Back
1973 Supreme(AP) 51
Andhra Pradesh High Court
Judges : GOPALRAO EKBOLE, LAKSHMAIAH, MADHAVA REDDY
M.A.V.Prasad Rao - Appellant
Versus
Union of India - Respondent
Decided On : 03-29-73
Headnote:
The Life Insurance Corporation of India is a "state" within the meaning of Article 12 of the Constitution of India. The regulations framed by the Corporation, governing the service conditions of its employees, have no statutory force. The action of the Corporation in repealing the existing rules regarding promotions does not constitute an action of "the State" within the meaning of Article 12 of the Constitution and, therefore, any State action, if it offends the fundamental rights, would be justiciable. The Corporation is entitled to make the proposed changes in the matter of conditions of service of its workmen by repealing the existing circulars governing promotions of the staff after issuing notice as required under section 9-A of the Industrial Disputes Act. Such action in proposing to change or alter the service conditions is amenable to the jurisdiction of the High Court under Article 226 of the Constitution.
Fact of the Case:
The petitioners are working as cashiers, stenographers and typists in the category of Assistants in the Machilipatnam and Hyderabad division of the Life Insurance Corporation of India (hereinafter referred to as the corporation ). The conditions of their service are governed by the Staff regulations made by the Corporation with the previous approval of the Central government as required under section 49 of the Life Insurance Corporation Act, 1956 (hereinafter referred to as the Act ). These Regulations classified the employees into four classes and Class III is the relevant class which comprises again of four categories viz. , Superintendents, High grade Assistants, section Heads and Assistants. Promotions from one category to another and from Class III to Class I are regulated by the rules contained in the circulars dated 7th June, 1960, 21st July, 1960, 20th November, 1963, 15th January, 1965 and 23rd February, 1965, which are generally referred to as the promotion rules. As per these circulars, an Assistant who obtains the Associateship of the chartered Insurance Institute or the associateship of the Federation of the insurance Institutes or the Diploma of the Indian Life Insurance Officers Association or Intermediate of C. A. or three subjects of Institute of Actuaries will be entitled to be promoted as a higher Grade Assistant from the 1st day of the month in which the results of the said examinations are declared and their salary will be fixed at a particular level after giving benefit of certain increments. Similarly, an Assistant by acquiring the prescribed qualifications, could be promoted directly as a Superintendent without having to be promoted to the next higher post. An Assistant, who did not pass the examinations referred to above, would still become a section Head or superintendent in the normal course after passing the departmental tests. These promotions were made on the above basis till 1966 giving two jumps to those who qualified by passing the Higher Examinations referred to supra. It is alleged that the Corporation has not been making any promotions having regard to the circulars in the force on the ground that there are no vacancies, though it was brought to the notice of the Corporation that several persons had acquired the requisite qualifications for promotion under the existing circulars. In the year 1971, the corporation entered into an agreement with some of the unions of the Corporation whereunder it agreed to revise the system of promotions giving weightage and preference to seniority without regard to the qualifications acquired by the persons and the promotion rules contained in the various circulars. Under this agreement, the Corporation agreed to abolish the four categories existing in Class III and bring into existence only two categories, Assistants and special Assistants. This reorganisation is questioned on the ground that it is made in breach of the circulars issued from time to time between the years 1960 and 1965 under the Regulations and that the reduction in the categories is made with a view to bypass the persons with qualifications and their legitimate right to be promoted automatically for higher posts when once they acquired the qualifications prescribed.
Finding of the Court:
The Life Insurance Corporation of India is a "state" within the meaning of Article 12 of the Constitution of India. The regulations framed by the Corporation, governing the service conditions of its employees, have no statutory force. The action of the Corporation in repealing the existing rules regarding promotions does not constitute an action of "the State" within the meaning of Article 12 of the Constitution and, therefore, any State action, if it offends the fundamental rights, would be justiciable. The Corporation is entitled to make the proposed changes in the matter of conditions of service of its workmen by repealing the existing circulars governing promotions of the staff after issuing notice as required under section 9-A of the Industrial Disputes Act. Such action in proposing to change or alter the service conditions is amenable to the jurisdiction of the High Court under Article 226 of the Constitution.
Issues: 1. Whether the Life Insurance Corporation is a "state" within the meaning of Article 12 of the Constitution of India? 2. If so, notwithstanding that the Regulations made by it have no statutory force, whether such Regulations are in the nature of executive actions of "the state" so as to seek their enforcement under Article 226 of the Constitution? 3. Whether the Corporation is entitled to make the proposed changes in the matter of conditions of service of its workmen by repealing the existing circulars governing promotions of the staff after issuing notice as required under section 9-A of the Industrial Disputes Act? 4. Whether such action in proposing to change or alter the service conditions is amenable to the jurisdiction of this court under Article 226 of the Constitution?
Ratio Decidendi: 1. The Life Insurance Corporation of India is a statutory body established by the Central Government under the Life Insurance Corporation Act, 1956. It is a body corporate having perpetual succession and a common seal, with power subject to the provisions of the Act, to acquire, hold and dispose of property and may by its name sue and be sued (section 3). The Corporation consists of fifteen persons appointed by the Central Government and one of them is appointed as the Chairman of the Corporation (section 4.) The initial capital of five crores of rupees is provided by the central Government (section 5 ). The corporation discharges its functions under the directions issued by the Central government (section 21 ). The Central government has also to lay reports of the auditors giving an account of the activities of the Corporation before both houses of Parliament as soon as such reports are received by the Central government from the auditors (section 29 ). The policies are guaranteed by the Central Government (section 37 ). The Central Government has also the power to make rules to carry out the purposes of the Act (section 48 ). The corporation has power to make Regulations with the previous approval of the central Government (section 49 ). 2. The aforesaid provisions bring the Corporation within the meaning of "the State" as defined in Article 12 of the Constitution. 3. The Regulations framed by the Corporation, governing the service conditions of its employees, have no statutory force.
Final Decision: The petition is dismissed with costs. Advocate's fee Rs. 250.
( 1 ) THIS application under Article 226 of the Constitution of india, is filed by certain employees belonging to the category of Assistants in the life Insurance Corporation of India, machilipatnam and Hyderabad Divisions for the issue of an appropriate writ restraining the respondents, viz. , the Life Insurance Corporation authorities from implementing or enforcing the new promotion policy contained in tbe Memo of settlement of promotion procedure applicable to class 3 and 4 employees, dated 15th october, 1971, and to further direct the respondents to promote the petitioners in accordance with the Promotion Rules (Policy) obtaining in the years 1966 to 1971 before upgrading the section heads as Special Assistants and before considering and promoting others in accordance with the aforesaid new policy.
( 2 ) HEVING regard to the several questions raised in the writ petition and for a final and speedy disposal of the case, it was referred to a Division Bench by one of us (Krishna Rao, J.) at the request of counsel on both the sides. After the case was taken up for hearing before the division Bench consisting of Kondaiah and Lakshmaiah, JJ. , the following order was passed:-"it is represented by Mr. B P. Jeevan reddi for the petitioners and the learned Advocate-General for the respondents that there are two conflicting bench decisions on the point involved in this case and the matter has already been referred by our learned brother vaidya J. , in W. P. No. 1032 of 1969 to a Full Bench. In this view, we direct the papers to be placed before the hon ble the Chief Justice to consider the constitution of a Full Bench and post this case along with the W. P. No. 1032 of 1969". Pursuant to this direction, this case was posted before us (Kiishna Rao, Kondiah and Ramachandra Ryu, JJ.) along with w. P. No. 1032 of 1969, which arose under the Andhra Pradesh State Road transport Corporation Act. When the said case was taken up for hearing before us, we held that the question whether the regulations have statutory force, did not arise and hence we had to dispose of that case on its own merits.
( 3 ) WE, therefore, propose to consider in this case whether the Regulations framed by the Life Insurance Corporation in so far as they relate to the service conditions of its employees, have statutory force.
( 4 ) IN M. Narasimha Rao v. Works Manager, a. P. State Road Transport Corporation, it was held by a D vision Bench of this court consisting of Kumarayya, C. J. , and Sambasiva Rao, J. , that the regulations framed by the Corporation, governing the service conditions of its employees, under section 45 of the A. P. State Road transport Corporation Act, 1950 have statutory force. A contrary view was taken by another Division Bench consisting of Sharfuddin and Vaidya, JJ. , in writ Petition No. 3152 of 1968, dated gth September, 1970 in a case which related to the service regulations framed under the Port Trust Act. The said decision in W. P. No. 3152 of 1968, was by some omission, not cited before the Division Bench of Kumaraya, C. J. , and sambasiva Rao, J. It was also pointed out by the respondent s learned Counsel that the decision of Kumarayya, C J. , and Sambasiva Rao, J. , in M. Narasimha rao v. Works Manager, A. P. State road Transport Corporation, cannot be held to be good law inview of a subsequent decision of the Supreme Court in indian Airlines v. Sukhadeo Rai.
( 5 ) IN U. P. State Warehousing Corporation, lucknow, v. C. K. Tyagi, the Supreme court had occasion to consider the nature of regulations framed by the U. P. State warehousing Corporation under the provisions of the Agricultural Produce (Development and Warehousing) Corporations act, 1956 ). The conditions of service including discipline of the employees of the Corporation were embodied in the regulations framed by the Corporation. A suit was filed by a Corporation employee challenging the order of dismissal on the ground that there was a violation of the procedu
