The Life Insurance Corporation Of … vs D. J. Bahadur & Ors on 10 November, 1980

The Life Insurance Corporation Of … vs D. J. Bahadur & Ors on 10 November, 1980

Equivalent citations: 1980 AIR 2181, 1981 SCR (1)1083Author: V KrishnaiyerBench: Krishnaiyer, V.R.

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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 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 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. 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, 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 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 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 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 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. 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 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. 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] 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]



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.

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 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 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.

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 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-

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 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, the problem of decoding the legislative intent is fraught with perils and pitfalls, as the learned author has noted :

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 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 :

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.

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 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, 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 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.

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 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 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, 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 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:

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) 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):

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 effect to any continuing obligation on the parties bound by the award.

(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:

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