Case: National Insurance Co. Ltd Vs. General Insurance Dev. Officers Asson. &amp; Others

is excessive delegation in framing schemes and reading the preamble, the scheme and the other provisions of the enactment taking note of the general economic situation in the country, the authorities concerned had to frame appropriate schemes. Therefore, it is not open to the petitioners to contend that there is excessive delegation in relation to the enactment to frame schemes.19. In Ajoy Kumar Banerjee case this Court after holding that there is no excessive delegation observed that the Scheme framed was ultra vires the enactment for the Scheme could only be framed once. Now the argument is that once a scheme is framed no further scheme should be allowed to be framed. If the legislature recognises the fact the rationalisation resulting from the merger of several companies are not yet over and on that basis enacts a law to enable the Government to frame appropriate schemes, we do not think that such step by the legislature is arbitrary or irrational as to be violative of Article 14 of the Constitution. In Ajoy Kumar Banerjee case this Court pointed out that though there is power in the Government to revise the pay scales, it cannot exercise the power more than once at the time of merging different companies for the purpose of rationalisation and this power could have been exercised no further. But now the enactment itself specifically provides that every scheme framed or purporting to have been framed by the Central Government under Section 16(1) of the principal Act and every notification made or purporting to have been made thereunder insofar as such scheme or notification provides for rationalisation or revision of pay scales or other terms and conditions of the officers and other employees of the Corporation are deemed always to have been for all purposes as valid and effective as made under Section 17-A of the Act. The retrospective effect given to the scheme is only to overcome the difficulty pointed out by this Court in Ajoy Kumar Banerjee case. That lacuna having been overcome, it is not open to the petitioners to contend that retrospective effect given is violative of Articles 14, 19 and 21 of the Constitution. Validation of invalid rule by amending the main enactment under which it is made is a well-known legislative device approved by this Court.Xx xx xx24. The Central Government, in exercise of the powers conferred under Section 16(1)(g) of the Act, framed three Schemes for three different categories of employees relating to (i) supervisory, clerical and subordinate staff; (ii) officers; and (iii) development staff. The Schemes also provided, inter alia, various provisions like fixation of pay on promotion, increments, provident fund and gratuity, etc. When the process of categorisation and rationalisation was in progress, it was noticed that as per the 1974 Scheme, contribution to the provident fund was @ 8 per cent of the basic salary and dearness allowance with an equal contribution of GIC or any of its subsidiaries. However, LIC and nationalised banks were giving provident fund at different rates. So as to keep parity with other similar organisations, the Scheme was corrected by an amending notification issued on 1-6-1976 and it was provided that the provident fund shall be contributed by every employee at the rate of 10% of the basic pay plus personal pay and special pay, if any, in place of 8% of the basic salary and dearness allowance.Xx xx xx26. The stand of the respondents is that amendments were made while the process of rationalisation of pay scales and other service conditions were still in progress and the process had not been finally completed to achieve uniformity and inter se rationalisation in terms and conditions of service of different categories of employees of merged companies. In 1977 various labour unions presented a charter of demands in relation to revision of pay scales and service conditions. The Scheme of 1974 contained a provision to the effect that the provisions of the Scheme relating to scales of pay, dearness allowance etc. will continue to be in force till the Government modified the same. After considering the demands of the unions and the view of the management, the Government formulated guidelines and requested the management to hold consultations and discussions with the unions so that final views of the unions may be known and may be taken into account by the Government before modifying the pay scales, etc. But this course will not indicate that there was an obligation cast on the Government to formally negotiate with the unions. However, in keeping with the democratic tradition and to maintain harmonious industrial relations the management had several rounds of discussions with the four major registered unions. The procedure of consultations and discussions was adopted in order to narrow down the differences to the minimum and to ensure that the viewpoint of the employees was kept in mind before any scheme was finalised by the Government. 20. It was further clarified that if the scheme is prima facie discriminated it is open to challenge.21. In para 28 it was held that there was no need for any consultation with the employees. When the changes introduced by the scheme are considered in the background of the position in law and the decision of this Court by a Constitution Bench in Prakash Sharmas case (supra) there is no scope for interference in these appeals. However, it would be in the interests of the officers and the insurance companies if the Development Officers who work within the cost ratio are not transferred unless the transfer is required to be done in public interest. So far as the promotional prospects and the wage revision are concerned, a draft policy stated to have been formulated for the latter be finalized within a period of three months. The writ petitions filed in different High Courts stand dismissed because of this judgment. Consequentially, the interim orders passed which form the subject matter of challenge in the appeals are vacated subject to the directions given supra.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]18. It is true as contended by learned counsel for the writ petitioners that a personal factor has a role to play notwithstanding the overall importance of the entity. With opening of economy there is a remarkable change in the various sectors including the insurance sector. Since modifications appear to have been done for the purpose of rationalization, there is no scope for interference because essentially a policy decision is immune from judicial review unless it is founded on no rational basis or material to justify the change in policy.So far as the delegated legislation is concerned, the case-law will throw light as to the manner in which the same has to be understood and in each given case we have to understand the scope of the provisions and no uniform rule could be laid down. The legislatures in India have been held to possess wide power of legislation subject, however, to certain limitations such as the legislature cannot delegate essential legislative functions which consist in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of conduct. The legislature cannot delegate uncanalised and uncontrolled power. The legislature must set the limits of the power delegated by declaring the policy of the law and by laying down standards for guidance of those on whom the power to execute the law is conferred. Thus the delegation is valid only when the legislative policy and guidelines to implement it are adequately laid down and the delegate is only empowered to carry out the policy within the guidelines laid down by the legislature. The legislature may, after laying down the legislative policy, confer discretion on an administrative agency as to the execution of the policy and leave it to the agency to work out the details within the framework of the policy. When the Constitution entrusts the duty of law-making to Parliament and the legislatures of States, it impliedly prohibits them to throw away that responsibility on the shoulders of some other authority. An area of compromise is struck that Parliament cannot work in detail the various requirements of giving effect to the enactment and, therefore, that area will be left to be filled in by the delegatee. Thus, the question is whether any particular legislation suffers from excessive delegation and in ascertaining the same, the scheme, the provisions of the statute including its preamble, and the facts and circumstances in the background of which the statute is enacted, the history of the legislation, the complexity of the problems which a modern State has to face, will have to be taken note of and if, on a liberal construction given to a statute, a legislative policy and guidelines for its execution are brought out, the statute, even if skeletal, will be upheld to be valid but this rule of liberal construction should not be carried by the court to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power conferred on the executive. These very tests were adopted in Ajoy Kumar Banerjee case also to examine whether there is excessive delegation in framing schemes and reading the preamble, the scheme and the other provisions of the enactment taking note of the general economic situation in the country, the authorities concerned had to frame appropriate schemes. Therefore, it is not open to the petitioners to contend that there is excessive delegation in relation to the enactment to frame schemes.It was further clarified that if the scheme is prima facie discriminated it is open to challenge.21. In para 28 it was held that there was no need for any consultation with the employees. When the changes introduced by the scheme are considered in the background of the position in law and the decision of this Court by a Constitution Bench in Prakash Sharmas case (supra) there is no scope for interference in these appeals. However, it would be in the interests of the officers and the insurance companies if the Development Officers who work within the cost ratio are not transferred unless the transfer is required to be done in public interest. So far as the promotional prospects and the wage revision are concerned, a draft policy stated to have been formulated for the latter be finalized within a period of three months. The writ petitions filed in different High Courts stand dismissed because of this judgment. Consequentially, the interim orders passed which form the subject matter of challenge in the appeals are vacated subject to the directions given supra.