The powers of the Life Insurance Corporation of India (LIC) and the Central Government to alter the terms and conditions of service of employees whose services were transferred to the LIC under the Life Insurance Corporation Act, 1956.

Headnote:
LIFE INSURANCE CORPORATION ACT, 1956 - SECTION 11 - INDUSTRIAL DISPUTES ACT, 1947 - SECTION 18(C) - INDUSTRIAL DISPUTES ACT, 1947 - SECTION 19 - EMPLOYEES OF INSURANCE COMPANIES WHOSE CONTROLLED BUSINESS VESTED IN LIFE INSURANCE CORPORATION - CONTINUANCE OF SERVICE - TERMS AND CONDITIONS OF SERVICE - ALTERATION BY CORPORATION - APPROVAL OF CENTRAL GOVERNMENT - VALIDITY.
Fact of the Case:

The petitioners were employees of various insurance companies whose controlled business was transferred to and vested in the Life Insurance Corporation of India (LIC) under the Life Insurance (Emergency Provisions) Ordinance, 1956, and the Life Insurance Corporation Act, 1956. The petitioners contended that the terms and conditions of their service, as embodied in awards and settlements arrived at under the Industrial Disputes Act, 1947, continued to apply to them even after their services had been transferred to the LIC. The LIC, with the approval of the Central Government, issued a summary of pay scales and other conditions of service applicable to its employees, which differed from the terms and conditions of service applicable to the petitioners prior to the transfer of their services. The petitioners challenged the action of the LIC and the Central Government, contending that they had no power to alter the terms and conditions of their service.
Finding of the Court:

The court held that the LIC had no power to alter the terms and conditions of service of the petitioners by issuing the summary of pay scales and other conditions of service, or by issuing instructions regarding the selection of superintendents, section heads, and assistants. The court also held that the approval of the Central Government to the summary of pay scales and other conditions of service was not valid, as the Central Government had no power to approve such alterations under Section 11 of the Life Insurance Corporation Act, 1956. The court further held that the Central Government had no power to alter the terms and conditions of service of the petitioners as to their remuneration, as the power conferred upon the Central Government under Section 11(2) of the Act was limited to rationalizing the pay scales or reducing the remuneration in certain cases.
Issues: 1. Whether the LIC had the power to alter the terms and conditions of service of the petitioners by issuing the summary of pay scales and other conditions of service, or by issuing instructions regarding the selection of superintendents, section heads, and assistants? 2. Whether the approval of the Central Government to the summary of pay scales and other conditions of service was valid? 3. Whether the Central Government had the power to alter the terms and conditions of service of the petitioners as to their remuneration?
Ratio Decidendi: 1. The court held that the LIC had no power to alter the terms and conditions of service of the petitioners, as Section 11(1) of the Life Insurance Corporation Act, 1956, provided for continuity of service on the same terms and conditions as those which prevailed at the time when the services of the employees were transferred to the LIC. The court held that the LIC could only alter the remuneration and the terms and conditions of service in the same manner in which and subject to the same conditions under which the previous companies, whose life insurance business was taken over by the LIC, could alter the same. 2. The court held that the approval of the Central Government to the summary of pay scales and other conditions of service was not valid, as the Central Government had no power to approve such alterations under Section 11 of the Life Insurance Corporation Act, 1956. The court held that the power to approve what somebody else has done is something different from the power of doing something by oneself. 3. The court held that the Central Government had no power to alter the terms and conditions of service of the petitioners as to their remuneration, as the power conferred upon the Central Government under Section 11(2) of the Act was limited to rationalizing the pay scales or reducing the remuneration in certain cases.
Final Decision: The court allowed the petition and issued a writ of mandamus directing the LIC to cancel and withdraw the alterations in the terms and conditions of service contained in the summary of pay scales and other conditions of service and the instructions issued by the LIC. The court also issued a writ of mandamus directing the LIC to give effect to the awards, settlements, and agreements governing the terms and conditions of service of the petitioners prior to the transfer of their services to the LIC.

Judgment -

1. The first and the second petitioners were clerks employed by the Bombay Life Assurance Co. Ltd. immediately prior to 1st September, 1956. The third petitioner was a clerk then employed by the Oriental Government Security Life Assurance Co. Ltd. The fourth petitioner was a clerk then employed by the Hindus than Co-operative Insurance Society Ltd. The fifth petitioner was then employed ns an assistant doing clerical work by the New India Assurance Co. Ltd. at Bombay. The sixth petitioner was a peon then employed by the New India Assurance Co. Ltd. at Bombay. The seventh petitioner was then employed as a clerk by the National Insurance Co. Ltd. On 19th January, 1958, the President of India promulgated an Ordinance called The Life Insurance (Emergency Provisions) Ordinance, 1956. Under that Ordinance, on and from the appointed day, that is, the 19th January. 1956. the management of the controlled business of all the insurers carrying on life insurance business vested in the Central Government. The said Ordinance was repealed and replaced by the Life Insurance (Emergency Provisions) Act, 1956. On 18th June, 1956, the Life Insurance Corporation Act, 1956, was enacted. That Act came into force on the 1st July, 1956. Under Section 7 of that Act, on the appointed day, that is, the date on which the Life Insurance Corporation of India was established viz., 1st September, 1956, all the assets and liabilities appertaining to the controlled business of all insurers were transferred to and vested in the Life Insurance Corporation of India, the respondent to the petition. The controlled business referred to in the said section included all the business appertaining to life insurance business of the insurers. Under Section 11 of the Life Insurance Corporation Act, 1956, the petitioners became the employees of the Corporation on and from the appointed day.

2. The petitioners have prayed for a writ of mandamus and/or other appropriate writs, orders or directions under Article 226 of the Constitution of India and/or an order under Section 45 of the Specific Relief Act against the Corporation directing the Corporation to cancel and/or withdraw and/or for-bear from implementing and/or giving effect to and/or in any way enforcing the alterations in the terms and conditions of service as contained in "the Summary" dated the 10th September, 1956, being Ex. F to the petition, and/or "the instructions" issued by the Corporation on 18th September, 1956, being Ex. G to the petition and/or in "the Summary" dated 24th December, 1956 (being Exhibit No. 2 to the affidavit of Mr. T.S. Swaminathan, dated 9th February, 1957) and/or those purported to be prescribed in the letter dated 21st February, 1957 (being Ex. No. 1 to the affidavit of Mr. T.S. Swaminathan, dated 7th March 1957). The petitioners nave further prayed for the issue of a writ of mandamus and/or appropriate writs, orders or directions under Article 226 of the Constitution of India or an order under Section 45 of the Specific Relief Act against the Corporation directing the Corporation to give effect and to continue to give effect to the awards, settlements and agreements being Exhibits A, B, C, D and E to the petition subsequent to 31st August, 1956. They have further prayed for an order and injunction restraining the Corporation, its servants and agents from implementing and/or giving effect to and/or in any way enforcing the said alterations in the terms and conditions of service or any part thereof.

3. The material circumstances giving rise to the petition are as hereinafter stated : Prior to and on 1st September 1956, the scales of pay and other terms and conditions of service of the first and second petitioners as also of about 300 other employees of the Bombay Life Assurance Co. Ltd. were governed by an award of the Industrial Tribunal, dated 12th May 1954. The said award was published on 11th June, 1954 and is contained in Ex. A to the petition. Prior to and on 1st September, 1

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