IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 11-09-2008 CORAM THE HONOURABLE MR.JUSTICE M.JAICHANDREN Writ Petition No.5748 of 2001 1.Tmt.Kanniammal 2.K.Valliammal 3.M.Amudhavalli 4.P.Vinayagammal 5.A.lakshmi 6.G.chandra 7.S.Santhi 8.M.Amudha 9.D.Usha Rani 10.D.Padma 11.M.Elliaya 12.V.Banu .. Petitioners. Versus 1.The Life Insurance Corporation of India Group Insurance Section, LIC Buildng, 3rd Floor, Anna Salai, Chennai-2. 2.The Management of Steel Authorities of India Limited., 3.M.Devarajulu .. Respondents. Prayer: This petition has been filed under article 226 of the constitution seeking for a writ of Mandamus, directing the respondents to pay the insurance settlement of the petitioners' husbands to the petitioners herein with interest. For Petitioner : Mr.V.Prakash For Respondents : Mr.M.B.Raghavan (R1) Mr.Sanjay Mohan (R2) Mr.K.R.Vijayakumar (R3) O R D E R Heard the learned counsel appearing for the petitioners and the learned counsel appearing for the respondents. 2. It has been stated that the petitioners are the wives of https://hcservices.ecourts.gov.in/hcservices/ deceased contract labourers, who have been working under the various contractors of the second respondent management. Lastly, they had worked under the third respondent contractor. After the death of the husbands of the petitioners, the gratuity amounts due to them were settled. It has been further stated that the deceased contract labourers had been insured by the third respondent contractor under the Group Insurance Scheme of the Life Insurance Corporation of India, the first respondent herein, under Reference No.GGCA MP No.404088. The first respondent instead of passing the insurance benefits to the petitioners pursuant to the death of their husbands, they have been passed on to the third respondent contractor, without any notice to the petitioners. The second respondent had also failed to look into the matter and to ensure that the insurance benefits were properly disbursed. 3. It has been further stated that the petitioners had made a representation to the first respondent, through the United Labour Federation, which is a trade union, on 7.12.2000, requesting the first respondent to investigate the issue of non-payment of the insurance benefits to the families of the deceased workers. No serious action had been taken by the first respondent pursuant to the representation made by the petitioners. By non payment of the insurance benefits to the families of the deceased workers, the first respondent has caused deficiency in service by being negligent in performing their duties. The second respondent being an instrumentality of the State is also responsible to take all necessary steps to ensure that the insurance benefits had been received by the family of the deceased workers. Thus, the respondents had failed in performing their duties and responsibilities vested in them. In such circumstances, the petitioners have filed the present writ petition before this Court, under Article 226 of the Constitution of India. 4. In the counter affidavit filed on behalf of the first respondent, the allegations and claims made on behalf of the petitioners have been denied. There is no deficiency or negligence in the services rendered by the first respondent Corporation. It has been stated that the Group Gratuity Scheme is governed by the Income Act, 1961, and the Income Tax Rules, 1962. A Trust has to be formed by the company. The Trustees have to enter into an agreement. Thus, the contract is only between the Life Insurance Corporation of India and the Trustees. The members of the scheme have no direct contract with the Life Insurance Corporation of India and the gratuity will be settled only in favour of the Trustees, who act on behalf of the members of the Trust. Since there is no contract between the Life Insurance Corporation of India and the members of the Trust, the members have to resolve their disputes only with the concerned Trustees. It is the responsibility of the Trustees to settle the gratuity as per the rules of the Scheme. In the present case, the Income Tax approval was obtained for winding up the Scheme, vide letter, dated 18.7.2001. 5. It has been further stated that the Life Insurance https://hcservices.ecourts.gov.in/hcservices/ Corporation of India had issued a Group Gratuity Cash Accumulation Master Policy No.404088, with the date of commencement, on 1.12.1994. The renewal date falls on the first of December every year. The policy covers all eligible employees who are aged not less than 18 years and not more than 58 years, subject to extension. The first respondent insurance company had received an application from M/s.M.Devarajulu employees' Group Gratuity Scheme Trustees for settling the surrender value under the Gratuity Cash Accumulation Scheme. On receipt of the necessary documents, the first respondent Corporation had settled the wholesale Surrender Value on 8.12.2001, as per the rules in favour of the Trustees, who had entered into a contract with the first respondent Corporation. Therefore, there was no deficiency or negligence in the performance of its duties. The amount settled in favour of the Trustees is only in accordance with the rules and regulations. 6. In the counter affidavit filed on behalf of the second respondent, the allegations and averments made on behalf of the petitioners have been denied. It has been stated that there is no employer or employee relationship between the petitioners or their husbands and the second respondent company. The second respondent company is a Government of India concern, engaged in the manufacture of steels, having various depots all over India, including one at Madras. The said depot was initially within the Chennai Port and later it was shifted to a different premises. To load and unload the steel that comes to its stock yard, the second respondent had given the work on contract basis. One such contractor is the third respondent under whom the husbands of the petitioners had been working. The third respondent was not a contractor of the second respondent company at the time of the filing of the writ petition. After the termination of the contract, all the dues have been paid by the second respondent company to the third respondent contractor, except a sum of Rs.10 lakhs, which has been retained by way of a bank guarantee for settling the third respondent's account with the petitioners. The third respondent had undertaken to pay the gratuity to the workers under him, as per the provisions of the Payment of Gratuity Act, 1972. However, the second respondent company is not aware of the fact as to whether the petitioners' husbands had been insured by the contractor, under the Insurance scheme, with the Life Insurance Corporation of India, the first respondent herein. The second respondent company is in no way connected with the claims made by the petitioners against the first respondent Corporation. 7. In view of the averments made on behalf of the petitioners, as well as the respondents, it is clear that the insurance policy taken by the contractor from the Life Insurance Corporation of India is to cover the risks and liabilities that may arise during the course of his business, with regard to the payment of gratuity to the contract workers. The Group Gratuity Cash Accumalation Master Policy No.404088, taken on 15.12.1994, covers all eligible employees. However, the petitioners are not eligible for the benefits accruing from the said policy. There is no privity of contract between the petitioners and the life Insurance Corporation of India. The contract https://hcservices.ecourts.gov.in/hcservices/ is only between the members of the employees group gratuity scheme and the Life Insurance Corporation of India. Therefore, there is no liability on the part of the contractor or the Life Insurance Corporation of India to pay to the contract workers or to their families, the benefits arising out of the policy. The contract workers would be eligible only to the gratuity amounts due to them, in accordance with the provisions of the Payment of Gratuity Act, 1972. The petitioners have not shown sufficient cause or reason for this Court to grant the reliefs prayed for in the writ petition. It has not been shown by the petitioners as to how they are eligible for payment of gratuity more than what has been prescribed under the provisions of the Payment of Gratuity Act, 1972. It is open to the contractor concerned to opt for any policy that may be conducive to his requirements in order to cover the risks and liabilities that may arise in the course of his business. One such policy is the Group Gratuity Cash Accumulation Master Policy, which the contractor has taken with the Life Insurance Corporation of India. Therefore, the contract is only between the contractor who has taken the policy with Life Insurance of Corporation of India. Such a contract will not have any binding effect either on the Steel Authority of India Limited or the contract labourers. Once the requirements of the Payment of Gratuity Act, 1972, are satisfied, the contract labourers or their families can have no further claim over the benefits that may accrue to the contractor, under the insurance policy. In such circumstances, the writ petition deserves to be dismissed. Hence, it is dismissed. No costs. Sd/- Asst. Registrar /True Copy/ Sub Asst. Registrar csh To The Life Insurance Corporation of India Group Insurance Section, LIC Buildng, 3rd Floor, Anna Salai, Chennai-2. 1 C.C. to Mr.M.B.Gopalan , Advocate, SR.No.52002 Writ Petition No.5748 of 2001 LA [CO] RB 30/10/2008 https://hcservices.ecourts.gov.in/hcservices/