1. The General Insurance Business (Nationalization Act, 1972 (for short "Act of 1972") governs the subject matter of the writ petition as also the issues raised therein. Petitioner was working in the respondent-corporation and was accorded confirmation as "Inspector Grade-1" vide order dated 11.01.1984. In the said confirmation order, it was, inter alia, provided that the services of the petitioner will be governed by General Insurance (Conduct, Discipline and Appeal) Rules, 1975 and General Insurance (Rationalization of Pay Scales and other conditions of Service of Development Staff) Scheme, 1976, hereinafter referred to as "Rules of 1975" and "Scheme of 1976". 2. The scheme has been amended from time to time. The services of the petitioner at present are governed by General Insurance (Rationalization of Pay Scales and other conditions of Services of Development Staff) (Second) Amendment Scheme, 1990) (for short "Scheme of 1990"). 3. In view of the issuance of the Development Officers Amendment Scheme, 2003, vide notification dated 02.01.2003 option was given to the officers working in the corporation to opt for service of Development Officer (Administration) in the respondent-company on the terms and conditions stipulated in the General Insurance (Rationalization of Pay Scales and other conditions of Services of Development Staff) Amendment Scheme, 2003. Petitioner exercised his option to be adjusted as Development Officer (Administration) in the respondent-company and same was submitted by him on 03.03.2003. The Regional Manager vide its communication dated 08.05.2003 informed the petitioner that his option for rendering service as the Development officer (Administration) has been accepted by the competent authority. 4. The sub-clauses 3, 7, 8, 9, (9A), (13A) of Clause 3, and Clause 11 of the Scheme of 1990 are reproduced as under: "(3). "Chairman" means- (a) In relation to the Corporation, the Chairman or the Managing Director, (b) In relation to the Company, the Chairman-cum-Managing Director, (7) "Cost" means the cost incurred on a Development Officer for procuring general insurance business during a performance year and includes, in addition to the gross emoluments of such Development Officer, non-core allowances, expenses on vehicle and telephone, bonus or ex-gratia payment travelling expenses on tours undertaken for procuring general insurance business, paid to the Development Officer during that year but does not include employers contribution to Provident Fund. Provided that for the purposes of paragraphs 11, 11A and 13, cost shall mean gross emoluments paid to the Development Officer during a performance year. Provided that for the purposes of paragraphs 11, 11A and 13, cost shall mean gross emoluments paid to the Development Officer during a performance year. (8) "Cost ratio" in respect of a performance year means that ratio expressed as percentage of the cost incurred on a Development Officer to the scheduled premium income procured through him; (9) "Development Staff" means the person employed for the purpose of procuring general insurance business and categorized or designated under this Scheme- (a) as Development Superintendents or Inspectors Grade I or Inspectors Grade II or (b) as Field Workers; (9A) "Development Officer" means members of the Development Staff who immediately before the commencement of the Amendment Scheme, 1987 were categorized or appointed as Inspector Grade I and Inspector Grade II and on such commencement designated respectively as Development Officer Grade I and Development Officer Grade II. 13A. "non-core allowance" means entertainment allowance, conveyance allowance or such other similar allowances as allowed or may be allowed by the Corporation; 11. Cost Control: (1) Every Development Officer shall work with such cost as to maintain his cost ratio within the limits stipulated in sub-clause (c) of Clause (17) of paragraph 3. (2) If the cost ratio in respect of a Development Officer for a particular performance year exceeds the stipulated limits, the non-core allowance payable to him in the following performance year shall be reduced to the extent of the amount by which his cost ratio exceeded the stipulated limits. (3) If in respect of a Development Officer, cost ratio is in excess of stipulated limit for second performance year in succession, he may be issued a letter of warning that in the event of his cost ratio exceeding stipulated limits for third or subsequent performance years in succession, his non-core allowance shall continue to be reduced in the following years to the extent necessary to bring his cost ratio within stipulated limits and, if there are no non-core allowance to be reduced, he shall be liable to decrements in basic pay as indicated in the Table below sub-paragraph (4). (4) If in respect of a Development Officer cost ratio is in excess of stipulated limit for the third or subsequent performance years in succession, the non-core allowance payable to him, if any, in the following performance year shall be reduced to the extent of the amount by which his cost ratio exceeded the stipulated limits.; Provided that if no non-core allowance are payable to him or the amount of non-core allowance payable to him in the year following such third or subsequent successive performance year is less than the excess cost, decrements shall be effected to such Development Officer as per table below from the relevant appraisal date to provide him an opportunity to conform to the stipulated limits of cost. REDUCTION IN BASIC PAY WHERE COST RATIO IS IN EXCESS OF STIPULATED LIMITS IN THE RELVANT PREFORMANCE YEAR Sr. No. Actual cost ratio over stipulated limits On 1st occasion. On 2nd successive occasion On 3rd successive Occasion On 4th Successive Occasion On 5th and Sub-sequent successive occasion(s) NUMBER OF DECREMENTS TO BE EFFECTED FROM RELEVANT APPRAISAL DATE 1 By not more than 1% 1 1 1 1 1 2 By margin exceeding 1% but no exceeding 3% 1 1 1 1 1 3 By margin exceeding 3% but not exceeding 5% 2 2 3 3 4 4 By margin exceeding 5% 2 3 3 4 4 Note: 1. If a Development Officer is in the scale of Development Officer Grade I, and by reduction as provided above, his basic pay falls below the minimum of the scale, his basic pay shall be fixed at one stage below the maximum of the scale of Development Officer Grade II. If the said development Officer continues to operate beyond stipulated cost limits, even after placement in the scale of Development Officer Grade II, the reduction in basic pay shall start in the scale of Development Officer Grade II, by the number of stages as applicable to the relevant successive occasion. Note: II. If after such reduction the basic pay falls below the minimum of the scale of Development Officer Grade II, the basic pay, of such Development Officer shall be fixed at the minimum of the scale of Development Officer Grade II. Note: II. If after such reduction the basic pay falls below the minimum of the scale of Development Officer Grade II, the basic pay, of such Development Officer shall be fixed at the minimum of the scale of Development Officer Grade II. (5) The Development Officer whose basic pay has been fixed at the minimum of the scale of Development Officer Grade II, after reduction under sub-paragraph (4), shall be provided an opportunity of one year to conform to the stipulated cost limits and will be issued a warning that his services shall be liable for termination if he still continues to exceed the stipulated cost limits. (6) If the Development Officer continues to be beyond stipulated cost limits even after bringing down his basic pay to the minimum of the scale of Development Officer Grade II and providing him an opportunity of one year under sub-paragraph (5), his services shall be terminated by an officer not below the rank of Assistant General Manager, after giving him a notice of 30 days. Provided that services of no Development Officer shall be terminated unless he is given an opportunity of appeal to the appeals committee constituted for the purpose under sub-paragraph (7) within the period of 30 days from the date of serving a notice of termination and unless the said appeals committee considers the said appeal and confirms that the services of the concerned Development Officer are liable for termination. Provided further that the services of the concerned Development Officer shall not be terminated, if the appeals committee after considering his appeal decides that certain relief should be provided to him. (7) The appeals committee referred to in sub-paragraph (6) shall be constituted by the Chairman of the Corporation from time to time for providing relief to Development Officers liable for termination of services under this paragraph and the said Committee shall consider the appeals having regard to the relevant factors such as factual inaccuracies in computation of premium, cost and cost ratio or sickness, accident or such individual extenuating circumstances beyond the control of Development Officer adversely affecting the business procurement and provided such relief other than that provided in sub-paragraph (8), as may be considered necessary in each case. (8) Any Development Officer whose services are liable to the terminated under this paragraph may, on his specific request, be appointed as clerical staff on such terms as may be decided by the Chairman of the Corporation if he is eligible and considered suitable and subject to the condition that -- (i) he is at least 45 year of age but has not completed 55 years of age and has put in at least 15 years service as Development Officer; or (ii) there are grounds of individual extenuating circumstances such as illness, injury or disablement. (9) Where the non-core allowance of Development Officer are reduced under sub-paragraph (2) or sub-paragraph (3) or decrements are effected under sub-paragraph (4) or his services are terminated under sub-paragraph (6), such reduction of non-core allowance or decrements or termination of services shall not be deemed to be a penalty." 5. Petitioner has filed this petition praying for issuance of writ of Certiorari for quashing the action of the respondents in reducing the salary of the petitioner and also prayed that writ of Certiorari be issued for quashing/striking down impugned order/standing instruction and provision of the rationalization scheme which are found to be ultra vires to the rules and the constitution. Petitioner has also prayed that by issuance of writ of Mandamus, respondents be directed to release all the withheld amount of salary, increments and allowances notwithstanding the decisions taken behind the back of the petitioner and make the payment of the arrears within one month. He further prayed that respondents be directed to issue orders of posting/placement/promotion in his favour to the next higher post. Some other reliefs are also sought in the writ petition. 6. The claim of the petitioner is that besides depriving him of his non-core allowances, his pay scale has been reduced below the minimum. 7. Respondents in the reply affidavit have stated that in view of the provisions of the scheme action was necessitated to be taken because of the poor performance of the petitioner. 8. Heard learned counsel for parties. Considered the matter. 9. Learned counsel for petitioner submitted that short fall in business was suffered for the reason that on the onset of militancy in the State of J&K, more particularly, in Kashmir valley respondents issued instructions asking employees to desist to solicit new business and stringent conditions were put in renewing the insurance policies already issued. Considered the matter. 9. Learned counsel for petitioner submitted that short fall in business was suffered for the reason that on the onset of militancy in the State of J&K, more particularly, in Kashmir valley respondents issued instructions asking employees to desist to solicit new business and stringent conditions were put in renewing the insurance policies already issued. It is further submitted that because of the executive instructions/orders issued from time to time the business activities of the petitioner got restricted as he being obedient officer of the respondent-company was duty bound to be faithful and obey the said instructions. Learned counsel further submitted that reduction in pay scale is a punishment, which has been inflicted on the petitioner without following the procedure established by law. Learned counsel also submitted that the scheme is illegal and in this behalf reliance has been placed on the judgment of the Honble Supreme Court in case titled Ajay Kumar Banerjee and ors v. Union of India and ors reported in (AIR 1980 SC 1130). Learned counsel also referred to and relied upon the judgment of High Court of Judicature, Bombay, and judgment reported in 1985 LAB. I.C. 1591. 10. Mr. Kawoosa, learned appearing counsel for respondents submitted that the petition is not maintainable as none of the legal rights of the petitioner has been infringed, nor any of the provisions of the Rules or Scheme have been observed in breach by the respondents. Learned counsel further submitted that writ petition already filed by the petitioner covers the same subject matter, as such, this writ petition is not maintainable and merits dismissal. He also invited the attention of the Court to the Scheme of 1976 as amended upto 1990 to indicate that on the basis of "cost ratio", petitioner automatically lost non-core allowances and his pay scale was also brought down. Learned counsel submitted that the action taken by the respondent-company is not penal in nature, but is provided by above referred scheme. 11. The Scheme of 1990 was formulated in exercise of powers conferred under Section 17A of the Act of 1972 and Section 17A of Act of 1972 is reproduced as under: "17A. Learned counsel submitted that the action taken by the respondent-company is not penal in nature, but is provided by above referred scheme. 11. The Scheme of 1990 was formulated in exercise of powers conferred under Section 17A of the Act of 1972 and Section 17A of Act of 1972 is reproduced as under: "17A. Power of Central Government to regulate the terms and conditions of service of officer and other employees.- (1) The Central Government may, by notification in the Official Gazette, frame one or more schemes for regulating the pay scales and other terms and conditions of service of officers and other employees of the Corporation or of any acquiring company. (2) A scheme framed under sub-section (1) may add to, amend or vary any scheme framed under Section 16 [including any addition, amendment or variation made therein by notification under sub section (6) of Section 16] with respect to rationalization or revision of pay scales and other terms and conditions of service of officers and other employees of the Corporation or of any acquiring company, to provide for further rationalization or revision of such pay scales and other terms and conditions of service notwithstanding that such further rationalization or revision is unrelated to, or unconnected with, the amalgamation of insurance companies or merger consequent on nationalization of general insurance business. (3) The Central Government may, by notification, add to, amend or vary any scheme framed under this section. (4) the power to frame a scheme under sub section (1), and the power conferred by sub section (3) to add to, amend or vary any scheme framed under this section, shall include the power to frame such scheme, or, as the case may be, to make such addition, amendment or variation in any scheme framed under this section, with retrospective effect from a date not earlier than the appointed day. (5) A copy of every scheme, and every amendment thereto, framed under this section shall be laid, as soon as may be after it is made, before each House of Parliament. (6) The provisions of this section and of any scheme framed under it shall have effect notwithstanding anything to the contrary contained in any other law or any agreement, award or other instrument for the time being in force." 12. (6) The provisions of this section and of any scheme framed under it shall have effect notwithstanding anything to the contrary contained in any other law or any agreement, award or other instrument for the time being in force." 12. This Section was inserted in the Act of 1972 by General Insurance Business (Nationalization) Amendment Act (3 of 1985). Section 17A of the Act of 1972 falls in Chapter V(a) and confers powers on the Central Government that by notification in the official Gazette it may frame one or more schemes for regulating the pay scales and other terms and conditions of service of officers and other employees of the Corporation or of any acquiring company. The power to add to, amend or vary scheme has also been conferred on the Central Government under Section 17A of the Act of 1972. 13. No challenge is thrown to Section 17A of the Act of 1972 in the writ petition, so no challenge can be thrown to Scheme of 1990. The Scheme of 1990, however, is not ultra vires of the Act of 1972 as Section 17A confers power on the competent authority to frame such a scheme. The reference made by the learned counsel for the petitioner to Ajay Kumar Banerjees case is misplaced inasmuch as in that case, scheme was formulated in exercise of powers conferred by Section 16 of the Act of 1972. The Honble Supreme Court while considering the purpose and purport of Section 16 of the Act of 1972 held that object of said section was only to provide amalgamation of different insurance companies and scheme providing for rationalization and revision of pay scales, in the said case was held to be beyond the powers of the competent authority. As already stated, the scheme of 1990 has been framed in exercise of powers conferred by Section 17A of the Act of 1972. The object and purpose of Section 17A of 1972 is to lay down terms and conditions of services of the officers and other employees. The competent authority had thus power to frame the Scheme of 1990. As already stated, the scheme of 1990 has been framed in exercise of powers conferred by Section 17A of the Act of 1972. The object and purpose of Section 17A of 1972 is to lay down terms and conditions of services of the officers and other employees. The competent authority had thus power to frame the Scheme of 1990. The submission of learned counsel for petitioner is that in terms of Rules of 1975, the reduction in pay scale is a penalty and can be inflicted only by following procedure provided in the Rules of 1975 is also misplaced, inasmuch as the reduction in pay scale is not traceable to the exercise of powers as given by Rules of 1975. Petitioner has not been deprived of non-core allowances and his reduction of pay is not consequence of any misconduct committed by the petitioner. Petitioner has been deprived of these benefits, in view of the provisions contained in Scheme of 1990. Clause 11 of Scheme of 1976 specifically provides that non-core allowance of Development Officer are reduced under sub-paragraph (2) or sub-paragraph (3) or decrements are effected under sub-paragraph (4) or his services are terminated under sub-paragraph (6), such reduction of non-core allowance or decrements or termination of services shall not e deemed to a penalty. 14. The purpose underlying the Scheme of 1990 is to ensure that the respondent-company does not suffer huge monetary loss, so as to threaten the very existence of the company itself. The purpose is to pursue the employee to seek benefit for himself and company by increasing the business of the company. The scheme, on the face of it, is legal and no fault can be found therewith. The other judgments referred to and relied upon by learned counsel for the petitioner related to different schemes and on such judgments Court cannot declare that the Scheme of 1990 to be illegal. Having held that the action of the respondents which have visited the petitioner are not penal in nature, so are not illegal or unconstitutional. 15. However, the action taken in pursuance to the Scheme of 1990 for depriving the petitioner of non-core allowance and for making him to suffer the decrements, whether is justifiable in the fact situation of this case, requires to be ascertained. 15. However, the action taken in pursuance to the Scheme of 1990 for depriving the petitioner of non-core allowance and for making him to suffer the decrements, whether is justifiable in the fact situation of this case, requires to be ascertained. The petitioner has placed on writ record the communications which do show that respondent-company did place some restriction on soliciting business for the company but the affect of such restrictions on the actions of the petitioner has not been considered by the respondents. The respondents are duty bound to consider the effect of restriction placed on the petitioner for soliciting business and thereafter it is to be found as to whether petitioner can be said to have failed to solicit business to the expectations of the respondent-company. 16. A reasonable person having some prudence in the circumstances as enumerated in this case would consider the impact of restriction placed by the respondent-company on the soliciting of business in view of the abnormal circumstances in which the valley of Kashmir was ushered into on the onset of militant activities. The decision of the respondent-company to deprive the petitioner of non-core allowances and ordering him to suffer decrements, in these circumstances, without considering the impact of restrictions placed on soliciting business is an action which is arbitrary and unreasonable and cannot stand in law, fairplay and justice. 17. The earlier writ petition filed by the petitioner has been dismissed for non-prosecution. The record of that writ petition was summoned and it was found that writ petition has not been decided on merits. In the present writ petition, some more reliefs are sought by the petitioner, which were not available to him at the time of filing of earlier writ petition. 18. For the above stated reasons this writ petition deserves to be allowed in the following terms: 1. By issuance of writ of Certiorari, orders passed by the respondents depriving the petitioner of his non-core allowances and reducing his salary below the minimum salary are quashed. 2. Respondents are directed to reconsider the case of the petitioner and take a fresh decision in the case on the basis of observation made in this judgment within a period of two months from the date copy of this judgment is served on them. 3. 2. Respondents are directed to reconsider the case of the petitioner and take a fresh decision in the case on the basis of observation made in this judgment within a period of two months from the date copy of this judgment is served on them. 3. Respondents to further consider the claim of the petitioner for being promoted and appointed to higher post strictly in accordance with rules. 19. Record be handed over back to Mr. Kawoosa learned counsel for respondents against proper receipt.