Case: Life Insurance Corporation of India Vs. K.R. Krishnamurthi

SARKAR J.1. The respondent is an employee of the appellant, the Life Insurance Corporation of India, being an Assistant in its Bangalore Divisional Office2. The appellant was going to hold certain examinations from March 18, 1961, for promotion of some of its employees to higher grades in its organization. The respondent claimed to be entitled to appear in some of these examinations but was not allowed to do so by the appellant on the ground that he was not eligible under the rules framed for the purpose of deciding who shall appear at the examinations. The respondent thereupon moved the High Court of Mysore on March 14, 1961, under article 226 of the Constitution for a writ to stop the examinations for promotion to two of the higher posts, namely, the higher grade assistants and superintendents posts or, in the alternative, for a writ of mandamus directing the appellant to hold a special examination for him for promotion to the higher grade assistants and superintendents cadres and not to publish the results of the examinations to be held from March 18, 1961, except along with the result of that special examination. The petition was decided by a judgment dated December 7, 1961, and was allowed. By that time however the examinations had all been concluded and presumably their results declared. The High Court, therefore, only directed the appellant to permit the respondent to sit for the examinations for promotion to the cadres of superintendents and higher grade assistants as and when they were held. Hence the present appeal3. In this appeal no question as to the validity of any rules or statutes has been raised. Nor was any such question raised in the High Court. The only question argued in this appeal is really one of interpretation of certain rules to which, and to certain statutory provisions, we now proceed to referThe Government of Mysore had been carrying on the business of life insurance and this was managed by its insurance department. On June 18, 1956, the Life Insurance Corporation Act, 1956 (XXXI of 1956), came to be passed. Section 7 of this Act provides that on the appointed day, which, it may be stated, is September 1, 1956, all the assets and liabilities of the controlled business, which means the life insurance business, of all insurers would stand transferred to and vested in the appellant Corporation which was created by this Act. Now, the Government of Mysore which as already stated had been carrying on life insurance business was admittedly an "insurer" within the meaning of the Act. The assets and the liabilities of the life insurance business of the mysore Government, therefore, became vested in the appellant on September 1, 19564. Sub-section (1) of section 11 of this Act provides that every whole time employee of an insurer whose life insurance business has been transferred to the Life Insurance Corporation " and who was employed by the insurer wholly or mainly in connection with his controlled business immediately before the appointed day shall, on or 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 privileges as to pension 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 employment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation." Sub-section (2) of this section provides that where the Central Government is satisfied that for certain reasons it is necessary to do so, "the Central Government may, notwithstanding anything contained in sub-section (1) or in the Industrial Disputes Act, 1947, or in any other law for the time being in force......alter......the terms and conditions of service" of the employees of the insurer whose life insurance business has been transferred to the Corporation to such extent as it thinks fitNow, the Central Government made an order under sub-section (2) aforesaid, providing that certain employees including assistants shall be eligible for promotion to the offices of superintendents and higher grade assistants if they possess adequate qualification and pass the test prescribed in this behalf by the Corporation. By Regulation 4 made by the Corporation under section 49(2)(b) and (bb) of the Act it was provided that "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." Under the powers contained in regulation 4, the chairman issued certain administrative orders concerning promotion, two paragraphs of which may now be referred to"6. Selections for promotions to the higher grade assistants cadre shall be made from employees who pass the prescribed qualifying test.... Only employees who have put in at least 7 years service (5 years in the case of graduates) would qualify to appear at the test8. Promotions to the superintendents cadre will be made from employees in the whole zonal area who have passed the prescribed qualifying test..... Employees who have put in at least 10 years service shall be eligible for appearing at the qualifying test."5. At the end of these administrative orders appears the following note by way of explanation of them6. Note 1. The term service where it occurs shall, unless otherwise explicitly stated, include service in the corporation, service with the previous insurer........and also service with any other insurer carrying on life insurance business provided there is no break of more than six months between successive appointments."The respondent wanted promotion to the cadres of superintendents and higher grade assistants. The question in dispute is whether the respondent had put in the requisite number of years of service under paragraphs 6 and 8 of the administrative orders7. It appears that the respondent first joined the Mysore Government of February 22, 1950. He was then employed in the food section as a purchase depot clerk at Malur. From November 16, 1953, he was appointed as a third division clerk in the taluka office at Malur. It was only on January 2, 1956, that the respondent joined the insurance department of the Mysore Government. From September 1, 1956, he has been in the employment of the appellant Corporation under section 11(1) of the Act. It is not in dispute that there was no break in his service of more than six months since he first joined the Mysore Government service on February 22, 19508. Now, the dispute in this case has arisen over the interpretation of the words "service with the previous insurer" occurring in Note 1 in the administrative orders which we have earlier set out. If these words refer to any service under the previous insurer, that is, whether in his life insurance business or not, then the entire service of the respondent from February 22, 1950, up to date has to be taken into consideration for the purposes of paragraphs 6 and 8 of the administrative orders. in that case, it must be held that the respondent had put in the requisite number of years of service prescribed in these paragraphs and that is precisely his contention9. The appellant contends that the proper interpretation of the words "service with the previous insurer" is service in the insurance business of the insurer in a case where, as in the present, the insurer had other activities also. In other words, the appellant contends that the employment of the respondent by the Mysore Government in the taluka office or in the food section was not "service with the previous insurer" within the meaning of the noteIt seems to us that the appellants reading of the note is the correct one. The Act and the Regulations, and the orders are concerned with the previous insurer and its employees only so far as the life insurance business of that insurer is concerned. With the other activities of the insurer or his other employees the Act has nothing to do. It may be pointed out that under section 11 of the Act only those employees of the insurer who are employed " wholly or mainly in connection with his controlled business immediately before the appointed day", that automatically pass into the service of the Corporation. No doubt, section 11 deals with persons employed immediately before the appointed day and is concerned with the transfer of the services of these people to the Corporation, but it certainly indicates what kind of employees of the previous insurer is contemplated by the Act. That kind consists of persons who had been wholly and mainly employed in the life insurance business of the insurer. With other employees of the insurer the Act is not concerned. When, therefore, orders are issued under powers conferred by the Act concerning the services of employees of previous insurers and the words "service with the previous insurer" are used, it is plain that they can only refer to service in the insurance business of the previous insurer10. Learned counsel for the respondent drew our attention to Regulation 13 of the Regulations made under section 49(2)(b) and (bb) of the Act, earlier mentioned. That regulation provides that " service of an employee shall be deemed to commence from the working day on which an employee reports for duty." There is an explanation to this regulation and that reads, " In the case of a transferred employee, his service shall be deemed to have commenced from the date on which his service commenced with the insurer." Learned counsel contends that this explanation shows that any service under the insurer would do and such service need not be only in the life insurance business of the insurer. We do not think that the explanation shows that. In our view, it raises the same question which has arisen in the present case and is of no assistance in answering that questionThe High Court thought that as under sub-section (1) of section 11 an employee whose services were transferred was entitled to the same rights and privileges in all matters relating to his service as prevailed before his services were transferred and the respondent was entitled under the Mysore Government Service Regulations to contend that his service had commenced on February 22, 1950, that right cannot be taken away by Administrative Orders or Regulations. The learned judge of the High Court, however, did not consider sub-section (2) of section 11 which gives the Central Government the power to alter the conditions of service notwithstanding anything contained in sub-section (1). It is under that power that paragraphs 6 and 8 of the administrative orders and the notes appended to them had been made. However, as we have said earlier, no question as to the validity of any of these orders and regulations was raised on behalf of the respondent at the hearing before us. In fact the respondent has proceeded on the basis of these orders and regulations and claimed to be entitled to certain rights under them. We also, therefore, decide the appeal on that basis

Decision:
1[ds]7. It appears that the respondent first joined the Mysore Government of February 22, 1950. He was then employed in the food section as a purchase depot clerk at Malur. From November 16, 1953, he was appointed as a third division clerk in the taluka office at Malur. It was only on January 2, 1956, that the respondent joined the insurance department of the Mysore Government. From September 1, 1956, he has been in the employment of the appellant Corporation under section 11(1) of the Act. It is not in dispute that there was no break in his service of more than six months since he first joined the Mysore Government service on February 22,seems to us that the appellants reading of the note is the correct one. The Act and the Regulations, and the orders are concerned with the previous insurer and its employees only so far as the life insurance business of that insurer is concerned. With the other activities of the insurer or his other employees the Act has nothing to do. It may be pointed out that under section 11 of the Act only those employees of the insurer who are employed " wholly or mainly in connection with his controlled business immediately before the appointed day", that automatically pass into the service of the Corporation. No doubt, section 11 deals with persons employed immediately before the appointed day and is concerned with the transfer of the services of these people to the Corporation, but it certainly indicates what kind of employees of the previous insurer is contemplated by the Act. That kind consists of persons who had been wholly and mainly employed in the life insurance business of the insurer. With other employees of the insurer the Act is not concerned. When, therefore, orders are issued under powers conferred by the Act concerning the services of employees of previous insurers and the words "service with the previous insurer" are used, it is plain that they can only refer to service in the insurance business of the previousregulation provides that " service of an employee shall be deemed to commence from the working day on which an employee reports for duty." There is an explanation to this regulation and that reads, " In the case of a transferred employee, his service shall be deemed to have commenced from the date on which his service commenced with thedo not think that the explanation shows that. In our view, it raises the same question which has arisen in the present case and is of no assistance in answering that questionThe High Court thought that as under sub-section (1) of section 11 an employee whose services were transferred was entitled to the same rights and privileges in all matters relating to his service as prevailed before his services were transferred and the respondent was entitled under the Mysore Government Service Regulations to contend that his service had commenced on February 22, 1950, that right cannot be taken away by Administrative Orders or Regulations. The learned judge of the High Court, however, did not consider sub-section (2) of section 11 which gives the Central Government the power to alter the conditions of service notwithstanding anything contained in sub-section (1). It is under that power that paragraphs 6 and 8 of the administrative orders and the notes appended to them had been made. However, as we have said earlier, no question as to the validity of any of these orders and regulations was raised on behalf of the respondent at the hearing before us. In fact the respondent has proceeded on the basis of these orders and regulations and claimed to be entitled to certain rights under them. We also, therefore, decide the appeal on that basis