http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 80  

PETITIONER: THE LIFE INSURANCE CORPORATION OF INDIA

       Vs.

RESPONDENT: D. J. BAHADUR & ORS.

DATE OF JUDGMENT10/11/1980

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. PATHAK, R.S. KOSHAL, A.D.

CITATION:  1980 AIR 2181            1981 SCR  (1)1083  1981 SCC  (1) 315  CITATOR INFO :  R          1981 SC1829  (75)  C          1982 SC1126  (3,7,12,13,16,18,19)  RF         1984 SC1130  (33,34,40)  F          1987 SC1527  (17,28)  RF         1991 SC 855  (53)

ACT:      Life Insurance Corporation Act (Act 31), 1956, sections 11, 23  and 49,  scope of-Whether a general law or a special law-Industrial Disputes  Act (Act  14)  1947,  sections  9A, 19(2),  (6),  18,  23,  29-Object  of  the  Act,  award  and settlement, distinction  from the  point of  view  of  legal force-Whether a special legislation vis-a-vis Life Insurance Corporation Act-Annual  cash bonus  payable to Class-III and Class-IV employees  of the  Corporation under the settlement of 1974,  effect of-Effect  of notice  of termination of the settlements by  the Corporation  under sections 9A and 19(2) of the  Industrial Disputes  Act and  section 49 of the Life Insurance  Corporation   Act-Constitution  of  India,  1950, Articles 12,  38, 39  and 43  and Regulation  58 of the Life Insurance Corporation of India (Staff) Regulations, 1960.

HEADNOTE:      The Life  Insurance Corporation  came into existence on the  1st  of  September,  1956,  as  a  statutory  authority established under  the Life  Insurance Corporation  Act (Act 31), 1956.  As from  the said date all institutions carrying on Life Insurance business in India were nationalised to the extent of  such business  and their corresponding assets and liabilities were  transferred to the Corporation. Section 11 of the  Act provided  for the  transfer of  service of those employees of  such institutions who were connected with Life Insurance business  immediately before  the said date to the Corporation and  for some  other matters.  Section 23 of the Life Insurance  Corporation Act  gave to the Corporation the power to employ such number of persons as it thought fit for the purpose  of enabling it to discharge its functions under the Act  and declared that every person so employed or whose services stood  transferred to the Corporation under section 11 would  be liable  to serve  anywhere in India. Section 49 conferred on  the Corporation  the power to make regulations

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 80  

for the  purpose of  giving effect  to the provisions of the Act with  the previous  approval of  the Central Government. Sub-section (2)  of that  section enumerated various matters in relation  to which such power was particularly conferred. On 1st  of June, 1957 the Central Government promulgated the Life Insurance  Corporation (Alteration  of Remuneration and other Terms  and Conditions  of Service of Employees) Order, 1957  altering   the  remuneration   and  other   terms  and conditions of  service of those employees of the Corporation whose service  had been  transferred to it under sub-section (1) of  section 11. Clause 9 of the 1957 Order declared that no bonus  would be  paid but  directed that  the Corporation would set  aside an  amount every  year for  expenditure  on schemes of  general benefit  to the  employees such  as free insurance scheme, medical benefit scheme and other amenities to them.  On the  26th June,  1959, the  Central  Government amended clause  9 of  the 1957  Order so  as to provide that non-profit sharing bonus would be paid to those employees of the Corporation  whose salary  did not  exceed Rs.  500  per month. On  2nd of  July, 1959 there was a settlement between the Corporation  and its  employees providing for payment to them of cash bonus at the rate of 1 1/2 1084 months’ basic  salary for the period from the 1st September, 1956 to  the 31st  December, 1961. In the year 1960 the Life Insurance Corporation  of India  (Staff)  Regulations,  1960 were framed  and Regulation  58 dealt  with the  payment  of grant of  non-profit sharing bonus to its employees. On 14th April, 1962  and 3rd  August, 1963 orders were again issued, the effect  of which  was to  remove the limit of Rs. 500 on the basic  salary as  a condition of eligibility for payment of bonus.  The settlement  dated 2nd July, 1959 was followed by three  others which  were arrived at on the 29th January, 1963.  the   20th  June,  1970  and  the  26th  June,  1972, respectively and  each one  of which provided for payment of bonus at a particular rate.      Disputes between  the Corporation  and its  workmen  in regard to  the latter’s  conditions of service were received by two  settlements dated the 24th January, 1974 and the 6th February, 1974, arrived at in pursuance of the provisions of section 18 read with section 2(p) of the Industrial Disputes Act. The  Corporation was  a party  to both  the settlements which were  identical in  terms. However,  while four of the five Unions  of workmen  subscribed to the first settlement, the  fifth   Union  was  a  signatory  to  the  second.  The settlements provided  for revised  scales of pay, the method of their  fixation and dearness and other allowances as well as bonus.  The settlements were approved by the Board of the Corporation  and   also  by   the  Central  Government.  The employees of the Corporation having opted for the new scales of pay, bonus was paid in accordance therewith for the years 1973-74  and  1974-75  in  April  1974  and  in  April  1975 respectively. One  of the  Payment of Bonus (Amendment) Act, 1976 coming  into force  with retrospective effect from 25th September,  1975  curtailing  the  rights  of  employees  of industrial undertakings to bonus, though it was inapplicable to the Corporation by virtue of the provisions of section 32 of the  Payment of  Bonus Act,  the payment of bonus for the year 1975-76 to the employees of the Corporation was stopped under instructions from the Central Government, whose action in that  behalf was  challenged by  the employees  through a petition under  Article 226  of the Constitution of India in the High  Court of  Calcutta. The  single Judge  of the High Court issued a writ of mandamus directing the Corporation to act in accordance with the terms of the settlement dated the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 80  

24th of  January, 1974.  The Corporation preferred a Letters Patent appeal  against the  decision of  the learned  single Judge and  that appeal was pending disposal when the Central Government  promulgated   the  Life   Insurance  Corporation (Modification of  Settlement) Act,  1976 on  29th May, 1976. The said  Act was  challenged by  the workmen in the Supreme Court which  by a  judgment dated 21st February, 1980 (Madan Mohan Pathak  v. Union  of India, [1978] 3 SCR 334) declared it to be void as offending Article 31(2) of the Constitution of India  and  directed  the  Corporation  to  forbear  from implementing the  1976 Act  and to  pay to its Class-III and Class-IV employees  bonus for  the years  1st April  1975 to 31st March  1976 and  1st April  1976 to  31st March 1977 in accordance with  the terms of sub-clause (ii) of clause 8 of each settlement.      On 3rd  March,  1978  the  Corporation  issued  to  its workmen a  notice under sub-section (2) of section 19 of the Industrial Disputes Act declaring its intention to terminate the settlements on the expiry of a period of two months from the date  of the  notice was  served.  The  notice,  however mentioned in express terms that according to the Corporation no such  notice was  really necessary for termination of the settlements. On  the same date, another notice was issued by the Corporation under section 9A of the Industrial 1085 Disputes Act  stating that it intended to effect a change in accordance with  the contents of the annexure to the notice, as from  the 1st June, 1978, in the conditions of service of its workmen.  On 26th  May,  1978,  the  Central  Government issued a notification under section 49 of the Life Insurance Corporation Act  substituting a  new regulation for the then existing  regulation  bearing  serial  number  58.  The  new regulation was  to come  into force  from the  1st of  June, 1978. Simultaneously,  an amendment  on the  same lines  was made in  the 1957  Order by the substitution of a new clause for  the   then  existing  clause  9  in  pursuance  of  the provisions of  sub-section (2) of section 11 of the L. I. C. Act.      These  two   notices  dated  3rd  March,  1978  by  the Corporation under  sections 19(2)  and 9A  of the Industrial Disputes Act  respectively  and  the  action  taken  by  the Central Government  on the  26th May,  1978  by  making  new provisions  in  regard  to  the  payment  of  bonus  to  the Corporation’s employees  were challenged successfully by the workmen in  a petition  to the  Allahabad High  Court  under Article 226  of the  Constitution of  India  and  hence  the appeal by the Corporation.      Allowing the appeal by majority, the Court ^      HELD :      Per Iyer, J.-A. The Industrial Disputes Act is a benign measure which seeks to pre-empt industrial tensions, provide the  mechanics   of  dispute  resolutions  and  set  up  the necessary infra-structure  so that  the energies of partners in production  may not  be dissipated  in counter-productive battles and  assurance of  industrial justice  may create  a climate of  goodwill. Its  object is  "the investigation and settlement of  industrial disputes".  Parliament has  picked out  the   specific  subject   of  industrial  disputes  for particularised treatment,  whether the  industry be  in  the private or  public sector  or otherwise.  The  meat  of  the statute is  industrial dispute, not conditions of employment or contract of service as such. [1106E, 1110D, 1111B-C]      Bangalore Water  Supply and  Sewerage Board v. Rajappa, [1978] 2 SCC 213, applied.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 80  

    B.  (1)   The  Industrial  Disputes  Act  substantially equates an  award with  a settlement, from the point of view of their legal force. No distinction in regard to the nature and period of their effect can be discerned, especially when one reads  section 19(2)  and (6). Further, it is clear from section 18  that  a  settlement,  like  an  Award,  is  also binding. Thus  both settlements and Awards stand on the same footing. [1109F, G, 1109 E]      (2) There  are three  stages or  phases with  different legal effects  in the  life of an Award or Settlement. There is a  specific period  contractually or statutorily fixed as the period of operation. Thereafter, the Award or Settlement does not  become non  est, but continues to be binding. This is the  second chapter  of legal  efficacy but qualitatively different. Then comes the last phase. If notice of intention to terminate is given under section 19(2) or 19(6), then the third stage  opens where  the Award  or the  Settlement does survive and  is in  force between  the parties as a contract which has superseded the earlier contract and subsists until a new  Award or  negotiated settlement takes its place. Like nature, Law  abhors a  vacuum and  even  on  the  notice  of termination under section 19(2) or (6), the sequence and 1086 consequence cannot  be just  void but  a continuance  of the earlier terms,  but with  liberty to  both  sides  to  raise disputes, negotiate  settlements or  seek  a  reference  and Award. Until  such a  new contract  or  Award  replaces  the previous one,  the former  settlement or Award will regulate the relation between the parties. Industrial law frowns upon a lawless void and under general law the contract of service created by  an Award  or Settlement  lives so  long as a new lawful contract is brought into being. [1114 A-F]      (3) The  precedents on  the point,  the  principles  of Industrial Law,  the constitutional  empathy of  Part IV and the sound  rules of  statutory construction  converge to the same point  that when  a notice intimating termination of an Award or  Settlement is  issued the  legal import  in merely that the  stage is  set for fresh negotiations or industrial adjudication and until either effort ripens into a fresh set of conditions  of service  the previous  Award or Settlement does regulate  the relations  between the  employer and  the employees. [1124 F-G]      Judhisthir Chandra  v. Mukherjee,  AIR 1950  Cal.  577; Mangaldas Narandas  v.  Payment  of  Wages  Authority  etc., (1957) II LLJ 256 (Bombay D. B.); Workmen of New Elphinstone Theatre v.  New Elphinstone  Theatre, (1961) I LLJ 105 (119) (Madras); Yamuna  Mills Co.  Ltd. v. Majdoor Mahajan Mandal, Baroda &  Ors., (1957)  I LLJ  620 (Bom.); Sathya Studios v. Labour Court,  (1978) I  LLJ 227  (Madras); Maruti  Mahipati Mullick &  Anr. v. M/s. Polson Ltd. & Anr., (1970) Lab. & I. C. 308 (Bom.), approved.      South Indian  Bank Ltd.  v. A.  R. Chako,  [1964] 4 SCR 625; Management  of  Indian  Oil  Corporation  Ltd.  v.  Its Workmen, 1  SCR  110;  Md.  Qasim  Larry,  Factory  Manages, Sasamusa Sugar  Works v.  Md. Samsuddin & Anr., [1964] 7 SCR 419; followed.      (4) The  Settlement under the I. D. Act does not suffer death merely  because of  the notice  issued  under  section 19(2).  All  that  is  done  is  a  notice  "intimating  its intention to  terminate the  Award". The  Award even  if  it ceases to  be operative  qua award,  continues qua contract. Therefore, if  the Industrial  Disputes  Act  regulates  the jural relations  between the  L. I.  C. and its employees-an "if"-then the  rights under  the settlements  of 1974 remain until replaced  by a  later Award  or Settlement. [1124 G-H,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 80  

1125 A-B]      C. (1) In determining whether a statute is a special or a general  one. the  focus must  be on the principal subject matter  plus   the  particular   perspective.  For   certain purposes, the  Act may  be general  and  for  certain  other purposes it may be special. [1127 B-C]      (2) The Life Insurance Corporation Act is not a law for employment   or    disputes   arising   therefrom,   but   a nationalisation measure  which  incidentally,  like  in  any general take-over  legislation,  provides  for  recruitment, transfers, promotions  and the like. It is special vis-a-vis nationalisation of  life insurance,  but  general  regarding contracts  of  employment  or  acquiring  office  buildings. Emergency  measures   are   special,   for   sure,   Regular nationalisation  statutes   are   general   even   if   they incidentally refer  to conditions  of service. [1111 H, 1112 A-B]      (3) So  far as nationalisation of insurance business is concerned, the  Life  Insurance  Corporation  is  a  special legislation, but  equally indubitably is the inference, from a bare  perusal of  the subject,  scheme  and  sections  and understanding of the anatomy of the Act, that it has nothing to do  with  the  particular  problem  of  disputes  between employer   and   employees,   and   of   investigation   and adjudication of labour dispute. [1126 G-H, 1127 A] 1087      On the  other hand,  the Industrial  Disputes Act  is a special  statute   devoted  wholly   to  investigation   and settlement   of    industrial   disputes    which   provides definitionally for  the nature of industrial disputes coming within  its   ambit.  It   creates  an  infra-structure  for investigation  into,   solution  of  and  adjudication  upon industrial  disputes.   It  also   provides  machinery   for enforcement of  Awards and  Settlements. From alpha to omega the I.  D. Act  has one  special mission-the  resolution  of industrial disputes  through specialised  agencies according to specialised  procedures and with special reference to the weaker categories  of employees coming within the definition of workmen. Therefore, with reference to industrial disputes between employers  and workmen,  the I.  D. Act is a special statute, and  the L.  I. C.  Act does  not speak at all with specific reference to workmen. On the other hand, its powers relate  to   the  general  aspects  of  nationalisation,  of management when  private businesses  are nationalised  and a plurality of  problems which, incidentally, involve transfer of service  of existing  employees of  insurers. The workmen qua workmen  and industrial disputes between workmen and the employer as  such, are  beyond the  orbit  of  and  have  no specific or  special place  in the scheme of the L.I.C. Act. [1127 C-F]      (4)  Thus,   vis-a-vis  "industrial  disputes"  at  the termination of the Settlement as between the workmen and the Corporation, the  I. D. Act is a special legislation and the L.  I.   C.  Act   a  general  legislation.  Likewise,  when compensation on  nationalisation is  the question, the L. I. C. Act  is  the  special  statute.  An  application  of  the generalia maxim  makes it  clear that  the I.  D. Act  being special law,  prevails over  L. I. C. Act which is a general law. [1127 H, 1128 A-B]      U. P.  State Electricity  Board v. H. S. Jain, [1979] 1 SCR 355, J. K. Cotton Spinning and Weaving Mills Co. Ltd. v. State of Uttar Pradesh, AIR 1961 SC 1170 at 1174, followed.      (5) Section  11 of  the Life Insurance Corporation Act, 1956 does  not repel  the Industrial Disputes Act, 1947. The provisions of  the L.  I. C.  Act which contained provisions

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 80  

regarding conditions  of  service  of  employees  would  not become redundant,  if the I. D. Act was held to prevail. For one thing,  the provisions  of sections  11 and  49 are  the usual general  provisions  giving  a  statutory  corporation power to  recruit and prescribe conditions of service of its total  staff-not   anything  special   regarding  ‘workmen’. Secondly, no  case of  redundant  words  arose  because  the Corporation, like  a University,  employed not  only workmen but others  also and to regulate their conditions of service power was  needed.  Again,  institutions  where  no  dispute arose. power  in the employer to fix the terms of employment had to be vested. [1129 F-H, 1130 A-B]      Bangalore Water  Supply and  Sewarage Board v. Rajappa, [1978] 2  SCC 813;  D. N.  Banerji v. P. R. Mukherjee & Ors. [1953] SCR 302, followed.      (6) Whatever  be the powers of regulation of conditions of  service,  including  payment  or  non-payment  of  bonus enjoyed by  the employees of the Corporation under the L. I. C. Act  subject to the directives of the Central Government, they stem from a general Act and cannot supplant, subvert or substitute the  special legislation which specifically deals with  industrial   disputes  between   workmen   and   their employees. [1131 F-H]      [The Court  directed  the  Corporation  to  fulfil  its obligations in  terms of  the  1974  settlements  and  start negotiations like a model employer, for a fair settlement of the conditions  of service  between itself and its employees having 1088 realistic and  equitable regard to the prevailing conditions of life, principles of industrial justice and the directives underlying Part IV of the Constitution.]      Per Pathak  J. (Concurring  with Iyer, J.) (1) Both the limbs of  sub-section (2) of section 11 of the L. I. C. Act, 1956 are  intended to  constitute  a  composite  process  of rationalising the scales of remuneration and other terms and conditions of  service of  transferred employees with a view not  only   to  effecting   a  standardisation  between  the transferred employees  but also  to revising their scales of remuneration, and  terms and  conditions  of  service  to  a pattern, which will enable the newly established Corporation to become  a viable  and commercially successful enterprise. For that  reason, it is open to the Central Government under the sub-section  to ignore  the guarantee  contained in sub- section (1)  of section  11 in  favour of  the employees  or anything contained  in the  Industrial Disputes Act, 1947 or any other  law for  the time  being in  force or  any award, settlement or  agreement for  the time being in force. [1135 D-G]      The second limb of sub-section (2) of section 11 is not related  to  employees  generally,  that  is  to  say,  both transferred  and   newly   recruited   employees,   of   the Corporation. It  is confined to transferred employees. There is no  danger of  an order  made by  the Central  Government under the  second limb  of  subsection  (2)  in  respect  of transferred employees  being struck  down on the ground that it violates  the equality  provisions of  Part  III  of  the Constitution because  similar action  has not  been taken in respect of  newly recruited employees. So long as such order is confined  to what  is  necessitated  by  the  process  of transfer  and   integration,   the   transferred   employees constitute a reasonably defined class in themselves and form no common basis with newly recruited employees. [1136 C-E]      The power  under the  second limb of sub-section (2) of section 11  can be  exercised more  than once. To effectuate

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 80  

the  transfer   appropriately  and   completely  it  may  be necessary to  pass through  different stages,  and  at  each stage to  make a  definite order.  So long as the complex of orders so  made is  necessarily linked  with the  process of transfer and integration, it is immaterial that a succession of orders  is made.  The deletion of the words "from time to time" found in the Bill, is of no consequence. [1136 E-G]      (2) The notification dated 26th May, 1980 purporting to amend the Standardisation Order is invalid. It has no effect on the  right to  bonus by the workmen. The notification was intended to apply to transferred employees only. It declares explicitly that  the Central  Government is satisfied that a revision of  the terms  and conditions  of  service  of  the transferred employees  is considered necessary. This is made explicit by  the circumstance that identical provisions have been made by the Corporation, with the prior approval of the Central  Government,   in  the   new  Regulation   58  of  a notification issued  under both  clauses (b) and (bb). [1137 A-C]      (3) A  settlement under the Industrial Disputes Act, in essence, is  a contract between the employer and the workmen prescribing  new  terms  and  conditions.  As  soon  as  the settlement is  concluded and becomes operative, the contract embodied in  it takes  effect and  the  existing  terms  and conditions of  the workmen  are modified accordingly. Unless there is  something to  the contrary in a particular term or condition of the Settlement the embodied contract 1089 endures indefinitely,  continuing  to  govern  the  relation between  the   parties  in  future,  subject  of  course  to subsequent alteration  through a  fresh settlement, award or valid legislation.  Settlement is  not only  a contract  but something more.  Conceptually,  it  is  a  "settlement".  It concludes or  "settles" a dispute. In order the new contract be afforded  a chance  of being  effectively  worked  out  a mandate obliging  the parties to unreservedly comply with it for a  period of time is desirable. It was made "binding" by the statute  for such  period. On the expiry of such period, the ban  lifts, and  the parties  are at  liberty to seek an alteration of the contract. [1138 E-H-1139 A-C]      The law  laid down  in South  Indian Bank Ltd. v. A. R. Chacko [1964]  5 SCR  825  and  Md.  Quasim  Larry,  Factory Manager, Sasamusa  Sugar Works  v. Md.  Shamsuddin  &  Anr., [1964] 7  SCR 419  in respect of an Award applies equally in relation to a settlement. [1140B]      (4) The  Industrial Disputes  Act is  a special law and must prevail  over the  Corporation Act,  a general law, for the purpose  of  protecting  the  sanctity  of  transactions concluded under  the  former  enactment.  Regulation  58,  a product  of   the  Corporation  Act,  cannot  supersede  the contract respecting bonus between the parties resulting from the settlement of 1974. [1142 B-D]      Plainly, if a settlement resolves an industrial dispute under the  Industrial  Disputes  Act,  it  pertains  to  the central purpose  of that Act. This constitutes a special law in respect  of  a  settlement  reached  under  the  auspices between  an   employer  and  his  "workmen"  employees.  The consequences of  such settlement  are  the  product  of  the special law. [1141 E-F]      The Corporation Act was enacted primarily for effecting the  nationalisation   of   Life   Insurance   business   by transferring all  such business to a Corporation established for that  purpose. Clearly, the object behind section 11(1), section 23  and clauses (b) and (bb) of section 49(2) of the L. I.  C. Act is to provide staff and labour for the purpose

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 80  

of the  proper management of the nationalised Life Insurance business. The  Corporation Act does not possess the features found in  the Industrial  Disputes Act. No special provision exists in regard to industrial disputes and their resolution and  the   consequences  of  that  resolution.  The  special jurisdiction created  for the  purpose under  the Industrial Disputes Act  is not  the subject  matter of the Corporation Act at  all. No  corresponding provision  in the Corporation Act, a  subsequent enactment,  deals with the subject matter enacted in  the Industrial Disputes Act. [1140 F, 1141 A, F- G]      Yet   Parliament    intended   to   provide   for   the Corporation’s "workmen"  employees the same opportunities as are available  under the  Industrial  Disputes  Act  to  the workmen of  other  employers,  as  demonstrated  by  section 2(a)(1) of  the Corporation Act. The expression "appropriate Government" is  specifically defined by it in relation to an industrial   dispute    concerning   the    Life   Insurance Corporation. Both the Central Government and the Corporation understood the  Industrial Disputes  Act in that light, for, Regulation 51(2)  of the  (Staff) Regulations  made  by  the Corporation under  clauses (b)  and (bb) of section 49(2) of the Corporation  Act, with  the  previous  approval  of  the Central Government, speaks of giving effect to a revision of scales of  pay, dearness  allowance, or other allowances "in pursuance of any award, agreement or settlement." [1141 G-H, 1142 A-C]      Life Insurance  Corporation of  India  v.  Sunil  Kumar Mukherjee, [1964]  5 SCR  528; Sukhder  Singh v. Bhagat Ram, [1975] 3 SCR 619, referred to. 1090      U. P.  State Electricity  Board &  Ors. v. Hari Shanker Jain &  Ors. [1979]  1 SCR  355; J.  K. Cotton  Spinning and Weaving Mills  Co. Ltd., v. State of Uttar Pradesh, AIR 1961 SC 1170, followed.      Mary Sawards v. The Owner of the "Vera Cruz", [1884] 10 A. C 59 @ 68, quoted with approval.      (5) In construing the scope of the Corporation’s powers under section  11 (1)  of the  Corporation Act,  appropriate importance should be attached to the qualifying word "duly". When the Corporation seeks to alter the terms and conditions of transferred  employees, it  must do so in accordance with law, and  that requires  it to  pay  proper  regard  to  the sanctity of rights-acquired by the "workmen" employees under settlements or  awards under  the Industrial  Disputes  Act. [1142 H, 1143 A-B]      The provision  in section  11(2) has  been made for the purpose of  protecting the  interests of the Corporation and its  policy   holders.  The  policy  holders  constitute  an important and significant sector of public interest. Indeed, the avowed  object of  the  entire  Corporation  Act  is  to provide absolute  security to  the  policy  holders  in  the matter of  their life  insurance protection. That is assured by a  wise management  of the Corporation’s business, and by ensuring that  when settlements  are negotiated  between the Corporation and  its workmen or when industrial adjudication is initiated  in Labour  Court and industrial tribunals, the protection of  the policy  holders will  find  appropriately significant emphasis in the deliberations. [1143 D-E]      (6) In  the view  that the notification dated 26th May, 1978  purporting  to  amend  the  Standardisation  Order  by substituting clause  (a) is  invalid and  the newly  enacted Regulation 58  does not  effect the  contract in  respect of bonus embodied  in the  Settlements of 1974 between the Life Insurance Corporation  and its  "workmen" employees,  effect

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 80  

must be  given to that contract. If the terms and conditions of service  created by the contract need to be reconsidered, recourse must  be  had  to  the  modes  recognised  by  law- negotiated   settlement,    industrial    adjudication    or appropriate legislation. [1143 F-G]      Per Koshal, J. (Contra) (1) The Industrial Disputes Act deals  with  the  adjudication  or  settlement  of  disputes between an employer and his workmen and would, therefore, be a special  law vis-a-vis  another  statute  which  covers  a larger  field  and  may  thus  be  considered  "general"  as compared to it. It cannot, however, be regarded as a special law in  relation to  all  other  laws  irrespective  of  the subject matter  dealt with  by them.  In fact  a law  may be special when  considered in  relation to  another  piece  of legislation but  only a general one vis-a-vis still another. "Special" and  "general" are  relative terms  and it  is the content of  one statute  as compared  to the other that will determine which  of the  two is to be regarded as special in relation to the other. Viewed in this light the proposition, namely, "the  Industrial  Disputes  Act  is  a  special  law because it deals with adjudication and settlement of matters in dispute  between an  employer and  his workmen  while the Life Insurance  Corporation Act  is a  general  law"  cannot stand scrutiny.  The Industrial  Disputes Act would no doubt be a special Act in relation to a law which makes provisions for matters wider than but inclusive of those covered by it, such as the Indian Contract Act as that is a law relating to contracts generally  (including those  between an industrial employer  and   his  workmen)   but  it   would  lose   that categorisation and  must be  regarded as  a general law when its rival  is shown  to operate in a field narrower than its own and  such a  rival is  that part  of the  Life Insurance Corporation Act which deals with 1091 conditions of service of the employees of the Life Insurance Corporation-a single  industrial undertaking  of  a  special type) as opposed to all others of its kind which fall within the  ambit   of  the  Industrial  Disputes  Act.  Where  the competition is  between these  two Acts, therefore, the Life Insurance Corporation  Act must be regarded as a special law and (in comparison thereto) the Industrial Disputes Act as a general law. [1153 E-F, H, 1154 A-C]      (1A) Section 11 and clauses (b) and (bb) of sub-section 2 of  section 49  of the Life Insurance Corporation Act were intended  to   be  and   do  constitute  an  exhaustive  and overriding law  governing the  condition of  service of  all employees   of   the   Corporation   including   transferred employees.  The  proposition,  namely  that  the  Industrial Disputes Act  being a  special law, would override a general law like  the Life  Insurance Corporation Act, is incorrect. Even if the Industrial Disputes Act is regarded as a special law in comparison to the Life Insurance Corporation Act, the result would be the same. [1162E-F, 1153 E]      (1B) The  general rule  to be followed in the case of a conflict between  two statutes  is that  the later abrogates the  earlier   one  (Leges   posteriors  priors   contrarias abrogant). To  this general  rule  there  is  a  well  known exception,  namely,   generalia  specialibus   non  derogant (general things  do not  derogate from  special things).  In other words,  a prior  special law  would yield  to a  later general law,  if either  of the  following two conditions is satisfied: (i)  The two  are inconsistent  with each  other. (ii) There  is some  express reference  in the  later to the earlier  enactment.   If  either   of  these  conditions  is fulfilled the  later law, even though general, will prevail.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 80  

Further four  tests deductible  from the  several  texts  on interpretation of statutes are : (i) The legislature has the undoubted right  to alter  a law  already promulgated  by it through subsequent  legislation. (ii)  A special  law may be altered, abrogated  or  repealed  by  a  later  general  law through an express provision. (iii) A later general law will override a  prior special law if the two are so repugnant to each other  that they cannot co-exist even though no express provision in  that behalf  is found in the general law. (iv) It is only in the absence of a provision to the contrary and of a  clear inconsistency  that a  special law  will  remain wholly unaffected by a later general law. [1145 E, G-H, 1156 C-D]      (2) The  proposition that  the Industrial  Dispute  Act being a  special law  would override  a general law like the Life Insurance Corporation Act is equally insupportable even if the  Industrial Disputes Act is regarded as a special law in connection  with the  Life Insurance Corporation Act. The word  "duly",   in  section  11(1)  of  the  Life  Insurance Corporation Act  means properly, regularly or in due manner. In the  context in  which it  is used it may legitimately be given a  more restricted meaning, namely, in accordance with law. If  reference  to  the  provisions  of  the  Industrial Disputes Act  alone was  contemplated  and  the  alterations envisaged were  merely  such  as  could  be  achieved  by  a settlement or award resulting from a compliance thereof, not only  would  the  expression  "by  the  Corporation"  become redundant (which  would not be a situation conforming to the well-known principle  of interpretation  of statutes  that a construction which  leaves without  effect any  part of  the language of  a statute  will normally  be rejected)  but the express provisions  of clause  (bb) of  sub-section  (2)  of section 49  of the  Life Insurance  Corporation  Act,  which invest  the  Corporation  with  power  to  make  regulations (albeit with  the approval of the Central Government) laying down the  terms and conditions of service of the transferred employees would also be rendered otiose. To the extent, 1092 therefore, that  section 11(1) read with that clause confers on  the  Corporation  the  power  to  alter  the  terms  and conditions in  question-a power  not enjoyed by it under the provisions of the Industrial Disputes Act-it is inconsistent with the  Industrial Disputes  Act and  being a  later  law, would override  that Act  despite the  absence of  the  non- obstante  clause,   the  inconsistency  having  arisen  from express language  and not  from mere  implication. In  other words, sub-section  (2) of  section 11 not only gives to the Central  Government   the  power  to  alter  the  terms  and conditions of service of the employees of the Corporation in certain situations,  and to alter them even to the detriment of such  employees to  such extent  and in such manner as it thinks fit, but also states in so many words that such power shall be  exercisable "notwithstanding anything contained in sub-section (1)  or the  Industrial Disputes  Act 1947 or in any other  law for the time being in force, or in any Award, settlement or  agreement for  the time  being in force." The mandate of  the Legislature  has been expressed in clear and unambiguous terms  in this non-obstante clause and is to the effect that  the power  of the  Central Government  to alter conditions of  service of  the employees  of the Corporation shall be  wholly unfettered  and that  any provisions to the contrary contained  in the  Industrial Disputes  Act or  for that matter,  in any  other law for the time being in force, or in any award, settlement, or agreement for the time being in force, would not stand in the way of the exercise of that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 80  

power even  if such  exercise is  to the  detriment  of  the employees of the Corporation. The conferment of the power is thus in  express supersession of the Industrial Disputes Act and of  any settlement  made thereunder.  The provisions  of that Act  and the  two settlements  of 1974 must, therefore, yield to  the dictates  of section 11(2) and to the exercise of the  power conferred  thereby on  the Central Government. Further, in  the face  of an express provision, namely, sub- section (4) of section 11 it is not open to the employees to contend that  the law  laid down  in the Industrial Disputes Act and not sub-section (2) of section 11 would govern them. [1154C, 1157 C-H, 1159 A-E, F-G]      (3) The  rule making power conferred on the Corporation by section  49 of  the Life  Insurance  Corporation  Act  is exercisable notwithstanding the provisions of the Industrial Disputes Act.  This power  is  expressly  conferred  on  the Corporation in  addition to  that with  which it is invested under clause (bb) of the same sub-section (2) of section 49. If clauses  (b) and  (bb) of that sub-section were not meant to override the provisions of the Industrial Disputes Act on the same  subject they  would be completely meaningless, and that is  a situation  running directly counter to one of the accepted principles  of interpretation of statutes. Besides, these two  clauses are  not to  be read  in  isolation  from section 11.  The subject  matter  of  the  clauses  and  the section is  overlapping and together they form an integrated whole. The  clauses must, therefore, be read in the light of section 11.  When the  two clauses  say that the Corporation shall have  the power  to frame regulations in regard to the terms and  conditions of its employees including transferred employees subject,  of course,  to previous  approval of the Central Government,  the power  may  well  be  exercised  in conformity with  the provisions  of section 11. And if it so exercised the  resultant regulations  cannot be  said to  go beyond the  limits specified in the statute. [1159 G-H, 1160 A-D]      Life Insurance  Corporation of  India  v.  Sunil  Kumar Mukherjee & Ors. [1964] 5 SCR 528, followed.      Hukam Chand etc. v. Union of India and others, AIR 1972 SC 2427;  B. E. Vadera v. Union of India & Ors. [1968] 3 SCR 575, held inapplicable. 1093      U. P.  State Electricity  Board and Ors v. Hari Shanker Jain and  Ors., [1975]  1 SCR  355; Bangalore Water Supply & Sewerage Board  etc. v.  R. Rajappa & Ors. [1978] 3 SCR 207, explained and distinguished.      (4) Section  23 of  the L.  I. C.  Act, which envisages employment of  persons by  the Corporation  no doubt implies settlement of  conditions of  service and that does not mean that once a settlement is arrived at, the same is not liable to be  altered except  by another  settlement reached  under section 18  of the I. D. Act. The provisions of sub-sections (1), (2)  and (4)  of section  11 of  the L.  I. C.  Act and clauses (b)  and (bb)  of  sub-section  (2)  of  section  49 thereof have  overriding effect and the terms and conditions of service  of the employees of the Corporation forming part of a  settlement under  the I. D. Act cannot last after they have been altered in exercise of the powers conferred on the Corporation or  the Central  Government by these provisions, as was  done when  the new  Regulation 58  was framed  under section 49  by the  Corporation and  the new  clause  9  was inserted in  the 1957  order by  the Central Government. Nor can any action taken under section 19(2) and 9A of the I. D. Act have  any relevance  to the  exercise of these powers so long as such exercise conform to the provisions of the L. I.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 80  

C. Act. [1162 G-H, 1163 A-B]      (5) The  reliance of  the High  Court  on  Madan  Mohan Pathak v.  Union of  India, [1978] 3 SCR 334, for support to the proposition  that "the  new Regulation  58 framed  under section 49  of the  L. I. C. Act and the notification issued under sub-section  (2) of  section 11 thereof substituting a new clause  9 in  the  1957  Order  are  wholly  ineffective against the  operation of  the 1974  settlements which  were arrived at  in pursuance  of the provisions of the I. D. Act and which therefore continue to govern the parties thereto", is wholly misplaced because:      (a) The  judgment limited itself to the duration of the settlements as  appearing in clause 12 thereof and therefore does not cover any period subsequent to 21st March, 1977.      (b) No finding at all was given nor was any observation made to  the effect  that sections 11 and 49 of the L. I. C. Act or  the action taken thereunder (the promulgation of new Regulation 58  and the  new clause  9 of the 1957 Order) was ineffective against  the operation  of the provisions of the I. D.  Act or of the 1974 settlements. On the other hand the judgment very  specifically proceeded on the ground that the two settlements  had to and did conform to the provisions of Regulation  58   inasmuch  as  the  Central  Government  had accorded its  approval to  them, (c)  Although it  was  held clearly, rather  quite correctly  that  sub-clause  (ii)  of clause 8 of the 1974 settlements stood independently of sub- clause  (1)   thereof,  the  judgment  contains  no  finding whatsoever to the effect that the conditions of service laid down in  those settlement  could be  varied only  by a fresh settlement or  award made  under the provisions of the I. D. Act and  that till  then  sub-clause  (ii)  aforesaid  would remain in full force. [1165 C-H, 1166 A-B]      (6) The  observations in  Chako’s case must be taken to mean that  the expired  award would  continue to  govern the parties till  it is  displaced by  another contract, or by a relationship otherwise substituted for it in accordance with law. In  the present  case, there  is a  special mandate  by Parliament to  fill the void of the 3rd period following the expiry of  1974 settlements  which did not obtain in Chako’s case. [1170 A-C]      South Indian  Bank Ltd.  v. A.  R. Chacko, [1964] 5 SCR 625, Indian  Link Chain Manufacturers Ltd. v. Their Workmen, [1972] 1 SCR 790, Shukla 1094 Manseta Industries  Pvt. Ltd.  v. The Workmen Employed under it. [1978]  1 SCR  249; Haribhau Shinde and another v. F. H. Lala Industrial  Tribunal, Bombay and another, AIR 1970 Bom. 213, distinguished.      Sukhdev  Singh   &  Ors.   v.  Bhagatram  Sardar  Singh Raghuvanghi and anr., [1975] 3 SCR 619, followed.      (7) 1.  Section 11(2)  of the  Corporation Act  suffers from no ambiguity either by reason of the omission therefrom of the  expression "from  time to  time" or otherwise and it is, therefore, not permissible for a reference to be made to the speech  of the  then Finance  Minister in  the matter of interpretation of the sections. [1180 B-C]      Anandji Haridas  & Co.  (P) Ltd. v. Engineering Mazdoor Sangh & Anr., [1975] 3 SCR 542, applied.      (7) 2.  The power  to alter the terms and conditions of service of  the Corporation’s  employees which  the  Central Government is authorised to exercise in the interests of the Corporation and  its policy-holders  must of  necessity be a power which  can  be  exercised  as  and  when  occasion  so requires. A  contrary view  would lead  to absurd results in certain given situations. [1179 A-B]

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 80  

    Himangsu  Chakraborty  and  others  v.  Life  Insurance Corporation of  India and others, 1977 Lab. I. C. 622; K. S. Ramaswamy anr.  v. Union of India and ors. [1977] I LLJ 211; Harivadan K.  Desai and others v. Life Insurance Corporation of India and others, (1977) Lab. I. C. 1072 (Guj), approved.      Mazagaon Dock  Ltd. v.  Commissioner of  Income Tax and Excess Profits Tax, [1959] SCR 848; Babu Manmohan Das Shah & Ors., v.  Bishun Das,  [1967] 1 SCR 836; Vasantlal Maganbhai Sanjanwala v.  The State  of Bombay and others, [1961] 1 SCR 341, applied.      (8) There  being no  challenge to  the vires of section 11(2) of  the Corporation  Act by either side and so long as the section  itself  is  good  the  exercise  of  the  power conferred by it cannot be attacked unless such exercise goes beyond the  limits of  the section, either in its content or manner. If  the legislature  was competent to confer a power on the Central Government to alter the conditions of service of the  employees of  the Corporation  to their detriment or otherwise, the fact that the power was exercised only to cut down bonus  would furnish no reason for striking down clause 9 of  the 1957  Order or Regulation 58 as being isolative of Article 14 or 19. [1181 E-F]      (9) Clause  9 of  the 1957  Order is  not violative  of Article 14  or 16  of the Constitution of India. That clause no doubt  takes within  its sweep only transferred employees because clause  2 of the 1957 Order specifically states that the Order  is restricted  in its  operation to  employees of that category;  but then  no question  of any discrimination whatsoever is involved inasmuch as the transferred employees have not  only been treated differently from other employees of the  Corporation but by reason of Regulation 58 they have been placed fully at par with the latter. [1181 G-H, 1182 A]      (10) Clause 9 of the Order of 1957 does not suffer from the maxim  "Delegatus non-potest  delegare". Clause 9 itself states in  unmistakable terms that the Corporation may grant non-profit sharing  bonus to its employees in respect of any particular year  subject to  the previous  approval  of  the Central Government, and so the real bonus-granting authority remains the  Central Government. There is thus no delegation of  any   real  power   to  the   Corporation  through   the promulgation of clause 9. [1182 B-D] 1095      (11) New contentions, not raised before the High Court, like "necessity  for revising  the terms  and conditions  of service through  promulgation  of  clause  9"  will  not  be permitted to  be raised at the Supreme Court level. Again in the  absence   of  any  evidence  to  the  contrary,  it  is permissible  to   presume  that   official  acts  have  been regularly  performed   and  that   the   preamble   to   the notification therefore, is in accord with facts. [1182 E-G]      12. When  Regulation 2 of 1960 says that it shall apply to every  whole-time employee  of  the  Corporation  "unless otherwise provided  by the  terms of any contract, agreement or letter  of appointment",  all that  it means is that if a contract, agreement or letter of appointment contains a term stating that  the concerned  employee or employees shall not be governed  by  the  Regulations,  then  such  employee  or employees  shall   not  be  so  governed.  Regulation  2  is definitely not  susceptible of  the interpretation that if a settlement has  been reached between the Corporation and its employees, the  regulations shall  not apply  to  them  even though the  settlement makes no provision in that behalf. It is nobody’s  case that the 1974 settlements contain any such provision and  Regulation 2,  therefore, does  not come into play at all. [1183 C-E]

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 80  

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2275 of 1978.      Appeal by  Special Leave  from the  Judgment and  Order dated 11-8-1978  of the  High Court of Judicature at Lucknow in Writ Petition No. 1186/78.                             WITH                 Transfer Case No. 1 of 1979.      S. V. Gupte, G. B. Pai, K. J. John and D. N. Mishra for the Appellant in C.A. 2275/78.      R. K.  Garg, Madan  Mohan, V. J. Francis and D. K. Garg for Respondents 1-3, in CA 2275/78.      M. K.  Banerjee, Addl. Sol. Genl. R. N. Sachthey, R. B. Datar and  Miss A.  Subhashini for Respondent No. 4, in C.A. 2275/78.      P. K.  Chatterjee and  Rathin Das for the Petitioner in Transfer Case No. 1/79.      M. K.  Banerjee, Addl.  Sol. Genl.,  R. B. Datar, R. N. Sachthey and  Miss A.  Subhashini for  Respondent No.  1  in Transfer Case No. 1/79.      S. V.  Gupte, G.  B. Pai  and K. J. John for Respondent No. 6 in Transfer Case No. 1/79.      For the Interveners      P. K. Chatterjee and Rathin Das for All India Employees Assn.      Adarsh Goel,  Janardan and  Sarwa Mitter  for  National Organisation of Insurance Workers.      P. R.  Kumaramanglam, Mukul Mudgal and K. Vasdev for G. Meenakshi Sundaram and K. Ramakrishnan. 1096      R. K.  Garg, Madan  Mohan, V. J. Francis and D. K. Garg for C. N. Sharma and Rajendra Nath Misra.      D. L.  Sengupta, S.  K. Nandy  and P.  S. Khera for All India Life  Insurance Employees  Assn. and  L.I.C. of  India through its Chairman Bombay.      The following Judgments were delivered,      KRISHNA IYER, J.      A Word  of Explanation.-A  preliminary  divagation  has become necessary  since application  and enquiries  had been made more  than once about the postponement of the judgment. The first  anniversary of the closure of oral submissions in the above  case is just over; and this unusual delay between argument and  judgment calls from me, the presiding judge of the bench  which heard  the case,  a word of explanation and clarification so  that misunderstanding about the judges may melt away  in the  light.  A  better  appreciation  of  this court’s  functional   adversities  and   lack  of   research facilities will  promote more  compassion than criticism and in that hope I add this note.      The    judicature,     like    other     constitutional instrumentalities, has a culture of national accountability. Two factors  must be highlighted in this context. A court is more than  a judge;  a collegium  has  a  personality  which exceeds its  members. The  price a  collective process (free from personality  cult, has  to pay  is long  patience, free exchange and final decision in conformity with the democracy of judicial functionality. Sometimes, when divergent strands of thought  haunt the  mentations of  the members, we pause, ponder and  reconsider because we follow the words of Oliver Cromwell commended  for courts  by Judge  Learned Hand:  "My brethren, I  beseech you,  in the bowels of Christ, think it possible that  you may  be mistaken."  Utter incompatibility

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 80  

exists   between    judicial    democracy    and    dogmatic infallibility; and  so, in  this case,  we have  taken time, more time  and repeated  extension of time to evolve a broad consensus out  of our initial dissensus. Not procrastination but plural toil, is the hidden truth behind the considerable interval.      Secondly, when  important  issues  demand  the  court’s collective judgment an informed meeting of instructed minds, in many  ways, is  a  sine  qua  non.  But  the  torrent  of litigation flooding the court drowns the judges in the daily drudgery  of   accumulated  dockets.  To  gain  leisure  for fundamental reflections  with some respite from paper-logged existence and supportive research from trained law clerks is a 1097 consummation devoutly to be wished’ if the final court is to fulfil its  tryst with  the Constitution  and  country.  The Indian judicial  process, sui  generis in some respects, has its problems,  Himalayan in dimension but hardly appreciated in perspective  and in  true proportions  two of  which have been mentioned  by me  in extension of the great gap between closure for  judgment and  its actual  pronouncement. Having said this,  I must  proceed to  deal with  the merits of the case and  the conclusions  we have  reached in  our  diverse opinions. By  majority, any  way, we  dismiss the appeal and find no merit in the contentions of the appellant.           The fundamental differences in approach      My  learned   brother  Koshal,   J.  has,   after  long reflection on  the issues  in  this  appeal,  expressed  his conclusion  with   which  I   respectfully   disagree.   Our difference   stems    from   basic   divergence   in   legal interpretation and judicial perspective.      Law is  no  cold-blooded  craft  bound  by  traditional techniques and  formal forceps  handed down  to us  from the Indo-Anglican era  but a warm-blooded art, with a break from the past  and a  tryst with  the present,  deriving its soul force from  the Constitution enacted by the People of India. Law, as  Vice President  G. S.  Pathak used  to emphasise in several lectures,  is a  tool to  engineer a peaceful ‘civil revolution’ one of the components of which is a fair deal to the weaker human sector like the working class. The striking social justice  values of  the Constitution  impact  on  the interpretation of  Indian laws  and to forget this essential postulate while  relying on  foreign erudition  is to weaken the vital  flame of  the Democratic,  Socialist Republic  of India. Chief  Justice Earl  Warren of  the United States has spelt out  with clarity  and felicity  the correct  judicial approach to the issues at stake in this case:           Our  judges  are  not  monks  or  scientists,  but      participants in the living stream of our national life,      steering the law between the dangers of rigidity on the      one hand  and of  formlessness on the other. Our system      faces no  theoretical dilemma  but a  single continuous      problems how  to  apply  ever-changing  conditions  the      never-changing principles of freedom. (1) For the  Indian judicial  process, the nidus of these never- changing principles is the Constitution. The bearing of this broad observation  on  statutory  construction  will  become evident as we get down to the discussion. 1098      Now let  me proceed  to the merits, but, at the outset, underscore the constitutional bias towards social justice to the weaker  sections. including  the working  class, in  the Directive Principles  of State  Policy-a factor  which  must enliven judicial consciousness while decoding the meaning of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 80  

legislation. Victorian-vintage  rules of construction cannot override this value-laden guide book.      The flawless  flow of  facts, so  far as  I am  able to remember, aided by our notes, finds expression in the stream of narration  in our  learned brother’s  judgment  and  that frees me  from a  like exercise.  But our  consensus on  the facts is no less than our dissensus on the law. In the pages that follow  I adopt, for convenience, the same acronyms and abbreviations as have been used by brother Koshal, J. in his judgment.      To begin with, I have to stress three key circumstances which colour the vision of social justice: (a) the factum of payment  of   bonus,  without   break,  since  1959  by  the Corporation(1) to  its employees, (b) the consciousness that the Management  in this  case is  no asocial, purely profit- oriented  private   enterprise  but   a  model  employer,  a statutory   corporation,    created    by    nationalisation legislation inspired  by socialistic objectives; and (c) the importance of  industrial peace for securing which a special legislation viz.  the Industrial  Disputes Act, 1947 (the ID Act, for  short) has  been in  operation for  33 years.  The Corporation is itself a limb of the State as defined in Art. 12 and  Arts. 38,  39 and  43 which  deal with workers’ weal have, therefore, particular significance.      The Corporation,  to begin  with, had  to take over the staff of the private insurers lest they should be thrown out of employment,  on nationalisation.  These private companies had no  homogeneous policy  regarding conditions  of service for their  personnel, but  when these  heterogeneous  crowds under  the   same  management  (the  Corporation)  divergent emoluments and  other terms of service could not survive and broad uniformity  became a  necessity. Thus,  the  statutory transfer   of    service   from    former   employers    and standardization  of   scales  of   remuneration  and   other conditions of employment had to be and were taken care of by s. 11  of the  Life Insurance  Corporation  Act,  1956  (for short, the  LIC Act).  The obvious purpose of this provision was to enable the Corporation initially to absorb the motley multitudes from many companies who carried with them varying incidents of  service so as to fit them into a fair pattern, regardless of  their antecedent  contracts of  employment or industrial settle- 1099 ments or  awards. It  was elementary  that  the  Corporation could not  perpetuate incongruous  features  of  service  of parent insurers,  and statutory  power had  to be  vested to vary, modify  or supersede  these contracts, geared to fair, equitable and,  as far as possible, uniform treatment of the transferred staff.  Unless there  be unmistakable expression of such  intention, the ID Act will continue to apply to the Corporation employees.  The office  of s.  11 of the LIC Act was to  provide for  a smooth  take-over and to promote some common conditions  of service  in a situation where a jungle of divergent  contracts of  employment and industrial awards or   settlements   confronted   the   State.   Unless   such rationalisation and standardization were evolved the ensuing chaos would  itself  have  spelt  confusion,  conflicts  and difficulties. This  functional focus  of s.11 of the LIC Act will dispel  scope for interpretative exercises unrelated to the  natural  setting  in  which  the  problem  occurs.  The inference is  clear that  s.11 does  not repel the ID Act as that is  not  its  purpose.  Farewell  to  the  context  and fanatical adherence  to the  text may lead to the tyranny of literality-a hazardous  road which  misses  the  meaning  or reaches a  sense which  the author never meant. Lord Denning

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 80  

has observed : "A judge should not be a servant of the words used. He should not be a mere mechanic in the power-house of semantics." Reed  Dickerson has  in his  "The Interpretation and   Application   of   Statutes"   warned   against   ‘the disintegration of  statutory construction’ and quoted Fuller to say :(1)           ....(W)e do not proceed simply by placing the word      in some  general context....  Rather, we ask ourselves,      What can  this rule  be for?  What evil does it seek to      avert?           ....Surely the  judicial process is something more      than a cataloguing procedure.           ....a  rule   or  statute   has  a  structural  or      systematic quality that reflects itself in some measure      into the meaning of every principal term in it.      I lay  so much  emphasis on the guidelines to statutory interpretation as  this case  turns solely  on  the  seeming meaning of  certain provisions  (for e.g.  s. 11) of the LIC Act as  capable of perpetual use, not only initial exercise, as the  Minister in  Parliament indicated.  But, as  we will presently see,  the decisive  aspect of  the case  turns  on another point,  viz. the  competing claims  for dominance as between the  ID Act and the LIC Act in areas of conflict. Of course, 1100 the problem  of decoding  the legislative  intent is fraught with perils  and pitfalls, as the learned author has noted : (1)           To do  his cognitive  job well,  a judge  must  be      unbiased, sensitive to language usages and shared tacit      assumptions, perceptive  in combining relevant elements      affecting meaning,  capable of  reasoning  deductively,      and generously  endowed with  good judgment. In view of      these formidable  demands, it is hardly surprising that      judges often disagree on the true meaning of a statute. Even so,  legal engineering,  in the province of deciphering meaning, cannot abandon the essay in despair and I shall try to unlock  the legislative  intent in  the light of the text and as reflecting the context.      A capsulated  presentation of  the conspectus  of facts will aid the discussion.      The battle  is about current bonus, the employer is the Life Insurance  Corporation  and  the  employees  belong  to Classes III  and IV  in the  service of the Corporation. The LIC Act brought into being a statutory corporation, i.e. the Life Insurance  Corporation and life was breathed into it as from September  1, 1956.  Since there was nationalisation of life insurance  business under the LIC Act private insurers’ assets and  liabilities of employees were transferred to the Corporation. We  are concerned  only with  the employees and their services  and s.11 of the LIC Act covers this field. I may extract  the said  provision to  make it  clear that  it deals with  the remuneration, terms and conditions and other rights and privileges of transferred employees :           11.(1) Every  whole-time employee  of  an  insurer      whose controlled  business has  been transferred to and      vested in  the Corporation  and who was employed by the      insurer  wholly   or  mainly  in  connection  with  his      controlled business  immediately before  the  appointed      day shall,  on and  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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 80  

    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 duty altered by      the Corporation : 1101           Provided  that  nothing  contained  in  this  sub-      section shall  apply to  any such  employee who has, by      notice in writing given to the Central Government prior      to the  appointed day,  intimated his  intention of not      becoming an employee of the Corporation.           (2) Where the Central Government is satisfied that      for the purpose of securing uniformity in the scales of      remuneration and  the other  terms  and  conditions  of      service  applicable  to  employees  of  insurers  whose      controlled business has been transferred to, and vested      in, the Corporation, it is necessary so to do, or that,      in  the   interests  of   the   Corporation   and   its      policyholders, a reduction in the remuneration payable,      or a  revision of  the terms  and conditions of service      applicable, to employees or any class of them is called      for,  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, or in any award, settlement or      agreement for  the time  being in force, alter (whether      by way  of reduction or otherwise) the remuneration and      the other  terms and  conditions  of  service  to  such      extent and  in such manner as it thinks fit; and if the      alteration is  not  acceptable  to  any  employee,  the      Corporation may  terminate his employment by giving him      compensation equivalent  to three  months’ remuneration      unless the  contract  of  service  with  such  employee      provides for a shorter notice of termination.      Explanation.-The compensation  payable to  an  employee      under this  sub-section shall  be in  addition to,  and      shall not affect, any pension, gratuity, provident fund      money or any other benefit to which the employee may be      entitled under his contract of service.           (3) If  any question  arises  as  to  whether  any      person was a whole-time employee of an insurer or as to      whether any  employee was  employed wholly or mainly in      connection with  the controlled  business of an insurer      immediately before the appointed day the question shall      be referred  to the  Central Government  whose decision      shall be final.           (4)  Notwithstanding  anything  contained  in  the      Industrial Disputes  Act, 1947, or in any other law for      the time being in force, the transfer of the service of      any employee of an insurer to the Corporation shall not      entitle any  such employee  to any  compensation  under      that Act  or other  law, and  no such  claim  shall  be      entertained by any court, tribunal or other authority. 1102 Recruitment of  fresh employees is provided for by s.23. And s.49 empowers  the Corporation  to  make  regulations  in  a general way  for all  the purposes of the Act, including the terms and  conditions of  service of  the employees  of  the Corporation. Pursuant  to its  powers the Central Government promulgated the  Life Insurance  Corporation (Alteration  of Remuneration and  other Terms  and Conditions  of Service of Employees) Order  1957 (the  1957 Order,  for  short).  This related to  the conditions of service of the transferees and was not  confined only  to Class  III and Class IV employees among them.  It was  a general  Order, not  one  limited  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 80  

workmen as  defined in s.2(s) of the ID Act. Clause 9 of the 1957 Order  states that  no bonus  will be  paid but certain other  benefits   of  insurance,   medical  care  etc.,  are mentioned therein.  Clause 9 was later amended providing for non-profit sharing bonus to certain classes of employees.      Be that  as it  may, the  Corporation, with  the  clear approval of  the Central  Government, reached  a  settlement with its  employees on July 2, 1959 providing for payment of cash bonus  from September  1, 1956  to December  31,  1961. Obviously, this  was under  the ID Act and not under the LIC Act and  proceeded on  the clear  assumption that the ID Act provisions regarding  claims of  bonus applied to workmen in the employment of the Corporation.      In  1960,  the  Life  Insurance  Corporation  of  India (Staff)  Regulations,   1960  (the  1960  Regulations)  were framed. Regulation 58 states:           The Corporation may, subject to such directions as      the Central  Government  may  issue,  grant  non-profit      sharing bonus to its employees and the payment thereof,      including conditions  of  eligibility  for  the  bonus,      shall  be  regulated  by  instructions  issued  by  the      Chairman from time to time. Here again,  it must  be noted that the provision is general and covers  the entire gamut of employees of the Corporation and is  not a  specific stipulation  regarding that class of employees who  are  workmen  under  the  ID  Act  and  whose industrial disputes  will be  governed ordinarily  by the ID Act.      Consistently  with   the  good  relations  between  the Corporation and  its workmen,  the settlement  of  1959  was followed by those of 1963, 1970 and 1972 providing for bonus for workmen  in the  service of  the Corporation.  Rocketing cost of  living,  rising  aspirations  and  frustrations  of socioeconomic life  and the  general expectations from model employers like  the  public  sector  enterprises,  have  led workmen in  this country  to  make  escalating  demands  for better emoluments, 1103 including  bonus.   Naturally,   the   workmen   under   the Corporation raised  disputes for  bonus and  other  improved conditions. The  employer, consistently with the long course of conduct  by both  sides as if the ID Act did govern their relations, entered  into settlements  dated January 24, 1974 and February  6, 1974,  pursuant to  the provisions  of s.18 read  with   s.2(p)  of  the  ID  Act.  Clause  8  of  these settlements specificated  the scale  of bonus  and clause 12 thereof is more general and may be read here: Clause 8. Bonus:           (i)  No   profit  sharing  bonus  shall  be  paid.      However,  the   corporation  may,   subject   to   such      directions as the Central Government issue from time to      time, grant  any other  kind of  bonus to its Class III      and IV employees.           (ii) An  annual cash  bonus will  be paid to Class      III and  Class IV  employees at  the rate of 15% of the      annual salary (i.e. basic pay inclusive of special pay,      if any,  and dearness allowance and additional dearness      allowance) actually  drawn by an employee in respect of      the financial year to which the bonus relates.           (iii) Save  as provided herein all other terms and      conditions attached to the admissibility and payment of      bonus shall  be as laid down in the Settlement on bonus      dated the 26th June 1972. Clause 12:           (1) This  settlement shall  be effective  from 1st

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 80  

    April 1973,  and shall  be for  a period of four years,      i.e., from 1st April, 1973 to 31st March, 1977.           (2) The  terms of  the settlement shall be subject      to the approval of the Board of the Corporation and the      Central Government.           (3) This  Settlement disposes  of all  the demands      raised  by  the  workmen  for  revision  of  terms  and      conditions of their service.           (4) Except  as otherwise  provided or  modified by      this Settlement,  the  workmen  shall  continue  to  be      governed by  all the terms and conditions of service as      set  forth   and  regulated   by  the   Life  Insurance      Corporation of  India (Staff Regulations), 1960 as also      the administrative  instructions issued  from  time  to      time and  they shall, subject to the provisions thereof      including any period of operation specified therein, be      entitled to the benefits thereunder.      It is  important and,  indeed, is an impressive feature that these  two settlements  cover a  wide ground  of  which bonus is but one item. 1104 Equally significant  is the  fact  that  the  Board  of  the Corporation and  the Central  Government,  which  presumably knew the scope of the LIC Act and the ID Act, did approve of these settlements.      The thought  of terminating the payment of bonus to the employees  covered   by  the   1974  settlements  apparently occurred to  the Central  Government a  year later  and  the Payment of  Bonus (Amendment)  Ordinance, 1975, (replaced by the Payment  of Bonus  (Amendment) Act,  1976), was  brought into force  to extinguish the effect of the 1974 settlements and  the  claims  for  bonus  put  forward  by  the  workers thereunder. This  Act was  successfully challenged  and this court struck down the said legislation in Madan Mohan Pathak v. Union  of India(1) and directed the Corporation to pay to its Class  III and IV employees bonus for the years 1-4-1975 to 31-3-1977.  Thereupon,  the  Corporation  issued  to  its workmen certain notices under s.19(2) of the ID Act and s.9A of the  same Act.  Likewise, the  Central Government, on May 26, 1978,  issued a  notification under  s.49 of the LIC Act substituting a new Regulation for the old Regulation 58. All these three steps were taken to stop payment of bonus to the workmen under  the two settlements and led to a challenge of their validity in the Allahabad High Court under Art. 226 of the  Constitution.  If  the  two  notices  and  the  changed Regulation were  good they  did deprive the workmen of their benefits of  bonus pursuant to the settlements reached under the ID  Act. But  the workmen contended that the proceedings under the  LIC Act  could not  prevail against the continued flow of  bonus benefits  under the  ID Act.  The High  Court (Lucknow Bench) struck down the appellant’s actions as of no consequence and void and sustained the claim for bonus based on the  settlements of  1974. The Corporation has come up in appeal to  this Court  assailing the  findings of  the  High Court.      The Corporation  is  clearly  an  ’industry’,  and  the ’workmen’ raised demands for bonus, the management responded constructively and for long years settlements, as envisioned by  the  ID  Act,  were  entered  into  and  the  stream  of industrial  peace   flowed  smooth.  Industrial  settlements marked their  relations the last of which were in 1974 but a later  legislation  marred  this  situation  and  led  to  a litigation.  In   1976,  the   Life  Insurance   Corporation (Modification of  Settlement) Act, 1976 (for short, the 1976 Act) was  enacted to  abolish the  efficacy of  the right to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 80  

bonus under the two settlements of 1974 but the challenge to its constitutionality  was upheld.  When  the  parliamentary burial of  bonus was  stultified by  judicial  resurrection, other measures  to effectuate the same purpose were resorted to, both 1105 under the  LIC Act  and the ID Act. These moves proved to be essays in  futility because  the High  Court held that bonus was still  payable, that  the ID  Act prevailed over the LIC Act in  the area of industrial relations, the former being a special  law,   and  that   the  steps  taken  both  by  the Corporation and the Central Government under the LIC Act and Regulations as  well as  under the  ID Act,  were  of  legal inconsequence. Against  this judgment  the  Corporation  has come up  in appeal  and the  questions raised  are of  great moment and  of serious portent. If law allows administrative negation of bonus, judges are not to reason why; but whether law does allow nullification of industrial settlement is for judges to  decide, not  for the  Administration to  say, why not? That is Montesquien functionalism of sorts. So, against this backdrop,  I will  analyse the  submissions, scan their substance and pronounce upon their validity.      I may  as well  formulate, in more particularised form, the   various   contentions   urged   on   either   side-not exhaustively though,  because  that  has  been  done  by  my learned brothers. I propose to confine the discussion to the decisive issues.  First  of  all,  we  have  to  investigate whether the two settlements of January 24, 1974 and February 6, 1974,  arrived at in pursuance of the provisions of s. 18 read with  s. 2(p)  of the  ID Act,  have current  validity, having regard to the notice given by the Management under s. 19(2) of the ID Act terminating the settlements and under s. 9A of  its intention  to  vary  the  conditions  of  service bearing on bonus. In case the settlements do not survive the notices, the  claim  to  bonus  perishes  and  nothing  more remains to  be decided.  But in case I hold that despite the intention to  change the  service conditions under s. 9A and determination under  s. 19(2),  the terms of the settlements continue to  operate until  substituted by  a  new  contract arrived at  by mutual settlement or by an award, the further issue opens  as to  whether a  settlement under  the ID  Act cannot be  operative since  the LIC  Act contains provisions vesting power  in the Corporation and the Central Government to  fix   the  terms   and  conditions  of  service  of  the Corporation employees  and that  power has been exercised to extinguish the bonus claim. The question will throw open for consideration which  statute prevails-the  ID Act or the LIC Act-when there  is an apparent conflict between the two. The problem of  the prevalence of a special statute at against a general statute  and the  determination of which, in a given situation, is  the special  statute will engage my attention at the  appropriate stage.  In the  event of my holding that the ID  Act prevails,  as against  the LIC Act, in the given situation, the  fate of  the steps  taken by the Corporation and the  Central  Government  under  the  LIC  Act  and  the Regulations framed thereunder will be sealed. Of course, 1106 if the  holding is that the ID Act cannot operate as against the LIC  Act and  the Regulations  framed  thereunder,  when dealing with  the terms  and conditions  of service  of  the employees of the Corporation, I may have to venture into the controversy about  how effectual  are the  measures taken by the two  statutory authorities, i.e. the Corporation and the Central Government,  under the provisions of the LIC Act and the Regulations. Every point has been emphatically contested

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 80  

and argued by both sides with erudite niceties. However, the judicial perspective  will be  the decisive  factor  in  the ultimate analysis. For, as Brennan, J. has observed: (1)           "The law  is not  an end  in itself,  nor does  it      provide ends.  It is preeminently a means to serve what      we think is right."           "Law is  here to serve ! To serve what ? To serve,      insofar as law can properly do so, within limits that I      have already  stressed, the  realization of man’s ends,      ultimate and  mediate. .  . Law cannot stand aside from      the social changes around it."      Judicial acceptance of social dynamics, as projected by the Constitution,  is the  crucial factor in this case, if I may anticipate myself.      The ID  Act is a benign measure which seeks to pre-empt are extant  even after  the notice under s.9A and the formal termination under  s. 19(2)  of the ID Act, Let me go to the basics. Before  that, a  glance at  the nature  of  the  two settlements, their  ambit and  ambience and their longevity, actual and  potential, may be desirable, after sketching the broad basics of the ID Act and its means and ends.      The ID  Act is a benign measure which seeks to pre-empt industrial  tensions,  provides  the  mechanics  of  dispute resolutions and set up the necessary infra-structure so that the energies of partners in production may not be dissipated in counter-productive  battles and  assurance of  industrial justice may  create a  climate of goodwill. Industrial peace is a  national need and, absent law, order in any field will be absent.  Chaos is  the enemy  of  creativity  sans  which production will suffer. Thus, the great goal to which the ID Act is  geared is  legal mechanism  for canalising conflicts along conciliatory  or adjudicatory processes. The objective of this  legislation and  the component of social justice it embodies were  underscored in the Bangalore Water Supply and Sewerage Board v. Rajappa (2) thus: 1107           To sum  up, the  personality of the whole statute,      be it  remembered, has  a welfare  basis,  it  being  a      beneficial legislation  which protects labour, promotes      their contentment  and regulates  situations of  crisis      and tension  where  production  may  be  imperilled  by      untenable  strikes   and   blackmail   lock-outs.   The      mechanism  of  the  Act  is  geared  to  conferment  of      regulated benefits to workmen and resolution, according      to a  sympathetic rule of law, of the conflicts, actual      or potential, between managements and workmen. Its goal      is amelioration  of the conditions of workers, tempered      by a  practical sense  of peaceful co-existence, to the      benefit of  both-not a  neutral position but restraints      on Iaissez  faire and  concern for  the welfare  of the      weaker lot  Empathy with  the statute  is necessary  to      understand not merely its spirit, but also its sense.      The ID Act deals with industrial disputes, provides for conciliation, adjudication and settlements and regulates the rights  of   parties  and  the  enforcement  of  awards  and settlements. When  a reference  is made  of a  dispute under s.10 or  s.10A, the legal process springs into action. Under s.11 and  award  is  made  after  a  regular  hearing  if  a conciliation under s.12 does not ripen into a settlement and a failure  report is  received. The award is published under s.17(1) and  acquires finality  by virtue  of s.17(2) unless under s.17A(1)  the appropriate government declares that the award shall  not be  enforceable. Section 17A(4) which is of significance reads thus:           (4) Subject  to the  provisions of sub-section (1)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 80  

    and sub-section  (3) regarding the enforceability of an      award, the  award shall come into operation with effect      from such  date as  may be specified therein, but where      no date  is so  specified, it shall come into operation      on the  date when  the award  becomes enforceable under      sub-section (1) or sub-section (3), as the case may be. It is  obvious from  s. 18 that a settlement, like an award, is  also  binding.  What  I  emphasise  is  that  an  award, adjudicatory  or   arbitral,   and   a   settlement   during conciliation or  by agreement  shall be  binding because  of statutory sanction.  Section 19  relates to  the  period  of operation of  settlements and  awards and  here also  it  is clear that both settlements and awards, as is evident from a reading of s. 19(2) and (6), stand on the same footing.      Section 19 has a key role to play in the life and death of awards  and settlements  and so we may read the text here to enable  closer  comment.  Particular  attention  must  be riveted on s. 19(2), (3) and (6): 1108           19. (1)  A settlement shall come into operation on      such date  as is  agreed upon  by the  parties  to  the      dispute, and  if no date is agreed upon, on the date on      which the memorandum of the settlement is signed by the      parties to the dispute.           (2) Such  settlement shall  be  binding  for  such      period as is agreed upon by the parties, and if no such      period is  agreed upon for a period of six months (from      the date  on which  the  memorandum  of  settlement  is      signed  by  the  parties  to  the  dispute,  and  shall      continue to  be binding on the parties after the expiry      of the period aforesaid, until the expiry of two months      from the  date on  which a  notice  in  writing  of  an      intention to  terminate the  settlement is given by one      of the  parties to  the other  party or  parties to the      settlement.           (3) An  award shall,  subject to the provisions of      this sections  remain in  operation for a period of one      year  (from   the  date  on  which  the  award  becomes      enforceable under section 17A).           Provided  that   the  appropriate  Government  may      reduce the said period and fix such period as it thinks      fit;           Provided further  that the  appropriate Government      may before  the expiry  of the  said period, extend the      period of  operation by  any period  not exceeding  one      year at  a time  as it thinks fit so, however, that the      total period  of operation of any award does not exceed      three years  from  the  date  on  which  it  came  into      operation.           (4) Where  the appropriate  Government, whether of      its own motion or on the application of any party bound      by the  award, considers that since the award was made,      there has  been a  material change in the circumstances      on which  it was  based, the appropriate Government may      refer the  award or  a part of it to a Labour Court, if      the award  was that of a Labour Court or to a Tribunal,      if the  award was  that of  a Tribunal or of a National      Tribunal,  for   a  decision   whether  the  period  of      operation should  not, by  reasons of  such change,  be      shortened and  the decision  of  Labour  Court  or  the      Tribunal, as the case may be on such reference shall be      final.           (5) Nothing  contained in  sub-section  (3)  shall      apply to  any award which by its nature, terms or other      circumstances does  not impose, after it has been given

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 80  

    effect to  any continuing  obligation  on  the  parties      bound by the award. 1109           (6) Notwithstanding  the expiry  of the  period of      operation  under   sub-section  (3),  the  award  shall      continue to be binding on the parties until a period of      two months has elapsed from the date on which notice is      given by  any party  bound by  the award  to the  other      party or  parties intimating its intention to terminate      the award.           (7) No  notice given under sub-section (2) or sub-      section (6)  shall have effect, unless it is given to a      party representing the majority of persons bound by the      settlement or award, as the case may be.      Section 9A fetters the Management’s right to change the conditions of  service of  workmen  in  respect  of  certain matters including  wages and  allowances. We had better read it here:           9A. No  employer who proposes to effect any change      in the  conditions of service applicable to any workman      in respect  of  any  matter  specified  in  the  Fourth      Schedule, shall effect such change,-           (a)  without giving  to the  workmen likely  to be                affected by  such  change  a  notice  in  the                prescribed manner of the nature of the change                proposed to be effected; or           (b)  within twenty-one days of giving such notice:      It will  be apparent  that  the  ID  Act  substantially equates an  award with  a settlement, from the point of view of their legal force. No distinction in regard to the nature and period of their effect can be discerned, especially when we read  s. 19(2) and (6). I highlight this virtual identity of  effect   to  bring   home   the   fact   that   judicial pronouncements on this aspect, whether rendered in a case of award or  settlement, will be a guideline for us and nothing turn on  whether the  particular  is  one  of  an  award  or settlement. Indeed, there are reported cases on both.      The statutory  regulation  of  industrial  disputes  is comprehensive, as  is manifest  from the  rest of  the  Act. Chapter V  prohibits strikes and lock-outs; Chapter VA deals with lay-off and retrenchment and Chapter VI puts teeth into the provisions  by enacting  penalties. Importantly,  s. 29, which proceeds  on the  footing of equal sanctity for awards and settlements, punishes breaches:           29. Any person who commits a breach of any term of      any settlement  or award, which is binding on him under      this Act  shall be  punishable with  imprisonment for a      term which may extend 1110      to six  months, or  with fine,  or with both, and where      the breach  is a  continuing one,  with a  further fine      which may  extend to  two hundred  rupees for every day      during which  the breach continues after the conviction      for the  first, and the Court trying the offence, if it      fines the  offender, may  direct that  the whole or any      part of  the fine  realised from  him shall be paid, by      way of  compensation, to any person who, in its opinion      has been injured by such breach.      There are  miscellaneous provisions  to  take  care  of other  residuary   matters  and   we  get   picture   of   a parliamentary project  designed to  deal, not  piecemeal but wholesale, with  a special  subject of  strategic concern to the nation,  viz.,  ’the  investigation  and  settlement  of industrial disputes’.  Let us  be  perspicacious  about  the purpose and  sensitive about  the social focus of the ID Act

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 80  

in a  developmental perspective.  Parliament has  picked out the   specific    subject   of   industrial   disputes   for particularised treatment,  whether the  industry be  in  the private or  public sector or otherwise. Our country, with so much leeway  to make  up, cannot afford paralysing processes in production  of goods  and services  and  whoever  be  the employer-Government,  quasi-public,  charitable  or  profit- making  private  enterprise-both  sides  viz.,  workmen  and management  shall  abide  by  the  discipline  adopting  the mechanics and  using the  machinery under  the ID  Act.  The Bangalore  Water  Supply  and  Sewerage  Board  case(1)  has highlighted this  core truth.  To lose  sight of  the spinal nature of  the legislation,  viz., industrial  disputes  and their settlement  through law,  and to  regard it  as a mere enactment bearing  on terms  and conditions  of  service  in enterprises is  to miss  the distinctive  genre,  particular flavour and legislative quintessence of the ID Act.      ....(Interpretation) involves far more than picking out      dictionary definitions  of words  or expressions  used.      Consideration  of   the  context  and  the  setting  is      indispensable  properly  to  ascertain  a  meaning.  In      saying  that   a  verbal  expression  is  plain  or  un      ambiguous,  we  mean  little  more  than  that  we  are      convinced that virtually anyone competent to understand      it, and  desiring fairly  and impartially  to ascertain      its signification, would attribute to the expression in      its context  a meaning such as the one we derive rather      than  any  other;  and  would  consider  any  different      meaning, by  comparison, strained,  or  farfetched,  or      unusual, or unlikely. 1111      ... Implicit  in the  finding of a plain, clear meaning      of an expression in its context, is a finding that such      meaning  is   rational  and   "makes  sense"   in  that      context.(1)      Interpretative  insight   will  suffer,   even  as  the judicial focus  will blur,  if the legislative target is not sharply perceived.  Indeed, I  lay so  much stress  on  this facet because  brother Koshal’s  otherwise  faultless  logic has, if  I may  say  so  with  great  deference,  failed  to convince me because of this fundamental mis-focus. To repeat for emphasis, the meat of the statute is industrial dispute, not conditions of employment or contract of service as such. The line of distinction may be fine but is real.      Be that  as it  may, a  bird’s eye  view of  the ID Act reveals  the   statutory  structure  and  legal  engineering centering round  dispute settlement  in industries according to the  rule of  law and  away  from  fight  with  fists  or economic blackmail.  This large  canvas once  illumined, may illustrate the sweep, of awards and settlements by reference to the very agreement of 1974 we have before us. It goes far beyond bonus  and embraces  a wide  range  of  disputes  and rainbow of settlements in a spirit of give and take. One may visualise the  bargaining process. Give in a little on bonus and  get   a  better  deal  on  salary  scale  or  promotion prospects; relent  a wee-bit  on hours  of work  but bargain better on  housing facilities,  and so  on. The  soul of the statute is not contract of employment, uniformity of service conditions   or    recruitment   rules,   but   conscionable negotiations, conciliations  and adjudications  of  disputes and differences  animated by  industrial justice, to avoid a collision which  may spell chaos and imperil national effort at increasing the tempo of production.      If there  is no  dispute, the  ID Act is out of bounds, while the  LIC Act  applies generally  to all employees from

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 26 of 80  

the fattest  executive to the frailest manual worker and has no concern  with industrial  disputes. The  former is a ’war measure’ as  it were;  the latter  is a  routine power  when swords are  not drawn  if we may put it metaphorically. When disputes break  out or  are brewing,  a  special,  sensitive situation fraught  with frayed tempers and fighting postures springs  into   existence,  calling  for  special  rules  of control, conciliatory  machinery, demilitarising  strategies and methods of investigation, interim arrangements and final solutions,  governed   by  special  criteria  for  promoting industrial peace and justice. The LIC Act is not a law for 1112 employment   or    disputes   arising   therefrom,   but   a nationalisation measure  which  incidentally,  like  in  any general take-over  legislation,  provides  for  recruitment, transfers, promotions  and the like. It is special vis-a-vis nationalisation of  life  insurance  but  general  regarding contracts  of  employment  or  acquiring  office  buildings. Emergency  measures   are   special,   for   sure.   Regular nationalisation  statutes   are   general   even   if   they incidentally refer to conditions of service.      The anatomy of the 1974 settlements is no more confined to bonus  than the physiology of man is limited to bones. It is an integral, holistic and delicately balanced ensemble of clauses, with  cute calculations and hard bargaining on many matters. To  dissect is to murder, in the art of true poetry as in the craft of settlement in industry; and therefore, it is impermissible to single out a clause and extinguish it as the totality  is a  living entity  which does  not permit of dismemberment, limb  by limb,  without doing violence to the wholeness and  identity of  the settlement.  Here, the  1974 settlements have  brought about  a conflict-resolution  on a variety of  items including (a) scales of pay, (b) method of fixation in  the new  scales, (c)  dearness  allowance,  (d) house rent  allowance, (e) city compensatory allowance, etc. Thus bonus  is but one component of a multi-point agreement. Para 12 of the Settlement has some significance:           12.  Period  of  Settlement.-(1)  This  Settlement      shall be  effective from  1st April,  1973 and shall be      for a  period of four years, i.e., from 1st April, 1973      to 31st March, 1977.           (2) The  terms of  the settlement shall be subject      to the approval of the Board of the Corporation and the      Central Government.           (3) This  Settlement disposes  of all  the demands      raised  by  the  workmen  for  revision  of  terms  and      conditions of their service.           (4) Except  as otherwise  provided or  modified by      this Settlement,  the  workmen  shall  continue  to  be      governed by  all the terms and conditions of service as      set  forth   and  regulated   by  the   Life  Insurance      Corporation of  India (Staff) Regulations, 1960 as also      the administrative  instructions issued  from  time  to      time and  they shall, subject to the provisions thereof      including any period of operation specified therein, be      entitled to the benefits thereunder. Likewise, the preamble has a purpose:           WHEREAS  the  parties  representing  the  workmen,           namely:           1. All India Insurance Employees Association;           2. All India LIC Employees Federation; 1113           3. All  India Life Insurance Employees Association                and           4. National Organisation of Insurance Workers.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 27 of 80  

    (hereinafter called  the said  Associations)  submitted      their Charter  of Demands  to the  Life Ins.  Corpn. of      India (hereinafter called the Corporation) for revision      of the  scales of  pay, allowances  and other terms and      conditions of  service after the expiry of the award of      the National  Industrial Tribunal  New  Delhi  on  31st      March, 1973:           AND WHEREAS the Corpn. has carried on negotiations      with the said Associations between the period July 1973      and January 1974 at which there has been free and frank      exchange  of   views  in   regard  to  various  matters      including the  obligations of the Corpn. to the policy-      holders and the community;           AND WHEREAS  the said  Associations solemnly agree      to  cooperate   with  the   management  in  maintaining      discipline  and  in  its  endeavour  to  effect  utmost      economy in administration and to improve efficiency and      productivity  so  as  to  ensure  that  the  growth  in      profitability is maintained which alone will enable the      Corpn. (i) to safeguard and (ii) to meet the legitimate      demands of the employees for wage revision.           AND WHEREAS  the said  Associations further  agree      that   the    management   may   issue   administrative      instructions in  the interest of maintaining discipline      and peaceful atmosphere in the office.           NOW THEREFORE  it is  hereby agreed by and between      the parties hereto is as follows:      What  stand  out  prominently  in  this  Memorandum  of Settlement are:      (a)     There  was   a  previous   settlement  and  new           negotiations were  started in  the  light  of  new           demands  for   a  substitutions   of  the  earlier           settlement by  a new settlement without leaving an           interregnum of vacuum.      (b)   There was  a plurality  of items unconnected with           bonus as  such and  the overall  settlement  is  a           composite fabric; and      (c)   There is  specific reference  to the  LIC (Staff)           Regulations, 1960,  and, so  far as the Settlement           provided, it prevailed over the Regulations and so           far as  the Settlement  did not  cover a topic the           Regulations governed,  thus making  it clear  that           the Settlements  did not become subordinate to the           Regulations. 1114      The core question that first falls for consideration is as to  whether the  Settlements of  1974 are still in force. There are  three  stages  or  phases  with  different  legal effects in  the life  of an  award or settlement. There is a specific period  contractually or  seatutorily fixed  as the period of  operation. Thereafter,  the award  or  settlement does not become non est but continues to be binding. This is the second  chapter  of  legal  efficacy  but  qualitatively different as  we will  presently show.  Then comes  the last phase. If notice of intention to terminate is given under s. 19(2) or 19(6) then the third stage opens where the award or the settlement  does survive  and is  in force  between  the parties as  a contract  which  has  superseded  the  earlier contract and  subsists  until  a  new  award  or  negotiated settlement takes its place. Like Nature, Law abhors a vacuum and even  on the notice of termination under s. 19(2) or (6) the sequence  and consequence  cannot be  just  void  but  a continuance of  the earlier  terms, but with liberty to both sides to  raise disputes  negotiate settlements  or  seek  a reference and  award. Until  such a  new contract  or  award

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 28 of 80  

replaces the  previous one,  the former  settlement or award will regulate the relations between the parties. Such is the understanding of  industrial law  atleast for  30  years  as precedents of  the  High  Courts  and  of  this  court  bear testimony. To  hold to  the contrary is to invite industrial chaos by  an interpretation  of the  ID  Act  whose  primary purpose is  to obviate  such a  situation and to provide for industrial peace.  To distil  from the provisions of s. 19 a conclusion  diametrically   opposite   of   the   objective, intendment and  effect of  the Section  is an interpretative stultification  of   the  statutory   ethos   and   purpose. Industrial law  frowns upon a lawless void and under general law  the   contract  of  service  created  by  an  award  or settlement lives so long as a new lawful contract is brought into being.  To argue  otherwise is to frustrate the rule of law. If  law is  a means  to an  end-order in society-can it commit functional  harakiri by  leaving a conflict situation to lawless void ?      Now we  will move  on to  the precedents  on the  point which have been summed up by Malhotra thus:(1)           (3) Effect  of termination of award under s. 19(6)      on rights and obligations of parties.-Termination of an      award by  either party under s. 19(6) does not have the      effect of  extinguishing the  rights flowing therefrom.      The effect  of termination  of  an  award  is  only  to      prevent thereafter  the enforcement  of the  obligation      under it  in the  manner prescribed, but the rights and      obligations which  flow from  it  are  not  wiped  out.      Evidently, by the termination 1115      of  an   award,  the  contract  of  employment  is  not      terminated, the  obligations created  by the  award  or      contract could  be altered  by a  fresh adjudication or      fresh contract.(1).      In Judhisthir  Chandra v.  Mukherjee(2) the position as stated above  was accepted  as correct  by the High Court. A Division  Bench  of  the  Bombay  High  Court  in  Mangaldas Narandas v.  Payment of  Wages Authority  etc.(3) (Shah  and Gokhale, JJ)  came to  the same conclusion and neatly summed up the sequence of triple stages and the difference in legal consequences, and  upholding the  contention that even after termination  of   an  award   under  s.   19(6)  the   terms incorporated in  the award  continued as  a contract between the parties.  So   much so,  no reversion  to the  pre-award position was  permissible on  the part  of the employer. The head-note which  is sufficiently lucid and luminous, sums up the ratio thus:           Where an  award is  delivered  by  the  industrial      tribunal it  has the  effect of  imposing  a  statutory      contract governing  the relations  of the  employer and      the employe.  It is true that statutory contract may be      terminated in  the manner prescribed by s. 19(6) of the      Industrial Disputes  Act. After  the statutory contract      is terminated  by notice,  the employer  by failing  to      abide by  the terms  of the  award does  not incur  the      penalties provided  by the Industrial Disputes Act, nor      could the award be enforced in the manner prescribed by      s. 20  of the  Industrial Disputes (Appellate Tribunal)      Act, 1950. But the termination of the award has not the      effect of  extinguishing the  rights flowing therefrom.      Evidently by  the termination of the award the contract      of employment  is not  terminated. The employer and the      employee remain  master and  servant in the industry in      which they  are employed, unless by notice the employer      has also  simultaneously with  the termination  of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 29 of 80  

    award terminated the employment of the employee. If the      employment is  not terminated,  it is difficult to hold      that the  rights which had been granted under the award      automomatically cease  to be effective from the date on      which  notice  of  termination  of  the  award  becomes      effective. The  effect of  termination of  the award is      only to prevent enforcement of the obligations under 1116      the award  in the manner prescribed, but the rights and      obligations which  flow from  the award  are not  wiped      out. Termination  of the  award or lapsing of the award      has not  the  effect  of  wiping  out  the  liabilities      flowing under the award.           An award  has the  effect of  imposing fresh terms      upon the  contract of  employment between  the employer      and the  employee to which they have been assented. The      termination  of  such  award  does  not  terminate  the      contract. Even  after the  award is  terminated in  the      manner provided  by s. 19(6) of the Industrial Disputes      Act, the obligation created by the award could be alter      by a  fresh contract  or a fresh adjudication under the      Industrial Disputes Act and not otherwise.           The Industrial  Disputes Act has been enacted with      the object  of securing  harmonious  relations  in  the      working of  the industry  between the  employer and the      employees by  providing a machinery for adjudication of      disputes  between   them;  and   the  object   of   the      legislature would  be frustrated  if  after  every  few      months  by   unilateral  action  the  employer  or  the      employees may  be entitled  to reopen  the dispute  and      ignore the  obligations declared  to be  binding by the      process of adjudication.                                             (emphasis added)      There is  a remarkable  continuity in  the Bombay  High Court (a jurisdiction where industrial unrest is a sensitive issue)  because   we  find   that  another   Division  Bench interpreting similar  provisions in  the  Bombay  Industrial Relations Act has been persuaded by the same reasoning, well brought out in the Head Note which we excerpt:(1)           The result  of the award ceasing to have effect on      notice of  termination being  given under  s. 116(1) of      the Bombay  Industrial Relations  Act is that the award      ceases to  exist. The  result of  the award  ceasing to      have effect  is that  it is open to either party give a      notice of  change under s. 42 of the Act and attempt of      bring about  a  change.  Further  it  is  open  to  the      employer in  cases in  which he  could bring  a  change      without a  notice of  change such as matters enumerated      in Sch. III to the Act to bring about a change, because      the impediment  placed  in  his  way  by  s.  46(3)  is      removed. But until a change is brought about by the act      either of  employer or  the  employee  after  following      relevant provisions in 1117      the Bombay  Industrial Relations  Act, 1946,  the award      that exists,  shall continue  to regulate the relations      between the  employer and  the employees. The effect of      termination of  an award  is not  that the rights which      flow from  that award  cease to  be  available  to  the      employees, but  the effect  of termination  is that the      award continues  to govern  the relations  between  the      employer and  the employee  until such time as a change      is effected  in accordance  with the  provisions of the      Bombay Industrial Relations Act, 1946.                                             (emphasis added)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 30 of 80  

Indeed, the  precise submission  that  upon  termination  by notice, the award ceased to have effect for all purposes and the employees  were not  entitled to  benefit thereunder was raised and  examined as  a matter  of  great  importance  to industrial  relations.   The  court,  in  our  view  rightly rejected the  contention of  the employer  and with forceful precision argued  to reach  the conclusion  which  the  only sensible solution :(1)           What this  sub-section in  effect provides is that      if a  notice of termination is given by either party to      the award,  then on  the expiry  of two months from the      date  of   such  notice   the   registered   agreement,      settlement or  award shall  cease to have effect.......      But the  question that  we have  been  called  upon  to      determine goes  a little  further  than  that  and  the      question is  by what  is the  relationship between  the      employers and the employees regulated after an award is      terminated ?  Does termination  of the  award create  a      vacuum and  leave the  employees to the tender mercy of      the employer  ? Does  it, by  providing that  the award      shall cease  to have effect, get rid of the award so as      to bring  about the  result  that  any  agreement  that      governed the relations of the parties prior to the date      of the  award is  thereby revived;  or does it preserve      such rights as the employees have, prior to the date of      termination, already enjoyed under the award or does it      preserve the  whole of the award until it is changed by      the  procedure  prescribed  by  the  Bombay  Industrial      Relations Act  for a  change ? Now, quite obviously its      would not  be possible  for any  court to take the view      that the  termination of  the award creates a vacuum in      which the  employees are  at the  tender mercy  of  the      employer; nor  does it  appear to  us to be possible to      hold that  by termination  of the award the contract or      agreement that  governed the  relations of the employer      and the  employees prior to the award is in some manner      revived.  Initially  that  contract  or  agreement  had      binding effect;  but it  ceased to  have such effect on      the award 1118      taking effect  and the  moment the award became binding      on the  parties, the  antecedent contract  or agreement      was superseded  by the  award. It  is not  a case of an      antecedent  contract   or  agreement  being  suspended,      because there  is no provision for suspension which can      even be  spelt out  from any  of the  sections  of  the      Bombay Industrial  Relations Act.  The award, or as the      case may  be, a  registered agreement  or a  settlement      under the Bombay Industrial Relations Act has obviously      the effect  of superseding  the contract  or  agreement      that existed  and that  regulated the relations between      the employer  and the employees prior to the registered      agreement, settlement  or award taking effect under the      provisions of  the  Act.  Then  we  come  to  the  next      possibility: Is  only so much of the award preserved as      relates to  the rights already enjoyed by the employees      before the  termination of  the  award  ?  We  find  it      difficult so to hold. There is no principle or logic in      dealing with  an award  in this  piecemeal  manner  and      preserving  rights  that  have  already  been  actually      enjoyed and  destroying those  which, although they may      have accrued,  have to be enjoyed in future in terms of      the award.  Mr. Patel  for the  petitioners has  argued      that on  the termination  of the  award the  effect  or      rather the  result that  is brought  about is  that the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 31 of 80  

    rights of  parties are frozen as of that date. Assuming      such a concept of freezing the rights was adopted, even      the freezing  would be  in respect  of rights that have      already accrued and it is not quite easy to conceive of      rights which  would not  accrue to an employee under an      industrial award  and which  can only be contingent. In      any event,  if the  original contract  or agreement has      been superseded by the award, holding that the award is      no  longer  what  governs  the  relations  between  the      employer and  the employees  would necessarily create a      vacuum. Trying  to save  the creation  of a  vacuum  by      splitting up  the award into two parts, the award under      which benefits  have already been enjoyed and that part      of  the  award  under  which  benefits  have  not  been      enjoyed, is  dissecting  the  award  in  a  manner  not      justified in  law or  logic. There appears to be on the      scene after the termination of the award only one thing      that can  govern the relations between the employer and      the employees  and that undoubtedly can be nothing else      than the  award itself. The result of the award ceasing      to have  effect is  not that the award ceases to exist;      the result of the award ceasing to have effect is, as I      have already  pointed out,  that it  is open  to either      party to  give a  notice of  change and  to attempt  to      bring about a change.                                             (emphasis added) 1119      In the  Madras jurisdiction the same view has prevailed as is  apparent from 1961 I LLJ 105, 1971 I LLJ 310 and 1978 I LLJ  227. A Division Bench of that Court in Sathya Studios case(1)  stressed   the  purpose  of  the  ID  Act  and  the preference for  that interpretation  which will advance that purpose. The Head Note brings out the holding correctly:           ...... a combined reading of s. 18(3), sub-ss. (1)      to (3) and (6) of s. 19, s. 23 and s. 29 leave no doubt      that, bring  about,  conserve  and  promote  industrial      peace, the  termination of an award under s. 19(6) does      not mean  that the  terms and  conditions evolved by it      and applied to the industrial relations concerned would      be set  at large.  All that  that termination  under s.      19(6) would  mean is that, thereafter, the parties will      be at  liberty to  raise a  fresh industrial dispute if      there is  a basis  therefor. But,  so long as the award      terminated under  s. 19(6)  has not been substituted by      an award,  the industry concerned has to proceed on the      basis that  the terms and conditions of the award would      continue to govern the terms of employment.                                             (emphasis added)      We need  not labour  the point  further because  we are bound, presidentially  speaking, by  three decisions of this Court. Chacko’s  case, (2)  in a  clinching passage, settles the proposition  and  the  Indian  Oil  Corporation  case(3) adopts a  reasoning compelling the same conclusion even like Mohd. Quasim Larry(4) has done. Das Gupta, J. speaking for a Bench of  three judges  studies the statutory scheme bearing on the  triple periods  after an  award came  into being and indicated,  by  purposive  interpretation  of  the  relevant provisions, the  legal stages of the life of an award. After quoting s. 19(6) of the ID Act, the Court observed(5):           This makes  it clear  that  after  the  period  of      operation of  an award  has expired, the award does not      cease to  be effective. For, it continues to be binding      thereafter on  the parties  until notice has been given      by one  of the parties of the intention to terminate it      and two  months have  elapsed from  the  date  of  such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 32 of 80  

    notice. 1120      The effect  of s. 4 of the Industrial Disputes (Banking      Companies) Decision  Act is that the award ceased to be      in force after March 31, 1959. That however has nothing      to do  with question as to the period for which it will      remain binding on the parties thereafter. The provision      in s.  19(6) as  regards the period for which the award      shall continue  to be  binding on the parties is not in      any way  affected by  s. 4  of the  Industrial Disputes      (Banking Companies) Decision Act, 1955.           Quite apart  from this,  however, it appears to us      that even  if an award has ceased to be in operation or      in force  and has  ceased to  be binding on the parties      under the  provisions of  s. 19(6)  it will continue to      have its  effect as a contract between the parties that      has been  made by  industrial adjudication  in place of      the old  contract. So  long as  the  award  remains  in      operation under s. 19(3), s. 23(c) stands in the way of      any strike  by the workmen and lock-out by the employer      in respect  of any  matter covered by the award. Again,      so long  as the  award is binding on a party, breach of      any of  its terms will make the party liable to penalty      under s.  29 of  the Act,  to  imprisonment  which  may      extend to  six months  or with fine or with both. After      the period  of its  operation and  also the  period for      which the award is binding have elapsed s. 23 and s. 29      can have  no operation.  We can  however see nothing in      the scheme  of Industrial  Disputes Act  to  justify  a      conclusion that  merely because these special provision      as regards  prohibition of strikes and lock-outs and of      penalties for breach of award cease to be effective the      new contract as embodied in the award should also cease      to be  effective. On the contrary, the very purpose for      which  industrial   adjudication  has  been  given  the      peculiar authority  and right  of making  new contracts      between employers  and workmen  makes it  reasonable to      think that  even though  the period of operation of the      award and  the period  for which  it remains binding on      the parties  may elapse-in  respect of  both  of  which      special provisions  have been  made under ss. 23 and 29      respectively-the new  contract would continue to govern      the relations  between the parties till it is displaced      by another contract. The objection that no such benefit      as claimed  accrue to  the respondent  after March  31,      1959 must therefore be rejected.                                             (emphasis added)      The power  of  reasoning,  the  purpose  of  industrial jurisprudence and  the logic of the law presented with terse force in  this  pronouncement  cannot  be  missed.  The  new contract which is created by an 1121 award continued  to govern the relations between the parties "till it is displaced by another contract."      Another Bench  of three  judges, speaking through Chief Justice Gajendragadkar,  in Md.  Quasim Larrys  case(1)  has ratiocinated on similar lines:           When an award is made and it prescribes a new wage      structure, in  law the  old contractual  wage structure      becomes inoperative  and its place is taken by the wage      structure prescribed  by the  award. In  a  sense,  the      latter wage  structure must  be deemed to be a contract      between the  parties because that, in substance, is the      effect  of  industrial  adjudication.  The  true  legal      position is  that when  industrial disputes are decided

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 33 of 80  

    by industrial  adjudication and  awards are  made,  the      said awards  supplant contractual  terms in  respect of      matters  covered   by  them  and  are  substituted  for      them.... In  this connection, we may incidentally refer      to the  decision of this Court in the South Indian Bank      Ltd. v.  A. R.  Chacko(2) where it has been observed by      this Court  that the  very purpose for which industrial      adjudication has  been given the peculiar authority and      right of  making new  contracts between  employers  and      workmen makes  it reasonable  to think that even though      the period of operation of the award and the period for      which it  remains binding  on the parties may elapse-in      respect of  both of  which special provisions have been      made under  sections 23  and  29  respectively-the  new      contract would continue to govern the relations between      the parties  till it  is replaced  by another contract.      This observation  clearly and  emphatically brings  out      that the  terms prescribed  by an award, in law, and in      substance, constitute  a  fresh  contract  between  the      parties.                                             (emphasis added)      Again, a  Bench  of  four  Judges  in  the  Indian  Oil Corporation case(3)  reiterated the  same principle  in  the context of  s. 9A  of the  ID Act although the court did not specifically advert  to Chacko’s case (supra). In the Indian Oil Corporation  case (supra)  the question  turned  on  the management seeking to effect changes in the service 1122 conditions of the workmen. The Court made observations which have pertinence to the non-extinguishment of the contract of service until a negotiated or adjudicated substitution comes into being. Fazal Ali J. speaking for the bench observed:(1)           In the  circumstances, therefore, s. 9A of the Act      was clearly  applicable and the non-compliance with the      provisions of  this section  would undoubtedly  raise a      serious dispute  between the  parties  so  as  to  give      jurisdiction to  the tribunal to give the award. If the      appellant wanted to withdraw the Compensatory Allowance      it should  have given notice to the workmen, negotiated      the matter  with them  and arrived  at some  settlement      instead  of   withdrawing  the  compensatory  allowance      overnight.                                             (emphasis added) This ruling  shows (a)  that  unilateral  variation  by  the management is  an exercise  in futility, and (b) an award or settlement must  take the place of the contract sought to be varied. We have a similar situation in the present case vis- a-vis the  notice under  s. 9A  and the ruling in the Indian Oil case (supra) is a helpful guide.      A passing  reference was  made to a possible difference between  an   award  and  a  settlement  when  it  comes  to termination of  the terms.  We have indicated already that a closer  study  of  the  scheme  of  the  ID  Act  shows  the distinction, if  any, to  be no more than between Tweedledum and Tweedledee.  A Division  Bench of  the Bombay High Court had occasion  to examine  the effect  of a  notice under  s. 19(2) of  the ID  Act in  terminating a  settlement and that ruling deserves  special mention  because it  deals with the the survival  beyond the two months notice of termination of a settlement  (not an  award). Tarkunde  J, speaking for the Bench and  following Chacko’s  case (supra)  observed in the context of notice to terminate the settlement under s. 19(2) : (2)           Even if a notice of its intention to terminate the      settlement was  given by  either party,  the settlement

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 34 of 80  

    did not  automatically cease  to be  operative  on  the      expiry of  two months  from the date of the notice. The      legal position  is  that  the  terms  of  a  settlement      continue to  govern the  relations between  the parties      after the  notice of  termination and the expiry of two      months thereafter,  until the settlement is replaced by      a valid contract or award 1123      between the  parties. This was laid down by the Supreme      Court in  South Indian Bank Ltd. v. Chacko [1964] 1 LLJ      19-AIR 1964  SC 1522,  while dealing  with the  binding      effect of  an award  under the  provisions contained in      sub-section  (6)   of  section  19  of  the  Industrial      Disputes Act.  The Authority  in the  present case was,      therefore, not  justified in  rejecting  the  workmen’s      application on  the ground that the settlement on which      the workmen relied had ceased to be operative.                                             (emphasis added)      A precedent,  as Disraeli said, embalms a principle. We have pointed  out the  principle and  cited the  precedents. There is  more to  it than mere wealth of precedents or what Burke called  ’the deep  slumber of  a decided  opinion’. It enlivens industrial  peace,  avoids  labour  discontent  and helps to  set the  stage for  next negotiations  for  better terms for  workers. Economic  freedom of the weaker sections is behind these precedents, almost reminding us of Tennyson:      A land of settled government,      A land of just and old renown,      Where freedom slowly broadens down,      From precedent to precedent. The law  is lucid  and the  justice manifest  on termination notice or  notice of change the award or settlement does not perish but  survives to  bind until  reincarnation,  in  any modified form,  in  a  fresh  regulation  of  conditions  of service by  a settlement  or award. Precedents often broadly guide but  when on the same point willy-nilly bind. So here, even if  I would,  I could  not and even if I could, I would not depart  from the  wisdom in  Chacko’s case  (supra) with consistent case-flow-before  and after.  An aching  void, an abhorrent vacuum,  a legicidal situation of industrial clash cannot be  a judicial  bonus when the constitutional command is social justice.      The  catena   of  cases   we  have  briefly  catalogued discloses an  unbroken stream  of case-law  binding on  this court, the ratio whereof, even otherwise, commends itself to us. The  award or  settlement under  the ID Act replaces the earlier contract  of service  and is given plenary effect as between the  parties. It  is  not  a  case  of  the  earlier contract being  kept under suspended animation but suffering supersession. Once  the earlier contract is extinguished and fresh conditions  of service are created by the award or the settlement, the  inevitable consequence  is that even though the period  of operation  and  the  span  of  binding  force expire, on the notice to terminate the contract being given, the said 1124 contract continues  to  govern  the  relations  between  the parties until  a new  agreement  by  way  of  settlement  or statutory contract by the force of an award takes its place. If notice  had not  been given,  the  door  for  raising  an industrial dispute and fresh conditions of service would not have been legally open. With action under s. 9A, s. 19(2) or (6),  the  door  is  ajar  for  disputes  being  raised  and resolved. This, in short, is the legal effect not the lethal effect of invitation to industrial trial of strength with no

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 35 of 80  

contract of service or reversion to an obsolete and long ago ’dead’ contract of service.      It  is   inconceivable  that   any  other   alternative subsists. For instance, imagine a case where for 30 years an award or  settlement might  have given  various benefits  to employees and  at the  end of  30 years a notice terminating the settlement  were given  by the employer. Does industrial law absurdly  condemn the  parties to  a reversion  to  what prevailed between  them 30  years ago? If the employees were given Rs.  100 as  salary in 1947 and, thereafter, by awards and settlements  the salary  scale was  raised to  Rs.  1000 could  it   be  the  Management  might,  by  unilateral  yet disastrous  action   give  notice  under  s.  19(2)  or  (6) terminating the  settlement or  award, tell the workers that they would  be paid  Rs. 100 which was the original contract although in  law that contract had been extinguished totally by a  later contract  of settlement or by force of an award? The horrendous  consequences of  such an  interpretation may best be  left to  imagination. Moreover, if industrial peace is the signature tune of industrial law, industrial violence would be  the vicious shower of consequences if parties were relegated either  to an  ancient and  obsolete contract or a state of  lawless hiatus.  No  canon  of  interpretation  of statutes can  compel  the  court  to  construe  a  statutory provision in  this manner.  We  have,  no  doubt,  that  the precedents on  the point,  the principles of industrial law, the constitutional  sympathy of  Part IV and the sound rules of statutory  construction converge  to the  same point that when  a   notice  intimating  termination  of  an  award  or settlement is  issued the  legal import  is merely  that the stage  is   set  for   fresh  negotiations   or   industrial adjudication and until either effort ripens into a fresh set of conditions  of service  the previous  award or settlement does regulate  the relations  between the  employer and  the employees. The court never holds justice as hostage with law as janitor!  Law, if  at all,  liberates justice through the judicial process.  Fundamental error  can be avoided only by remembering fundamental values.      At this  stage I may record my firm conclusion that for the reasons  already given  the settlement  under the ID Act does not  suffer death  merely because  of the notice issued under s. 19(2). All that is done is a notice "intimating its intention to terminate the award". The 1125 award even if it ceases to be operative qua award, continues qua contract.  Therefore, if  the ID Act regulates the jural relations between  the LIC and its employees-an ’if’ we will presently scan-then the rights under the settlements of 1974 remain until replaced by a later award or settlement.      In my view, to reverse the High Court’s holding will be to disregard  the consistent  current of  case-law-a step  I hesitate to  take in  the sensitive area of labour relations under  a   Constitution  with  social  justice  slant.  Lord Herscheli in Russell v. Russell [1897] AC 395 observed:(1)           I have no inclination towards a blind adherence to      precedents. I am conscious that the law must be moulded      by  adapting   it  on  established  principles  to  the      changing conditions which social development involves.      The next  logical question then is as to whether the ID Act is  a general  legislation pushed  out of  its  province because of the LIC Act, a special legislation in relation to the Corporation  employees. Immediately,  we are  confronted with the  question as  to whether  the LIC  Act is a special legislation or a general legislation because the legal maxim generalia specialibus  non derogant  is ordinarily attracted

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 36 of 80  

where there  is a  conflict between  a special and a general statute and an  argument of implied repeal is raised. Craise states the law correctly: (2)           The general  rule, that prior statutes are held to      be repealed  by implication  by subsequent  statutes if      the two  are repugnant,  is said  not to  apply if  the      prior enactment is special and the subsequent enactment      is general,  the rule  of law  being, as stated by Lord      Selbourne in  Mary Seward  v. Veera Cruz(3) "that where      there are  general words  in a  later  Act  capable  of      reasonable and  sensible application  without extending      them  to  subjects  specially  dealt  with  by  earlier      legislation, you  are not  to  hold  that  earlier  and      special legislation  indirectly repealed,  altered,  or      derogated from  merely by  force of such general words,      without any  indication of a particular intention to do      so." "There  is a well-known rule which has application      to this  case, which  is that  a subsequent general Act      does not  affect a  prior special  Act by  implication.      That this  is the  law cannot be doubted, and the cases      on the  subject will  be found  collected in  the third      edition  of   Maxwell  is   generalia  specialibus  non      derogant-i.e. general 1126      provisions will  not abrogate special provisions. "When      the legislature  has given  its attention to a separate      subject and  made provision  for it, the presumption is      that a  subsequent general enactment is not intended to      interfere  with   the  special   provision  unless   it      manifests that  intention very  clearly. Each enactment      must be  construed in that respect according to its own      subject matter and its own terms.      The crucial  question which demands an answer before we settle the  issue is  as to whether the LIC Act is a special statute and  the ID Act a general statute so that the latter pro tanto  repeals or prevails over the earlier one. What do we mean  by a  special statute and, in the scheme of the two enactments in  question, which  can we regard as the special Act and  which the  general ?  An implied repeal is the last judicial refuge  and unless  driven to  that conclusion,  is rarely restored  to. The decisive point is as to whether the ID Act  can be  displaced or dismissed as a general statute. If it  can be  and if  the LIC  Act is a special statute the proposition  contended   for  by   the  appellant  that  the settlement depending for its sustenance on the ID Act cannot hold good  against s. 11 and s. 49 of the LIC Act, read with Reg. 58 thereunder. This exercise constrains me to study the scheme of  the two  statutes in  the context of the specific controversy I am dealing with.      There is  no doubt  that the LIC Act, as its long title suggests, is  an Act  to provide  for the nationalisation of life insurance  business in  India by  transferring all such business 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.  Its primary  purpose was to nationalise private  insurance   business  and  to  establish  the  Life Insurance Corporation  of India.  Inevitably, the  enactment spelt out the functions of the Corporation, provided for the transfer  of   existing  life   insurance  business  to  the Corporation and  set  out  in  detail  how  the  management, finance, accounts  and audit  of the  Corporation should  be conducted. Incidentally, there was provision for transfer of service  of  existing  employees  of  the  insurers  to  the Corporation  and,   sub-incidentally,  their  conditions  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 37 of 80  

service also  had to  be provided  for. The  power  to  make regulations covering  all matters  of  management  was  also vested in  appropriate authorities.  It is  plain and beyond dispute that so far as nationalisation of insurance business is concerned,  the LIC  Act is  a special  legislation,  but equally indubitably,  is the  inference, from a bare perusal of the subject, scheme and sections and understanding of the anatomy of  the Act  that it  has nothing  to  do  with  the particular problem of disputes between employer and 1127 employees,  or   investigation  and   adjudication  of  such disputes. It does not deal with workmen and disputes between workmen and  employers  or  with  industrial  disputes.  The Corporation has  an army of employees who are not workmen at all. For  instance, the  higher echelons  and other types of employees do not fall within the scope of workmen as defined in s.  2(s) of  the ID  Act. Nor  is the  Corporation’s main business investigation  and adjudication  of labour disputes any more  than a  motor  manufacturer’s  chief  business  is spraying paints !      In determining  whether a  statute is  a special  or  a general one,  the focus  must be  on the  principal  subject matter  plus   the  particular   perspective.  For   certain purposes, an  Act may  be  general  and  for  certain  other purposes it  may be  special and we cannot blur distinctions when dealing  with finer  points of  law. In  law, we have a cosmos of  relativity, not  absolutes-so too in life. The ID Act is a special statute devoted wholly to investigation and settlement   of    industrial   disputes    which   provides definitionally for  the nature of industrial disputes coming within  its   ambit.  It   creates  an   infrastructure  for investigation  into,   solution  of  and  adjudication  upon industrial  disputes.   It  also   provides  the   necessary machinery for  enforcement of  awards and  settlements. From alpha to  omega the  ID  Act  has  one  special  mission-the resolution  of   industrial  disputes   through  specialised agencies  according   to  specialised  procedures  and  with special reference  to the  weaker  categories  of  employees coming within  the definition  of workmen.  Therefore,  with reference  to  industrial  disputes  between  employers  and workmen, the  ID Act  is a  special statute, and the LIC Act does not speak at all with specific reference to workmen. On the other  hand, its powers relate to the general aspects of nationalisation, or  management when  private businesses are nationalised   and    a   plurality   of   problems   which, incidentally,  involve   transfer  of  service  of  existing employees  of   insurers.  The   workmen  qua   workmen  and industrial disputes  between workmen  and  the  employer  as such, are  beyond the  orbit of  and have  no  specific,  or special place  in the  scheme of  the LIC  Act. And whenever there was  a dispute  between workmen  and management the ID Act mechanism was resorted to.      What are  we confronted  with in  the present  case, so that I  may determine as between the two enactments which is the special  ? The  only  subject  which  has  led  to  this litigation and  which is  the bone of contention between the parties is an industrial dispute between the Corporation and its workmen  qua workmen.  If we  refuse to be obfuscated by legal abracadabra  and see  plainly what  is so obvious, the conclusion that  flows, in the wake of study I have made, is that 1128 vis a  vis ’industrial  disputes’ at  the termination of the settlement as between the workmen and the Corporation the ID Act is  a special  legislation and  the LIC  Act  a  general

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 38 of 80  

legislation.  Likewise, when compensation on nationalisation is the  question, the  LIC Act  is the  special statute.  An application of  the generalia  maxim as expounded by English text-books and  decisions leaves  us in no doubt that the ID Act being  special law,  prevails over  the LIC Act which is but general law.      I am  satisfied in  this conclusion  by citations but I content myself  with a recent case where this Court tackling a  closely   allied   question   came   to   the   identical conclusion.(1) The  problem  that  arose  there  was  as  to whether the  standing orders under the Industrial Employment (Standing  Orders)   Act,   1946,   prevailed   as   against Regulations regarding  the age of superannuation made by the Electricity Board  under the  specific power  vested  by  s. 79(c) of  the  Electricity  (Supply)  Act,  1948  which  was contended to  be a  special law  as against  the  Industrial Employment (Standing  Orders) Act.  This court  (a bench  of three  judges)   speaking  through   Chinnappa   Reddy,   J. observed:(2)           The maxim  "Generalia specialibus non derogant" is      quite well  known. The  rule flowing from the maxim has      been explained in Mary Seward v. The owner of the Veera      Cruz (3) as follows:           "Now if anything be certain it is this, that where                there  are  general  words  in  a  later  Act                capable   of    reasonable    and    sensible                application   without   extending   them   to                subjects  specially  dealt  with  by  earlier                legislation, you are not to hold that earlier                and special  legislation indirectly repealed,                altered, or derogated from merely by force of                such general words, without any indication of                a particular intention to do so."      In J.  K. Cotton  Spinning &  Weaving Mills Co. Ltd. v. State of  Uttar Pradesh  this Court  observed (at page 1174) (4)           "The rule  that general provisions should yield to      specific provisions  is not an arbitrary principle made      by lawyers  and judges  but  springs  from  the  common      understanding of  men and  women  that  when  the  same      person gives  two directions  one covering large number      of matters  in general and another to only some of them      his intention is that these latter directions should 1129      prevail as  regards these while as regards all the rest      the earlier direction should have effect".           We  have   already  shown   that  the   Industrial      Employment (Standing  Orders)  Act  is  a  special  Act      dealing with a specific subject, namely with conditions      of service,  enumerated in  the Schedule, of workmen in      industrial establishments. It is impossible to conceive      that Parliament  sought to  abrogate the  provisions of      the  Industrial   Employment  (Standing   Orders)   Act      embodying as  they do  hardwon and  precious rights  of      workmen  and   prescribing  as  they  do  an  elaborate      procedure, including a quasi-judicial determination, by      a general,  incidental provision like sec. 79(c) of the      Electricity (Supply) Act. It is obvious that Parliament      did not  have before it the Standing Orders Act when is      passed the  Electricity  (Supply)  Act  and  Parliament      never meant  that the  Standing Orders Act should stand      pro tanto  of the  view  that  the  provisions  of  the      Standing Orders  Act repealed  by  Sec.  79(c)  of  the      Electricity Supply Act. We are clearly of the view that      the provisions of the Standing Orders Act applies.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 39 of 80  

I  respectfully  agree  and  apply  the  reasoning  and  the conclusion to  the near-identical  situation before  me  and hold that  the ID  Act relates specially and specifically to industrial disputes  between workmen  and employers  and the LIC Act,  like the  Electricity (Supply)  Act,  1948,  is  a general statute  which is silent on workmen’s disputes, even though it  may be a special legislation regulating the take- over of private insurance business.      A plausible  submission was  made  by  the  appellants, which was  repelled by  the High  Court, that  the  LIC  Act contained provisions  regarding  conditions  of  service  of employees and they would be redundant if the ID Act was held to prevail.  This is  doubly fallacious.  For one thing, the provisions of ss. 11 and 49 are the usual general provisions giving a  statutory  corporation  (like  a  municipality  or university) power  to recruit  and prescribe  conditions  of service of  its total  staff-not anything  special regarding ’workmen’. This Court in Bangalore Water Supply and Sewerage case (7  judges’ bench) (1) and long ago in D. N. Banerji v. P. R.  Mukherjee & Ors (5 judges’ bench(2) has held that the ID Act applied to workmen 1130 employed by  those bodies  when disputes  arose. The general provision would  still apply  to other  echelons and even to workmen if  no industrial  dispute was  raised. Secondly, no case of  redundant words arose because the Corporation, like a University,  employed not only workmen but others also and to regulate  their conditions  of service, power was needed. Again, in  situations where  no dispute  arose, power in the employer to  fix the  terms of  employment had to be vested. This is  a  common  provision  of  a  general  sort,  not  a particularised provision to canalise an industrial dispute.      What is  special or general is wholly a creature of the subject  and   context  and   may   vary   with   situation, circumstances and angle of vision. Law is no abstraction but realises itself  in the living setting of actualities. Which is a  special provision  and which  general, depends  on the specific problem,  the topic  for decision,  not  the  broad rubric nor  any rule  of thumb.  The peaceful coexistence of both legislations  is best achieved, if that be feasible, by allowing to  each its  allotted field  for play.  Sense  and sensibility, not  mechanical  rigidity  gives  the  flexible solution. It  is difficult  for me  to think  that when  the entire  industrial   field,  even  covering  municipalities, universities, research  councils and  the like, is regulated in the  critical area  of industrial disputes by the ID Act, Parliament would  have provided as oasis for the Corporation where  labour  demands  can  be  unilaterally  ignored.  The general words  in ss. 11 and 49 must be read contextually as not covering industrial disputes between the workmen and the Corporation. Lord  Haldane had, for instance, in 1915 AC 885 (891) observed that (1):           "general words  may in  certain cases  properly be      interpreted as having a meaning or scope other than the      literal or  usual meaning.  They may  be so interpreted      where the  scheme appearing  from the  language of  the      Legislature,  read   in   its   entirety,   points   to      consistency as  requiring modification of what would be      the meaning  apart from  any context, or apart from the      general law." To avoid  absurdity and  injustice by  judicial servitude to interpretative literality  is a  function of  the court  and this leaves  me no  option but to hold that the ID Act holds where disputes  erupt and  the LIC  Act guides  where  other matters  are   concerned.  In   the   field   of   statutory

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 40 of 80  

interpretation there  are no  inflexible formulae  or  fool- proof mechanisms. The sense and sensibility, the setting and the scheme,  the perspective  and the purpose-these help the judge navigate  towards the  harbour of  true intendment and meaning. The legal dynamics of social justice also guide the court in statutes of the type 1131 we are  interpreting. These  plural considerations led me to the conclusion  that the  ID Act  is a  special statute when industrial disputes, awards and settlements are the topic of controversy, as  here. There  may be other matters where the LIC Act  vis a vis the other statutes will be a special law. I am not concerned with such hypothetical situations now.      I  have   set  out,   right  at  the  outset,  that  my perspective must  be benign  in tune  with Part  IV  of  the Constitution. In the UP State Electricity Board case(1) this Court underscored the same approach:           Before examining  the rival contentions, we remind      ourselves that  the Constitution  has expressed  a deep      concern for  the welfare of workers and has provided in      Art.  42  that  the  State  shall  make  provision  for      securing just and humane conditions of work and in Art.      43  that  the  State  shall  endeavour  to  secure,  by      suitable legislation or economic organisation or in any      other way,  to all workers, agricultural, industrial or      otherwise, work,  a living  wage,  conditions  of  work      ensuring a  decent standard  of life and full enjoyment      of  leisure   etc.  These   are  among  the  ’Directive      Principles of  State Policy’. The mandate of Article 37      of  the   Constitution  is  that  while  the  Directive      Principles of  State Policy shall not be enforceable by      any Court, the principles are ’nevertheless fundamental      in the  governance of the country’ and ’it shall be the      duty of  the State  to apply these principles in making      laws’. Addressed  to Courts,  what the injunction means      is that  while courts are not free to direct the making      of legislation,  courts are bound to evolve, affirm and      adopt principles  of interpretation  which will further      and not  hinder the  goals  set  out  in  the  Director      Principles  of   State  Policy.  This  command  of  the      Constitution must  be ever  present  in  the  minds  of      judges  when   interpreting  statutes   which   concern      themselves directly  or indirectly with matters set out      in the Directive Principles of State Policy.      Whatever be  the powers  of regulation of conditions of service, including  payment or  non-payment of bonus enjoyed by the  employees of  the Corporation  under  the  LIC  Act, subject to  the directives  of the  Central Government, they stem from  a general  Act and  cannot supplant,  subvert  or substitute the  special legislation which specifically deals with  industrial   disputes  between   workmen   and   their employers. In  this view,  other questions,  which have been argued at  length and  considered by  my learned brother, do not demand my 1132 discussion. The High Court was right in its conclusion and I affirm its judgment. I, therefore, direct the Corporation to fulfill its obligations in terms of the 1974 settlements and start negotiations,  like  a  model  employer,  for  a  fair settlement of  the conditions  of service between itself and its employees  having realistic  and equitable regard to the prevailing conditions  of  life,  principles  of  industrial justice  and  the  directives  underlying  Part  IV  of  the Constitution.      Judicial review  of administrative  action and judicial

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 41 of 80  

interpretation  of   legislative  provisions   have  serious limitations. Nevertheless,  that power  is a  constitutional fundamental  which   must  be  exercised  circumspectly  but without being  scared by  statutory omnipotence or executive finality. The words of Prof. Wade come to one’s mind:           The law  is still  developing, but  the  important      thing is that the courts once again accept, as they had      always done  except in  their period  of amnesia,  that      part of their duty was to require public authorities to      respect certain  basic rules  of fairness in exercising      power over the citizen.      I dismiss  the appeal  with  costs.  This  disposes  of Transfer Case  No. 1  of 1979 also in which the order has to be that  a writ  will issue to the Corporation compelling it to carry  out the  terms of  the  Settlements  of  1974  and injuncting it  from acting  upon or  giving  effect  to  the impugned notices,  circulars and the said amended Government Order the  said amended Staff Regulations being Annexures F, H, J, K and L thereto.      PATHAK, J.-I  have read with great respect the separate judgments of  my brother  Krishna Iyer and my brother Koshal but in  view of  the importance  of the  questions raised  I propose to deliver a separate judgment.      The facts  of the case have already been set out in the judgments prepared  by my  learned brothers.  I need mention again a  few only. Clause (8) of the two settlements of 24th January, 1974  and 6th  February, 1974  made  the  following provisions respecting bonus:      "(i) No  profit sharing  bonus shall  be paid. However,           the Corporation may, subject to such directions as           the Central  Government may  issue  from  time  to           time, grant  any other  kind of bonus to its class           III and IV employees.      (ii) An annual cash bonus will be paid to all class III           and class  IV employees  at the rate of 15% of the           annual 1133           salary....  actually   drawn  by  an  employee  in           respect of  the financial  year to which the bonus           relates.       (iii) Save  as provided  herein all  other  terms  and           conditions  attached   to  the  admissibility  and           payment of  bonus shall  be as  laid down  in  the           settlement on bonus dated the 26th June, 1972."      The settlements  were operative from 1st April, 1973 to 31st March,  1977. On  3rd March,  1978 the  Life  Insurance Corporation (the "Corporation") issued a notice, purportedly under s.  19(2),  Industrial  Disputes  Act,  1947,  of  its intention to  terminate the settlements on the expiry of two months because  of economic  and other  reasons. The notice, however,  recited   the  reservation   that   the   material provisions of  the Industrial  Disputes Act did not apply to the Corporation  and that  the  notice  was  not  necessary. Another notice,  this time  under s. 9A, Industrial Disputes Act and issued on the same date, stated that it was intended to effect  a change  in the  conditions of  service  of  the workmen with effect from 1st June, 1978. The change notified related to  the existing  provision for  bonus. A new clause was proposed.      The   Life   Insurance   Corporation   (Alteration   of Remuneration and  other Terms  and Conditions  of Service of Employees) Order,  1957 (the  "Standardisation  Order")  was amended under  s. 11(2), Life Insurance Corporation Act (the "Corporation Act")  on 26th  May, 1978  with effect from 1st June, 1978  substituting a  new clause  (9) for the original

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 42 of 80  

clause  in   respect  of   bonus.  On  the  same  date,  the Corporation acting under clauses (b) and (bb) of s. 49(2) of the same  Act amended the Life Insurance Corporation (Staff) Regulations, also  with  effect  from  1st  June,  1978  and substituted for  the existing  provision a new Regulation 58 along the  same lines.  Clause (9)  of  the  Standardisation Order and  Regulation 58 of the (Staff Regulations) now read as follows:      "No employee  of the  Corporation shall  be entitled to      profit-sharing bonus.  However,  the  Corporation  may,      having  regard   to  the  financial  condition  of  the      Corporation, in  respect of any year and subject to the      previous approval of the Central Government, grant non-      profit-sharing bonus  to its  employees in  respect  of      that year  at such  rates as  the Corporation may think      fit and  on such terms and conditions as it may specify      as regards the eligibility of such bonus." 1134      The amendments  made in  the Standardisation  Order and the Staff  Regulations, in  their application to the workmen of the  Corporation, were made for the purpose of nullifying any further  claim to  annual cash  bonus in  terms  of  the settlements of  1974. The workmen challenged the validity of the amendments  in so  far as it affected their claim to the bonus, and  the Allahabad  High Court  having found in their favour, the  Corporation has  appealed  to  this  Court.  An identical  controversy  is  the  subject-matter  of  a  writ petition filed in the Calcutta High Court and transferred to his Court.      The first question is whether the new clause (9) of the Standardisation Order succeeds in defeating the claim of the workmen. To  determine that,  s. 11  of the  Corporation Act must be  examined. Sub-s.  (1) guarantees to the transferred employee the  same tenure, at the same remuneration and upon the same  terms  and  conditions  on  the  transfer  to  the Corporation as  he enjoyed  on the  appointed day  under the insurer, and  he is  entitled to  then until  they are  duly altered  by   the  Corporation  or  his  employment  in  the Corporation  is   terminated.  The   sub-section   envisages alteration by the Corporation.      Sub-s. (2)  of s.  11, by its first limb, confers power or  the   Central  Government   to  alter   the  scales   of remuneration and  other  terms  and  conditions  of  service applicable to  transferred employees.  Predictably, when the transferred employees  of different  insurers  were  brought together in  common employment  under the  Corporation  they would have  been enjoying  different scales  of remuneration and other  terms and  conditions of service. The power under this part  of sub-s.  (2) is  intended for  the  purpose  of securing uniformity  among them.  The second  limb of sub-s. (2) is  the source of controversy before us. It empowers the Central Government  to reduce  the remuneration  payable  or revise the other terms and conditions of service. That power is to  be exercised when the Central Government is satisfied that the interests of the Corporation and its Policy holders require such  reduction or revision. The question is whether the provision  is confined  to transferred employees only or extends to  all employees  generally. In  my opinion,  it is confined to  transferred employees.  The provision is a part of the  scheme enacted  in  Chapter  IV  providing  for  the transfer  of  existing  life  insurance  business  from  the insurers to  the Corporation, and the attendant concomitants of that  process. There is provision for the transfer of the assets  and  liabilities  pertaining  to  the  business,  of provident funds, superannuation and other like funds, of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 43 of 80  

services  of   existing  employees   of  insurers   to   the Corporation and  also of  the services of existing employees of chief agents of the 1135 insurers to  the Corporation, and finally for the payment of compensation  to  the  insurers  for  the  transfer  of  the business  to   the  Corporation.  They  are  all  provisions relating to  the process of transfer. Sub-s. (2) of s. 11 is a part of that process, involving as it does the integration of the Corporation’s staff and labour force. While the first limb of  the sub-section  provides for  securing  uniformity among the  transferred employees  in regard to the scales of remuneration and  other terms and conditions of service, the second limb  provides that if after such uniformity has been secured, or even in the process of securing such uniformity, the Central  Government finds  that  the  interests  of  the Corporation and  its policy  holders require  a reduction in the remuneration  payable or revision of the other terms and conditions of  service applicable to those employees, it may make an  order  accordingly.  It  is  true  that  the  words "employees or  any class of them" in the second limb are not prefaced by the qualifying word "transferred" or "such". But that was  hardly necessary  when regard is had to the mosaic of sections  in which  the provision is located. Admittedly, the  first   limb  of  sub-s.  (2)  relates  to  transferred employees only,  and it must be held that so does the second limb. Both provisions are intended to constitute a composite process for  rationalising the  scales of  remuneration  and other  terms   and  conditions  of  service  of  transferred employees  with   a   view   not   only   to   effecting   a standardisation between  the transferred  employees but also to revising  their scales  of remuneration,  and  terms  and conditions of  service to  a pattern  which will  enable the newly  established   Corporation  to  become  a  viable  and commercially successful  enterprise. The  standpoint of  the second limit  of the  sub-section, as  its language  plainly indicates, is  provided by  the interests of the Corporation and its  policy holders.  For that reason, it is open to the Central Government  under  the  sub-section  to  ignore  the guarantee contained in sub-section (1) of s. 11 in favour of the employees,  or  anything  contained  in  the  Industrial Disputes Act,  1947, or  any other law for the time being in force or  any award,  settlement or  agreement for  the time being  in   force.  Benefits  conferred  thereunder  on  the employees must  yield to  the need  for  ensuring  that  the Corporation  and   its  policy   holders   do   not   suffer unreasonably from  the burden of such benefits. The need for such a  provision arises because it is a burden by which the Corporation finds  itself saddled upon the transfer a burden not of  its own making. Unless the statute provided for such relief, the  weight of that burden could conceivably cripple the successful working of the Corporation from its inception as  a   business  organisation.   It  is   situation  to  be distinguished from what 1136 happens when the Corporation, launched on its normal course, voluntarily  assumes,   in  the   course  of   its  working, obligations in  respect of  its employees or becomes subject to such  obligations  by  reason  of  subsequent  industrial adjudication. Like  any other  employer, the  Corporation is then open  to the  normal play  of industrial  relations  in contemporary or future time. That the two provisions of sub- s.  (2)   are  linked  with  the  process  of  transfer  and integration is  further indicated  by the  circumstance that the power  thereunder is  vested in  the Central Government.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 44 of 80  

The scheme of the sections in Chapter IV indicates generally that Parliament  has appointed the Central Government as the effective and  direct instrumentality for bringing about the transfer and  integration in  the different  sectors of that process.      There is  no danger  of an  order made  by the  Central Government under the second limb of sub-s. (2) in respect of transferred employees  being struck  down on the ground that it violates  the equality  provisions of  Part  III  of  the Constitution because  similar action  has not  been taken in respect of  newly recruited employees. So long as such order is confined  to what  is  necessitated  by  the  process  of transfer  and   integration,   the   transferred   employees constitute a reasonably defined class in themselves and form no common basis with newly recruited employees.      I am  unable to  subscribe to  the view that the second limb to  sub-s.  (2)  of  s.  11  is  related  to  employees generally, that  is  to  say,  both  transferred  and  newly recruited employees, of the Corporation.      Another point  is whether  the power  under the  second limb of sub-s. (2) of s. 11 can be exercised more than once. Clearly,  the   answer  must   be  in  the  affirmative.  To effectuate the  transfer appropriately and completely it may be necessary  to pass  through different stages, and at each stage to  make a  definite order.  So long as the complex of orders so  made is  necessarily linked  with the  process of transfer and integration, it is immaterial that a succession of orders  is made.  I am  not impressed by the circumstance that the original Bill moved in Parliament for amending sub- s. (2)  of s. 11 contained the words "from time to time" and that those  words were  subsequently deleted  when enactment took place.  The intent of the legislative provision must be discovered primarily from the legislation itself.      Now turning  to the  notification dated  26th May, 1978 which inserted  the new  clause (9)  in the  standardisation Order, it is 1137 evident from  the recital  with which  it opens  that it  is intended to apply to transferred employees only. It declares explicitly that  the Central  Government is satisfied that a revision of  the terms  and conditions  of  service  of  the transferred  employees  is  considered  necessary.  However, there is  nothing to  show that  the amendment is related to the process  of transfer  and integration.  On the contrary, the circumstance  that an  identical provision has been made by the  Corporation, with  the prior approval of the Central Government, in  the new  Regulation  58  by  a  notification issued under both clauses (b) and (bb) of the s. 49(2), that is to  say, in  respect of  both newly  recruited as well as transferred employees,  demonstrates that  the provision has no particular relationship with that process. Accordingly, I am of  opinion that  the notification  dated 26th  May, 1978 purporting to amend the Standardisation Order is invalid. It has no effect on the right to bonus claimed by the workmen.      That takes us to question whether the new Regulation 58 inserted in  the (Staff)  Regulations by  the Life Insurance Corporation of  India (Staff)  Second Amendment Regulations, 1978 can be invoked against the workmen of the Corporation.      The workmen  contend that  the Industrial  Disputes Act constitutes  special   legislation  for  the  resolution  of industrial disputes  and inasmuch  as it  has been specially enacted for  the promotion  of harmonious relations  between an employer  and his  workmen  all  matters  concerning  the workmen must  be regarded as falling within the scope of the Industrial Disputes  Act. The  Corporation Act,  it is said,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 45 of 80  

has a  different orientation. It is concerned primarily with the nationalisation  of life  insurance  business;  and  the employment of  a staff,  and their  terms and  conditions of service as  well as disputes concerning them, are subsidiary to the  main purpose  of nationalisation. The workmen, it is urged, are a special category of the total staff employed by the Corporation,  and as  regards them  it is the Industrial Disputes Act  and not  the Corporation  Act  which  governs. Accordingly, the  argument goes, a settlement effected under s. 18  of the  Industrial Disputes Act must continue to have force as  determined  by  s.  19(2)  of  the  Act  and  even thereafter, and  nothing contained in the Corporation Act or the Regulations  made thereunder  can be permitted to affect the operation  of its  terms. It is urged that Regulation 58 cannot be  applied in  the case  of those  employees of  the Corporation who  are "workmen"  within the  meaning  of  the Industrial Disputes Act. 1138      The case  of the  Corporation and the Union of India is that Regulation  58 was  framed  when  the  settlements  had ceased  to   be  operative   and  binding  under  s.  19(2), Industrial Disputes  Act, that  even if it be assumed that a contract existed  between the  parties at  the time  it must yield to  Regulation 58,  which had the force of law. It was contended that  as regards  the workmen  of the Corporation, the Corporation  Act, is  a special  law and  the Industrial Disputes Act  is the  general law and, therefore, Regulation 58 must  prevail over  any transaction  under the Industrial Disputes Act.      Before any thing more, it is necessary to ascertain the true  relationship   of  the   parties  in  respect  of  the settlements of  1974 at  the time  when  Regulation  58  was framed. The  settlements were  to remain  in operation for a period of  four years  ending 31st  March, 1977. Admittedly, they were  settlements reached under the Industrial Disputes Act. There is no dispute that they were settlements governed by s.  19, Industrial  Disputes Act. Therefore, by virtue of s. 19(2) they were binding upto 31st March, 1977, the period agreed upon  by the parties and they continued to be binding on the  parties there  after until  the expiry of two months from the  date on  which written  notice of the intention to terminate the  settlement was given by one of the parties to the other.      It is  desirable to  appreciate what is a settlement as understood in the Industrial Disputes Act. In essence, it is a contract  between the employer and the workmen prescribing new terms  and conditions  of service.  These  constitute  a variation of  existing terms  and conditions. As soon as the settlement is  concluded and becomes operative, the contract embodied in  it takes  effect and  the  existing  terms  and conditions of  the workmen  are modified accordingly. Unless there is  some thing to the contrary in a particular term or condition of  the settlement  the embodied  contract endures indefinitely, continuing  to govern the relation between the parties in  the future,  subject  of  course  to  subsequent alteration  through  a  fresh  settlement,  award  or  valid legislation. I have said that the transaction is a contract. But it  is  also  something  more.  Conceptually,  it  is  a "settlement".  It   concludes  or   "settles"   a   dispute. Differences which had arisen and were threatening industrial peace and harmony stand resolved in terms of a new contract. In order that the new contract be afforded a chance of being effectively worked  out, a  mandate obliging  the parties to unreservedly  comply  with  it  for  a  period  of  time  is desirable. It  was made  "binding" by  the statute  for such

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 46 of 80  

period.  Section   19(2)  was   enacted.   The   spirit   of conciliation, the 1139 foundation of  the settlement,  was required  by law to bind the parties  for the  time prescribed. Immediate reagitation in respect  of matters covered by the settlement was banned. Section 23  (c) prohibited  strikes by the workmen in breach of the  contract and  lockouts by the employer in respect of such matters. A breach of any term was made punishable by s. 29.  Certainty  in  industrial  relations  is  essential  to industry, and  a period  of such  certainty is ensured by s. 19(2). On  the expiry  of the  period prescribed in the sub- section, the  conceptual quality  of the  transaction  as  a "settlement" comes to an end. The ban lifts. The parties are no longer  bound to  maintain the  industrial status  quo in respect of  matters covered  by the  settlement. They are at liberty to  seek an  alteration of  the contract.  But until altered, the  contract continues  to  govern  the  relations between the  parties in  respect of the terms and conditions of service.      The position  seems comparable with what happens in the case of an award. Section 19(3) and s. 19(6) contain similar provisions. In the case of an award this Court has laid down in South  Indian Bank  Limited v. A. R. Chacko(1) that after the period  of operation  of an award has expired, the award does not  cease to  be effective. It continues to be binding on the parties, by virtue of s. 19(6), until notice has been given by one of the parties of the intention to terminate it and two  months have  elapsed from  the date of such notice. Thereafter, "it  will continue  to  have  its  effect  as  a contract  between   the  parties   that  has  been  made  by industrial adjudication  in place  of the old contract.... , the very  purpose for which industrial adjudication has been given  the  peculiar  authority  and  right  of  making  new contracts between  employers and workmen makes it reasonable to think  that even  though the  period of  operation of the award and  the period  for which  it remains  binding on the parties may  elapse-in respect  of  both  of  which  special provisions have  been made under ss. 23 and 29 respectively- may expire,  the new  contract would  continue to govern the relations between  the  parties  till  it  is  displaced  by another  contract."   Later  in  Md.  Qasim  Larry,  Factory Manager, Sasamusa  Sugar Works  v.  Muhammad  Samsuddin  And Another,(2) the  court held  that when an award was made and it  prescribed   a  new  wage  structure,  in  law  the  old contractual wage  structure became inoperative and its place was taken by the wage structure prescribed by the award. The court said: 1140      "In a  sense, the  latter wage structure must be deemed      to be  a contract between the parties, because that, in      substance, is  the effect  of industrial  adjudication.      The  true   legal  position  is  that  when  industrial      disputes are  decided by  industrial  adjudication  and      awards are  made, the  said awards supplant contractual      terms in  respect of  matters covered  by them  and are      substituted for them."      Learned counsel  for the  Corporation and  the Union of India submit  that the law declared by this Court in respect of an  award does not hold true in the case of a settlement. I am  unable to agree. Not only are the statutory provisions pertaining to  a settlement  and an award comparable in this regard but, if anything, the observations if read in respect of a  settlement, which  after all  is a voluntary agreement between the parties, would seem to hold more strongly.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 47 of 80  

    The  contract  between  the  parties  embodied  in  the settlements of  1974 set  forth the  terms and conditions of service when  Regulation 58  was substituted  in the (Staff) Regulations under  clauses (b)  and (bb)  of s. 49(2) of the Corporation Act.  The question is whether Regulation 58 will prevail over the "settlement" contract. For that purpose, it is  necessary   to  examine   the  controversy  whether  the Corporation Act  is  the  general  law  and  the  Industrial Disputes Act the special law or vice-versa.      It will be noticed that the Corporation Act was enacted primarily  for   effecting  the   nationalisation  of   life insurance business  by transferring  all such  business to a Corporation  established  for  the  purpose.  The  principal provision in the Corporation Act is s. 7, which provides for the transfer  to, and vesting in, the Corporation of all the assets  and   liabilities  appertaining  to  the  controlled business of the insurers. The central purpose being assured, the concomitant  provisions followed.  These included making available to  the insurers’  employees, under  s.  11(1),  a continuous and  unbroken tenure  of employment  on terms and conditions to  which they  would have  been entitled  on the "appointed day"  as if  the Corporation  Act  had  not  been passed. It  was  evidently  intended  that  in  running  the business the  Corporation should  broadly take off where the insurers had  ceased. For  the purpose  of  enabling  it  to discharge its  functions under  the Act, the Corporation has been empowered  by s. 23 to employ such number of persons as it thinks  fit. The  power conferred in clauses (b) and (bb) of s.  2(2) to  make regulations  prescribing the  terms and conditions  of   service  of  newly  recruited  as  well  as transferred  employees  has  been  conferred  for  the  same purpose, that is 1141 to say,  the purpose, specifically mentioned in s. 49(1), of giving effect  to the  provisions of  the Act.  Clearly, the object behind  s.11(1), s. 23 and clauses (b) and (bb) of s. 49(2) is  to provide staff and labour for the purpose of the proper  management   of  the   nationalised  life  insurance business. On  the other  hand, the  Industrial Disputers Act deals  specifically  with  a  special  subject  matter,  the investigation and  settlement of industrial disputes between an employer  and his  workmen. An  "industrial  dispute"  as defined by  s. 2(k) is a collective dispute. It is a special kind of  dispute. Except  for a case under s. 2A, the entire body of  workmen or a substantial number of them constitutes a party to the dispute. And all the employees of an employer are not "workmen". Those employees are "workmen" who satisfy the definition  contained in  s. 2(s). A restricted category of employees  is contemplated,  and in an industrial dispute that category  alone of all the employees can be interested. The resolution  of industrial  disputes  under  the  Act  is envisaged through  the particular  machinery  and  processes detailed therein.  A special jurisdiction is created for the purpose. Industrial  disputes, according  to the Act, can be resolved  by  settlement  or  award.  There  are  provisions setting forth  the consequences of a settlement or an award, and there are also provisions indicating how a change can be initiated  in  the  resulting  industrial  relations.  Other chapters in  the Industrial Disputes Act lay down the law in respect of  strikes and lock-outs, lay off, retrenchment and closure and penalties for breach of its provisions. Plainly, if a  settlement resolves  an industrial  dispute under  the Industrial Disputes  Act, it pertains to the central purpose of that Act. The Act constitutes special law in respect of a settlement reached  under its  auspices between  an employer

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 48 of 80  

and  his  "workmen"  employees.  The  consequences  of  such settlement  are   the  product   of  the  special  law.  The Corporation Act  does  not  possess  the  features  outlined above. It  deals only  generally in  regard to  a staff  and labour  force.   They  are   referred  to  compendiously  as "employees".  No  special  provision  exists  in  regard  to industrial   disputes   and   their   resolution   and   the consequences of  that resolution.  The special  jurisdiction created for the purpose under the Industrial Disputes Act is not the  subject-matter of  the Corporation  Act at  all. It would be  correct to  say that no corresponding provision in the Corporation  Act, subsequent  enactment, deals  with the subject matter  enacted in  the industrial Disputes Act. Yet Parliament  intended   to  provide   for  the  Corporation’s "workmen" employees  the same opportunities as are available under the  Industrial Disputes  Act to  the workmen of other employers. That  is demonstrated  by s. 2(a)(i) of that Act. The expression "appropriate 1142 Government" is  specifically defined by it in relation to an industrial   dispute    concerning   the    Life   Insurance Corporation. Both the Central Government and the Corporation understood the  Industrial Disputes  Act in  that light, for one finds  that Regulation  51(2) of the (Staff) Regulations made by  the Corporation  under clauses  (b) and  (bb) of s. 49(2) of  the Corporation Act, with the previous approval of the  Central  Government,  speaks  of  giving  effect  to  a revision of  scales of  pay, dearness  allowances  or  other allowances  "in   pursuance  of   any  award,  agreement  or settlement".      In my opinion, it is difficult to resist the conclusion that the  Industrial Disputes  Act is a special law and must prevail over  the Corporation  Act, a  general law,  for the purpose of protecting the sanctity of transactions concluded under the  former enactment. It is true that as laid down in Life  Insurance   Corporation  of   India  v.   Sunil  Kumar Mukherjee(1) and  reiterated in  Sukhadev  Singh  v.  Bhagat Ram,(2) the  Regulations framed  under the  Corporation  Act have the  force of  law. But  that is of little moment if no reference is permissible to the Regulations when considering the validity  and operation  of the  "settlement"  contract. Accordingly, Regulation  58, a  product of  the  Corporation Act, cannot  supersede the contract respecting bonus between the parties  resulting from the settlements of 1974. Support is derived  for this conclusion from U. P. State Electricity Board &  Ors. v. Hari Shanker Jain & Ors.(3) where reference has been  made to  Mary Sewards  v. The  Owner of  the  Vera Cruz(4) and  J. K.  Cotton Spinning  & Weaving Mills Ltd. v. State of Uttar Pradesh(5).      At the  same time,  it is  pertinent to  note that  the "workmen"  employees  of  the  Corporation  continue  to  be governed in  matters not  covered by  the settlements by the (Staff)  Regulations,   and  that   position  is   expressly recognised in  clause 12(4)  of  the  settlements  of  1974. Clause 12(4) declares:      "Except as  otherwise  provided  or  modified  by  this      settlement, the  workmen shall  continue to be governed      by all the terms and conditions of service as set forth      and regulated  by the  Life  Insurance  Corporation  of      India  (Staff)   Regulations,  1960.....  as  also  the      administrative instructions...." 1143      Our attention  has been  drawn to s. 11(1), Corporation Act which  empowers the  Corporation to duly alter the terms and conditions  of  service  of  transferred  employees.  In

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 49 of 80  

construing the  scope of  the Corporation’s  powers in  that behalf, it seems to me that appropriate importance should be attached to the qualifying word "duly". When the Corporation seeks to  alter the  terms  and  conditions  of  transferred employees, it  must do  so in  accordance with law, and that requires it  to pay  proper regard to the sanctity of rights acquired by  the "workmen"  employees under  settlements  or awards made  under the  Industrial Disputes  Act.  The  only provision, so  far as  I can  see where  the Corporation Act permits disregard of the Industrial Disputes Act and awards, settlements or  agreements is  the second  limb of s. 11(2). And the  scope of  that provision,  as I  have explained, is confined  to   the  peculiar   circumstance  in   which  the Corporation immediately  on  coming  into  existence,  finds itself saddled  with a recurring financial burden, by virtue of the  service of  the transferred employees, too heavy for its own  viability  as  a  business  organisation.  No  such provision is  to be  found elsewhere in the Corporation Act. It is  conspicuous by its absence in clauses (b) and (bb) of s. 49(2).  The provision  in s.  11(2) has been made for the purpose of  protecting the  interests of the Corporation and its policyholders. The policyholders constitute an important and significant  sector  of  public  interest.  Indeed,  the avowed object  of the  entire Corporation  Act is to provide absolute security  to the  policyholders in  the  matter  of their life  insurance protection.  That is assured by a wise management of  the Corporation’s  business, and  by ensuring that when settlements are negotiated between the Corporation and its workmen or when industrial adjudication is initiated in labour courts and industrial tribunals, the protection of the  policyholders   will  find   appropriately  significant emphasis in the deliberations.      In the  view that the notification dated 26th May, 1978 purporting   to   amend   the   Standardisation   order   by substituting clause  (9) is  invalid and  the newly  enacted Regulation 58  does not  effect the  contract in  respect of bonus embodied  in the  settlements of 1974 between the Life Insurance Corporation  and its  "workmen" employees,  effect must be given to that contract and this appeal must fail and the writ petition, transferred from the Calcutta High Court, must succeed. If the terms and conditions of service created by the  contract need  to be  reconsidered, recourse must be had to  the modes  recongnised by law-negotiated settlement, industrial adjudication or appropriate legislation. 1144      In the  result,  Civil  Appeal  No.  2275  of  1978  is dismissed  with   costs  to  the  first,  second  and  third respondents. The fourth respondent shall bear its own costs. The Transfer Petition No. 16 of 1979 is allowed in the terms set out  above, costs  to be  paid to the petitioners by the second respondent.      KOSHAL, J.-By  this judgment  I shall  dispose of Civil Appeal No. 2275 of 1978 which has been instituted by special leave granted  by this Court against a judgment dated August 11, 1978  of a  Division Bench  of the  Allahabad High Court allowing a petition under article 226 of the Constitution of India and  issuing a  writ of mandamus to the Life Insurance Corporation  of   India  (hereinafter  referred  to  as  the Corporation) directing  it not  to give  effect to  a notice dated the  6th May,  1978, issued  by it under section 9A of the Industrial Disputes Act (I. D. Act for short) as also to a notification  dated the  26th May,  1978 issued under sub- section (2)  of section 11 of the Life Insurance Corporation Act, 1956  (hereinafter called  the  L.  I.  C.  Act).  This judgment shall  also cover  Transfer Case  No. 1  of 1979 in

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 50 of 80  

which  another   petition  under   article   226   aforesaid instituted before the High Court of Calcutta and raising the same questions which fall for decision in the said appeal is awaiting disposal  by us as that petition was transferred to this Court by its order dated the 10th September, 1979.      2. The petition decided by the Allahabad High Court was filed by  the Class  III  and  Class  IV  employees  of  the Corporation challenging  the right  of the  employer and the Union of  India to  change to  the  detriment  of  the  said employees a  condition of  service regarding  the payment to them of  bonus to  which they  had earlier  become  entitled through a settlement with the Corporation made under section 18 of the I. D. Act.      3. The  petition last  mentioned arose in circumstances which may  be set  out in  some detail. The Corporation came into existence  on the  1st September,  1956, as a statutory authority established  under the  L. I.  C. Act. As from the said  date  all  institutions  carrying  on  life  insurance business in  India were  nationalised to  the extent of such business and their corresponding assets and liabilities were transferred to  the Corporation.  Section 11 of the L. I. C. Act provided  for the transfer of service of those employees of such  institutions who were connected with life insurance business (described  in the  Act as  "controlled  business") immediately before  the said date to the Corporation and for some other  matteds. As  it is  the interpretation  of  that section which  is mainly in controversy before us, it may be set out here in extenso: 1145           "11.(1) Every  whole-time employee  of an  insurer      whose controlled  business has  been transferred to and      vested in  the Corporation  and who was employed by the      insurer  wholly   or  mainly  in  connection  with  his      controlled business  immediately before  the  appointed      day shall,  on and  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  no: 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:           "Provided that  nothing  contained  in  this  sub-      section shall  apply to  any such  employee who has, by      notice in writing given to the Central Government prior      to the  appointed day,  intimated his  intention of not      becoming an employee of the Corporation.           "(2) Where  the Central  Government  is  satisfied      that for  the purpose  of securing  uniformity  in  the      scales  of   remuneration  and   the  other  terms  and      conditions  of   service  applicable  to  employees  of      insurers whose controlled business has been transferred      to, and  vested in, the Corporation, it is necessary so      to do, or that, in the interests of the Corporation and      its policy-holders,  a reduction  in  the  remuneration      payable,  or   a  revision   of  the  other  terms  and      conditions of  service applicable,  to employees or any      class of  them is  called for,  the Central  Government      may, notwithstanding  anything contained in sub-section      (1), or  in the  Industrial Disputes  Act 1947,  or any      other law for the time being in force, or in any award,      settlement or  agreement for  the time  being in force,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 51 of 80  

    alter (whether  by way  of reduction  or otherwise) the      remuneration and  the other  terms  and  conditions  of      service to  such extent and in such manner as it thinks      fit; and  if the  alteration is  not acceptable  to any      employee, the  Corporation may terminate his employment      by giving  him compensation equivalent to three months’      remuneration unless  the contract  of service with such      employee provides for a shorter notice of termination.           "Explanation.-The  compensation   payable  to   an      employee under  this sub-section  shall be  in addition      to,  and  shall  not  affect,  any  pension,  gratuity,      provident fund money or any other 1146      benefit to which the employee may be entitled under his      contract of service.           "(3) If  any question  arises as  to  whether  any      person was  a whole-time employee of an insurance or as      to whether  any employee  was employed wholly or mainly      in  connection  with  the  controlled  business  of  an      insurer  immediately   before  the  appointed  day  the      question shall  be referred  to the  Central Government      whose decision shall be final.           "(4) Notwithstanding  anything  contained  in  the      Industrial Disputes  Act, 1947, or in any other law for      the time  being in  force, the transfer of the services      of any  employee of an insurer to the Corporation shall      not entitle any such employee to any compensation under      that Act  or other  law, and  no such  claim  shall  be      entertained by any court, tribunal or other authority."      Section 23  of the L. I. C. Act gave to the Corporation the power to employ such number of persons as it thought fit for the  purpose of  enabling it  to discharge its functions under the  Act and declared that every person so employed or whose services  stood transferred  to the  Corporation under section 11  would be  liable to  serve  anywhere  in  India. Section 49  conferred on  the Corporation  the power to make regulations  for   the  purpose  of  giving  effect  to  the provisions of  the Act  with the  previous approval  of  the Central  Government.   Sub  section   (2)  of  that  section enumerated various  matters in  relation to which such power was particularly  conferred. Clauses  (b) and  (bb) of  sub- section (2) read thus:      "(b) the  method of recruitment of employees and agents           of the Corporation and the terms and conditions of           service of such employees or agents;      "(bb) the  terms and  conditions of  service of persons           who have become employees of the Corporation under           sub-section (1) of section 11;"      On the  1st June,  1957,  the  Central  Government,  in exercise of the powers conferred on it by sub-section (2) of section 11  of the  L.  I.  C.  Act,  promulgated  the  Life Insurance Corporation  (Alteration of Remuneration and other Terms and  Conditions of  Service of  Employees) Order, 1957 (for short  "the 1957  order") altering the remuneration and other terms  and conditions of service of those employees of the Corporation  whose services  had been  transferred to it under  sub-section   (1)  of   that  section   (referred  to hereinafter as  the transferred  employees). Clause 9 of the 1957 order declared that 1147 no bonus  would be  paid but  directed that  the Corporation would set  aside an  amount every  year for  expenditure  on schemes of  general benefit scheme and on other amenities to them. On  the 26th June 1959, the Central Government amended clause 9  of the 1957 order so as to provide that non-profit

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 52 of 80  

sharing bonus  would be  paid  to  those  employees  of  the Corporation whose salary did not exceed Rs. 500/ per month.      On the  2nd July,  1959 there  was a settlement between the Corporation  and its  employees providing for payment to them of cash bonus at the rate of 1/2/1 months’ basic salary for the  period from  the 1st  September, 1956  to the  31st December, 1961.      In the year 1960 were framed, under section 49 of L. I. C. Act,  the Life  Insurance Corporation  of  India  (Staff) Regulations,  1960  (the  1960  regulations,  for  brevity), whereof regulation 58 ran thus:      "The Corporation may, subject to such directions as the      Central Government  may issue, grant non-profit sharing      bonus  to   its  employees  and  the  payment  thereof,      including conditions  of  eligibility  for  the  bonus,      shall  be  regulated  by  instructions  issued  by  the      Chairman from time to time."      Orders were  again passed  on 14th  April, 1962 and 3rd August, 1963, the effect of which was to remove the limit of Rs. 500/-  on the basic salary as a condition of eligibility for payment of bonus.      The settlement dated the 2nd July, 1959 was followed by three others  which were  arrived at  on the  29th  January, 1963,  the   20th  June,  1970  and  the  26th  June,  1972, respectively and  each one  of which provided for payment of bonus at a particular rate.      Disputes between  the Corporation  and its  workmen  in regard to  the  latter’s  conditions  of  service  persisted nevertheless, but were resolved by two settlements dated the 24th January, 1974 and the 6th February, 1974, arrived at in pursuance of  the provisions of section 18 read with section 2(p) of  the I.  D. Act. The Corporation was a party to both the settlement,  which were  identical  in  terms.  However, while four  of the  five Unions of workmen subscribed to the first settlement,  the fifth  Union was  a signatory  to the second. The  settlements provided for revised scales of pay, the  method   of  their  fixation  and  dearness  and  other allowances as  well as  bonus.  Clause  8  of  each  of  the settlements was to the following effect: 1148      "Bonus      "(i) No  profit sharing  bonus shall  be paid. However,           the Corporation may, subject to such directions as           the Central  Government may  issue  from  time  to           time, grant  any other  kind of bonus to its Class           III & IV employees.      (ii) An annual cash bonus will be paid to all Class III           and Class  IV employees  at the rate of 15% of the           annual salary (i.e. basic pay inclusive of special           pay, if any, and dearness allowance and additional           dearness allowance)  actually drawn by an employee           in respect  of the  financial year  to  which  the           bonus relates.       (iii) Save  as provided  herein all  other  terms  and           conditions  attached   to  the  admissibility  and           payment of  bonus shall  be as  laid down  in  the           Settlement on bonus dated the 26th June 1972." Clause 12 of each settlement provided:      "(1) This settlement shall be effective from 1st April,           1973. and  shall be  for a  period of  four years,           i.e., from 1st April, 1973 to 31st March, 1977.      (2)   The terms  of the  settlement shall be subject to           the approval  of the  Board of the Corporation and           the Central Government.      (3)  This Settlement disposes of all the demands raised

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 53 of 80  

         by  the   workmen  for   revision  of   terms  and           conditions of their service.      (4)   Except as  otherwise provided or modified by this           Settlement,  the  workmen  shall  continue  to  be           governed  by  all  the  terms  and  conditions  of           service as  set forth  and regulated  by the  Life           Insurance    Corporation     of    India    (Staff           Regulations),  1960  as  also  the  administrative           instructions issued  from time  to time  and  they           shall, subject to the provisions thereof including           any period  of  operation  specified  therein,  be           entitled to the benefits thereunder."      It is  not disputed  that the settlements were approved by the  Board of  the Corporation  as also  by  the  Central Government.      Under clause  11 of  each settlement  every employee of the Corporation  had the  option to  elect  to  be  governed either by  the new  scale of  pay applicable  to him  or the scale which  he had  been enjoying  hitherto. It  is  common ground between  the parties  that all  the employees  of the Corporation opted for the new scales of pay and 1149 that bonus  was paid  in accordance  therewith for the years 1973-74  and   1974-75  in   April  1974   and  April   1975 respectively.      On  25th   September  1975,   the  Payment   of   Bonus (Amendment) Ordinance, 1975 was promulgated by the President of India  and was  subsequently replaced  by the  Payment of Bonus (Amendment)  Act, 1976  which was  brought into  force with effect  from the date last mentioned. This amending law considerably curtailed the rights of employees of industrial undertakings  to   bonus,  but   was  inapplicable   to  the Corporation by virtue of the provisions of section 32 of the Payment of  Bonus Act. However, the payment of bonus for the year 1975-76 to the employees of the Corporation was stopped under instructions from the Central Government, whose action in that  behalf was  challenged by  the employees  through a petition under  article 226  of the Constitution of India in the High Court of Calcutta, a single Judge of which issued a writ  of  mandamus  directing  the  Corporation  to  act  in accordance with  the terms  of the settlement dated the 24th January, 1974.  The Corporation  preferred a  Letters Patent appeal against  the decision of the learned single Judge and that  appeal   was  pending   disposal  when   the   Central legislature  promulgated   the  Life  Insurance  Corporation (Modification of  Settlement) Act, 1976 (for short, the 1976 Act) section 3 of which laid down:      "Notwithstanding anything  contained in  the Industrial      Disputes Act,  1947, the  provisions  of  each  of  the      settlements, in so far as they relate to the payment of      an annual  cash bonus  to every  Class III and Class IV      employee of  the Corporation at the rate of fifteen per      cent of  his annual salary, shall not have any force or      effect and  shall not  be deemed  to have  any force or      effect on and from 1st day of April, 1975."      The 1976  Act was  enacted on  29th May,  1976 and  was challenged by  the workmen  in this Court which, on the 21st of February,  1978, declared  it to  be  void  as  offending article  31(2)  of  the  Constitution  of  India  through  a judgment which is reported as Madan Mohan Pathak v. Union of India ,  [1978] 3 S. C. R. 334, and directed the Corporation to forbear  from implementing the 1976 Act and to pay to its Class III  and Class  IV employees  bonus for the years 1-4- 1975 to  31-3-1976 and  1-4-1976 to  31-3-1977 in accordance with the  terms of  sub-clause (ii)  of  clause  8  of  each

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 54 of 80  

settlement.      On the  3rd March,  1978, the Corporation issued to its workmen a  notice under sub-section (2) of section 19 of the I.  D.   Act  declaring   its  intention  to  terminate  the settlements on the expiry of a period of two months from the date the  notice was  served. The notice, however, mentioned in express terms that according to the Corporation 1150 no such  notice was  really necessary for termination of the settlements. On  the same date, another notice was issued by the Corporation  under section  9A of  the I. D. Act stating that it  intended to  effect a change in accordance with the contents of  the annexure  to the  notice, as  from the  1st June, 1978, in the conditions of service of its workmen. The said annexure contained the following clause:      "AND WHEREAS  for economic  and other  reasons it would      not be  possible for  the Life Insurance Corporation of      India to continue to pay bonus on the aforesaid basis;      "NOW, therefore,  it is  our intention  to pay bonus to      the employees  of the  Corporation in  terms reproduced      hereunder;           "No employee  of the Corporation shall be entitled           to profit  sharing bonus. However, the Corporation           may, having  regard to  the financial condition of           the Corporation in respect of any year and subject           to  the   previous   approval   of   the   Central           Government, grant  non-profit sharing bonus to its           employees in  respect of that year at such rate as           the Corporation  may think  fit and  on such terms           and conditions  as it  may specify  as regards the           eligibility of such bonus’."      The workmen  sent a reply to the two notices just above mentioned and  took the  stand that  the Corporation  had no right to  render  inoperative  the  clause  regarding  bonus contained in the two settlements.      On  26th   May,  1978,   the   Corporation   issued   a notification  under   section  49   of  the  L.  I.  C.  Act substituting  a   new  regulation   for  the  then  existing regulation bearing  serial number 58. The new regulation was to come into force from the 1st June, 1978, and stated:           "58. No  employee  of  the  Corporation  shall  be      entitled  to   profit  sharing   bonus.  However,   the      Corporation  may,   having  regard   to  the  financial      condition of the Corporation in respect of any year and      subject  to   the  previous  approval  of  the  Central      Government  grant   non-profit  sharing  bonus  to  its      employees in  respect of  that year at such rate as the      Corporation  may  think  fit  and  on  such  terms  and      conditions as it may specify as regards the eligibility      for such bonus."      Simultaneously an  amendment on the same lines was made in the  1957 order (which, as already stated, was restricted in its  application to  transferred employees  only) by  the substitution of  a new clause for the then existing clause 9 in pursuance of the provisions of sub-section (2) of section 11 of  the L.  I. C. Act. The new clause is in the following terms: 1151           "9.  No  employee  of  the  Corporation  shall  be      entitled  to   profit  sharing   bonus.  However,   the      Corporation  may,   having  regard   to  the  financial      condition of the Corporation in respect of any year and      subject  to   the  previous  approval  of  the  Central      Government,  grant  non-profit  sharing  bonus  to  its      employees in  respect of  that year at such rate as the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 55 of 80  

    Corporation  may  think  fit  and  on  such  terms  and      conditions as it may specify as regards the eligibility      for such bonus."      It  was   the  issuance  of  the  two  notices  by  the Corporation on  the 3rd March, 1978, under section 19(2) and 9A of the I. D. Act respectively and the action taken by the Central Government  on the  26th May,  1978, by  making  new provisions  in  regard  to  the  payment  of  bonus  to  the Corporation’s employees  that furnished  the cause of action for the latter to petition to the Allahabad High Court under article 226 of the Constitution of India.      4.  After  consideration  of  the  various  contentions raised before  it the  Allahabad High  Court arrived  at the following conclusions:           I. The  I. D.  Act is  an ’independent  Act’ which      deals with  adjudication and  settlement of  matters in      dispute between an employer and his workmen. It is thus      a special  law which would override the provisions of a      general law like the L. I. C. Act.           II. Three corollaries follow from conclusion 1:           (a)   Section  23  of  the  L.  I.  C.  Act  which                envisages  employment   of  persons   by  the                Corporation implies  settlement of conditions                of service  which may  legally be  superseded                (only) by another settlement arrived at under                section 18 of the I. D. Act.           (b)  The new regulation 58 framed under section 49                of the  L. I.  C. Act  and  the  notification                issued under  subsection (2)  of  section  11                thereof substituting  a new  clause 9  in the                1957 Order are wholly ineffective against the                operation of  the 1974 settlements which were                arrived at  in pursuance of the provisions of                the I.  D. Act  and which therefore, continue                to govern the parties thereto.           (c)   After the  issuance  of  the  notices  under                sections 19(2)  and 9A  of the  I.D. Act, the                Corporation  had   no  power   to  alter  the                condition of  service  of  its  employees  in                regard  to  bonus  by  a  unilateral  act  as                neither of  the  two  sections  confers  such                power on an employer. 1152           III. Corollary  (b) in  conclusion II  is in  full      accord with  the view expressed in Madan Mohan Pathak’s      case (supra)  by the  Supreme Court  in as  much as  it      upheld the  two settlements  even  though  it  did  not      advert to  regulation 58  and further  ruled  that  the      conditions of  service laid  down in  those settlements      could be  varied only  by a  fresh settlement  or award      made under  the provisions  of the  I. D.  Act and that      till  then   sub-clause  (ii)   of  clause  8  of  each      settlement (which is independent of clause (i) thereof)      would remain  in full  force. None  of the  authorities      reported as  C. Sankararskavanon v. The State of Kerala      Roshan Lal v. Union, Sukhdev v. Bhagatram,(3) Kalvammal      Bhandari v.  State of  Rajasthan,(4) State  of U.P.  v.      Babu Ram  Upadhya,(5) I.T.O.  v. M.  C. Ponnoose(6) and      cited on  behalf of  the Corporation lays down any rule      to the contrary.      IV. In  spite of  clause 12 of the two settlements they did not  cease to  be binding  on the  parties thereto  even after the  expiry of the period of 4 years mentioned in that clause and  the notice  under section 19(2) of the I. D. Act issued  by   the  Corporation   would  not   terminate   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 56 of 80  

settlements but  would have  the effect merely of paving the way for  fresh negotiations.  This proposition  follows from South Indian  Bank Ltd.  v. A. R. Chacko,(7) and Indian Link Chain Ltd.  v. Workmen,(8)  and  is  not  negatived  by  the decision  in  Premier  Auto  v.  K.  S.  Wadke(9).  Although Chacko’s case  dealt in  terms  with  an  award  and  not  a settlement, no  distinction exists  between the two and they stand on  the same  footing for  the purpose  of judging the effect of a notice under section 19(2) of the I. D. Act.      V. There  is no  dispute that no petition under article 226 of  the Constitution  of India  would lie merely for the enforcement of  a contract  or for the recovery of an amount payable by the Corporation to its employees where the latter had an alternative remedy under section 10 or 33-C of the I. D. Act.  However, the  relief sought  by the  workmen in the present case  is directed  only against  the action taken by the Corporation and the Union of India under sections 19 and 9A of  the I.  D. Act and sections 11(2) and 49 of the L. I. C. Act-a  relief similar  to that  granted by  this Court in Madan Mohan  Pathak’s case (supra). The contention raised on behalf of the Corpo- 1153 ration about  the non-maintainability  of  the  petition  is therefore without force.      It was  on the basic of these conclusions that the writ of mandamus  mentioned in  the  opening  paragraph  of  this judgment was  issued by the High Court to the Corporation on whose behalf  the first  four of those conclusions have been impugned before  us and I proceed to examine the same in the light of arguments advanced at length by learned counsel for the  parties   and  for   the  Class  II  employees  of  the Corporation who  were permitted  to intervene  in the appeal before us.      5. As  conclusion II  consists  merely  of  corollaries derived directly from conclusion I and it is the correctness or  otherwise   of  the  latter  that  would  determine  the sustainability of  the former,  the two  may legitimately be dealt with  together, although it is conclusion I on which I would primarily concentrate.      6. For  convenience of examination, conclusion I may be split up into two  propositions:      (a)   The I.  D. Act  is a special law because it deals           with adjudication  and settlement  of  matters  in           dispute between  an employer and his workmen while           the L. I. C. Act is a general law.      (b)  The I. D. Act, being a special law, would override           a general law like the L. I. C. Act.      7. Now  in relation  to proposition  (a) it  cannot  be gain-said that  the I. D. Act deals with the adjudication or settlement of  disputes between  an employer and his workmen and would,  therefore, be  a special  law vis-a-vis  another statute  which  covers  a  larger  field  and  may  thus  be considered "general"  as compared to it. It cannot, however, be regarded  as a  special law in relation to all other laws irrespective of  the subject-matter  dealt with  by them. In fact a  law may  be special  when considered  in relation to another piece  of legislation  but only a general one vis-a- vis still  another. An  example  will  help  illustrate  the point.  A   law  governing  matters  pertaining  to  medical education would  be a  special law  in relation to a statute embracing education  of all  kinds but must be regarded as a general law  when preference  over it  is claimed for what I may call  a more  special law,  such as  an Act dealing with only one  aspect of  medical education,  say, instruction in the field  of surgery.  And even this "more special’ law may

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 57 of 80  

become general if there is a conflict between it and another operating in a still narrower field, e.g., thoracic surgery. "Special" and  "general" used  in this  context are relative terms and  it is  the content one statute as compared to the other that will determine 1154 which of the two is to be regarded as special in relation to the other. Viewed in this light proposition (a) cannot stand scrutiny. The  I. D.  Act would no doubt be a special Act in relation to  a law  which makes  provision for matters wider than but  inclusive of  those covered  by it,  such  as  the Indian Contract  Act as  that is a law relating to contracts generally (including  those between  an industrial  employer and his  workmen), but it would lose that categorisation and must be regarded as a general law when its rival is shown to operate in  a field  narrower than its own. And such a rival is that part of the L. I. C. Act which deals with conditions of  service   of  the   employees  of  the  L.I.C.-a  single industrial undertaking (of a special type) as opposed to all others of  its kind  which fall within the ambit of the I.D. Act. Where  the  competition  is  between  these  two  Acts, therefore, the  L. I.  C. Act  must be regarded as a special law and  (in comparison  thereto) the I. D. Act as a general law.      8. Proposition (b) is equally insupportable even if the I. D.  Act is regarded as a special law in comparison to the L. I.  C. Act.  The High Court appears to have somehow tried to apply  the maximum  generalia specialibus non derogant to the situation  with which  it was  concerned. But  does that maxim lead to the proposition under discussion?      The general  rule to  be followed  in  the  case  of  a conflict between  two statutes  is that  the later abrogates the  earlier   one  (Leges  posteriores  priores  contrarias abrogant). To  this general  rule  there  is  a  well  known exception,  namely,   generalia  specialibus   non  derogant (general things  do not  derogate from  special things), the implications of  which are  thus stated  succinctly by  Warl Jowitt in ’The Dictionary of English Law’:      "Thus  a  specific  enactment  is  not  affected  by  a      subsequent  general   enactment  unless   the   earlier      enactment is  inconsistent with the later enactment, or      unless there  is some  express reference  in the  later      enactment to  the earlier enactment, in either of which      cases the  maxim leges  posteriores priores  contrarias      abrogant applies." In other  words a  prior special  law would yield to a later general law,  if either  of the  following two conditions is satisfied:      (i)  The two are inconsistent with each other.      (ii) There  is some  express reference  in the later to           the earlier enactment.      If either  of these  conditions is  fulfilled the later law, even though general, will prevail. 1155      The principles  enunciated in  Chapter 9 of ’Maxwell on the Interpretation of Statutes’ are to the same effect:      "A later  statute may  repeal  an  earlier  one  either      expressly or  by implication. But repeal by implication      is not  favoured by  the courts..........If, therefore,      earlier and  later statutes can reasonably be construed      in such  a way  that both  can be given effect to, this      must be  done.............. If, however, the provisions      of a  later  enactment  are  so  inconsistent  with  or      repugnant to  the provisions of an earlier one that the      two cannot  stand together, the earlier is abrogated by

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 58 of 80  

    the  later..............   Wherever  Parliament  in  an      earlier  statute  has  directed  its  attention  to  an      individual  case   and  has   made  provision   for  it      unambiguously, there  arises a presumption that if in a      subsequent statute  the Legislature lays down a general      principle, that general principle is not to be taken as      meant  to  rip  up  what  the  Legislature  had  before      provided for  individually, unless  an intention  to do      so, is specially declared." (emphasis supplied) The same  principles have been thus reiterated in Chapter 15 of Craies on Statute Law:      "Parliament, in the exercise of its supreme legislative      capacity, can  extend, modify,  vary,  or  repeal  Acts      passed in the same or previous sessions................      The provisions  of an  earlier Act  may be  revoked  or      abrogated in  particular cases  by  a  subsequent  Act,      either from  the express  language used being addressed      to  the   particular  point,  or  from  implication  or      inference from the language used................. Where      two Acts are inconsistent or repugnant, the latter will      be read  as having  implieose.  To the  extent,  therefore,  that  section 11(1) read  with that  clause confers on the Corporation the power to  alter the terms and conditions in question-a power not enjoyed  by it  under the provisions of the I. D. Act-it is inconsistent  with the  I. D.  Act and being a later law, would override  that Act  despite the  absence of  the  non- obstante  clause,   the  inconsistency  having  arisen  from express language and not from mere implication. 1158      But the  matter does  not end  here as sub-sections (2) and (4)  of section  11 and clause (b) of sub-section (2) of section 49  of the  L. I.  C. Act  pose other insurmountable hurdles in the way of the acceptance of proposition (b). The scope of  sub-section (2)  of section  11 was stated in Life Insurance Corporation  of India  v. Sunil  Kumar Mukherjee & Ors (supra) by Gajendragadkar, J., in the following terms:      "Section 11(2) as it originally stood was substantially      modified  in   1957,  and   the  plain  effect  of  the      provisions  contained   in  the   said  sub-section  as      modified is  that the  Central Government  is given the      power  to   alter  (whether  by  way  of  reduction  or      otherwise) the  remuneration and  the other  terms  and      conditions of service to such extent and in such manner      as it thinks fit. It is significant that this power can      be exercised  by the Central Government notwithstanding      anything  contained   in  sub-section  (1)  or  in  the      Industrial Disputes  Act, 1947, or in any other law, or      in any  award, settlement  or agreement  for  the  time      being in  force. It  was thought  a that  for a  proper      functioning of  the Corporation  it  was  essential  to      confer upon  the Central Government an overriding power      to change  the terms  and conditions  of employees  who      were wholly or mainly employed by the insurers prior to      the appointed  day. Having conferred such wide power on      the Central  Government, section 11(2) further provides      that if  the alternation made by the Central Government      in the  terms and  conditions of  his  service  is  not      acceptable  to   any  employee,   the  Corporation  may      terminate his  employment by  giving  him  compensation      equivalent to  three months’  remuneration  unless  the      contract of  service with  such employee provides for a      shorter notice of termination. It is thus clear that in      regard to  cases fall  under section  11(2),  if  as  a      result of the alteration made by the Central Government      any  employee   does  not   want  to   work  with   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 59 of 80  

    Corporation, he  is  given  the  option  to  leave  its      employment on  payment of  compensation provided by the      last part of section 11(2). Thus, the scheme of the two      sub-sections of  section 11  is clear. The employees of      the insurers  whose controlled  business has been taken      over, become  the employees  of the  Corporation,  then      their terms  and conditions  of service  continue until      they are  altered by the Central Government, and if the      alteration  made  by  the  Central  Government  is  not      acceptable to  them, they  are entitled  to  leave  the      employment   of   the   Corporation   on   payment   of      compensation as  provided by  section 11(2)." (emphasis      supplied) 1159      In other  words sub-section  (2) of section 11 not only given to the Central Government the power to alter the terms and  conditions   of  service   of  the   employees  of  the Corporation in certain situations, and to alter them even to the detriment  of such employees, to such extent and in such manner as  it thinks  fit, but  also states in so many words that such power shall be exercisable-      "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, or  in  any  award,      settlement or agreement for the time being in force."      The mandate  of the  legislature has  been expressed in clear and  unambiguous terms in this non-obstante clause and is to the effect that the power of the Central Government to alter  conditions   of  service  of  the  employees  of  the Corporation  shall   be  wholly   unfettered  and  that  any provisions to the contrary contained in the I. D. Act or for that matter,  in any  other law for the time being in force, or in any award, settlement, or agreement for the time being in force, would not stand in the way of the exercise of that power even  if such  exercise is  to the  detriment  of  the employees of the Corporation. The conferment of the power in thus in  express supersession  of the  I. D.  Act and of any settlement made  thereunder. The  provisions of that Act and the two  settlements of  1974 must,  therefore, yield to the dictates of  section 11(2)  and to the exercise of the power conferred thereby on the Central Government.      Sub-section (4)  of section 11 is again illuminating as in the  matter of  compensation to  be paid to a transferred employee it  provides specifically  that the  provisions  of sub-section (2)  of that section shall override those of the I. D.  Act and  of any other law for the time being in force and that  no claim  to the  contrary shall be entertained by any court,  tribunal or  other authority.  In the face of an express provision  like this it is not open to the employees to contend  that the  law laid down in the I. D. Act and not sub-section (2) of section 11 would govern them.      The rule-making  power conferred  on the Corporation by section 49  of the  L. I.  C. Act  must also  be held  to be exercisable notwithstanding the provisions of the I. D. Act. In clause  (b) of  sub-section (2)  thereof  the  method  of recruitment of  employees and  agents of the Corporation and the terms  and conditions  of their service are stated to be matters  which   the  Corporation   may  deal  with  through regulations subject,  however, to  the previous  approval of the Central Government. This power is expressly conferred on the Corporation  in  addition  to  that  with  which  it  is invested under clause (bb) 1160 of the same sub-section. If these two clauses were not meant to override  the provisions  of the  I. D.  Act on  the same

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 60 of 80  

subject they  would be completely meaningless, and that is a situation, as  already pointed out, running directly counter to one  of the  accepted  principles  of  interpretation  of statutes. Besides,  these two  clauses are not to be read in isolation from section 11. The subject matter of the clauses and the  section is  overlapping and  together they  form an integrated whole.  The clauses  must, therefore,  be read in the light  of section  11. Sub-section  (1) of  that section confers power  on the  Corporation to  alter the  terms  and conditions of  service of  the transferred  employees and by necessary implication  gives a go-bye to the I. D. Act which is again  expressly superseded  by sub-section  (2) of  that section in  so  far  as  the  Central  Government  has  been invested with the power in certain ciKB\001\002\001\000\026Microsoft ApplicationsË\206\000 \013\000A\000*á\013\000B\000[\002\017\000B\000\\002\013\000C\000"á\017\000C\000\031â\202¬ \013\000D\000Y\002\017\000D\000Z\002\013\000E\000Ã\200â\202¬\017\000F\000(â\202¬\013\000G \000+â\202¬\017\000G\000\020â\202¬\013\000I\000\027â\202¬\017\000I\000\026â\202¬\013\000J \000Ã\207â\202¬\017\000J\000Ã\206â\202¬\013\000K\000\033â\202¬\013\000L\000\035â\202¬\017 \000L\000Ã\205â\202¬\013\000M\000,â\202¬\017\000M\000Fâ\202¬\013\000N\000\000á\013\000O\000 \001á\017\000O\000X\002\013\000P\000\007á\017\000P\000        Ã¡\013\000R\000Rì³\214\017 \000R\000Pì³\214\013\000S\000\003á\017\000S\000\022â\202¬\013\000T\000\025â\202¬\017\000T \000\024â\202¬\013\000U\000\034â\202¬\017\000U\000\036â\202¬\013\000V\000%á\017\000V\000 \032â\202¬\003\000]\000Câ\202¬\013\000]\000/â\202¬\003\000\000Ã\212\002\013\000\000Ã\212â\202¬ \023\000\000+á\013\000\003\000Sâ\202¬\003\000.\000 á\013\000.\000Ã\210â\202¬\023\000.\000!à ¡\007\000.\000#á\017\000.\000{\002\003\000(\000l\002\013\000(\000\177\002\023\000(\000i\002 \007\000(\000x\002\017\000(\000ì³\214\002\003\000#\000d\002\013\000#\000b\002\023\000#\000} \002\007\000#\000r\002\017\000#\000p\002\003\000p\000Fá\013\000p\000\023â\202¬\007\000p\000 Eá\013\000y\000Ã\205\002\007\000y\000Câ\202¬\003\000z\000<â\202¬\013\000z\000¶â\202¬\007 \000z\000µâ\202¬\003\000{\000\004á\003\000q\000®â\202¬\013\000q\000Â-â\202¬\007\000q\000 ¯â\202¬\017\000q\000°â\202¬\023\000r\000Qâ\202¬\003\000s\000¹â\202¬\013\000t\000-â\202¬ \003\000u\000Pá\007\000u\000Qá\003\000v\000³ì³\214\013\000v\000Sì³\214\013\000w\000*â\202 ¬\003\000x\000Tâ\202¬\013\000x\000Pâ\202¬\007\000x\000Oâ\202¬\003\000$\000c\002\013\000$\000 a\002\023\000$\000|\002\007\000$\000q\002\017\000$\000o\002\003\000-\000ì³\214\002\013\000- \000"á\007\000-\000%á\003\000%\000m\002\013\000%\000[\002\007\000%\000y\002\017\000%\000\ \002\003\000"\000f\002\013\000"\000h\002\007\000"\000v\002\017\000"\000u\002\003\000!\000e \002\013\000!\000g\002\007\000!\000s\002\017\000!\000t\002\013\000\000Ã\202â\202¬\017\000\000Ã\201â\202¬\023\000\000²â\202¬\003\000’\000n\002\013\000’\000_\002\007\000’\000z\002\017\000’\000‘\002\013\000 \000:â\202¬\017\000     \000;â\202¬\003\000&\000k\002\013\000&\000˜\002\023\000&\000j\002 \007\000&\000w\002\017\000&\000â\202¬\002\013\000W\000_\002\017\000W\000‘\002\013\000X\000#à ¡\017\000X\000\030â\202¬\013\000Y\000,á\017\000Y\000Ž\002\013\000Z\000+á\017\000Z\000ì³ \214\002\003    t\000\000â\202¬\017     A\000\034â\202¬\007     r\000\033â\202¬\013     F \000&â\202¬\003 r\000’â\202¬\007        s\000’â\202¬\013        H\000)â\202¬\003        w \000â\200¡\002\003      \033\000Ë\206\002\017   w\0004â\202¬\017ñK\000\005â\202¬\023ñ0\000 »ì³\214\013ñr\000\004è\007Ã\214\000Ã\212\002ZÂ¥\020\000\000\000

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 61 of 80  

\000\003\000\000\000\000\000\000\000\000\000\013\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\001\000\000\000\000\000\000\000\000\000\000 \000\005\000\000\000\000\000\000\000\000\000\000\000\006\000\000\000\000\000\000\000\000\000 \000\000\004\000\000\000\000\000\000\000\000\000\000\000\002\000\000\000\000\000\000\000\000 \000\000\000ÿÿÿÿ\000\000\000\000\000\000\000\000\007\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000    \000\000\000\000\000\000\000\000\000 \000\000 \000\000\000\000Q\000\000\000\000\000ÿÿÿÿ\000\000\000\000\000\000\000\000ÿÿÿÿ\000\000 \000\000\000\000\000\000ÿÿÿÿ\000\000\000\000\000\000\000\000ÿÿÿÿZÂ¥\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000 \000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000\000|08/15/1 947|08/15/1947| ITA  |124   |1999|07/14/1999|06/08/1999|08/15/1947| ITXA |124   |1999|01/26/2000|01/10/2000|08/15/1947| ITXA |124   |1999|08/15/1947|12/09/2001|08/15/1947| NMS  |124   |1999|07/19/2001|07/13/2001|08/15/1947| NMS  |124   |1999|08/02/2001|08/03/2001|08/15/1947| NMW  |124   |1999|04/16/1999|08/15/1947|08/15/1947| SJ   |124   |1999|04/02/2000|08/15/1947|08/15/1947| ARBP |124   |2000|04/24/2000|04/04/2000|08/15/1947| ARBP |124   |2000|08/22/2000|08/16/2000|08/15/1947| ARBPL|124   |2000|03/27/2000|08/15/1947|08/15/1947| CA   |124   |2000|06/30/2000|08/15/1947|08/15/1947| CA   |124   |2000|08/15/1947|06/30/2000|08/15/1947| CHOCL|124   |2000|02/15/2000|08/15/1947|08/15/1947| CHOCL|124   |2000|02/21/2000|02/15/2000|08/15/1947| CHOL |124   |2000|03/06/2000|08/15/1947|08/15/1947| CHOL |124   |2000|03/10/2000|03/06/2000|08/15/1947| CHOL |124   |2000|03/27/2000|03/10/2000|08/15/1947| CHOL |124   |2000|04/17/2000|04/10/2000|08/15/1947| CHS  |124   |2000|12/08/2000|08/15/1947|08/15/1947| CHS  |124   |2000|08/15/1947|12/08/2000|08/15/1947| CHSW |124   |2000|12/08/2000|08/15/1947|08/15/1947| CHSW |124   |2000|08/15/1947|12/08/2000|08/15/1947| CONP |124   |2000|10/03/2000|08/15/1947|08/15/1947| CONP |124   |2000|11/22/2000|11/06/2000|08/15/1947| CP   |124   |2000|02/14/2000|08/15/1947|08/15/1947| CP   |124   |2000|07/12/2000|06/09/2000|08/15/1947| IGP  |124   |2000|11/22/2000|08/15/1947|08/15/1947| NMW  |124   |2000|08/07/2000|08/01/2000|08/15/1947| APP  |124   |2001|03/27/2001|03/06/2001|08/15/1947| APP  |124   |2001|08/23/2001|08/09/2001|08/15/1947| APP  |124   |2001|08/27/2001|08/23/2001|08/15/1947| ARBAP|124   |2001|09/21/2001|08/15/1947|08/15/1947| ARBP |124   |2001|03/19/2001|08/15/1947|08/15/1947| CHSW |124   |2001|01/28/2002|08/15/1947|08/15/1947|

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 62 of 80  

CHSW |124   |2001|08/15/1947|01/28/2002|08/15/1947| CP   |124   |2001|01/31/2001|08/15/1947|08/15/1947| CP   |124   |2001|06/29/2001|06/28/2001|08/15/1947| CP   |124   |2001|08/15/1947|07/06/2001|08/15/1947| CP   |124   |2001|07/25/2001|07/18/2001|08/15/1947| EXAL |124   |2001|06/24/2001|08/15/1947|08/15/1947| ITAL |124   |2001|08/14/2001|08/15/1947|08/15/1947| WP   |124   |2001|01/24/2001|01/15/2001|08/15/1947| WP   |124   |2001|01/29/2001|01/24/2001|08/15/1947| APP  |124   |2002|03/20/2002|03/18/2002|08/15/1947| CA   |124   |2002|03/01/2002|08/15/1947|08/15/1947| CP   |124   |2002|03/14/2002|02/01/2002|08/15/1947| NMS  |124   |2002|02/06/2002|08/15/1947|08/15/1947| WP   |124   |2002|02/04/2002|08/15/1947|08/15/1947| S    |1242  |1980|11/08/1997|12/09/1996|08/15/1947| S    |1242  |1980|08/15/1947|08/18/1999|08/15/1947| S    |1242  |1988|12/01/1996|02/26/1996|08/15/1947| CHS  |1242  |1990|09/25/1997|06/29/1997|08/15/1947| NMS  |1242  |1993|08/17/1996|08/11/1996|08/15/1947| S    |1242  |1993|04/28/1999|08/15/1947|08/15/1947| CHS  |1242  |1994|08/30/1996|08/15/1947|08/15/1947| S    |1242  |1994|02/10/1999|02/03/1999|08/15/1947| APP  |1242  |1996|12/23/1996|11/26/1996|08/15/1947| CHS  |1242  |1996|09/19/1997|09/12/1997|08/15/1947| NMS  |1242  |1996|01/26/1999|11/11/1998|08/15/1947| WP   |1242  |1996|07/08/1996|08/15/1947|08/15/1947| APP  |1242  |1998|01/11/1999|12/08/1998|08/15/1947| APPL |1242  |1998|02/16/1999|08/15/1947|08/15/1947| CHOL |1242  |1999|11/18/1999|08/15/1947|08/15/1947| CHS  |1242  |1999|04/20/2000|04/06/2000|08/15/1947| CHS  |1242  |1999|02/07/2001|01/11/2001|08/15/1947| CP   |1242  |1999|12/06/1999|08/15/1947|08/15/1947| CP   |1242  |1999|06/28/2000|02/01/2000|08/15/1947| SJ   |1242  |1999|08/15/1947|01/08/2002|08/15/1947| WP   |1242  |1999|05/04/1999|08/15/1947|08/15/1947| WP   |1242  |1999|08/15/1947|06/11/1999|08/15/1947| WPL  |1242  |1999|05/06/1999|05/05/1999|08/15/1947| CHS  |1242  |2000|10/16/2009|08/15/1947|08/15/1947| CHS  |1242  |2000|10/16/2000|10/16/2009|08/15/1947| CHS  |1242  |2000|11/09/2000|10/16/2000|08/15/1947| CHS  |1242  |2000|03/08/2001|05/01/2001|08/15/1947| APP  |1242  |2001|03/26/2002|03/18/2002|08/15/1947| WP   |1242  |2001|06/11/2001|08/15/1947|08/15/1947| WP   |1242  |2001|06/25/2001|06/12/2001|08/15/1947| S    |1243  |1983|11/08/1996|11/04/1996|08/15/1947| S    |1243  |1988|02/16/2002|01/19/2002|08/15/1947| SMN  |1243  |1991|08/15/1947|08/27/2000|08/15/1947| NMS  |1243  |1993|08/26/1996|08/21/1996|08/15/1947| CHS  |1243  |1994|12/15/1994|08/29/1996|08/15/1947| NMS  |1243  |1994|01/16/1998|01/25/1998|08/15/1947| S    |1243  |1994|06/01/1998|02/03/1999|08/15/1947| APP  |1243  |1996|11/27/1996|11/26/1996|08/15/1947| CHS  |1243  |1996|02/11/1rcumstances to vary the terms  and   conditions  of  service  of  the  Corporation’s employees. When  the two  clauses, therefore,  say that  the Corporation shall  have the  power to  frame regulations  in regard  to   the  terms  and  conditions  of  its  employees including transferred  employees,  subject,  of  course,  to previous approval  of the  Central Government, the power may well be  exercised in  conformity  with  the  provisions  of section  11.  And  if  it  is  so  exercised  the  resultant regulations cannot be said to go beyond the limits specified in the  statute. In this view of the matter Hukam Chand etc. v. Union  of India  and others,(1) and B. S. Vadera v. Union of India  & Ors,(2) which lay down that the authority vested

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 63 of 80  

with the  power of  making subordinate  legislation must act within the limits of and cannot transgress its power, are of no help  to the  case of  the employees on whose behalf they have been cited.      Another proposition  put forward by learned counsel for the employees  may be  noticed here.  It was  contended that section 49  conforms on the Corporation "ordinary" powers of framing subordinate legislation and that the Corporation has not been  invested with any right to unilaterally promulgate a regulation  altering the  conditions  of  service  of  its employees to  their  detriment  and  that  such  regulations cannot override  the provisions  of the  I. D.  Act and  the settlements reached thereunder. Reliance for the proposition was placed on U. P. State Electricity Board and Ors. v. Hari Shanker Jaing  and  Ors.(3)  and  Bangalore  Water-Supply  & Sewerage Board,  etc. v.  R. Rajappa  & Others,(4).  In  the former the case of the employees was that they were governed by the  Industrial Employment  (Standing Orders)  Act which, according to them, was a special Act laying down 1161 provision in  relation to  their conditions  of service  and which could  not, therefore,  be superseded by section 79 of the Electricity  Supply  Act,  1948.  In  holding  that  the section last  mentioned was  a general  law  which  did  not override  the   provisions  of   the  Industrial  Employment (Standing Order) Act, this court observed:      "Chapter VII  (from section  70 to section 83) which is      headed "Miscellaneous"  contains various  miscellaneous      provisions amongst  which are section 78 which empowers      the Government  to make  rules  and  section  79  which      empowers the  Board to  make regulations  in respect of      matters  specified  in  clauses  (a)  to  (k)  of  that      section. Clause  (c) of  section 79  is ’the  duties of      Officers and servants of the Board, and their salaries,      allowances and  other conditions  of service’. This, of      course is no more than the ordinary general power, with      which every employer is invested in the first instance,      to regulate the conditions of service of his employees.      It  is  an  ancillary  or  incidental  power  of  every      employer. The  Electricity Supply Act does not  presume      to be  an Act  to regulate the conditions of service of      the employees of State Electricity Boards. It is an Act      to   regulate    the   coordination    Development   of      electricity. It  is a  special Act  in  regard  to  the      subject of  development of  electricity,  even  as  the      Industrial  Employment   (Standing  Orders)  Act  in  a      special Act  in regard  to the subject of conditions of      service of  workmen in  industrial  establishments.  If      section 79(c)  of the  Electricity Supply Act generally      provides for  the making  of regulations  providing for      the conditions  of service  of  the  employees  of  the      Board, it  can only  be regarded as a general provision      which must  yield to  the  special  provisions  of  the      Industrial Employment  (Standing Orders) Act in respect      of matters covered by the latter Act."      Quite clearly there was no provision in the Electricity Supply Act such as we find in section 11 of the L. I. C. Act which, as already shown, is a special law in relation to the terms and  conditions of  service of  the employees  of  the Corporation very  much in  derogation of  what the I. D. Act lays  down  and  the  case  cited,  therefore,  presents  no parallel to the case in hand.      In Bangalore  Water-Supply & Sewerage Board, etc. v. R. Rajappa &  others  (supra)  the  question  was  whether  the employees of  a statutory  Corporation would or would not be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 64 of 80  

governed by  the provisions  of the  I. D. Act. The question was answered in the affirmative by this Court and Beg, C.J., while concurring with Bhagwati, Krishna Iyer and Desai, JJ., on that point, observed: 1162      "I am  impressed by  the argument  that certain  public      utility services  which are carried out by governmental      agencies or  corporations are treated by the Act itself      as within  the sphere  of industry.  If  express  rules      under other  enactments govern the relationship between      the State  as an employer and its servants as employees      it  may   be  contended;   on  the   strength  of  such      provisions, that  a particular  set  of  employees  are      outside the  scope of  the Industrial  Disputes Act for      that reason.  The special excludes the applicability of      the general. We cannot forget that we have to determine      the meaning  of the  term ’industry’ in the context, of      and for  the purposes  of matters  provided for  in the      Industrial  Disputes  Act  only............  Hence,  to      artificially  exclude  State-run  industries  from  the      sphere  of   the  Act,   unless  statutory  provisions,      expressly or  by a  necessary  implication,  have  that      effect, would not be correct." (emphasis supplied)      Far from  assisting the  case of  the  employees  these observations only  support the  conclusion arrived  at by me above in  as much as they specifically state that if express provision  has   been  made  under  a  particular  enactment governing the relationship of an employer and his employees, such special  provision  would  govern  those  employees  in supersession of the dictates of the I. D. Act.      9. I thus hold that section 11 and clauses (b) and (bb) of subsection  (2) of  section 49  of the  L. I. C. Act were intended  to   be  and   do  constitute  an  exhaustive  and overriding law  governing the  conditions of  service of all employees   of   the   Corporation   including   transferred employees. Proposition  (b) forming  part of conclusion I is consequently found to be incorrect.      10. Conclusion I reached by the High Court being faulty in both  its material aspects, the three corollaries flowing from it and set out above as part of conclusion II must also be held to be unsustainable.      Section 23 of the L. I. C. Act, envisages employment of persons by  the Corporation  no doubt  implies settlement of conditions of  service but  that does  not mean  that once a settlement is  arrived at  the same  is  not  liable  to  be altered except  by another  settlement reached under section 18 of  the I.  D. Act. As already pointed out the provisions of sub-sections  (1), (2) and (4) of section 11 of the L. I. C. Act  and clauses (b) & (bb) of sub-section (2) of section 49  thereof   have  overriding  effect  and  the  terms  and conditions of  service of  the employees  of the Corporation forming part of a settlement under the I. D. Act cannot last after they  have been  altered in  exercise  of  the  powers conferred on the Corporation or the Central Government by 1163 those provisions, as was done when the new regulation 58 was framed under  section 49  by the  Corporation  and  the  new clause 9  was inserted  in the  1957 Order  by  the  Central Government. Nor  can any  action taken  under sections 19(2) and 9A  of the  I. D. Act have any relevance to the exercise of those  powers so  long as  such exercise  conforms to the provisions of the L. I. C. Act.      Conclusion II  is, therefore,  held to  be erroneous in its entirety.      11. Conclusion  III also does not stand scrutiny as the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 65 of 80  

reliance of  the High  Court on  Madan Mohan  Pathak’s  case (supra) for  support to  proposition  (b)  stated  above  is wholly misplaced.  That case was decided by a Bench of seven judges of  this Court  before whom  were canvassed  two main points which  were thus  crystallized by  Bhagwati, J.,  who delivered the judgment on behalf of himself, Iyer and Desai, JJ.:           "A. The  right of class III and Class IV employees      to annual  cash bonus  for the years 1st April, 1975 to      31st March,  1976 and  1st April,  1976 to  31st March,      1977, under clause 8(ii) of the Settlement was property      and since  the impugned  Act  provided  for  compulsory      acquisition  of   this  property   without  payment  of      compensation, the impugned Act was violative of Article      31(2) of the Constitution and was hence null and void."           "3. The  impugned Act deprived Class III and Class      IV employees  of the right to annual cash bonus for the      years 1st April, 1975 to 31st March, 1976 and 1st April      1976 to  31st March,  1977, which  was vested  in  them      under clause  8(ii) of  the Settlement  and there  was,      therefore,  clear  infringement  of  their  fundamental      right under Article 19(1)(f) and since this deprivation      of the  right to  annual cash  bonus, which was secured      under a Settlement arrived at as a result of collective      bargaining and with full and mature deliberation on the      part of  the Life Insurance Corporation and the Central      Government after  taking into  account the interests of      the policy-holders and the community and with a view to      approximating towards  the goal  of a  living  wage  as      envisaged in Article 4 of the Constitution, amounted to      an unreasonable  restriction, the  impugned Act was not      saved by  Article 19(5)  and hence  it was liable to be      struck down as invalid."      In relation to point A the argument raised on behalf of the Corporation  was that under the then existing regulation 58 the  grant of  annual cash  bonus  was  subject  to  such directions as  the Central  Government might  issue and that the right of Class III and Class IV 1164 employees to  receive such bonus could not therefore be said to be  an absolute  right which  was not liable to be set at naught by  any direction that might be issued by the Central Government.  Bhagwati,   J.,  appreciated   the   force   of regulation 58 and remarked:      "Regulation 58 undoubtedly says that non-profit sharing      bonus may  be granted by the Life Insurance Corporation      to its  employees, subject  to such  directions as  the      Central Government  may issue  and, therefore,  if  the      Central Government  issues a direction to the contrary,      non-profit sharing  bonus cannot be granted by the Life      Insurance Corporation to any class of employees." He further observed, however:      "But here,  in the  present case,  grant of annual cash      bonus by  the Life  Insurance Corporation  to Class III      and  Class   IV  employees   under  Cl.  8(ii)  of  the      Settlement was  approved by  the Central  Government as      provided in  Cl. 12 and the ’direction’ contemplated by      Regulation 58  was given by the Central Government that      annual cash  bonus may  be granted  as provided  in Cl.      8(ii) of  the Settlement.  It was  not competent to the      Central Government thereafter to issue another contrary      direction which would have the effect of compelling the      Life Insurance  Corporation to  commit a  breach of its      obligation under  S. 18,  sub-s. (1)  of the Industrial      Disputes Act, 1947 to pay annual cash bonus in terms of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 66 of 80  

    Cl. 8(ii) of the Settlement." It was further held by Bhagwati, J., that clause 8(ii) was a clause independent  of clause  8(i) and  was subject only to the approval  mentioned in  clause 12(2)  which, as  already pointed out,  had been accorded by the Central Government He went on  to hold  that the  right to bonus for the two years (1st April,  1975 to 31st March, 1976 and 1st April, 1976 to 31st March,  1977)  was  property  of  which  the  concerned employees   could   not   be   deprived   without   adequate compensation. Repelling  another argument advanced on behalf of  the   Corporation,   Bhagwati,   J.,   held   that   the extinguishment of the right to bonus really meant a transfer of ownership to the Corporation of the debt available to the employees under  that right  and  that  such  extinguishment amounted to  acquisition of property without compensation so that it  was hit  by article  31 (2)  of the Constitution of India. In  view of  this conclusion Bhagwati, J., considered it unnecessary to consider point B. 1165      Chandrachud, Fazal  Ali and  Shinghal, JJ., agreed with the conclusion  arrived at by Bhagwati, J., on point A. Beg, C.J.,  however,  delivered  a  separate  judgment  seriously doubting the  correctness of  the proposition  enunciated by Bhagwati, J.,  that the extinguishment of the right to bonus amounted to acquisition of property, and deciding point B in favour of  the employees  with a finding that in view of the provisions of  article 43  of the  Constitution the 1976 Act was vitiated  by the  provisions of  article 19(1)(f) of the Constitution and  was  not  saved  by  clause  (6)  of  that article. Beg, C.J., was further of the opinion that the 1976 Act was violative of article 14 of the Constitution.      Three factors are noteworthy:      (a)   Points A  and B  detailed above were specifically           limited to  the duration  of  the  settlements  as           appearing in  clause 12  thereof and the judgment,           therefore, does not cover any period subsequent to           31st March, 1977, as has been rightly contended by           learned counsel for the Corporation.      (b)     No  finding  at  all  was  given  nor  was  any           observation made  by Bhagwati,  J., to  the effect           that sections  11 and  49 of the L.I.C. Act or the           action taken  thereunder (the  promulgation of the           new regulation 58 and the new clause 9 of the 1957           Order) was  ineffective against  the operation  of           the provisions  of the  I.D. Act  or of  the  1974           settlements. On  the other hand, his judgment very           specifically proceeded  on the ground that the two           settlements had  to and  did fully  conform to the           provisions of  regulation 58  in as  much  as  the           Central Government  had accorded  its approval  to           them. The  High  Court  thus  not  only  erred  in           observing that  those settlements  had been upheld           by this  Court "even  though it  did not advert to           regulation 58",  but also failed to take notice of           the clearly  expressed opinion  of  Bhagwati,  J.,           that bonus  under the  two settlements  could  not           have been  paid if  they had  run counter  to  the           requirements of regulation 58. Far from supporting           corollary (b)  of conclusion  II, therefore, Madan           Mohan Pathak’s case rules to an opposite effect.      (c)  Although Bhagwati, J., did hold clearly (and, if I           may say so with all respect, quite correctly) that           sub-clause  (ii)   of  clause   8  of   the   1974           settlements stood  independently of sub-clause (i)           thereof, his judgment contains no finding

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 67 of 80  

1166           whatsoever to  the effect  that the  conditions of           service laid  down in  those settlements  could be           varied only  by a  fresh settlement  or award made           under the provisions of the I.D. Act and that till           then sub-clause  (ii) aforesaid  would  remain  in           full  force.  The  High  Court  clearly  erred  in           observing that  such a  finding formed part of the           majority judgment in Madan Mohan Pathak’s case.      Conclusion III also, therefore, is negatived.      12. We  now take  up for consideration the High Court’s conclusion IV  which  is  based  on  the  interpretation  of section 19  of the  I.D. Act  by this  Court in South Indian Bank Ltd.  v. A.  R. Chacko  (supra). That  section may with advantage be  extracted here  in  extenso  for  facility  of reference:           "19(1) A  settlement shall  come into operation on      such date  as is  agreed upon  by the  parties  to  the      dispute, and  if no date is agreed upon, on the date on      which the memorandum of the settlement is signed by the      parties to the dispute.           "(2) Such  settlement shall  be binding  for  such      period as is agreed upon by the parties, and if no such      period is  agreed upon, for a period of six months from      the date  on which  the  memorandum  of  settlement  is      signed  by  the  parties  to  the  dispute,  and  shall      continue to  be binding on the parties after the expiry      of the period aforesaid, until the expiry of two months      from the  date on  which a  notice  in  writing  of  an      intention to  terminate the  settlement is given by one      of the  parties to  the other  party or  parties to the      settlement.           "(3) An  award shall, subject to the provisions of      this section,  remain in  operation for a period of one      year  from   the  date   on  which  the  award  becomes      enforceable under section 17A:           "Provided  that  the  appropriate  Government  may      reduce the said period and fix such period as it thinks      fit:           "Provided further  that the appropriate Government      may, before  the expiry  of the said period, extend the      period of  operation by  any period  not exceeding  one      year at  a time  as it thinks fit so, however, that the      total period  of operation of any award does not exceed      three years  from  the  date  on  which  it  came  into      operation.           "(4) Where  the appropriate Government, whether of      its own motion or on the application of any party bound      by the  award, considers that since the award was made,      there has been 1167      a material  change in the circumstances on which it was      based, the  appropriate Government  may refer the award      or a  part of  it to  a Labour  Court, if the award was      that of  a Labour  Court or to a Tribunal, if the award      was that  of a  Tribunal or  of a National Tribunal for      decision whether the period of operation should not, by      reason of such change, be shortened and the decision of      Labour Court  or the  Tribunal, as  the case may be, on      such reference shall be final.           "(5) Nothing  contained in  sub-section (3)  shall      apply to  any award which by its nature, terms or other      circumstances does  not impose, after it has been given      effect to,  any continuing  obligation on  the  parties      bound by the award.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 68 of 80  

         "(6) Notwithstanding  the expiry  of the period of      operation  under   sub-section  (3),  the  award  shall      continue to be binding on the parties until a period of      two months has elapsed from the date on which notice is      given by  any party  bound by  the award  to the  other      party or  parties intimating its intention to terminate      the award.           "(7) No notice given under sub-section (2) or sub-      section (6)  shall have  effect unless it is given by a      party representing the majority of persons bound by the      settlement or award, as the case may be." Sub-section (2)  of  the  section  makes  it  clear  that  a settlement reached  under the  I.D. Act  shall be binding on the parties thereto-      (a)  for the  period agreed upon, and if no such period           is agreed upon for a period of six months from the           date on  which the  memorandum  of  settlement  is           signed by the parties; and      (b)  for a  further period  ending with  a span  of two           months reckoned from the date on which a notice in           writing  of   an  intention   to   terminate   the           settlement is  given by one of the parties thereto           to the others.      Sub-sections (3), (4) and (5) provide for the period of operation of an award and its extension and reduction, while sub-section (6) lays down that after such period has expired the award  shall continue to be binding on the parties to it for a  further period  ending with  a  span  of  two  months reckoned in the same manner as the span mentioned earlier.      In so  far as  the explicit  language of the section is concerned there  is no  ambiguity involved.  The  difficulty arises regarding  the period  (hereinafter  called  the  3rd period) subsequent to the date 1168 on which the said span of two months expires in either case, because the  I.D. Act  is silent  about it  and it  is  that difficulty which  this Court  resolved in Chacko’s case. The parties before  the Court in that case were the South Indian Bank Ltd.  and one  of its clerks named A. R. Chacko who had been promoted  as an  accountant with  effect from  the 13th July  1959   and  claimed  certain  allowances  for  periods subsequent to  that date  in terms  of what  is  called  the Sastry award.  On behalf  of the Bank reliance was placed on section 4  of the  Industrial Disputes  (Banking  Companies) Decision Act, 1955 which runs thus:           "Notwithstanding   anything   contained   in   the      Industrial  Disputes   Act,  1947,  or  the  Industrial      Disputes (Appellate  Tribunal) Act,  1950 the  award as      now modified  by the  decision of  the Labour Appellate      Tribunal in  the manner  referred to in section 3 shall      remain in force until March 31, 1959." and a  contention was  raised that  the non-obstante  clause contained in  this section  made the  provisions of  section 19(6) of the I.D. Act inapplicable to the Sastry award which therefore, became  dead for  all  purposes  after  the  31st March, 1959. Repelling the contention this Court observed:      "The effect  of section  4 of  the Industrial  Disputes      (Banking Companies)  Decision Act  is  that  the  award      ceased to  be in  force  after  March  31,  1959.  That      however has  nothing to  do with the question as to the      period for  which it will remain binding on the parties      thereafter. The  provision in  section 19(6) as regards      the period  for which  the award  shall continue  to be      binding on  the parties  is not  in any way affected by      section  4   of  the   Industrial   Disputes   (Banking

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 69 of 80  

    Companies) Decision Act, 1955."      The Court  then proceeded  to consider specifically the situation that would obtain in the 3rd period in relation to an award and held:           "Quite apart  from this, however, it appears to us      that even  if an award has ceased to be in operation or      in force  and has  ceased to  be binding on the parties      under the  provisions of section 19(6) it will continue      to have  its effect  as a  contract between the parties      that has  been made by industrial adjudication in place      of the  old contract.  So long  as the award remains in      operation under  section 19(3), section 23(c) stands in      the way  of any  strike by  the workmen and lock-out by      the employer  in respect  of any  matter covered by the      award. Again  so long  as the  award is  binding  on  a      party, breach of any of its terms 1169      will make  the party liable to penalty under section 29      of the  Act, to  imprisonment which  may extend  to six      months or  with fine  or with both. After the period of      its operation  and also  the period for which the award      is binding  have elapsed  section 23 and section 29 can      have no  operation. We  can however  see nothing in the      scheme of  the Industrial  Disputes Act  to  justify  a      conclusion that merely because these special provisions      as regards  prohibition of strikes and lock-outs and of      penalties for breach of award cease to be effective the      new contract as embodied in the award should also cease      to be  effective. On the contrary, the very purpose for      which  industrial   adjudication  has  been  given  the      peculiar authority  and right  of making  new contracts      between employers  and workmen  makes it  reasonable to      think that  even though  the period of operation of the      award and  the period  for which  it remains binding on      the  parties-in   respect  of  both  of  which  special      provisions have  been made  under sections  23  and  29      respectively-may  expire,   the  new   contract   would      continue to  govern the  relations between  the parties      till it is displaced by another contract. The objection      that no  such benefit  as claimed  could accrue  to the      respondent after  March  31,  1959  must  therefore  be      rejected." (emphasis supplied)      It is  the underlined  portion of  this paragraph which impelled the  High Court to come to the conclusion that even a notice  under section  19(6) of  the I.D.  Act  would  not terminate a  settlement (which, according to the High Court, stands on  the same  footing as  an award  and, in  fact  is indistinguishable therefrom  for the  purpose of section 19) but would have the effect of merely paving the way for fresh negotiations resulting  ultimately in  a new  settlement-  a conclusion which  has been seriously challenged on behalf of the Corporation  with the  submission that Chacko’s case has no application  whatsoever to  the present controversy in as much as  the special  law comprised  of section 11 and 49 of the L.I.C.  Act fully covers the situation in the 3rd period following the expiry of the 1974 settlements. The submission is well  based. In Chacko’s case this Court was dealing with the provisions  of the  I.D. Act  alone  when  it  made  the observations last  extracted and  was not  concerned with  a situation which would cover the 3rd period in relation to an award (or for that matter a settlement) in accordance with a specific mandate  from Parliament. The only available course for filling  the void  created by  the Sastry  award  was  a continuation  of  its  terms  till  they  were  replaced  by something   else   legally   enforceable   which,   in   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 70 of 80  

circumstances before the Court, could only be another 1170 contract (in  the shape  of an award or a settlement), there being no  legal provision  requiring the  void to  be filled otherwise.  In  the  present  case  the  law  intervenes  to indicate how  the void which obtains in the 3rd period shall be filled  and, if  it has  been  so  filled,  there  is  no question of  its being  filled in  the manner  indicated  in Chacko’s case  wherein, as  already pointed out, no such law was available.  The observations  in that  case must thus be taken to  mean that  the expired  award  would  continue  to govern the  parties till it is displaced by another contract or  by  a  relationship  otherwise  substituted  for  it  in accordance with law.      13. Indian  Link  Chain  Manufacturers  Ltd.  v.  Their Workmen which  also the  High Court  pressed into service in arriving at  conclusion IV  is really  not relevant  for the present discussion  as it  deals only  with the  two periods expressly covered  by sub-sections (2) and (6) of section 19 of the I.D. Act and not at all with the 3rd period. The same is true  of Shukla  Manseta  Industries  Pvt.  Ltd.  v.  The Workmen  Employed  under  it  in  which  the  only  question canvassed before  the Court  and answered  by it was whether the law  required that  notice of  termination under section 19(2) had  to be  given only  after the  date of expiry of a settlement. However,  it may  be pointed  out that  in  both those cases  as also in Haribhau Shinde and another v. F. H. Lala Industrial Tribunal, Bombay and another, which has been relied upon by learned counsel for the employees, this Court was not  concerned with  any special  law as  I  find  in  a combined reading  of sections  11 and  49 of the L.I.C. Act; and for that reason also none of these three decisions is of any  assistance  for  the  determination  of  the  point  in controversy before us.      14.  Some   arguments  were   addressed  to   us  on  a proposition advanced  by learned counsel for the Corporation to the  effect that a settlement could not be treated at par with an  award for  the purpose  of the  I.D. Act  and  that Chacko’s case,  therefore, could furnish no proper basis for the High  Court’s conclusion  IV. I  do not  propose to deal with that  proposition which  is merely of academic interest in view  of the  material distinction  already pointed  out, namely, that  in the present case there is a special mandate by Parliament  to fill  the void of the 3rd period which did not obtain in Chacko’s case. However, I may briefly dwell on another aspect  of the same distinction and that consists of the circumstance  that while  in Chacko’s  case the employer was the South Indian Bank 1171 Ltd.-a non-statutory  banking company-the employer before us now is the creation of the L.I.C. Act itself and therefore a statutory corporation.  This circumstance  coupled with  the contents  of   the  L.I.C.   Act  leads   to  the  following deductions,  as   laid  down  in  Suchdev  Singh  &  Ors  v. Bhagataram Sardar Singh Raghuvanshi and anr.(1).      (a)   The Corporation carries on the exclusive business           of life  insurance as  an agency of the Government           by  which  it  is  managed  and  which  alone  can           dissolve it. It is, therefore, an authority within           the meaning  of article  12 of the Constitution of           India.  The   status  of   persons   serving   the           Corporation thus  carries with  it the  element of           public employment.      (b)   The L.I.C.  Act enables  the Corporation  to make           regulations which  may provide, inter alia for the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 71 of 80  

         terms and  conditions of service of its employees.           Such regulations  cannot  be  equated  with  those           framed  by   a  company   incorporated  under  the           Companies Act  and, on  the other  hand, have  the           force of  law which  must be  followed both by the           Corporation and those who deal with it.      It is  obvious that  an application of these deductions to the  situation prevailing  in the present case would rule out the  relevance of  Chacko’s case  because regulation  58 framed under  section 49  of  the  L.I.C.  Act  specifically governs the  3rd period  following the  expiry of  the  1974 settlements.      15. I  need not go into the correctness or otherwise of conclusion V  reached by  the High  Court as no arguments in relation thereto  were addressed to us. I shall now proceed, however, to  discuss certain other contentions raised before us on  behalf of  the employees  although the  same were not canvassed before the High Court.      16. It was argued that both sub-sections (1) and (2) of section 11  of the L.I.C. Act relate exclusively to the case of employees  and that  sub-section (2) does not embrace the case of  employees  recruited  under  section  23.  In  this connection an analysis of section 11 would be helpful. In so far as  sub-section (1)  is concerned it is quite clear that it cannot  be extended  to cover  employees recruited  under section 23,  and that it is restricted in its operation only to the  transferred employees.  This follows  from the clear language  used.  Sub-section  (2)  however,  is  differently worded. It may be split up as follows:      (a)   The Central  Government may alter (whether by way           of reduction  or otherwise)  the remuneration  and           the other 1172           terms and conditions of service (of .............)           to such  extent and  in such  manner as  it thinks           fit.      (b)    The  Central  Government  may  take  the  action           detailed in  (a)  above  notwithstanding  anything           contained in  sub-section (1)  or the I.D. Act, or           in any other law for the time being in force or in           any award,  settlement or  agreement for  the time           being in force.      (c)   The action  detailed in  (a) can be taken only if           the Central Government is satisfied-           (i)   that for  the purpose of securing uniformity                in the  scales of  remuneration and the other                terms and conditions of service applicable to                transferred employees,  it is necessary so to                do;                              or           (ii) that, in the interests of the Corporation and                its  policyholders   a   reduction   in   the                remuneration payable  or a  revision  of  the                other  terms   and  conditions   of   service                applicable, to employees or any class of them                is called for.      According to  learned counsel  for  the  employees  the expression "employees  or any  class of  them" occurring  in sub-clause (i)  of the above analysis must be interpreted to mean transferred  employees or  any class  thereof  and  the expression does  not cover  the  employees  recruited  under section 23.  Support for  the contention  is sought from the circumstance that  the section is not only a part of Chapter IV of  the L.I.C. Act, which is headed "Transfer of existing Life Insurance Business to the Corporation" but also carries

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 72 of 80  

the marginal note "Transfer of service of existing employees of insurers to the Corporation". This circumstance is wholly immaterial not only for the reason that headings of chapters and marginal  notes cannot be looked into for the purpose of ascertaining the  intention of  the Legislature  unless  the language employed  by it  is ambiguous  but also because the absorption of the transferred employees into the Corporation may itself necessitate a change in the conditions of service of the  employees recruited  under section  23.  It  is  not disputed that  transferred  employees,  amongst  themselves, were governed  by widely different conditions of service and that was  so for  the simple  reason that they had come from different companies,  each having  its  own  scales  of  pay applicable to  its servants.  Then the Corporation came into existence, recruitment   under  section  23  need  not  have waited for  action under  section 11(2)  and the  process of examination of  different scales  of pay  of the transferred employees as compared to 1173 those pertaining  to hands  recruited under  section 23,  as also the  appropriate action which should have been taken as a  result  of  such  examination,  was  bound  to  be  time- consuming; and  the result may well have entailed a decision to equalise  the scales  of  pay  not  only  by  raising  or reducing those  of the  transferred employees but also those of the  employees  recruited  under  section  23.  And  that appears to  be only  reason why  the legislature  chose  the comprehensive expression "employees or any class of them" in sub-section (2)  in spite  of the fact that not only in sub- sections (1)  and (4) but also in sub-section (2) itself the detailed  description   "employee  of   an   insurer   whose controlled business  has been  transferred to  and vested in the Corporation"  or words  to that effect have been used to denote a transferred employee. Again, wherever a transferred employee was meant but a detailed description in relation to him was  not given,  the expression "such employee" was used with reference  to that  description. Examples  in point are the proviso  to sub  section (1) and the latter part of sub- section (4).  If the  expression "employees  or any class of them"  was   intended  to   be  restricted   to  transferred employees, it would certainly have been preceded by the word ’such’ so  that  it  could  be  referable  to  the  detailed description of  employees  of  that  kind  occurring  in  an earlier part  of the sub section. From the circumstance that no such  device was  pressed into  service the conclusion is irresistible that the expression last mentioned was intended to convey  a meaning different from that which was deducible from the  detailed description  otherwise  employed  in  the section- a  conclusion based  on the well-known principle of interpretation of statutes thus stated by Maxwell in Chapter 12 of his celebrated work earlier cited:           "From  the   general  presumption  that  the  same      expression is  presumed to  be used  in the  same sense      throughout an  Act or  a series  of cognate Acts, there      follows  the  further  presumption  that  a  change  of      working denotes a change in meaning."      17. The  matter may  also be  looked  at  from  another angle. As  stated in  clause (c)  of the  above analysis the Central Government  is empowered  to take  action under sub- section (2)  of section  11 if  it is  satisfied  about  the existence of  either of  two conditions.  It may  take  such action if  it is  satisfied that for the purpose of securing uniformity in  the scales  of remuneration, etc., applicable to transferred  employees it is necessary to do so. But then if no action is intended to be taken for that purpose it may

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 73 of 80  

still be  taken provided the Central Government is satisfied that it  is in  the interests  of the  Corporation  and  its policy-holders to  make  a  reduction  in  the  remuneration payable or a revision of the other terms and conditions 1174 applicable to  its employees.  Now the first condition which envisages the  securing  of  uniformity  in  the  scales  of remuneration clearly  applies to  transferred employees only but the  same is  not true  of the  second condition.  At  a particular juncture  in the  life of  the Corporation it may become necessary  to make  a reduction  in the  remuneration payable to  its employees  or a  revision of the other terms and conditions  of service applicable to them. But then this must follow  from the satisfaction of the Government that it is in the interest of the Corporation and its policy-holders to do  so. It  is obvious  that this condition envisages the change in  conditions of service, etc., of all the employees of the Corporation and not only transferred employees. If it were  otherwise   the   sub-section   may   well   lead   to discrimination and  render the  provision  unconstitutional. Even if,  therefore, the  expression "employees or any class of them"  occurring in  sub-section (2) was capable of being regarded  as   ambiguous,  the   Court  would   choose  that interpretation which  would conform to the constitutionality of the  provision. This  well known  principle  of  satutory construction was  made use  of by  a learned single Judge of the Calcutta  High Court in Himrangsu Chakraborty and others v. Life Insurance Corporation of India and others(1) wherein he dealt with sub-section 11(2) thus:      "According to  Mr. Chatterjee  section 11(2) of the Act      contains two limbs. The first limb confers power on the      Central Government  to revise  the terms and conditions      of service  of the  employees of  the Corporation.  Its      power is,  however, confined  only to  those  employees      whose services  have been  transferred to and vested in      the Corporation  by reason  of the  commencement of the      Act. The  second limb  confers  power  on  the  Central      Government to  alter the  terms and  conditions of  the      service applicable  to all employees of the Corporation      irrespective of  whether they are transferred employees      or are  directly recruited  after the  inception of the      Corporation.  Strong   emphasis  is   placed   on   the      expression ’terms  and conditions of service applicable      to employees  of insurers whose controlled business has      been transferred  to and vested in the Corporation’ and      ’terms  and   conditions  of   service  applicable   to      employees or any class of them’. Mr. Chatterjee submits      that the  latter clause does not contain the expression      ’such employees’  and therefore  should be construed to      confer a  power on  the Central Government to alter the      conditions of service of all employees..... In my view,      this contention of Mr. Chatterjee is sound and should 1175      be accepted. On a plain reading of section 11(2) of the      Act it  seems to  contain  two  distinct  and  separate      powers. The  first part  relates to  the power  of  the      Central  Government   in   relation   to   "transferred      employees" whereas  the second part appears to apply to      all  employees   of  the  Corporation  irrespective  of      whether they are transferred or directly recruited."      I find  myself in complete agreement with this view for the reasons already stated.      18. In order to steer clear of the above interpretation of section  11(2) learned  counsel  for  the  employees  put forward the  argument that  the word  ’for’ occurring in the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 74 of 80  

section should  not be  read as  a disjunctive and should be given the  meaning ’and’ so that the two clauses forming the conditions about  which the  Central Government  has  to  be satisfied before  it can  act under the section are taken to be one  single whole;  but we  do not see any reason why the plain meaning  of the  word should  be distorted to suit the convenience or  the cause  of the  employees. It is no doubt true that  the word  ’or’ may  be interpreted  as  ’and’  in certain extraordinary  circumstances such  as in a situation where its use as a disjunctive could obviously not have been intended. (see  Mazagaon Dock  Ltd. v.  The Commissioner  of Income-tax and  Excess Profits  Tax.(1) Where  no compelling reason for  the  adoption  of  such  a  course  is  however, available, the word ’or’ must be given its ordinary meaning, that is, as a disjunctive. This rule was thus applied to the interpretation of  clause (c)  of section  3(1) of  the U.P. (Temporary) Control  of Rent  and Eviction Act, 1947 in Babu Manohan Das Shah & Ors. v. Bishun Das,(2) by Shelat, J:      "The  clause  is  couched  in  simple  and  unambiguous      language and  in its  plain meaning  provided  that  it      would be  a good  ground enabling a landlord to sue for      eviction  without   the  permission   of  the  district      Magistrate if  the tenant  has made or has permitted to      be made  without the landlord’s consent in writing such      construction which  materially alters the accommodation      or is  likely substantially  to diminish its value. The      language  of   the  clause  makes  it  clear  that  the      legislature wanted  to lay  down two alternatives which      would furnish  a ground  to the landlord to sue without      the District  Magistrate’s permission,  that is,  where      the tenant  has  made  such  construction  which  would      materially alter  the accommodation  or which  would be      likely  to   substantially  diminish   its  value.  The      ordinary rule of construction is 1176      provision of  a statute must be construed in accordance      with  the   language  used  therein  unless  there  are      compelling   reasons,   such   as   where   a   literal      construction would reduce the provision to absurdity or      prevent the  manifest intention of the legislature from      being carried  out. There is no reason why the word ’or      should be  construed otherwise  than  in  its  ordinary      meaning."      In my  view this  reasoning is  fully applicable to the case in  hand and  there is  every reason  why the word ’or’ should be given its ordinary meaning. This was also the view taken by  a learned single Judge of the Madras High Court in K. S.  Ramaswamy and  anr. v. Union of India and ors.(1), of which I fully approve.      19. Still  another argument  calculated  to  mould  the interpretation of  section 11(2)  in favour of the employees was that the power conferred on the Central Government by it was intended  to be  used only  once and  that too  for  one purpose, namely, to achieve uniformity in the scales of pay, etc. In  this connection  our attention  was  drawn  to  two factors, namely,  that the words ’from time to time’ forming part of  the section  as it  originally stood  were  deleted therefrom when  it was  amended in  1957 and  that while the amendment  of   the  section   at  that   time   was   under consideration of  Parliament the  then Finance  Minister had given an  assurance in  that behalf.  The argument is wholly unacceptable to  me. One  good reason  is available  in  the provisions of  section 14  of the  General Clauses Act which runs thus:           "14(1) Where,  by any  Central Act  or  Regulation

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 75 of 80  

    made after  the commencement  of this Act, any power is      conferred, then  unless a  different intention appears,      that power  may be  exercised  from  time  to  time  as      occasion requires.           "(2) This section applies also to all Central Acts      and Regulations  made on or after the fourteenth day of      January, 1887." In view  of the  clear language  of the  section, no Central law, while  conferring a  power, need  say in  so many words that such power may be exercised from time to time; and if a law does  make use  of such  an expression  that  would  not change the  position. The  deletion of such an expression by the legislature  at a  given point  of time  may, therefore, follow the  detection of  the superfluity and that would not mean, all by itself, that the legislature intended to 1177 limit the  exercise of such power to a single occasion. This is precisely  the view  that was  taken by  this Court  in a similar situation  in Vasantlal  Maganbhai Sanjanwala v. The State of  Bombay and  Others(1). In  that case the Court was dealing  with   section  6(2)  of  the  Bombay  Tenancy  and Agricultural Lands Act, 1948, which ran thus:           "The Provincial Government may, by notification in      the official  Gazette, fix  a lower rate of the maximum      rent payable  by the  tenants of  lands situate  in any      particular area  or may  fix such  rate  on  any  other      suitable basis as it thinks fit." It was  pointed out  to the  Court that  in this section the words ’from  time to  time’  which  found  a  place  in  the corresponding section  of the  earlier  tenancy  legislation were missing although the expression ’from time to time’ was retained in  section 8(1)  of the Act. The contention raised was that the power delegated under section 6(2) was intended to be used only once but was rejected as fallacious with the following observations:      "Why the  Legislature did  not use the words ’from time      to time"  in section  6(2) when it used them in section      8(1) it  is difficult  to understand; but in construing      section 6(2)  it is  obviously necessary  to apply  the      provisions of  section 14 of the Bombay General Clauses      Act, 1904  (I of  1904). Section 14 provides that where      by any  Bombay Act  made after the commencement of this      Act any  power is conferred on any Government then that      power may  be exercised  from time  to time as occasion      requires. Quite  clearly if section 6(2) is read in the      light of  section 14  of the Bombay General Clauses Act      it must  follow that  the power to issue a notification      can  be   exercised  from  time  to  time  as  occasion      requires. It  is true  that section  14 of  the General      Clauses Act,  1897 (X of 1897), provides that where any      power is  conferred by  any Central  Act or  Regulation      then, unless  a different intention appears, that power      may  be   exercised  from  time  to  time  as  occasion      requires. Since  there is  a specific  provision of the      Bombay General  Clauses Act relevant on the point it is      unnecessary to  take recourse  to  section  14  of  the      Central General  Clauses Act;  but even  if we  were to      assume that the power in question can be exercised from      time to  time unless  a different  intention appears we      would feel  no  difficulty  in  holding  that  no  such      different  intention   can   be   attributed   to   the      Legislature when it enacted section 6(2). It 1178      is obvious  that having  prescribed for  a  maximum  by      section 6(1)  the Legislature has deliberately provided

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 76 of 80  

    for a  modification of  the said  maximum rent and that      itself shows  that the fixation of any maximum rent was      not treated  as immutable. If it was necessary to issue      one notification  under section 6(2) it would follow by      force of  the same logic that circumstances may require      the issue  of a  further notification.  The fixation of      agricultural  rent   depends  upon  so  many  uncertain      factors-which may vary from time to time and from place      to place  that it  would be  idle to  contend that  the      Legislature wanted to fix the maximum only once, or, as      Mr. Limaye concedes, twice. Therefore the argument that      the power  to issue  a notification  has been exhausted      cannot be sustained."      The language  of section  14 of the General Clauses Act being identical  with that of the Bombay General Clauses Act this reasoning  is fully applicable to the interpretation of section 11(2)  of the L.I.C. Act. The same view was taken by a Division  Bench of  the Gujarat High Court in Harivadan K. Desai and  others v. Life Insurance Corporation of India and others(1), in the following words:      "While construing  a statutory  provision,  it  is  not      permissible to  traverse beyond  the  language  of  the      provision  unless  the  legislative  intent  cannot  be      gathered from  the clear  and definite  language of the      provision. It  is true  that often  Courts do look into      the debates  in the  Legislature and  also the marginal      notes to  ascertain the scope of a particular provision      of the  statute. But that is only in exceptional cases.      The language  of section  11(2) is very clear. There is      nothing to  indicate or  suggest even remotely that the      powers vested  in the  Central Government under section      11(2) get  exhausted when  once the  Central Government      exercises that power. Section 14 of the General Clauses      Act, 1897 further strengthens our view. Section 14 lays      down that  where by  an Central  Act or Regulation made      after  the  commencement  of  the  Act,  any  power  is      conferred, then  unless a  different intention appears,      that power  may be  exercised  from  time  to  time  as      occasion  requires.   We  are   unable  to  gather  any      different intention from section 11(2) so as to injunct      the Government  from exercising  their power  after the      issuance of  the Blue Order; in other words, after they      once exercised that power." 1179      20. I  may further point out that  part of the power to alter  the   terms  and   conditions  of   service  of   the Corporation’s employees  which  the  Central  Government  is authorised to  exercise in  the interests of the Corporation and its  policy-holders must  of necessity  be a power which can be  exercised  as  and  when  occasion  so  requires.  A contrary view  would lead to absurd results in certain given situations.  Let   us  assume   that  the   affairs  of  the Corporation did not present a rosy picture to begin with and that therefore,  a drastic reduction in the scales of pay of its employees  was called  for and  was achieved by an order made by  the Central  Government in  exercise of  its  power under section  11(2). Does  that mean  that if  later on the Corporation  develops   its  business   and  makes  sizeable progress in  the way of earning profits, the power conferred on the  Central Government would not be exerciseable to give better pay  scales to  the  employees?  An  answer  to  this question in  the  negative  would  obviously  not  meet  the exigencies of  the situation  and in  my opinion leads to an absurdity. Again,  if the  scales  of  remuneration  of  the transferred employees are adjusted by the Central Government

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 77 of 80  

so as  to smooth out anomalies and discrepancies, would that put an end to the exercise of the power so that it cannot be used  subsequently  for  the  amelioration  of  the  service conditions  of   the  employees  when  the  affairs  of  the Corporation so  warrant? To put such a restricted meaning on the language  used does  not appear  to be warranted for any reason whatsoever.      21. In  so for  as the  proceedings of  Parliament  and speeches made  during the course thereof are concerned, they are not  admissible for the purpose of interpretation of the resultant  statute  unless  the  language  used  therein  is ambiguous and  impels the Court to resort to factors outside the statute for the purpose of ascertaining the intention of the law-makers.  This is what was clearly held this Court in Anandji Haridas & Co. Pvt. Ltd. v. Engineering Mazdoor Sangh  & Anr.,(1) by Sarkaria,  J. who  delivered the  judgment on behalf of  himself and Alagiriswami,J., and the observations made therein are worth repetition:           "As a  general principle  of interpretation, where      the  words   of  a   statute  are  plain,  precise  and      unambiguous, the  intention of the Legislature is to be      gathered from the language of the statute itself and no      external  evidence   such  as   Parliamentary  Debates,      Reports of  the Committees  of the Legislatures or even      the statement  made by the Minister on the introduction      of a measure or by the framers of the Act is admissible      to construe 1180      those  words.  It  is  only  where  a  statute  is  not      exhaustive  or   where  its   language  is   ambiguous,      uncertain, clouded  or susceptible  of  more  than  one      meaning or shades of meaning, that external evidence as      to the evils, if any, which the statute was intended to      remedy, or  of  the  circumstances  which  led  to  the      passing of  the statute  may be  looked  into  for  the      purpose  of   ascertaining   the   object   which   the      Legislature  had   in  view   in  using  the  words  in      question."      These observations  amply cover  the situation in hand. Section 11(2)  suffers from no ambiguity either by reason of the omission therefrom of the expression "from time to time" or otherwise  and it  is, therefore,  not permissible  for a reference to  be made  to the  speech of  the  then  Finance Minister in the matter of interpretation of the section.      22. The  next contention for the employees which raises a question of the vires of clause 9 of the 1957 order and of regulation 58  is based  on the  following  passage  in  the judgment of Beg, C.J., in M. M. Pathak’s case (supra):           "He submits that article 43 casts an obligation on      the State  to secure  a living wage for the workers and      is part  of the principles "declared fundamental in the      governance of  the country".  In other  words, he would      have us  use article  43 as  conferring  practically  a      fundamental right which can be enforced. I do not think      that we  can go so far as that because, even though the      directive principles  of State  policy,  including  the      very important general ones contained in article 38 and      39 of the Constitution, give the direction in which the      fundamental policies  of the  State must  be  oriented,      yet, we  cannot direct either the Central Government or      Parliament to  proceed in  that direction.  Article  37      says that  they ’shall not be enforceable by any court,      but the  principles therein  laid down are nevertheless      fundamental in  the governance  of the  country and  it      shall  be   the  duty  of  the  State  to  apply  these

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 78 of 80  

    principles in  making laws.’ Thus, even if they are not      directly enforceable by a court they cannot be declared      ineffective.  They   have  the   life  and   force   of      fundamentals. The  best  way  in  which  they  can  be,      without being  directly enforced,  given  vitality  and      effect in  Courts of  law is to use them as criteria of      reasonableness, and  therefore, of validity, as we have      been doing.  Thus, if  progress towards  goals found in      articles 38  and 39 and 43 is desired, there should not      be any  curtailment of  wage rates  arbitrarily without      disclosing any valid reason for it as is the case here.      It is quite reasonable, in my opinion, to submit that 1181      the measure  which seeks  to  deprive  workers  of  the      benefits of  a settlement arrived at and assented to by      the Central  Government, under  the provisions  of  the      Industrial Disputes Act, should not be set at naught by      an Act  designed to  defeat a particular settlement. If      this be  the purpose of the Act, as it evidently is, it      could very  well be  said  to  be  contrary  to  public      interest, and therefore, not protected by article 19(6)      of the Constitution." These observations  are of  no  help  to  the  case  of  the employees as  they were  made in  relation to  the change of conditions  of   service  of   employees  in  an  industrial establishment under a settlement which was then in operation and therefore,  covered only  the first  period mentioned in section 19(2)  of the  I.D. Act--a  period with which we are not concerned.  As pointed  out  by  Bhagwati,  J.,  in  his separate judgment,  the bonus  for the period up to the 31st March 1977  had actually  vested in  the employees  and  had become a  debt due  to them and that was why the majority of six held  that the  1976 Act  was violative of article 31, a view  which  Beg,  C.  J.,  doubted.  Besides,  the  opinion expressed in  the observations  just  above  extracted,  was perhaps not  shared by the other six judges who chose not to decide the  question as  to whether  the 1976 Act was or was not hit  by articles 14 and 19 of the Constitution of India. In these premises the employees cannot draw any benefit from Beg, C.  J.’s observations.  On the other hand, no challenge to the  vires of section 11(2) was made from either side and so long  as the  section itself  is good the exercise of the power  conferred  by  it  cannot  be  attacked  unless  such exercise goes  beyond the  limits of  the section, either in its content  or manner.  If the legislature was competent to confer a  power on  the  Central  Government  to  alter  the conditions of service of the employees of the Corporation to their detriment  or otherwise,  the fact  that the power was exercised only to cut down bonus would furnish no reason for striking down clause 9 of the 1957 order or regulation 58 as being violative of article 14 or 19.      23. Clause  9 of  the 1957  order was  also attacked as contravening articles 14 and 16 of the Constitution of India for the reason that it applied only to transferred employees who were  discriminated against  in the  matter of  equality before the law and of opportunity of employment. That clause no doubt  takes within  its sweep only transferred employees because clause  2 of the 1957 order specifically states that the order  is restricted  in its  operation to  employees of that category;  but then  no question  of any discrimination whatsoever  is  involved  in  as  much  as  the  transferred employees have  not only  not been  treated differently from other employees of the Corporation 1182 but by  reason of  regulation 58 they have been placed fully

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 79 of 80  

at  par  with  the  latter.  The  argument  would  have  had plausibility only  in the  absence of  regulation 58  (which applies to  all the  employees of  the Corporation)  and  is wholly devoid of force.      24. Another  attack levelled  against clause 9 was that it suffered  from a  contravention of  the well-known  maxim delegatus non potest delegare. It was urged that the Central Government having  been invested  with the power of altering the terms  and conditions of service of the employees of the Corporation, it  was bound  in law  to exercise  that  power itself and  that it  could not  delegate that  power to  the Corporation as  it has  done in  clause 9.  This argument is again  without   substance.  The  clause  itself  states  in unmistakable terms that the Corporation may grant non-profit sharing bonus  to its employees in respect of any particular year  subject  to  the  previous  approval  of  the  Central Government, and so the real bonus-granting authority remains the Central  Government and  not the  Corporation. There  is thus no  delegation of  any real  power to  the  Corporation through the promulgation of clause 9.      25. Clause  9 was  also challenged  on the  ground that although the  notification promulgating  it began  with  the preamble "whereas  the Central  Government is satisfied that in the  interests of  the Corporation and its policy-holders it is  necessary to  revise  the  terms  and  conditions  of service.. "  there is  nothing  to  show  that  the  Central Government was  actually so satisfied. This is a stand which cannot be allowed to be raised at this late stage in as much as it involves questions of fact. which cannot be determined without  the   Central  Government   being  given   a   full opportunity to  rebut it.  Had the  contention  been  raised before the  High Court, documentary evidence could have been produced to  establish that  the requirement  of the section had been fully met in regard to the relevant satisfaction of the  Central  Government.  Again,  in  the  absence  of  any evidence to  the contrary, it is permissible to presume that official acts  have been  regularly performed  and that  the preamble to  the notification,  therefore, is in accord with facts.      26.  Another   contention  raised   on  behalf  of  the employees was  that the  new clause 9 and the new regulation 58 were  both hit by the provisions of articles 14 and 19 of the Constitution of India in as much as they singled out the employees of  only one  statutory corporation  for a special rule regarding bonus in derogation of the terms hithertofore prevailing, no other Corporation in the public sector having been so  touched.  The  contention  cannot  prevail  in  the absence  of  evidence  that  the  total  emoluments  of  any employee to  be affected  by the  new  clause  and  the  new regulation (regardless 1183 of bonus) would be less than those of his counterpart in any other statutory  corporation. In this connection also we may point out that the contention was not raised before the High Court and no foundation was laid for it at any stage.      27. The  only other  contention raised on behalf of the employee was  that regulation  58 could  not operate to make in-applicable the  1974 settlements  to the 3rd period in as much as  all settlements  reached under  the I.D.  Act  were protected by  the provisions  of  regulation  2  which  thus specifies the  employees of  Corporation to  whom  the  1960 regulations apply:           "2. They  shall apply  to every wholetime salaried      employee of  the Corporation  in India unless otherwise      provided by  the terms  of any  contract, agreement  or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 80 of 80  

    letter of appointment."      It  is   impossible  to   accept  the   argument  under examination in  view of  the language  of regulation 2 which merely signifies  the persons to whom the regulations are to apply. When  it says  that it shall apply to every wholetime employee of  the Corporation  "unless otherwise  provided by the  terms   of  any   contract,  agreement   or  letter  of appointment", all  that it  means is  that  if  a  contract, agreement or  letter of  appointment contains a term stating that the  concerned  employee  or  employees  shall  not  be governed by the regulations, then such employee or employees shall not  be so  governed. Regulation  2 is  definitely not susceptible of  the interpretation  that if a settlement has been reached  between the Corporation and its employees, the regulations  shall   not  apply  to  them  even  though  the settlement makes no provision in that behalf. It is nobody’s case that  the 1974  settlements contain  any such provision and regulation 2, therefore, does not come into play at all.      28. In  the result appeal No. 2275 of 1978 succeeds and is accepted.  The impugned  judgment is  set aside  and  the petition under  article 226  of the  Constitution  of  India decided thereby  is dismissed along with transfer case No. 1 of 1979.  In the  circumstances of  the case,  however,  the parties are left to bear their own costs.                            ORDER      In view  of the  opinion expressed by the majority, the appeal is  dismissed with  costs to  the first,  second  and third respondents,  and the  Transfer Petition No. 1 of 1979 stands allowed  insofar that  a writ  will issue to the Life Insurance Corporation  directing it  to give  effect to  the terms of  the settlements  of 1974  relating to  bonus until superseded by  a fresh  settlement, an  industrial award  or relevant legislation.  Costs  in  respect  of  the  Transfer Petition will  be paid  to the  petitioners  by  the  second respondent. V.D.K.                                    Appeal dismissed. 1184