 48 has given statutory recognition to the (Staff)
Regulations of 1960 and in particular to Regulation 19(2) as amended in 1977 which
is impugned in these proceedings.
It is thus seen that at no point of time the transferred employees were integrated
into one cadre along with the employees appointed after September 1, 1956 as such
and the transferred employees have retained their birth marks throughout.
The fact that the pay, allowances and other conditions of service have been made
the same in respect of both the transferred employees and the employees of the
Corporation recruited after 1st September, 1956 has not brought about the
integration of the two classes of employees into one single cadre.
Even the High Court in the instant case accepts that it was just and proper to
extend the benefit of the higher age of retirement to the trans ferred employees
but it has held that when once a trans ferred employee is promoted he would lose
the right to a special treatment as regards the age of superannuation.
The relevant portion of the judgment of the High Court reads thus: "A reasonable
classification which prevents a Court from dissecting it is one which includes all
persons who are similarly situated with respect to the purpose of law or 216
objective which the rule or section seeks to achieve.
The apparent or inherent intention sought to be achieved by the regulation 19
framed by Corporation was to continue upto age of sixty years the employees of
insurers as the age of superannuation in some of the companies was sixty and to
derive benefit from expertise and experience of employees who had worked with
insurers.
May be laudable, reason able and proper.
But is it like that? Obvious ly not.
An employee in Class III of insurer could be continued upto sixty.
But what hap pens when he climbs the ladder of promotion and reaches Class I.
Does he still carry the stamp of experience and expertise of having worked with
insurer? Once a transferred em ployee of Class III and a direct appointee in (that)
class are promoted to Class I obviously on merit, efficiency and seniority then how
can the distinction of 'transferred ' and 'direct ' be maintained.
So long employees are in Class III they can be said to constitute two different
classes of transferred and direct appointees but once they are promoted they become
similarly situated and the dis tinction stands obliterated.
They on promotion form one integrated cadre of Class I officers.
To segregate them here for purposes of retire ment is invidious when their pay,
responsibil ity and benefits are same.
" While we agree with the first part of the observations made in the above extract
from the judgment of the High Court, namely, that it was not discriminatory to
extend the benefit of the age of 60 years to the transferred employees, we do not
agree with the latter part of the observations made therein which suggests that on
promotion from Class III to Class I the transferred employees and the directly re
cruited employees would lose their birth marks.
Pathak, J., as he then was, has observed in D.J. Bahadur 's case (supra) that it is
open to the Government to make an order trader section 11(2) of the Act from time
to time in respect of the transferred employees and that power is not exhausted
when it is exercised once.
It suggests that the transferred employees are always amenable for separate
treatment and they do not lose their identity.
It appears to be the inten tion of Parliament that even as late as in 1981 that the
two categories of employees, namely, the transferred employees and employees
recruited after 1st September, 1956 in the Corporation should be kept separate.
In these circumstances the High Court was in error in relying upon the judgment of
this Court in Roshan Lal Tandon 's case (supra).
217 In O.P. No. 5295 of 1985 and connected cases on the file of the High Court of
Kerala which was decided on 4.2.
1987 the claim of the employees of the Corporation belonging to class I but
appointed after 1st September, 1956 to continue in service till they attained the
age of 60 years arose for consideration.
The High Court has negatived it.
In the course of its judgment it has referred to the judgment under appeal in this
case but has only distinguished it.
The High Court of Kerala was right in not following the decision of the High Court
of Allahabad which is now under appeal.
It, however, distinguished it on the ground that the employees in question had not
been promoted from Class III to Class I as it was the case here but the petitioners
before it had continued in Class I or Class 11 right from the commence ment.
We, however, approve of the reasons given by the High Court of Kerala in holding
that the employees of the Corpo ration belonging to Class I and Class II who had
entered service of the Corporation after 1st September, 1956 were not entitled to
continue in service beyond the age of 58 years.
In our view the fact that an employee had entered the service of the Corporation
after September 1, 1956 in a Class III post and is later on promoted to a Class I
post does not make any difference in so far as the question which arises for
decision before us.
The High Court of Delhi has rejected two petitions in which the very question
raised in this case arose for consideration, namely, N.L. Aneja vs Union of India
and Others, (Civil Writ No. 1911 of 1986) and H.S. Kochar vs L.I.C. of lndia &
Ors., (C.W. No. 1660 of 1986) at the stage of admission itself giving reasons,
though short, for its orders.
The two decisions, referred to above, have been rendered by two different Division
Benches.
We may also refer to one decision of the Madras High Court and another decision of
the Calcutta High Court which arose trader the provisions of the Banking Companies
(Acqui sition and Transfer of Undertakings) Act, 1970 (Act 5 to 1970) where again
the claim of employees of the banks in question who joined their service after
nationalisation to the benefit of the conditions prescribed in the case of
employees of the former banking companies whose services were taken over on
nationalisation as regards the age of retirement arose for consideration.
The scheme of section 12(2) of the and the scheme of section 11(1) of the Act,
which is trader consideration before us, were the same.
In Govindarajulu vs The Management of Union Bank of India & Ors., (Writ Petition
No. 5486 of 1980) the High Court of Madras rejected the said claim by its judgment
dated 21.11.
In Dr. Nikhil Bhushan Chandra vs Union of India & Ors., (Civil Order 218 No. 13958
(W) of 1980) decided on December 21, 1982 the High Court of Calcutta has rejected a
similar claim.
We may at this stage refer to a recent decision of this Court in Miss Lena Khan vs
Union of India and Ors.
, J.T. decided on 30.3.
1987 in which the validity of the continua tion of some foreign Air Hostesses
beyond the prescribed age of retirement came up for consideration.
The Court rejected the petition stating that the management of Air India having
taken a decision "to phase out U.K. incumbents when they attain the age of 45", it
was not discriminatory to Air Hostesses of Indian origin who were to retire at the
age of 35 years and was not unconstitutional.
The principle enunci ated in this case can be applied to the cases of three
officers who belong to the Department of Insurance who joined the service of the
Corporation after resigning their posts in the Government of India in the year
1965, there being no chance of any addition to their class.
Classification of employees into two categories for purposes of fixing the age of
superannuation depending upon their dates of entry into service when the necessity
for doing so arises on account of certain historical reasons is not unknown.
This Court had to deal with a case involving a similar situation in Railway Board
vs A. Pitchumani, ; Several railway companies which were running their own railways
in different parts of India were amalaga mated with the Indian Railway
Administration in 1947.
On such amalagamation servants of the railway companies, whose railways were taken
over, became the employees of the Indian Railway Administration.
On the absorption of the services of the servants of the previous railway companies
it became necessary for the Indian Railway Administration to frame rules with
regard to their conditions of service including the determination of the age of
retirement of those railway employees.
Accordingly, rule 2046 (F.R. 56) of the Indian Railway Fundamental Rules had to be
modified.
That rule was, therefore, substituted by a new rule on January 11, 1967.
The new rule read as follows: "2046.
56) (a) Except as otherwise provided in this rule, every railway servant shall
retire on the day he attains the age of fifty eight years.
A ministerial railway servant who entered Government service on or before the 31st
March, 1938 and held on that date (i) a lien or a suspended lien on a permanent
post, or 219 (ii) a permanent post in a provision al substantive capacity under
Clause (d) of Rule 2008 and continued to hold the same without interruption until
he was confirmed in that post, shall be retained in service till the day he attains
the age of sixty years.
NOTE: For the purpose of this Clause, the expression "Government Service" includes
service rendered in ex company, and ex State Railways, and in a former provincial
Govern ment.
" In the above new rule every railway servant, whose case did not fall under clause
(b) of that rule was required to retire on the date he attained the age of 58
years.
Clause (b), however, provided that every ministerial railway serv ant who had
entered the Government service on or before 31st March, 1938 and who satisfied the
conditions mentioned either in sub clause (i) or sub clause (ii) thereof was
entitled to continue in service till he attained the age of 60 years.
As may be seen from that rule, the classification of the employees was made on the
basis of the date of entry into the service of the Government.
That clause (b) of the said rule applied also to the employees of ex companies and
ex State railways which were taken over by the Indian Rail way Administration is
clear from the note attached to clause (b) of rule 2046 which provided that for the
purpose of that clause the expression 'Government Service ' included service
rendered in ex company and ex State railways and in a former provincial Government.
On December 27, 1967 the Indian Railway Administration substituted the note
attached to clause (b) of rule 2046 by the new note which read thus: "For the
purpose of this clause the expression 'Government Service ' includes service
rendered in a former provincial gov ernment and in ex company and ex State Rail
ways, if the rules of the Company or the State had a provision similar to Clause
(b) above." The effect of the new note was that an employee who satis fied the
condition in sub section (i) or sub clause (ii) of clause (b) was entitled to
continue upto 60 years after December 23, 1967 only if the rules of the company in
which he was formerly working had a provision similar to clause (b) of rule 2046
which fixed the age of retirement at 60 years.
220 The Respondent in that case, that is, A. Pitchumani while he was entitled
before December 23, 1967 to continue in service till he attained the age of 60
years as he had joined the service of the Madras and Southern Mahratta Railway
Company on August 16, 1927, i.e., prior to March 31, 1938 and satis fied the other
conditions mentioned in clause (b) of rule 2046 could not have the benefit of that
clause on and after December 23, 1967 since in the Madras and Southern Mahratta
Railway Company where he was formerly working there was no rule similar to clause
(b) as regards the age of retirement.
He was asked to retire from service on April 14, 1968 on which date he was
completing the age of 58 years.
The Re spondent, A. Pitchumani questioned before the High Court of Mysore
(Karnataka) the validity of the note substituted by the Order dated December 23,
1967 which took away his right to continue in service till he attained the age of
60 years which he otherwise possessed before the introduction of the said note.
The High Court of Mysore struck down a part of the new note only on the ground that
it was discriminatory and directed that the Respondent, A. Pitchumani should be
allowed to continue in the service till he completed the age of 60 years.
On appeal, the judgment of the High Court was affirmed by this Court in Railway
Board vs A. Pitchumani (supra).
This Court did not find fault with the classifica tion that had been made between
the persons falling under clause (a) and persons falling under clause (b) on the
basis of the date of entry into service since clauses (a) and (b) of rule 2046 had
uniform application to all the employees of the Indian Railway Administration who
came within the re spective clauses.
It, however, agreeing with the High Court found fault with the classification of
the employees falling under clause (b) into two categories, namely, those employ
ees belonging to a company where there was a rule similar to clause (b) as regards
the age of superannuation and those employees who came from companies where there
was no rule similar to clause (b) as regards the age of superannuation.
In Manindra Chandra Sen vs Union of India & Ors.
A.I.R. 1973 CAL.
385 Sabyasachi Mukharji J., has upheld the said classi fication of railway
employees into two categories viz. those who joined on or before 31.3. 1938 and
those who joined after 31.3. 1938 for purposes of fixing the age of superan nuation
on the basis of same historical facts which are set out in detail in that judgment.
Such classification for purposes of fixing the age of superannuation depending upon
the date of entry into services is not, therefore, something which is unusual and
such classification becomes necessary on account of historical facts and the need
for treating the employees in a fair and just way.
221 On behalf of the 1st Respondent reliance is placed on the decision of this
Court in M/s. British Paints (India) Ltd. vs The Workmen, ; in support of his case
that there should be no discrimination amongst the employees of an establishment
with regard to the age of superannuation.
That decision was rendered in an appeal against an award passed by an Industrial
Tribunal.
In that decision this Court has, no doubt, observed that generally speaking there
should not be any difference in the age of retirement of existing workmen and
others to be employed in future unless there are special circumstances justifying
such difference.
By making the above observation this Court has virtually accepted the position that
when there are special circumstances justifying the difference, it is open to fix
different ages of retirement for the employees of an establishment in appropriate
cases.
We have already ex plained earlier the reason for treating the transferred
employees differently from the employees appointed after 1st September, 1956 by the
Corporation.
The transferred employ ees who are treated favourably belong to a vanishing group
and, perhaps, within a period of few years none of them would be in the service of
the Corporation.
Thereafter only one class of employees would be in the service of the Corpo ration,
namely, those appointed subsequent to 1st September, 1956 by the Corporation in
respect of whom the Corporation has fixed the age of retirement as 58 years which
corre sponds to the age of retirement in almost all the public sector
establishments, the Central Government services and the State Government services.
The 1st Respondent cannot derive any assistance from the decision of this Court in
Mohammad Shujat Ali & Ors.
vs Union of India & Ors. etc.
; , in support of his case before us.
In the above decision this Court was concerned with reservation of posts for
graduate Supervisors in the cadre of Assistant Engineers giving them a preferen
tial treatment over non graduate Supervisors who were also eligible to be promoted
along with the graduate Supervisors to the cadre to Assistant Engineers after the
graduates and non graduates had been integrated into one cadre of Supervi sors.
Merely because the pay, allowances and other perqui sites drawn by the transferred
employees and by the employ ees appointed after 1st September, 1956 by the
Corporation are the same it cannot be said that the transferred employ ees and the
other employees had been integrated so as to form one cadre.
So far as the age of retirement is concerned as it is already shown they are being
treated differently right from the date on which the Corporation was estab lished.
The decision of this Court in Workmen of the Bharat Petrole um 222 Corporation Ltd.
(Refining Division) Bombay vs Bharat Petro leum Corporation Ltd. and Another, ; no
doubt lays down that under the modern conditions there is a general trend in favour
of raising the age of retirement in the case of employees in industrial
establishments.
It may be so.
We are not concerned in this case with the question whether the age of retirement
of employees who have joined the service of the Corporation after 1st September,
1956 should be raised to 60 years.
That is a matter of policy which has got to be decided by the Corporation and the
Central Government.
We are only concerned with the question whether the employees appointed after 1st
September, 1956 have been subjected to any hostile discrimination while fixing the
age of retirement contrary to Article 14 and Article 16 of the Constitution.
Since the classification of the employees for the purpose of age of retirement into
two categories in this case appears to us to be reasonable and not arbitrary and
that there is a reasonable nexus between the classification and the object to be
attained thereby, it is not possible to hold that regulation 19(2) is violative of
Article 14 and 16 of the Constitution.
We may at this stage refer to the following passage in Tamil Nadu Education
Department Ministerial & General Subor dinate Service Association vs State of Tamil
Nadu & Anr., ; "In Service Jurisprudence integration is a complicated
administrative problem where, in doing broad justice to many, some bruise to a few
cannot be ruled out.
Some play in the joints, even some wobbing, must be left to Government without
fussy forensic monitoring, since the administration has been entrusted by the
Constitution to the Executive, not to the Court.
All life, including administrative life, involves experiment, trial and error, but
within the leading strings of fundamental rights, and, absent unconstitutional
'exces ses ', judicial correction is not right.
Under Article 32, this Court is the constitutional sentinel not the national
ombudsman.
We need an ombudsman but the court cannot make do." (page 1031) The decision taken
by the Corporation and the Central Government as regards the ages of retirement of
the differ ent classes of the employees of the Corporation in the instant case is a
bona fide one and cannot be characterised as unreasonable.
It is not, therefore, liable to be upset by a decision of the Court.
On a careful consideration of all 223 the aspects of the case we feel that the High
Court erred in striking down regulation 19(2) of the (Staff) Regulations, 1960 as
amended in the year 1977, and in directing the Corporation to continue the 1st
Respondent in its service till he completed the age of 60 years.
We, therefore, set aside the judgment of the High Court and dismiss the writ
petition filed in the High Court.
The appeals are according ly allowed.
There shall, however, be no order as to costs.
N.P.V. Appeals allowed.