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CASE NO.: Appeal (civil)  2004 of 2008

PETITIONER: LIC of India

RESPONDENT: R. Suresh

DATE OF JUDGMENT: 14/03/2008

BENCH: S.B. SINHA & V.S. SIRPURKAR

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO.     2004 OF 2008 (Arising out of SLP(C) No. 13230 of 2006)  

S.B. SINHA,  J :

       Leave granted.

1.      Whether jurisdiction of the Industrial Courts are ousted in regard to an  order of dismissal passed by the Life Insurance Corporation of India, a  Corporation constituted and incorporated under the Life Insurance  Corporation Act, 1956, is the question involved in this appeal which arises  out of a judgment and order dated 3.2.2006 passed by a Division Bench of  the Kerala High Court at Ernakulam.

2.      Respondent herein was appointed as a Development Officer of the  appellant.  Departmental proceeding were initiated against him.  Articles of  Charges were framed; fifth of it being, forgery of a signature on a proposal.   According to the Enquiry Officer, the respondent was negligent in the  performance of his duties as he did not personally verify the details of the  person concerned and relied wholly upon the representation of the agent.   The Enquiry Officer found him guilty of the first four charges, but  exonerated him on the fifth one.   He was dismissed from service by the  disciplinary authority by an order dated 19.4.1989.    

3.      An industrial dispute was raised by him.  The appropriate Government  referred the following dispute for adjudication of the Industrial Tribunal: "Whether the action of the Management of the Life  Insurance Corporation of India, Thiruvananthapuram in  removing from service of Sh. R. Suresh, Development  officer with effect from 19.04.1989 is justified?  If not  what relief is the workman entitled to."

4.      By an Award  dated 6.2.1993, while holding that the principles of  natural justice have been followed in the matter of holding the domestic  enquiry against the respondent, in respect of charges 1 to 4, but having  regard to the nature of charges vis-‘-vis the admission of the respondent, it  was held:

"IV.  Admittedly there was no monetary loss to the  management and no monetary gain to the workman  by the issuance of a policy in the name of a dead  person.   It is pertinent to note that senior branch  manager of the Punalur Branch office of the

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management has deposed before Enquiry Officer  "that the workman has not deliberately secured the  proposal knowing that the party as dead.   But he has  been careless in not verifying the correct facts that is  why it is said his work habit is unsatisfactory".   The  above statement makes it clear that the workman  deliberately not secured the policy but everything  happened due to his carelessness.  As per Regulation  Nos. 21 and 24 mentioned above every employee of  the management corporation shall serve the  corporation honestly and faithfully and shall  maintain absolute, integrity and devotion to duty  etc., and as per Regulation 39(1) the management is  empowered to impose punishment for committing  breach of the Regulations of the Corporation and the  punishment included dismissal as well.   But as  deposed by the senior Branch Manager the workman  was careless in securing the proposal which resulted  in the issuance of the policy in the name of a dead  person.   It may be recalled that he had only two  years service with the management and there was no  other complaint against him during that period  except the other complaint against him during that  period except the present charge.   But the  misconduct happened due to his carelessness on as  admitted by the senior Branch Manager.  On an  anxious consideration of all these aspects I am of the  view that the punishment of dismissal is too harsh to  be sustained.   The management failed to consider  these aspects and failed to award a lesser  punishment.   However, the workman cannot be let  off without any punishment for the misconducts  proved against him.   The anguish and pain suffered  by him due to the loss of his job and denial of  backwages and all other monetary benefits would be  adequate punishment according to me for the  misconducts now proved against him.    Subject to  that he is ordered to be reinstated in service."  

5.      A Writ Petition was filed by the appellant before the High Court. A  contention inter alia was raised therein that the Industrial Tribunal had no  jurisdiction in the matter.   Before the High Court, a decision of this Court in  M. Venugopal Vs. Divisional Manager, Life Insurance Corporation of India,  Machilipatnam, A.P. and Another [(1994) 2 SCC 323], was cited.

       The High Court opined that the said decision has no application in the  fact of the present case, stating: "\005..It was also held that once Section 2(cc) is not  attracted, there is no question of application of Section  25-F on the basis of which the termination of the  service of the probationer can be held to be invalid.   It  was therefore that the Court found that the proceedings  before the Tribunal were not justified.   There again the  reasoning is that in the case of conflict between the  provisions in the Staff Regulation and the provisions of  the Industrial Disputes Act, the former would prevail."

       Relying on a decision of this Court in S.K. Verma Vs. Mahesh  Chandra and another [AIR 1984 SC 1462], it was held; "\005.After considering the terms and conditions relating  to appointment of Development Officers,  it was found  that the Development Officer, a whole time employee  of the L.I.C. with liability for transfer is expected to  assist and inspire the agents while exercising no

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administrative control over them.   The agents are not  his subordinates.  In the circumstances, he is not a  person in administrative or managerial cadre and as  such was held to be a workman within the meaning of  Section 2(s) of the Industrial Disputes Act\005.."                          In regard to the question as to whether the Industrial Tribunal was  justified in interfering with the quantum of punishment, it was opined; "19.   The above findings were made in a case where the  Management alleged that four of its employees committed  breach of trust and misappropriated, two amounts of Rs.  24,239.97 and Rs. 19,884.06 during the period 1977-78.    The charges were established based on shortage of goods  notices on stock verification. When there is a charge of  misappropriation proved, there is certainly no justification  for interfering with the punishment of dismissal imposed  by the Management.   But, in the instant case, there is no  allegation of misappropriation.  As already mentioned,  there was no wrongful loss to the Corporation nor any  wrongful gain to the 2nd Respondent.   All that was proved  was negligence.   The case of breach of trust and forgery  alleged in Charge No. 5 was already found against and  only the minor charges arising from carelessness stood  proved.   In such a case, the observations of the Apex  Court made in the aforesaid case cannot be justly applied."

6.      On an intra-court appeal, having been preferred thereagainst, a  Division Bench of the High Court affirmed the said view.  

7.      Mr. K. Ramamurthy, the learned senior counsel appearing on behalf  of the appellant would submit:- (i)     In view of the provisions of the 1956 Act, as amended in the year  1981, the provisions of the Industrial Disputes Act, 1947 (for short  "1947 Act")  would have no application. (ii)    The respondent, in any event, being a Development Officer, was  not a workman and, thus, the Tribunal could not have interfered  with the quantum of punishment awarded by the management.     

8.      Mr. G. Prakash, learned counsel appearing on behalf of the  respondent, on the other hand, urged:-  (i)     The jurisdiction of the Tribunal would be ousted only in regard to  the terms and conditions of service and not in a case of this nature.   (ii)     There are various decisions of this Court, where an industrial  dispute against LIC has been entertained.    (iii)    Charge  No. 5  being  the  main  charge  and  the respondent  having been exonerated therefrom, the Tribunal cannot be said to  have committed any illegality in interfering with the quantum of  punishment in exercise of its jurisdiction under Section 11A of the  1947 Act.

9.      The 1956 Act was enacted to provide for the nationalization of life  insurance businesses in India by transferring all such businesses to a  Corporation established for the purpose and to provide for the regulation and  control of the business of the Corporation and for matters connected  therewith or incidental thereto.

       Section 3 provides for the establishment and incorporation of the Life  Insurance Corporation of India.   Section 4 provides for the constitution of  the Corporation.  Section 6 occurring in Chapter III of the Act enumerates  the functions of the Corporation inter alia to carry on business in insurance  and to carry on any other business which may seem to the Corporation to be  capable of  being conveniently carried on.

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       Section 48 of the Act empowers the Central Government to make  rules.  Sub-Section (2) of Section 48 enumerates the power in respect  whereof the Central Government can make rules in particular and without  prejudice to the generality of the power conferred upon it under Section 1  thereof.  Clause (cc) of sub-Section (2) of Section 48 reads as under:- "(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;"  

       Sub-section (2B) of Section 48 of the Act elucidates as to what would  be the matters which would be covered by clause (cc) of sub-Section (2) in  the following terms; "(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-section (2A), with retrospective effect, "

10.     By way of a validating statute, sub-section (2C) was also enacted,  giving retrospective effect to any Rule which have been made in terms of  sub-Section (2B) of Section 48 of the Act.

11.     LIC is a "State" within the meaning of Article 12 of the Constitution  of India.   Its duties and functions are provided for under the 1956 Act.   The  same by itself, however, having regard to the definition of "Industry" as  contained in Section 2(j) of the Industrial Disputes Act, 1947 cannot take  within its umbrage the functions of the Life Insurance Corporation outside  its purview.

12.     Under the industrial law, and in particular the 1947 Act, the  authorities specified therein, the appropriate governments and the industrial  courts have various functions to perform.   Terms and conditions can be laid  down thereunder.  Violations of the terms and conditions of service are also  justiciable.   Safeguards have been provided under the Act to see that  services of a workman are not unjustly terminated.   The 1947 Act provides  for a wider definition of termination of service.  Conditions precedent for  termination of service have been provided for thereunder.  A decision taken  by the Disciplinary Authority under the 1956 Act ordinarily could have been  a subject matter of suit.  The Civil Court, however, exercises a limited  jurisdiction.   If however, the concerned employee is a ’workman’ within the  meaning of the provisions of the 1947 Act, his remedy apart from the  common law remedies may also lie before an industrial court.   When a right  accrues under two statutes vis-‘-vis the common law right, the concerned  employee will have an option to chose his forum.  

       Section 48 provides for a rule making power.   Clause (cc) of sub- Section (2) whereof only empowers the Central Government to lay down the  terms and conditions of service of the employees and agents of the  Corporation.   The Act does not contain any provision in terms whereof the  jurisdiction of the Civil Court and/or Industrial Court is taken away.   It is  now a well settled principle of law that any provision taking away the  jurisdiction of a Court shall be strictly construed.  A presumption arises  against the ouster of jurisdiction.   Having regard to the provisions contained  in Section 9 of the Code of Civil Procedure and as also the provisions of the  1947 Act, an endeavour should be made to construe the provisions in such a  manner so as to retain the jurisdiction subject, however, to the ouster of  jurisdiction either expressly or by necessary implication.

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In Dwarka Prasad Agarwal Vs. Ramesh Chandra Agarwal [(2003) 6  SCC 220], it was stated:- "22. The dispute between the parties was eminently a civil  dispute and not a dispute under the provisions of the Companies  Act. Section 9 of the Code of Civil Procedure confers  jurisdiction upon the civil courts to determine all dispute of  civil nature unless the same is barred under a statute either  expressly or by necessary implication. Bar of jurisdiction of a  civil court is not to be readily inferred. A provision seeking to  bar jurisdiction of civil court requires strict interpretation. The  court, it is well-settled, would normally lean in favour of  construction, which would uphold retention of jurisdiction of  the civil court..."

13.     We have noticed hereinbefore that the 1956 Act does not contain any  provision ousting the jurisdiction of the Civil Court or the Industrial Court.  The question, therefore, would be as to whether the jurisdiction is ousted by  necessary implication.   For the said purpose, construction of clause (cc) of  sub-Section (2) of Section 48 of the Act is necessary.   It is one thing to say  that rules may provide for the terms and conditions of service of the  employees but it is another thing to say that a person is entitled to avail his  human right of access to justice to get his grievances adjudicated before an  independent fora.   Access to justice as is well known is a valuable right.

       Construing the text of G.P. Singh, Principles of Statutory  Interpretation, 11th Ed., pg. 707;

"There is a strong presumption that civil courts have  jurisdiction to decide all questions of civil nature.   The  exclusion of jurisdiction of civil courts is therefore not to be  readily inferred and such exclusion must either be  "explicitly expressed or clearly implied."  

       So construed, and applying the aforementioned principle of  interpretation to a case of this nature, the jurisdiction of the Industrial Court  must be held to be ousted only when the remedy sought for by the workman  is premised on a right under the industrial laws which is in conflict with the  right granted to an employee, an agent or LIC.

       Reliance has been placed by Mr. K. Ramamurthy on A.V. Nachane  and Anr. Vs. Union of India and Anr. [(1982) 1 SCC 205].   This Court  therein was concerned with the validity of Section 48(2C) of the Act.   It was  held that the appellant therein had not been able to bring on records  sufficient materials to attract the wrath of Article 14 of the Constitution of  India.          14.     The question came up for consideration in M. Venugopal (supra),  wherein again the issue was as to whether retrenchment of an employee  must precede compliance of the statutory requirements under Section 25 F of  the Act, although there exists a statutory power on the authorities under the  Act to effect such termination.   It was held that 1956 Act shall prevail over  the 1947 Act stating; "14.   The amendments introduced in Section 48 of the  Corporation Act have clearly excluded the provisions of  the Industrial Disputes Act so far as they are in conflict  with the rules framed under Section 48(2)(cc)\005"                  If, therefore, the Rules made under the 1956 Act are not in conflict  with the jurisdiction of an Industrial Tribunal to go into the question of  validity or legality of an order of termination of service, we fail to see how  the jurisdiction of the Industrial Court stood ousted.   Reliance has also been  placed on Life Insurance Corporation of India and Another Vs. Raghavendra  Seshagiri Rao Kulkarni [(1997 8 SCC 461], Bhavnagar University Vs.  Palitana Sugar Mill (P) Ltd. and Others [(2003)  2 SCC 111]  and Dipak

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Chandra Ruhidas Vs. Chandan Kumar Sarkar [(2003) 7 SCC 66].

       Each of the aforementioned decisions reiterate the aforementioned  principles only and in the fact situation obtaining therein, the Rules made  under the 1956 Act were held to be applicable. 15.     A Development Officer has been held to be a "workman" in S.K.  Verma (supra).         We, however, are not unmindful of a decision of a three Judges Bench  of this Court in Mukesh K. Tripathi Vs. Senior Divisional Manager, LIC and  Others [(2004) 8 SCC 387], wherein one of us (Sinha, J.) was a member,  where the question was as to whether an apprentice would be a workman  within the meaning of the provisions of Section 2(s) of the 1947 Act.  It is  not a case where case of an apprentice is involved. 16.     In Haryana Urban Development Authority Vs. Saurabh Aggarwal  [(2005) 9 SCC 548], also this Court was dealing with a case of an employee  whose services had been wrongly terminated and he prayed for a reference  under Section 10 of the Act.         An Industrial Court in terms of Section 11A of the Act exercises a  discretionary jurisdiction.   Indisputably, discretion must be exercised  judiciously.   It cannot be based on whims or caprice.  

Indisputably again, the jurisdiction must be exercised having regard to  all relevant factors in mind.   In exercising such jurisdiction, the nature of  the misconducts alleged, the conduct of the parties, the manner in which the  enquiry proceeding had been conducted may be held to be a relevant factor.    A misconduct committed with an intention deserves the maximum  punishment.  Each case must be decided on its own facts.  In given cases,  even the doctrine of proportionality may be invoked.    

17.     In fact this Court in Union of India and Others Vs. J. Ahmed  [(AIR  1979 SC 1022] opined that negligence by itself may not be held to be a  misconduct.    The Court stated; "11\005It is however, difficult to believe that lack of  efficiency or attainment of highest standards in  discharge of duty attached to public office would ipso  facto constitute misconduct.  There may be negligence  in performance of duty and a lapse in performance of  duty or error of judgment in evaluating the developing  situation may be negligence in discharge of duty but  would not constitute misconduct unless the  consequences directly attributable to negligence  would be such as to be irreparable or the resultant  damage would be so heavy that the degree of  culpability would be very high.   An error can be  indicative of negligence and the degree of culpability  may indicate the grossness of the negligence.    Carelessness can often be productive of more harm  than deliberate wickedness or malevolence\005"  

This Court in ITC Ltd., Monghyr, Bihar v. Presiding Officer, Labour  Court, Patna (Bihar), (1978) 3 SCC 504, opined that negligence by itself  cannot be held to constitute misconduct stating:-

"Mr. Pai submitted that even neglect of work  simpliciter can be a misconduct within the  meaning of Sub-clause (1) of Clause (ii) of  Standing Order 20 apart from its being a fault  within the meaning of Sub-clause (b) of Clause (i)  of the said Standing Order as the word ’habitual’ in  the former merely qualifies the word ’negligence’  and not the expression ’neglect of work’. This  argument has to be stated merely to be rejected.  Mere neglect of work cannot be both. If it is so, it  is a fault. If it is habitual that is, if it is repeated

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several times then only it is misconduct. It may  well be that fault of one kind or the other as  enumerated in Sub-clauses (a) to (g) of Standing  Order 20(i) if repeated more than once may be  habitual within the meaning of Standing Order  20(ii)(1), and especially in the light of the fourth  fault being a misconduct within the meaning of  Standing Order 20(a), but on the facts of this case,  there was no charge against respondent No. 3 that  he was guilty of habitual neglect of work.  Moreover the Labour Court found that the  negligence of the workman was not of a serious  kind. Some others in the factory also contributed to  it. We, therefore, reject point No. 2."

The jurisdiction of the Industrial Court being wide and it having been  conferred with the power to interfere with the quantum of punishment, it  could go into the nature of charges, so as to arrive at a conclusion as to  whether the respondent had misused his position or his acts are in breach of  trust conferred upon him by his employer.

18.     It may be true that quantum of loss may not be of much relevance as  has been held in Suresh Pathrella Vs. Oriental Bank of Commerce [(2006)  10 SCC 572], but there again a question arose as to whether he was in the  position of a trust or not.          

19.     Furthermore, however, the respondent is out of service since 1987.   He has already suffered a lot being out of service for more than 20 years.    All the courts have held in his favour.  We, thus, do not think that it would  be a fit case where we should exercise our discretionary jurisdiction under  Article 136 of the Constitution of India.  This appeal is dismissed.  No costs.