JUDGMENT

SABYASACHI MUKHARJI, J.:— Them petitions under Article 32 of the Constitution are filed by The employees of the General Insurance Companies and the All India Insurance Employees Association. The respondents are, Union of India, the General Insurance Corporation of India and four General Insurance companies.

2. The petitioners challenge the Notification dated 30th September, 1990 of the Ministry of Finance (Department of Economic Affairs) (Insurance) introducing what is called General Insurance (Rationalisation and Revision of Pay Scales and Other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme, 1980 as being illigal and violative of their fundamental rights under Arts. 14. 19 (1) (g) and 31 of the Constitution of India.

3. Prior to 1972, there were 106 General Insurance companies - Indian and foreign. Conditions of service of theft employees were governed by the respective contracts of service between the companies and the employers. On 13th May, 1971, the Government of India assumed management of the general insurance companies under the General Insurance (Emergency Provisions) Act, 1971. The general insurance business was nationalised by the General Insurance Business (Nationalisation) Act, 1972 (Act 57 of 1972). The preamble of the Act explains the purpose of the Act as to provide for the acquisition and transfer of shares of Indian insurance companies and undertakings of other Insurers in order to serve better the needs of economy in securing development of general insurance business in the best interest of the community and to ensure that the operation of the economic system does not result in the concentration of wealth to the common detriment, for the regulation and control of such business and for matters connected therewith or incidental thereto.

4. Act 57 of 1972, by Section 2, declared that it was for giving effect to the policy of the State towards securing the principles specified in Clause (c) of Article 39 of the Constitution. Under Section 3 (a) of the Act, acquiring company has been defined as any Indian insurance company and, where a scheme had been framed involving the merger of one or more insurance companies in another or amalgamation of two or more such companies, means the Indian insurance company in which any other company has been merged or the company which has been framed as a result of the amalgamation.

5. Section 4 provides that on the appointed day all the shares in the capital of every Indian insurance company shall be transferred to and vested in the Central Government free of all trusts, liabilities and encumbrances affecting these.

6. Section 5 provides for transfer of the undertakings of other existing insurers. Section 6 provides for the effect of transfer, of undertakings. Section 8 provides for the Provident Fund, superannuation, welfare or any other fund existing. Section 9 stipulates that Central Government shall form a Government company in accordance with the provisions of the companies Act, to be known as the General Insurance Corporation of India for the purpose of superintending, controlling and carrying on the business of general insurance. Section 10 stipulates that all shares in the capital of every Indian insurance company which shall stand transferred to and vested in the Central Government by virtue of Section 4 shall immediately after such vesting, stand transferred to and vested in the Corporation.

7. Chapter IV deals with the amounts to be paid for acquisition and as such we are not concerned in this case with that chapter in view of the controversy involved.

8. Chapter V of the aforesaid Act deals with "Scheme for reorganisation of general insurance business". Sections 16 and 17 of the Act in this chapter are as follows :

"16. (1) If the Central Government is of opinion that for the more efficient carrying on of general insurance business it is necessary so to do, it may, by notification, frame one or more schemes providing f