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2014 DIGILAW 566 (KER)

Life Insurance Corporation of India v. Ushakumari

2014-07-16

ANTONY DOMINIC, DAMA SESHADRI

body2014
Antony Dominic, J. 1. The Life Insurance Corporation of India, the 'Corporation', for short, the appellant herein, filed O.P.39055/02 challenging the common award passed by the Industrial Tribunal, Alappuzha in ID.Nos.64/99, 68/99, 69/99, 70/99 and 71/99. The OP having been dismissed by the learned single Judge, this appeal is filed. 2. Brief facts which are necessary for the disposal of this appeal are that by Exts.P1 to P6 orders, the party respondents herein were temporarily appointed in the Corporation, for periods ranging from 30 to 90 days. In the appointment orders, it was specified that their services shall come to an end on the expiry of the periods mentioned therein. After the expiry of the period of appointment, further orders with similar conditions were also issued, as a result of which, respondents continued in service for the extended periods also. It is the common case of the parties that the maximum period during which some of them served the Corporation is two years. 3. Finally, on expiry of the extended period, their services stood terminated by efflux of time. Contending that the termination of their services amounted to retrenchment in violation of section 25 F of the Industrial Disputes Act, 1947 (hereinafter, the 'ID Act', for short) disputes were raised and the Government referred to the Industrial Tribunal the dispute as to whether the action of the management terminating the services of the workmen was justified and if not, what relief the workmen are entitled to, for adjudication. On receipt of the references, the Tribunal adjudicated the disputes, giving the Corporation and the workmen opportunity to adduce oral and documentary evidence. Later, the Tribunal, by Ext.P8 common award, held that the termination of the services of the workmen amounted to retrenchment in violation of section 25 F of the ID Act. On that basis, it was ordered that the workmen should be deemed to continue in service until they were validly retrenched. 4. Before the Tribunal, although the appellant had contended that the termination of the services of the workmen did not amount to retrenchment for the reason that it was covered by section 2(oo)(bb) of the ID Act, in the OP filed by them, the main contention raised was regarding the inapplicability of the provisions of the ID Act itself. 4. Before the Tribunal, although the appellant had contended that the termination of the services of the workmen did not amount to retrenchment for the reason that it was covered by section 2(oo)(bb) of the ID Act, in the OP filed by them, the main contention raised was regarding the inapplicability of the provisions of the ID Act itself. This contention was rejected by the learned single Judge and upholding the finding of the Tribunal that the termination of services amounted to retrenchment, the OP was dismissed. It is this judgment which is under challenge before us. 5. We heard the learned senior counsel for the appellant, learned counsel for respondents 1 to 6 and the learned Government Pleader appearing for the 8th respondent. 6. In the nature of the contentions raised before us, the only issue that calls for our decision is whether, in so far the termination of services of the respondents is concerned, the provisions of the ID Act are applicable or not. 7. The Corporation was established by the Life Insurance Corporation Act, 1956 (hereinafter, the 'Act', for short). Section 23 of the Act provides that for the purposes of enabling the corporation to discharge its functions under the Act, it may employ such number of persons as it thinks fit. Section 48 of the Act empowers the Central Government to make rules to carry out the purposes of the Act and section 49 provides that the corporation may, with the previous approval of the Central Government, by notification in the Gazette of India, make regulations not inconsistent with the Act and the rules made thereunder to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of the Act. 8. In exercise of its powers under section 49(2), with the previous approval of the Central Government, the Corporation made the Life Insurance Corporation of India Staff Regulations, 1960 (hereinafter, the 'Regulations, 1960', for short). Clause 4 of the Regulations, 1960 provides for the power to implement regulations by issuing instructions and clause 8 provides for the appointment of temporary staff. These provisions, being relevant, are extracted for reference: "Power to implement Regulations: 4. Clause 4 of the Regulations, 1960 provides for the power to implement regulations by issuing instructions and clause 8 provides for the appointment of temporary staff. These provisions, being relevant, are extracted for reference: "Power to implement Regulations: 4. The Chairman may, from time to time, issue such instructions or directions as may be necessary to give effect to, and carry out the provisions of these regulations and in order to secure effective control over the staff employed in the Corporation." "Temporary Staff 8. (1) Notwithstanding anything contained in these Regulations, a Managing Director, Executive Director (Personnel), a Zonal Manager or a Divisional Manager may employ staff in Classes III and IV on a temporary basis subject to such general or special directions as may be issued by the Chairman from time to time. (2) No person appointed under sub- regulation (1) shall only by reason of such appointment be entitled to absorption in the service of the Corporation or claim preference for recruitment to any post." 9. While the position stood thus, the Act was amended by Act 1 of 1981 with effect from 20.6.1979. Section 48 (2)(cc), (2A), (2C) as amended and section 49(1), being relevant, are extracted below for reference: "48. Power to make rules - (1) The Central Government may, by notification in the Official Gazette, make rules to carry out the purposes of this Act. (2) In particular, and without prejudice to the generality of the forgoing power, such rules may provide for all or any of the following matters, namely:- (a) . . . . . . . . . . . . . . . . . . . . . . . . . . (c) . . . . . . . . . . . . (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; (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . (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; (d) . . . . . . . . . . . . . . . . . . . . . . . . . . (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 Corporation 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. (2B) . . . . . . . . . . . (2C) The provisions of clause (cc) of sub- section (2) and sub-section (2B) and any rules made under the said clause (cc) shall have effect, and any such rule made with retrospective effect from any date shall also be deemed to have had effect from that date, Notwithstanding any judgment, decree or order of any court, tribunal or other authority and Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or any other law or any agreement, settlement, award or other instrument for the time being in force. (3) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule." "49. Power to make regulations - (1) The Corporation may, with the previous approval of the Central Government, by notification in the Gazette of India, make regulations not inconsistent with this Act and the rules made thereunder to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this Act." 10. A reading of the aforesaid provisions show that the Regulations, 1960 were framed by the Corporation in exercise of the enabling provisions under section 49 of the Act. It also shows that in view of section 48 (2A), the regulations which were in force before the commencement of the amendment in 1981, shall be deemed to be rules made under section 48(2)(cc) and shall have effect accordingly. Section 48(2C) of the Act also shows that the aforesaid regulations shall have effect notwithstanding anything contained in the ID Act or any other rule or any agreement, settlement, award of other instrument for the time being in force. 11. The applicability of the provisions of the ID Act in the context of discharge of probationer appointed by the Corporation came up for consideration of the Apex Court in M.Venugopal v. The Divisional Manager, Life Insurance Corporation of India, Machilipatnam, (1994) 2 SCC 323 where the legal position has been clarified by the Apex Court in paragraphs 10 to 14 of the judgment thus: "10. There is yet another aspect of the matter. The Corporation Act vests power in the Central Government to make rules in order to carry out the purposes of the Act. By Life Insurance Corporation (Amendment) Act, 1981 (Act 1 of 1981), clause (cc) was added to sub-sec. (2) of S. 48 with effect from 31-1-1981, clause (cc) provides:- "(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." With introduction of clause (cc), the Central Government can by notification in Official Gazette, make rules in respect of the terms and conditions of the service of the employees and agents of the Corporation. By the aforesaid Amending Act, three new sub-sections were also introduced, which are relevant for the present case :- "(2-A) 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 Corporation on the appointed day under this Act, shall be deemed to be rules made under clause (cc) of sub-sec. (2) and shall subject to the other provisions of this section, have effect accordingly. (2-B) The power to make rules conferred by clause (cc) of sub-sec. (2) shall include - (i) the power to give retrospective effect to such rules; and (ii) the power to amend by way of addition, variation or repeal the regulations and other provisions referred to in sub-sec. (2-A), with retrospective effect from a date not earlier than the twentieth day of June, 1979. (2-C) The provisions of clause (cc) of sub-sec. (2) and sub-sec. 12-B and any rules made under the said clause (cc) shall have effect, and any such rule made with retrospective effect from any date shall also be deemed to have had effect from that date notwithstanding any judgment, decree or order of any court, tribunal or other authority and notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947) or any other law or any agreement, settlement, award or other instrument for the time being in force." Sub-sec. (2-A) provided that regulations and other provisions in force immediately before the commencement of the aforesaid Amending Act with respect to the terms and conditions of service of employees and agents of the Corporation, shall be deemed to be rules made under clause (cc) of sub- sec. (2) of S. 48, sub-sec. (2-B) empowered the Central Government to make rules under power conferred by clause (cc) of sub-sec. (2), which power includes to give retrospective effect to such rules. It also authorised the Central Government to add, vary or repeal the regulations already framed and in existence, sub-sec. (2-C) contains a non obstante clause saying that notwithstanding anything contained in the Industrial Disputes Act, 1947 or any other law or any agreement, settlement, award or other instrument for the time being in force, the provisions of clause (cc) of sub-sec. (2-C) contains a non obstante clause saying that notwithstanding anything contained in the Industrial Disputes Act, 1947 or any other law or any agreement, settlement, award or other instrument for the time being in force, the provisions of clause (cc) of sub-sec. (2) aforesaid and any rules made under the said clause (cc) shall have effect. In view of the introduction of clause (cc) in S.48(2) and sub- sec. (2-A) in S. 48 of the Corporation Act, it shall be deemed that Regulation 14 aforesaid which had been originally framed under S.49 of the Corporation Act, will be a rule framed under clause (cc) of sub-sec. (2) and shall have overriding effect because of sub-sec. (2-C) over the provisions of the Industrial Disputes Act in respect of terms and conditions of an employee of the Corporation, who is covered by the definition of "workman" under the Industrial Disputes Act. It may be pointed out that by the same Amending Act clause (bb) of sub-sec. (2) of S. 49, which authorised the Corporation with the previous approval of the Central Government to make regulations in respect of the terms and conditions of the services of the employees and agents of the corporation was deleted. By a statutory fiction, the regulations relating to the terms and conditions of the employees and agents of the corporation framed under S. 49(2)(bb), shall be deemed to be now the rules framed under S. 48(2)(cc) of the Corporation Act, and such rules shall have overriding effect over the provisions contained in the Industrial Disputes Act, so far the terms and conditions of the employment of such employees, who also conform to the requirement of the definition of "workman" under the Industrial Disputes Act, are concerned. 11. The effect of a deeming clause is wellknown, Legislature can introduce a statutory fiction and courts have to proceed on the assumption that such state of affairs exists on the relevant date. In this connection, one is often reminded of what was said by Lord Asquith in the case of East End Dwellings Co. 11. The effect of a deeming clause is wellknown, Legislature can introduce a statutory fiction and courts have to proceed on the assumption that such state of affairs exists on the relevant date. In this connection, one is often reminded of what was said by Lord Asquith in the case of East End Dwellings Co. Ltd. v. Finsbury Borough Council, (1952) AC 109 (B), that when one is bidden to treat an imaginary state of affairs as real, he must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, inevitably have flowed from-one must not permit his "imagination to boggle" when it comes to the inevitable corollaries of that state of affairs. In view of the amendments aforesaid introduced in S. 48, it has to be held that Regulation 14 referred to above in respect of termination of the service of an employee of the Corporation within the period of probation, shall be deemed to be a rule framed under S. 48(2) (cc) having overriding effect over S. 2(oo) and S. 25-F of the Industrial Disputes Act. 12. The Industrial Disputes Act as well as the Corporation Act both have been framed by the Parliament. But the amendments aforesaid have been introduced in the Corporation Act in S. 48 with effect from 31-1-1981 with a non obstante clause. In sub-sec. (2-C), the intention of the Parliament has been made apparent and obvious. It was pointed out in Aswini Kumar Ghose v. Arabinda Bose, AIR 1952 SC 369 ; A. V. Fernandez v. State of Kerala, AIR 1957 SC 657 and South India Corporation (P) Ltd; v. Secretary, Board of Revenue, Trivandrum. AIR 1964 SC 207 , that, the effect of non obstante clause is to obliterate in regard thereto the provisions which were earlier applicable. The framers of the Corporation Act through the amendments aforesaid have given the provisions of the Corporation Act an overriding effect over the provisions of the Industrial Disputes Act. So far the provisions relating to the terms and conditions of employment, which are in conflict with the provisions of the Industrial Disputes Act. The framers of the Corporation Act through the amendments aforesaid have given the provisions of the Corporation Act an overriding effect over the provisions of the Industrial Disputes Act. So far the provisions relating to the terms and conditions of employment, which are in conflict with the provisions of the Industrial Disputes Act. Unless the said attempt is held to be ultra vires being in conflict with any of the provisions of the Constitution, it was open to the Parliament to treat the employees and agents of the Corporation, as a separate class for purpose of fixing their terms and conditions of service. 13. Such employees earlier used to be governed by the regulations framed by the corporation under S. 49 of the Corporation Act as well as by the provisions of the Industrial Disputes Act, being "workman" within the meaning of that Act. It was up to them to enforce the rights or remedies in terms of the regulation so framed under the Corporation Act or in accordance with the provisions of the Industrial Disputes Act. Both after the amendment introduced by the Parliament in S. 48, the employees of the Corporation shall not be entitled to protections to which they were entitled before the coming into force of the amendment aforesaid. The amendments cannot be held to be violative of Art. 14 of the Constitution, merely on the ground that a section of the employees of the Corporation had the benefit of protection of the provisions of the Industrial Disputes Act, which now they have been deprived. The wisdom of the legislature in extending the protection of the provisions of the Industrial Disputes Act or denying the same cannot be judged by the courts, unless any such step is held to be violative of any of the provisions of the Constitution. This Court has considered the validity of the aforesaid Life Insurance Corporation (Amendment) Act, 1981 in the case of A.V. Nachane v. Union of India, (1982) 2 SCR 246 : AIR 1982 SC 1126 , and it has been held that the said Amending Act shall operate but prospectively in so far it seeks to nullify the terms of 1974 settlement in regard to payment of bonus in that case. It was said in the said case that S. 48(2-C) read with S.48 (2)(cc) authorises the Central Government to make rules to carry out the purposes of the Act notwithstanding the Industrial Disputes Act or any other law, which meant that in respect of the matters covered by the rules, the provisions of the Industrial Disputes Act or any other law will not be operating. It was pointed out that it was not really the rules framed by the Central Government that override the Industrial Disputes Act or any existing law, but the power of abrogating the existing laws was in sub-sec. (2-C) of S. 48, enacted by Parliament itself and as such there was no question of an excessive delegation. The grievance that by excluding the employees of the Corporation from the purview of the Industrial Disputes Act amounted to discrimination against them and as such the provisions of the Amending Act were violative of Art. 14 of the Constitution, was also rejected. 14. The amendments introduced in S. 48 of the Corporation Act have clearly excluded the provisions of the Industrial Disputes Act, so far they are in conflict with the rules framed under S. 48(2)(cc). The result whereof will be that termination of the service of the appellant shall not be deemed to be a "retrenchment" within the meaning of S. 2(oo), even if sub-sec. (bb) had not been introduced in the said section. Once S. 2(oo) is not attracted, there is no question of application of S. 25-F on basis of which the termination of the service of the appellant can be held to be invalid. The termination of the service of the appellant during the period of probation is in terms of the order of appointment read with Regulation 14 of the Regulations, which shall be deemed to be now Rules u/S. 48(2)(cc) of the Corporation Act. 12. From the above, it is obvious that in so far as the Regulations, 1960 (Ext.P9) are concerned, they are statutory in nature and have the force of law. In view of section 48(2) of the Act, the Regulations, 1960 would also override the provisions of the ID Act in So far as the provisions relating to the terms and conditions of employment which are in conflict with the ID Act are concerned. 13. In view of section 48(2) of the Act, the Regulations, 1960 would also override the provisions of the ID Act in So far as the provisions relating to the terms and conditions of employment which are in conflict with the ID Act are concerned. 13. In this context, we should also deal with a contention raised by the learned counsel for the respondents that in exercise of the powers under clause 4 of the Regulations, 1960, the Chairman of the Corporation had issued Life Insurance Corporation of India (Employment of Temporary Staff) Instructions, 1993, hereinafter, the 'Instructions, 1993', for short (Ext.P10). According to the counsel, appointments were made in terms of the provisions contained in the Instructions, 1993 and that though, in view of section 48(2C) of the Act, the Regulations, 1960 would prevail over the ID Act, such protection is not available to the Instructions, 1993. 14. According to us, this contention is only to be rejected in view of the principles laid down by the Apex Court in Life Insurance Corporation of India v. Asha Ramchandra Ambekar, (1994) 2 SCC 718 , where, it was held that the LIC Recruitment (of Class III and Class IV Staff) Instructions, 1979 issued by the Chairman of the Corporation exercising his powers under Regulation 4 of the Regulations, 1960 were held to be statutory in character and that they have the force of law (vide paragraph 1 of the judgment). 15. When the services of the workmen were terminated, they had rendered service for more than 240 days and such termination, but for the provisions of the Regulations, 1960 and the Instructions, 1979, would have attracted section 25 F of the ID Act. From the above discussion, it is clear that in so far as the appointment of the party respondents and their termination is concerned, they were done in exercise of the powers under the Regulations, 1960 and the Instructions, 1993 and that by virtue of the provisions contained in section 48(2C) of the Act, the Regulations and Instructions would override the ID Act. If that be so, the termination of such employees cannot amount to retrenchment as provided under section 2(oo) of the ID Act, attracting section 25 F, G or H thereof. Consequently, the judgment of the learned single Judge cannot be sustained and the award also is unsustainable. If that be so, the termination of such employees cannot amount to retrenchment as provided under section 2(oo) of the ID Act, attracting section 25 F, G or H thereof. Consequently, the judgment of the learned single Judge cannot be sustained and the award also is unsustainable. Accordingly, setting aside the judgment of the learned single Judge and quashing the award rendered by the Industrial Tribunal, Alappuzha in ID.Nos.64/99, 68/99, 69/99, 70/99 and 71/99, this appeal is disposed of.