Case: Life Insurance Corporation of India and Ors Vs. Retired L.I.C. Officers Association and Ors

Respondent No.1 is an Association of officers who have retired from the services of the appellant-Corporation which is a statutory authority constituted and incorporated under the Life Insurance Corporation Act, 1956. During the period of 1st August, 1992 and 31st July, 1994 a revision of scales of pay of the offices and employees of the Corporation took place. Different cut off dates were fixed for grant of different nature of allowances as also pay by the Chairman of the Corporation in purported exercise of his power under Regulation 51 of the Regulations. Whereas 1st April, 1993 was the cut off date for revision of pay; 1st August, 1994 was fixed as the cut off date for the purpose of payment of gratuity on the basis of revised pay. However, so far as those employees who had retired prior to 1st August, 1994 are concerned, they were directed to be entitled to reduce gratuity based on the reduced scale of pay with effect from 1st April, 1993 only. The arrears of pay were directed to be paid only w.e.f. 1st April,whereas the Gujarat and Kerala High Court upheld the validity of the instructions issued by the Chairman of the appellant-Corporation, the Karnataka High Court took a differentclaim of Respondent No.1 was allowed in part by a learned Single Judge of the High Court by his order dated 8th July, 2003reading of Ext.P.3 (instructions issued by the Chairman for supplementary of Revisionist in respect of class I officers and claimed IV will definitely go to show that it cannot operate as far as the claims for gratuity is concerned. It is admitted that at least certain officers, represented by the petitioner Association were deemed as having revised salary from April, 1993 onwards. In that view, at the time of retirement, they were deemed as getting a salary which alone could have been taken notice of for computing gratuity, if Regulation No.77 has any application. It is definite that the restriction in Ext. P.3 and benevolence in Regulation No.77 could not have co-existed because the Corporation is offering gratuity at the rate less than the amount an employee had notionally drawn at the time of their respective retirement. It is also pertinent to note that when powers were conferred on the Chairman under Regulation No.51(2), specific reference was there about the incidents of DA and other allowances. There is no reference to any alteration permissible in respect of gratuity. It leads to the position that the regulation did not permit the Chairman to disturb criterian for gratuity payment by exercise of powers under Regulation No.51ere was no power on the part of the Bank Management in that case to disturb the settlement, and the gratuity was to be paid on the basis of last drawn pay. Likewise, in the present case, it would not have been permissible for the Chairman to unsettle the benefits that had been spoken to by Regulation No.77 while issuing Ext.P.3 order."

Court's reasoning:
Method of fixation, eligibility for the benefit of revision and the date from which the revisions shall apply are thus, the only areas within which the Chairman can exercise jurisdiction. The effect of revision of pay scales on other spheres and which are otherwise governed by another statute or other provisions of the said Regulations would not come within the purviewterminology used "and other matters connected therewith or incidental thereto" must, therefore, be held to have a direct nexus with any one of the aforementioned three elements. The same has nothing to do with the construction of any other provision of the Regulations. The words "incidental to" cannot be interpreted too broadly. It cannot be read independently of the main provision. It cannot serve some other purpose which is not covered by Regulation 51 of the Regulations. It cannot be permitted to encroach upon an area which is not within the jurisdiction of the Chairman of theis one thing to say that the court while exercising its jurisdiction would be entitled to exercise such incidental power for determination of the principal issue but it is another thing to say that a statutory authority in such matters would be held to have such power which is beyond the scope and purport of the principalhowever, do not intend to lay down the law that the expression "incidental" or "connected" would be matters which are of a casual nature only, but, we reiterate that the same must have something to do with the nature of power granted to the authoritybefore the Gujarat High Court and the Karnataka High Court, both the counsels have missed in bringing to the Courts notice this aspect of the matter.