Section 11(1) of the Life Insurance Corporation Act, 1956, secured the petitioner's rank and terms of service, and the LIC's action in reducing his rank was illegal and ultra vires.

Ramaswami, J.

1. In this case the petitioner has obtained a rule from the High Court calling upon the respondents to show cause why a writ in the nature of mandamus under Article 226 of the Constitution should not be issued commanding the respondents not to reduce the rank of the petitioner to that of an Inspector of the Life Insurance Corporation of India. Cause has been shown by the Advocate General on behalf of the respondents to whom notice of the rule was ordered to be given.

2. The petitioner, Sri K. D. Banerji, was working as a Divisional Superintendent of the National insurance Company Limited, from the 1st of January, 1955. In that post he was getting a sum of Rs. 350.00 Per month as salary, Rs. 80/-as dearness allowance and Rs. 170.00 per month as motor-car allowance. On the 19th January, 1956, the Life Insurance (Emergency Commissions) Ordinance, 1956, was passed, by which all life insurance business in India was nationalised with effect from the 20th January, 1956.

After the passing of the Ordinance, the petitioner continued in his post of Divisional Superintendent up to the 1st of September, 1956. On that date the Life Insurance Corporation of India was constituted by an official notification under Sec.3 of the Life Insurance Corporation Act, 1956 (Act 31 Of 1956). Section 7 of that Act provided that all assets, rights and titles of the insurers and all liabilities and obligations in respect of the controlled business stood automatically transferred and vested in the Life Insurance Corporation. Sec.11 (1) of the Act further provided that all employees of the insurers employed la connection with the controlled business immediately before the appointed date would become employees of the Corporation and they would hold office on the same terms and conditions and have the same rights and privileges as to pension, gratuity and other matters.

The case of the petitioner is that by virtue of this Section he was entitled to hold the office of Class I Officer of the Corporation to the category of Assistant Branch Manager (Development) on the 1st September, 1956 It is further stated that the post of Divisional Superintendent corresponded to the post of Assistant Branch Manager (Development) mentioned in Section 7 (1) of the (Staff) Regulations, 1956, made by the Corporation under Sec. 49 (2) of the Act. The petitioner, however, alleges that the respondents have issued letters or orders reducing his rank to that of an Inspector. On the 18th September, 1956, the Divisional Manager (respondent) No. 1) sent to the petitioner a circular meant for the guidance and information of the Inspectors. On the 27th December, 1956, the Divisional Manager wrote to him to the effect that he should work as an Inspector of the Corporation (annexure J to the application). On the 27th March, 1957, the Assistant Divisional Manager wrote to the petitioner, asking him to sign the Attendance Register as an Inspector of the Corporation (annexure N to the application).

The contention of the petitioner is that these orders and letters are illegal and ultra vires and that the respondents have no legal authority to reduce the rank of the petitioner and ask him to work in the post of an Inspector. In these circumstances the petitioner has prayed for grant of a writ under Article 226 of the Constitution for quashing the orders of the respondents (Exts. J and N) requiring the petitioner to work as an Inspector of the Corporation. The petitioner has also asked for a writ in the nature of mandamus requiring the respondents, to post the petitioner as an Assistant Branch Manager (Development).

3. On behalf of the petitioner learned counsel made the submission that the tenure and the rank and the terms Of employment of the petitioner continued to be the same after the Life Insurance Corporation of India was constituted and established. In support of his submission learned Counsel referred to Sec.11 (1) of Act 31 of 1956, which is in the following terms :