Importent Point:
There is no need for any consultation with the employees while making amendment in the scheme.

JUDGMENT:

Dr. ARIJIT PASAYAT, J. -- Leave granted.

2. These appeals are taken up alongwith Transfer Case (Civil) Nos.60-64/2004, 73/2004, 42/2005 and 47/2005.

3. In all these cases the basic issue is the legality of General Insurance (Rationalisation of Pay Scales and Other Conditions of Service of Development Staff) Amendment Scheme, 2003 (in short 2003 Scheme').

4. The present scheme purports to amend the earlier scheme framed under Section 17A of the General Insurance (Business Nationalization) Act, 1972 (in short the 'Act'). The principal scheme was framed in 1976 in exercise of powers under Section 16(1)(g) of the Act. The scheme was amended earlier in the years 1987, 1990 and 1996 and 2000. The principal scheme of 1976 was challenged but the challenge was turned down and legality of the scheme was upheld by this Court. Several writ petitions have been filed by Development Officers questioning legality of the scheme on the ground that there was unilateral change of service conditions of the Development Officers in Class II category. The declaration sought for in the writ petitions was that administrative guidelines dated 5.2.2003 were without power, jurisdiction and legal sanctity. It was pointed out that while changing service conditions of the Development Officers in Class II category the service conditions of other employees in Class I, III and IV were not touched. According to the Development Officers the following stipulations affected them:

"Cost Norms: As per 2 (c) in the amendment, the proviso of clause 7 of the original scheme of 1976 as amended in 1990 was omitted.

The proviso inserted as per 1990 amendment is as follows:

"Provided that for the purposes of Para 11, 11A and 13 cost shall mean gross emoluments paid to the development officer during a performance year".

The Development Officer Marketing governed by cost norms has to perform within stipulated cost ratio. As per the pre amended scheme he gets the benefit of two tier cost system i.e.

1. For the purpose of increment.

2. For the purpose of incentives.

5. Now by the 2003 amendment single cost system has been introduced whereby the cost system for the purposes has been withdrawn by deleting the proviso to clause 7. The comparison table is as follows:

Development Officer Applicable in Applicable in relation Operating at increment to incentives. City/town As per 2003 Existing As per 2003 Existing Cost ratio cost ratio cost ratio cost ratio

A Cities 7% 8% 7% 7%

B Cities/Towns 8% 9% 8% 8%

C Other Centres 10% 11% 10% 10%

6. Existing scheme was amended in 1996.

7. "Cost ratio" is the ratio expressed as percentage of cost incurred on a person of the development staff to the scheduled premium income procured through him during the concerned year.

8. Cost relaxation was done from time to time by amending the scheme. The 2003 amendment brought down the cost ratio by 1% in all centers thereby increasing the cost ratio beyond stipulated limits. This resulted in monetary loss by way of decrement. This would not only lead to reduction in salary but would ultimately result in termination of service.

9. Through the following illustration it is demonstrated that as to how the consequence of the 2003 amendment adversely affects a development officer having a basic pay of Rs.13,630/-

SALARY COST RATIO PREMIUM TO BE PROCURED. EXISITING BASIC, DA, H RA,CCA 8% Rs.31,88,000 / Rs.2,55,096

REVISED BASIC, DA,HRA,CCA Rs.2,55,096 Add: Non-Core allowance 7% Rs.44,15,000 / Rs. 54,000 Conveyance +Entertain- Ment+Phone+TE Rs.3,09,096