Judgment
As delivered
PETITIONER:THE LIFE INSURANCE CORPORATION OF INDIA
Vs.
RESPONDENT:D. J. BAHADUR & ORS.
DATE OF JUDGMENT10/11/1980
BENCH:KRISHNAIYER, V.R.BENCH:KRISHNAIYER, V.R.PATHAK, R.S.KOSHAL, A.D.
CITATION:1980 AIR 2181 1981 SCR (1)10831981 SCC (1) 315CITATOR INFO :R 1981 SC1829 (75)C 1982 SC1126 (3,7,12,13,16,18,19)RF 1984 SC1130 (33,34,40)F 1987 SC1527 (17,28)RF 1991 SC 855 (53)
ACT:Life Insurance Corporation Act (Act 31), 1956, sections11, 23 and 49, scope of-Whether a general law or a speciallaw-Industrial Disputes Act (Act 14) 1947, sections 9A,19(2), (6), 18, 23, 29-Object of the Act, award andsettlement, distinction from the point of view of legalforce-Whether a special legislation vis-a-vis Life InsuranceCorporation Act-Annual cash bonus payable to Class-III andClass-IV employees of the Corporation under the settlementof 1974, effect of-Effect of notice of termination of thesettlements by the Corporation under sections 9A and 19(2)of the Industrial Disputes Act and section 49 of the LifeInsurance Corporation Act-Constitution of India, 1950,Articles 12, 38, 39 and 43 and Regulation 58 of the LifeInsurance Corporation of India (Staff) Regulations, 1960.
HEADNOTE:The Life Insurance Corporation came into existence onthe 1st of September, 1956, as a statutory authorityestablished under the Life Insurance Corporation Act (Act31), 1956. As from the said date all institutions carryingon Life Insurance business in India were nationalised to theextent of such business and their corresponding assets andliabilities were transferred to the Corporation. Section 11of the Act provided for the transfer of service of thoseemployees of such institutions who were connected with LifeInsurance business immediately before the said date to theCorporation and for some other matters. Section 23 of theLife Insurance Corporation Act gave to the Corporation thepower to employ such number of persons as it thought fit forthe purpose of enabling it to discharge its functions underthe Act and declared that every person so employed or whoseservices stood transferred to the Corporation under section11 would be liable to serve anywhere in India. Section 49conferred on the Corporation the power to make regulationsfor the purpose of giving effect to the provisions of theAct with the previous approval of the Central Government.Sub-section (2) of that section enumerated various mattersin relation to which such power was particularly conferred.On 1st of June, 1957 the Central Government promulgated theLife Insurance Corporation (Alteration of Remuneration andother Terms and Conditions of Service of Employees) Order,1957 altering the remuneration and other terms andconditions of service of those employees of the Corporationwhose service had been transferred to it under sub-section(1) of section 11. Clause 9 of the 1957 Order declared thatno bonus would be paid but directed that the Corporationwould set aside an amount every year for expenditure onschemes of general benefit to the employees such as freeinsurance scheme, medical benefit scheme and other amenitiesto them. On the 26th June, 1959, the Central Governmentamended clause 9 of the 1957 Order so as to provide thatnon-profit sharing bonus would be paid to those employees ofthe Corporation whose salary did not exceed Rs. 500 permonth. On 2nd of July, 1959 there was a settlement betweenthe Corporation and its employees providing for payment tothem of cash bonus at the rate of 1 1/21084months' basic salary for the period from the 1st September,1956 to the 31st December, 1961. In the year 1960 the LifeInsurance Corporation of India (Staff) Regulations, 1960were framed and Regulation 58 dealt with the payment ofgrant of non-profit sharing bonus to its employees. On 14thApril, 1962 and 3rd August, 1963 orders were again issued,the effect of which was to remove the limit of Rs. 500 onthe basic salary as a condition of eligibility for paymentof bonus. The settlement dated 2nd July, 1959 was followedby three others which were arrived at on the 29th January,1963. the 20th June, 1970 and the 26th June, 1972,respectively and each one of which provided for payment ofbonus at a particular rate.Disputes between the Corporation and its workmen inregard to the latter's conditions of service were receivedby two settlements dated the 24th January, 1974 and the 6thFebruary, 1974, arrived at in pursuance of the provisions ofsection 18 read with section 2(p) of the Industrial DisputesAct. The Corporation was a party to both the settlementswhich were identical in terms. However, while four of thefive Unions of workmen subscribed to the first settlement,the fifth Union was a signatory to the second. Thesettlements provided for revised scales of pay, the methodof their fixation and dearness and other allowances as wellas bonus. The settlements were approved by the Board of theCorporation and also by the Central Government. Theemployees of the Corporation having opted for the new scalesof pay, bonus was paid in accordance therewith for the years1973-74 and 1974-75 in April 1974 and in April 1975respectively. One of the Payment of Bonus (Amendment) Act,1976 coming into force with retrospective effect from 25thSeptember, 1975 curtailing the rights of employees ofindustrial undertakings to bonus, though it was inapplicableto the Corporation by virtue of the provisions of section 32of the Payment of Bonus Act, the payment of bonus for theyear 1975-76 to the employees of the Corporation was stoppedunder instructions from the Central Government, whose actionin that behalf was challenged by the employees through apetition under Article 226 of the Constitution of India inthe High Court of Calcutta. The single Judge of the HighCourt issued a writ of mandamus directing the Corporation toact in accordance with the terms of the settlement dated the24th of January, 1974. The Corporation preferred a LettersPatent appeal against the decision of the learned singleJudge and that appeal was pending disposal when the CentralGovernment promulgated the Life Insurance Corporation(Modification of Settlement) Act, 1976 on 29th May, 1976.The said Act was challenged by the workmen in the SupremeCourt which by a judgment dated 21st February, 1980 (MadanMohan Pathak v. Union of India, [1978] 3 SCR 334) declaredit to be void as offending Article 31(2) of the Constitutionof India and directed the Corporation to forbear fromimplementing the 1976 Act and to pay to its Class-III andClass-IV employees bonus for the years 1st April 1975 to31st March 1976 and 1st April 1976 to 31st March 1977 inaccordance with the terms of sub-clause (ii) of clause 8 ofeach settlement.On 3rd March, 1978 the Corporation issued to itsworkmen a notice under sub-section (2) of section 19 of theIndustrial Disputes Act declaring its intention to terminatethe settlements on the expiry of a period of two months fromthe date of the notice was served. The notice, howevermentioned in express terms that according to the Corporationno such notice was really necessary for termination of thesettlements. On the same date, another notice was issued bythe Corporation under section 9A of the Industrial1085Disputes Act stating that it intended to effect a change inaccordance with the contents of the annexure to the notice,as from the 1st June, 1978, in the conditions of service ofits workmen. On 26th May, 1978, the Central Governmentissued a notification under section 49 of the Life InsuranceCorporation Act substituting a new regulation for the thenexisting regulation bearing serial number 58. The newregulation was to come into force from the 1st of June,1978. Simultaneously, an amendment on the same lines wasmade in the 1957 Order by the substitution of a new clausefor the then existing clause 9 in pursuance of theprovisions of sub-section (2) of section 11 of the L. I. C.Act.These two notices dated 3rd March, 1978 by theCorporation under sections 19(2) and 9A of the IndustrialDisputes Act respectively and the action taken by theCentral Government on the 26th May, 1978 by making newprovisions in regard to the payment of bonus to theCorporation's employees were challenged successfully by theworkmen in a petition to the Allahabad High Court underArticle 226 of the Constitution of India and hence theappeal by the Corporation.Allowing the appeal by majority, the Court^HELD :Per Iyer, J.-A. The Industrial Disputes Act is a benignmeasure which seeks to pre-empt industrial tensions, providethe mechanics of dispute resolutions and set up thenecessary infra-structure so that the energies of partnersin production may not be dissipated in counter-productivebattles and assurance of industrial justice may create aclimate of goodwill. Its object is "the investigation andsettlement of industrial disputes". Parliament has pickedout the specific subject of industrial disputes forparticularised treatment, whether the industry be in theprivate or public sector or otherwise. The meat of thestatute is industrial dispute, not conditions of employmentor contract of service as such. [1106E, 1110D, 1111B-C]Bangalore Water Supply and Sewerage Board v. Rajappa,[1978] 2 SCC 213, applied.B. (1) The Industrial Disputes Act substantiallyequates an award with a settlement, from the point of viewof their legal force. No distinction in regard to the natureand period of their effect can be discerned, especially whenone reads section 19(2) and (6). Further, it is clear fromsection 18 that a settlement, like an Award, is alsobinding. Thus both settlements and Awards stand on the samefooting. [1109F, G, 1109 E](2) There are three stages or phases with differentlegal effects in the life of an Award or Settlement. Thereis a specific period contractually or statutorily fixed asthe period of operation. Thereafter, the Award or Settlementdoes not become non est, but continues to be binding. Thisis the second chapter of legal efficacy but qualitativelydifferent. Then comes the last phase. If notice of intentionto terminate is given under section 19(2) or 19(6), then thethird stage opens where the Award or the Settlement doessurvive and is in force between the parties as a contractwhich has superseded the earlier contract and subsists untila new Award or negotiated settlement takes its place. Likenature, Law abhors a vacuum and even on the notice oftermination under section 19(2) or (6), the sequence and1086consequence cannot be just void but a continuance of theearlier terms, but with liberty to both sides to raisedisputes, negotiate settlements or seek a reference andAward. Until such a new contract or Award replaces theprevious one, the former settlement or Award will regulatethe relation between the parties. Industrial law frowns upona lawless void and under general law the contract of servicecreated by an Award or Settlement lives so long as a newlawful contract is brought into being. [1114 A-F](3) The precedents on the point, the principles ofIndustrial Law, the constitutional empathy of Part IV andthe sound rules of statutory construction converge to thesame point that when a notice intimating termination of anAward or Settlement is issued the legal import in merelythat the stage is set for fresh negotiations or industrialadjudication and until either effort ripens into a fresh setof conditions of service the previous Award or Settlementdoes regulate the relations between the employer and theemployees. [1124 F-G]Judhisthir Chandra v. Mukherjee, AIR 1950 Cal. 577;Mangaldas Narandas v. Payment of Wages Authority etc.,(1957) II LLJ 256 (Bombay D. B.); Workmen of New ElphinstoneTheatre v. New Elphinstone Theatre, (1961) I LLJ 105 (119)(Madras); Yamuna Mills Co. Ltd. v. Majdoor Mahajan Mandal,Baroda & Ors., (1957) I LLJ 620 (Bom.); Sathya Studios v.Labour Court, (1978) I LLJ 227 (Madras); Maruti MahipatiMullick & Anr. v. M/s. Polson Ltd. & Anr., (1970) Lab. & I.C. 308 (Bom.), approved.South Indian Bank Ltd. v. A. R. Chako, [1964] 4 SCR625; Management of Indian Oil Corporation Ltd. v. ItsWorkmen, 1 SCR 110; Md. Qasim Larry, Factory Manages,Sasamusa Sugar Works v. Md. Samsuddin & Anr., [1964] 7 SCR419; followed.(4) The Settlement under the I. D. Act does not sufferdeath merely because of the notice issued under section19(2). All that is done is a notice "intimating itsintention to terminate the Award". The Award even if itceases to be operative qua award, continues qua contract.Therefore, if the Industrial Disputes Act regulates thejural relations between the L. I. C. and its employees-an"if"-then the rights under the settlements of 1974 remainuntil replaced by a later Award or Settlement. [1124 G-H,1125 A-B]C. (1) In determining whether a statute is a special ora general one. the focus must be on the principal subjectmatter plus the particular perspective. For certainpurposes, the Act may be general and for certain otherpurposes it may be special. [1127 B-C](2) The Life Insurance Corporation Act is not a law foremployment or disputes arising therefrom, but anationalisation measure which incidentally, like in anygeneral take-over legislation, provides for recruitment,transfers, promotions and the like. It is special vis-a-visnationalisation of life insurance, but general regardingcontracts of employment or acquiring office buildings.Emergency measures are special, for sure, Regularnationalisation statutes are general even if theyincidentally refer to conditions of service. [1111 H, 1112A-B](3) So far as nationalisation of insurance business isconcerned, the Life Insurance Corporation is a speciallegislation, but equally indubitably is the inference, froma bare perusal of the subject, scheme and sections andunderstanding of the anatomy of the Act, that it has nothingto do with the particular problem of disputes betweenemployer and employees, and of investigation andadjudication of labour dispute. [1126 G-H, 1127 A]1087On the other hand, the Industrial Disputes Act is aspecial statute devoted wholly to investigation andsettlement of industrial disputes which providesdefinitionally for the nature of industrial disputes comingwithin its ambit. It creates an infra-structure forinvestigation into, solution of and adjudication uponindustrial disputes. It also provides machinery forenforcement of Awards and Settlements. From alpha to omegathe I. D. Act has one special mission-the resolution ofindustrial disputes through specialised agencies accordingto specialised procedures and with special reference to theweaker categories of employees coming within the definitionof workmen. Therefore, with reference to industrial disputesbetween employers and workmen, the I. D. Act is a specialstatute, and the L. I. C. Act does not speak at all withspecific reference to workmen. On the other hand, its powersrelate to the general aspects of nationalisation, ofmanagement when private businesses are nationalised and aplurality of problems which, incidentally, involve transferof service of existing employees of insurers. The workmenqua workmen and industrial disputes between workmen and theemployer as such, are beyond the orbit of and have nospecific or special place in the scheme of the L.I.C. Act.[1127 C-F](4) Thus, vis-a-vis "industrial disputes" at thetermination of the Settlement as between the workmen and theCorporation, the I. D. Act is a special legislation and theL. I. C. Act a general legislation. Likewise, whencompensation on nationalisation is the question, the L. I.C. Act is the special statute. An application of thegeneralia maxim makes it clear that the I. D. Act beingspecial law, prevails over L. I. C. Act which is a generallaw. [1127 H, 1128 A-B]U. P. State Electricity Board v. H. S. Jain, [1979] 1SCR 355, J. K. Cotton Spinning and Weaving Mills Co. Ltd. v.State of Uttar Pradesh, AIR 1961 SC 1170 at 1174, followed.(5) Section 11 of the Life Insurance Corporation Act,1956 does not repel the Industrial Disputes Act, 1947. Theprovisions of the L. I. C. Act which contained provisionsregarding conditions of service of employees would notbecome redundant, if the I. D. Act was held to prevail. Forone thing, the provisions of sections 11 and 49 are theusual general provisions giving a statutory corporationpower to recruit and prescribe conditions of service of itstotal staff-not anything special regarding `workmen'.Secondly, no case of redundant words arose because theCorporation, like a University, employed not only workmenbut others also and to regulate their conditions of servicepower was needed. Again, institutions where no disputearose. power in the employer to fix the terms of employmenthad to be vested. [1129 F-H, 1130 A-B]Bangalore Water Supply and Sewarage Board v. Rajappa,[1978] 2 SCC 813; D. N. Banerji v. P. R. Mukherjee & Ors.[1953] SCR 302, followed.(6) Whatever be the powers of regulation of conditionsof service, including payment or non-payment of bonusenjoyed by the employees of the Corporation under the L. I.C. Act subject to the directives of the Central Government,they stem from a general Act and cannot supplant, subvert orsubstitute the special legislation which specifically dealswith industrial disputes between workmen and theiremployees. [1131 F-H][The Court directed the Corporation to fulfil itsobligations in terms of the 1974 settlements and startnegotiations like a model employer, for a fair settlement ofthe conditions of service between itself and its employeeshaving1088realistic and equitable regard to the prevailing conditionsof life, principles of industrial justice and the directivesunderlying Part IV of the Constitution.]Per Pathak J. (Concurring with Iyer, J.) (1) Both thelimbs of sub-section (2) of section 11 of the L. I. C. Act,1956 are intended to constitute a composite process ofrationalising the scales of remuneration and other terms andconditions of service of transferred employees with a viewnot only to effecting a standardisation between thetransferred employees but also to revising their scales ofremuneration, and terms and conditions of service to apattern, which will enable the newly established Corporationto become a viable and commercially successful enterprise.For that reason, it is open to the Central Government underthe sub-section to ignore the guarantee contained in sub-section (1) of section 11 in favour of the employees oranything contained in the Industrial Disputes Act, 1947 orany other law for the time being in force or any award,settlement or agreement for the time being in force. [1135D-G]The second limb of sub-section (2) of section 11 is notrelated to employees generally, that is to say, bothtransferred and newly recruited employees, of theCorporation. It is confined to transferred employees. Thereis no danger of an order made by the Central Governmentunder the second limb of subsection (2) in respect oftransferred employees being struck down on the ground thatit violates the equality provisions of Part III of theConstitution because similar action has not been taken inrespect of newly recruited employees. So long as such orderis confined to what is necessitated by the process oftransfer and integration, the transferred employeesconstitute a reasonably defined class in themselves and formno common basis with newly recruited employees. [1136 C-E]The power under the second limb of sub-section (2) ofsection 11 can be exercised more than once. To effectuatethe transfer appropriately and completely it may benecessary to pass through different stages, and at eachstage to make a definite order. So long as the complex oforders so made is necessarily linked with the process oftransfer and integration, it is immaterial that a successionof orders is made. The deletion of the words "from time totime" found in the Bill, is of no consequence. [1136 E-G](2) The notification dated 26th May, 1980 purporting toamend the Standardisation Order is invalid. It has no effecton the right to bonus by the workmen. The notification wasintended to apply to transferred employees only. It declaresexplicitly that the Central Government is satisfied that arevision of the terms and conditions of service of thetransferred employees is considered necessary. This is madeexplicit by the circumstance that identical provisions havebeen made by the Corporation, with the prior approval of theCentral Government, in the new Regulation 58 of anotification issued under both clauses (b) and (bb). [1137A-C](3) A settlement under the Industrial Disputes Act, inessence, is a contract between the employer and the workmenprescribing new terms and conditions. As soon as thesettlement is concluded and becomes operative, the contractembodied in it takes effect and the existing terms andconditions of the workmen are modified accordingly. Unlessthere is something to the contrary in a particular term orcondition of the Settlement the embodied contract1089endures indefinitely, continuing to govern the relationbetween the parties in future, subject of course tosubsequent alteration through a fresh settlement, award orvalid legislation. Settlement is not only a contract butsomething more. Conceptually, it is a "settlement". Itconcludes or "settles" a dispute. In order the new contractbe afforded a chance of being effectively worked out amandate obliging the parties to unreservedly comply with itfor a period of time is desirable. It was made "binding" bythe statute for such period. On the expiry of such period,the ban lifts, and the parties are at liberty to seek analteration of the contract. [1138 E-H-1139 A-C]The law laid down in South Indian Bank Ltd. v. A. R.Chacko [1964] 5 SCR 825 and Md. Quasim Larry, FactoryManager, Sasamusa Sugar Works v. Md. Shamsuddin & Anr.,[1964] 7 SCR 419 in respect of an Award applies equally inrelation to a settlement. [1140B](4) The Industrial Disputes Act is a special law andmust prevail over the Corporation Act, a general law, forthe purpose of protecting the sanctity of transactionsconcluded under the former enactment. Regulation 58, aproduct of the Corporation Act, cannot supersede thecontract respecting bonus between the parties resulting fromthe settlement of 1974. [1142 B-D]Plainly, if a settlement resolves an industrial disputeunder the Industrial Disputes Act, it pertains to thecentral purpose of that Act. This constitutes a special lawin respect of a settlement reached under the auspicesbetween an employer and his "workmen" employees. Theconsequences of such settlement are the product of thespecial law. [1141 E-F]The Corporation Act was enacted primarily for effectingthe nationalisation of Life Insurance business bytransferring all such business to a Corporation establishedfor that purpose. Clearly, the object behind section 11(1),section 23 and clauses (b) and (bb) of section 49(2) of theL. I. C. Act is to provide staff and labour for the purposeof the proper management of the nationalised Life Insurancebusiness. The Corporation Act does not possess the featuresfound in the Industrial Disputes Act. No special provisionexists in regard to industrial disputes and their resolutionand the consequences of that resolution. The specialjurisdiction created for the purpose under the IndustrialDisputes Act is not the subject matter of the CorporationAct at all. No corresponding provision in the CorporationAct, a subsequent enactment, deals with the subject matterenacted in the Industrial Disputes Act. [1140 F, 1141 A, F-G]Yet Parliament intended to provide for theCorporation's "workmen" employees the same opportunities asare available under the Industrial Disputes Act to theworkmen of other employers, as demonstrated by section2(a)(1) of the Corporation Act. The expression "appropriateGovernment" is specifically defined by it in relation to anindustrial dispute concerning the Life InsuranceCorporation. Both the Central Government and the Corporationunderstood the Industrial Disputes Act in that light, for,Regulation 51(2) of the (Staff) Regulations made by theCorporation under clauses (b) and (bb) of section 49(2) ofthe Corporation Act, with the previous approval of theCentral Government, speaks of giving effect to a revision ofscales of pay, dearness allowance, or other allowances "inpursuance of any award, agreement or settlement." [1141 G-H,1142 A-C]Life Insurance Corporation of India v. Sunil KumarMukherjee, [1964] 5 SCR 528; Sukhder Singh v. Bhagat Ram,[1975] 3 SCR 619, referred to.1090U. P. State Electricity Board & Ors. v. Hari ShankerJain & Ors. [1979] 1 SCR 355; J. K. Cotton Spinning andWeaving Mills Co. Ltd., v. State of Uttar Pradesh, AIR 1961SC 1170, followed.Mary Sawards v. The Owner of the "Vera Cruz", [1884] 10A. C 59 @ 68, quoted with approval.(5) In construing the scope of the Corporation's powersunder section 11 (1) of the Corporation Act, appropriateimportance should be attached to the qualifying word "duly".When the Corporation seeks to alter the terms and conditionsof transferred employees, it must do so in accordance withlaw, and that requires it to pay proper regard to thesanctity of rights-acquired by the "workmen" employees undersettlements or awards under the Industrial Disputes Act.[1142 H, 1143 A-B]The provision in section 11(2) has been made for thepurpose of protecting the interests of the Corporation andits policy holders. The policy holders constitute animportant and significant sector of public interest. Indeed,the avowed object of the entire Corporation Act is toprovide absolute security to the policy holders in thematter of their life insurance protection. That is assuredby a wise management of the Corporation's business, and byensuring that when settlements are negotiated between theCorporation and its workmen or when industrial adjudicationis initiated in Labour Court and industrial tribunals, theprotection of the policy holders will find appropriatelysignificant emphasis in the deliberations. [1143 D-E](6) In the view that the notification dated 26th May,1978 purporting to amend the Standardisation Order bysubstituting clause (a) is invalid and the newly enactedRegulation 58 does not effect the contract in respect ofbonus embodied in the Settlements of 1974 between the LifeInsurance Corporation and its "workmen" employees, effectmust be given to that contract. If the terms and conditionsof service created by the contract need to be reconsidered,recourse must be had to the modes recognised by law-negotiated settlement, industrial adjudication orappropriate legislation. [1143 F-G]Per Koshal, J. (Contra) (1) The Industrial Disputes Actdeals with the adjudication or settlement of disputesbetween an employer and his workmen and would, therefore, bea special law vis-a-vis another statute which covers alarger field and may thus be considered "general" ascompared to it. It cannot, however, be regarded as a speciallaw in relation to all other laws irrespective of thesubject matter dealt with by them. In fact a law may bespecial when considered in relation to another piece oflegislation but only a general one vis-a-vis still another."Special" and "general" are relative terms and it is thecontent of one statute as compared to the other that willdetermine which of the two is to be regarded as special inrelation to the other. Viewed in this light the proposition,namely, "the Industrial Disputes Act is a special lawbecause it deals with adjudication and settlement of mattersin dispute between an employer and his workmen while theLife Insurance Corporation Act is a general law" cannotstand scrutiny. The Industrial Disputes Act would no doubtbe a special Act in relation to a law which makes provisionsfor matters wider than but inclusive of those covered by it,such as the Indian Contract Act as that is a law relating tocontracts generally (including those between an industrialemployer and his workmen) but it would lose thatcategorisation and must be regarded as a general law whenits rival is shown to operate in a field narrower than itsown and such a rival is that part of the Life InsuranceCorporation Act which deals with1091conditions of service of the employees of the Life InsuranceCorporation-a single industrial undertaking of a specialtype) as opposed to all others of its kind which fall withinthe ambit of the Industrial Disputes Act. Where thecompetition is between these two Acts, therefore, the LifeInsurance Corporation Act must be regarded as a special lawand (in comparison thereto) the Industrial Disputes Act as ageneral law. [1153 E-F, H, 1154 A-C](1A) Section 11 and clauses (b) and (bb) of sub-section2 of section 49 of the Life Insurance Corporation Act wereintended to be and do constitute an exhaustive andoverriding law governing the condition of service of allemployees of the Corporation including transferredemployees. The proposition, namely that the IndustrialDisputes Act being a special law, would override a generallaw like the Life Insurance Corporation Act, is incorrect.Even if the Industrial Disputes Act is regarded as a speciallaw in comparison to the Life Insurance Corporation Act, theresult would be the same. [1162E-F, 1153 E](1B) The general rule to be followed in the case of aconflict between two statutes is that the later abrogatesthe earlier one (Leges posteriors priors contrariasabrogant). To this general rule there is a well knownexception, namely, generalia specialibus non derogant(general things do not derogate from special things). Inother words, a prior special law would yield to a latergeneral law, if either of the following two conditions issatisfied: (i) The two are inconsistent with each other.(ii) There is some express reference in the later to theearlier enactment. If either of these conditions isfulfilled the later law, even though general, will prevail.Further four tests deductible from the several texts oninterpretation of statutes are : (i) The legislature has theundoubted right to alter a law already promulgated by itthrough subsequent legislation. (ii) A special law may bealtered, abrogated or repealed by a later general lawthrough an express provision. (iii) A later general law willoverride a prior special law if the two are so repugnant toeach other that they cannot co-exist even though no expressprovision in that behalf is found in the general law. (iv)It is only in the absence of a provision to the contrary andof a clear inconsistency that a special law will remainwholly unaffected by a later general law. [1145 E, G-H, 1156C-D](2) The proposition that the Industrial Dispute Actbeing a special law would override a general law like theLife Insurance Corporation Act is equally insupportable evenif the Industrial Disputes Act is regarded as a special lawin connection with the Life Insurance Corporation Act. Theword "duly", in section 11(1) of the Life InsuranceCorporation Act means properly, regularly or in due manner.In the context in which it is used it may legitimately begiven a more restricted meaning, namely, in accordance withlaw. If reference to the provisions of the IndustrialDisputes Act alone was contemplated and the alterationsenvisaged were merely such as could be achieved by asettlement or award resulting from a compliance thereof, notonly would the expression "by the Corporation" becomeredundant (which would not be a situation conforming to thewell-known principle of interpretation of statutes that aconstruction which leaves without effect any part of thelanguage of a statute will normally be rejected) but theexpress provisions of clause (bb) of sub-section (2) ofsection 49 of the Life Insurance Corporation Act, whichinvest the Corporation with power to make regulations(albeit with the approval of the Central Government) layingdown the terms and conditions of service of the transferredemployees would also be rendered otiose. To the extent,1092therefore, that section 11(1) read with that clause conferson the Corporation the power to alter the terms andconditions in question-a power not enjoyed by it under theprovisions of the Industrial Disputes Act-it is inconsistentwith the Industrial Disputes Act and being a later law,would override that Act despite the absence of the non-obstante clause, the inconsistency having arisen fromexpress language and not from mere implication. In otherwords, sub-section (2) of section 11 not only gives to theCentral Government the power to alter the terms andconditions of service of the employees of the Corporation incertain situations, and to alter them even to the detrimentof such employees to such extent and in such manner as itthinks fit, but also states in so many words that such powershall be exercisable "notwithstanding anything contained insub-section (1) or the Industrial Disputes Act 1947 or inany other law for the time being in force, or in any Award,settlement or agreement for the time being in force." Themandate of the Legislature has been expressed in clear andunambiguous terms in this non-obstante clause and is to theeffect that the power of the Central Government to alterconditions of service of the employees of the Corporationshall be wholly unfettered and that any provisions to thecontrary contained in the Industrial Disputes Act or forthat matter, in any other law for the time being in force,or in any award, settlement, or agreement for the time beingin force, would not stand in the way of the exercise of thatpower even if such exercise is to the detriment of theemployees of the Corporation. The conferment of the power isthus in express supersession of the Industrial Disputes Actand of any settlement made thereunder. The provisions ofthat Act and the two settlements of 1974 must, therefore,yield to the dictates of section 11(2) and to the exerciseof the power conferred thereby on the Central Government.Further, in the face of an express provision, namely, sub-section (4) of section 11 it is not open to the employees tocontend that the law laid down in the Industrial DisputesAct and not sub-section (2) of section 11 would govern them.[1154C, 1157 C-H, 1159 A-E, F-G](3) The rule making power conferred on the Corporationby section 49 of the Life Insurance Corporation Act isexercisable notwithstanding the provisions of the IndustrialDisputes Act. This power is expressly conferred on theCorporation in addition to that with which it is investedunder clause (bb) of the same sub-section (2) of section 49.If clauses (b) and (bb) of that sub-section were not meantto override the provisions of the Industrial Disputes Act onthe same subject they would be completely meaningless, andthat is a situation running directly counter to one of theaccepted principles of interpretation of statutes. Besides,these two clauses are not to be read in isolation fromsection 11. The subject matter of the clauses and thesection is overlapping and together they form an integratedwhole. The clauses must, therefore, be read in the light ofsection 11. When the two clauses say that the Corporationshall have the power to frame regulations in regard to theterms and conditions of its employees including transferredemployees subject, of course, to previous approval of theCentral Government, the power may well be exercised inconformity with the provisions of section 11. And if it soexercised the resultant regulations cannot be said to gobeyond the limits specified in the statute. [1159 G-H, 1160A-D]Life Insurance Corporation of India v. Sunil KumarMukherjee & Ors. [1964] 5 SCR 528, followed.Hukam Chand etc. v. Union of India and others, AIR 1972SC 2427; B. E. Vadera v. Union of India & Ors. [1968] 3 SCR575, held inapplicable.1093U. P. State Electricity Board and Ors v. Hari ShankerJain and Ors., [1975] 1 SCR 355; Bangalore Water Supply &Sewerage Board etc. v. R. Rajappa & Ors. [1978] 3 SCR 207,explained and distinguished.(4) Section 23 of the L. I. C. Act, which envisagesemployment of persons by the Corporation no doubt impliessettlement of conditions of service and that does not meanthat once a settlement is arrived at, the same is not liableto be altered except by another settlement reached undersection 18 of the I. D. Act. The provisions of sub-sections(1), (2) and (4) of section 11 of the L. I. C. Act andclauses (b) and (bb) of sub-section (2) of section 49thereof have overriding effect and the terms and conditionsof service of the employees of the Corporation forming partof a settlement under the I. D. Act cannot last after theyhave been altered in exercise of the powers conferred on theCorporation or the Central Government by these provisions,as was done when the new Regulation 58 was framed undersection 49 by the Corporation and the new clause 9 wasinserted in the 1957 order by the Central Government. Norcan any action taken under section 19(2) and 9A of the I. D.Act have any relevance to the exercise of these powers solong as such exercise conform to the provisions of the L. I.C. Act. [1162 G-H, 1163 A-B](5) The reliance of the High Court on Madan MohanPathak v. Union of India, [1978] 3 SCR 334, for support tothe proposition that "the new Regulation 58 framed undersection 49 of the L. I. C. Act and the notification issuedunder sub-section (2) of section 11 thereof substituting anew clause 9 in the 1957 Order are wholly ineffectiveagainst the operation of the 1974 settlements which werearrived at in pursuance of the provisions of the I. D. Actand which therefore continue to govern the parties thereto",is wholly misplaced because:(a) The judgment limited itself to the duration of thesettlements as appearing in clause 12 thereof and thereforedoes not cover any period subsequent to 21st March, 1977.(b) No finding at all was given nor was any observationmade to the effect that sections 11 and 49 of the L. I. C.Act or the action taken thereunder (the promulgation of newRegulation 58 and the new clause 9 of the 1957 Order) wasineffective against the operation of the provisions of theI. D. Act or of the 1974 settlements. On the other hand thejudgment very specifically proceeded on the ground that thetwo settlements had to and did conform to the provisions ofRegulation 58 inasmuch as the Central Government hadaccorded its approval to them, (c) Although it was heldclearly, rather quite correctly that sub-clause (ii) ofclause 8 of the 1974 settlements stood independently of sub-clause (1) thereof, the judgment contains no findingwhatsoever to the effect that the conditions of service laiddown in those settlement could be varied only by a freshsettlement or award made under the provisions of the I. D.Act and that till then sub-clause (ii) aforesaid wouldremain in full force. [1165 C-H, 1166 A-B](6) The observations in Chako's case must be taken tomean that the expired award would continue to govern theparties till it is displaced by another contract, or by arelationship otherwise substituted for it in accordance withlaw. In the present case, there is a special mandate byParliament to fill the void of the 3rd period following theexpiry of 1974 settlements which did not obtain in Chako'scase. [1170 A-C]South Indian Bank Ltd. v. A. R. Chacko, [1964] 5 SCR625, Indian Link Chain Manufacturers Ltd. v. Their Workmen,[1972] 1 SCR 790, Shukla1094Manseta Industries Pvt. Ltd. v. The Workmen Employed underit. [1978] 1 SCR 249; Haribhau Shinde and another v. F. H.Lala Industrial Tribunal, Bombay and another, AIR 1970 Bom.213, distinguished.Sukhdev Singh & Ors. v. Bhagatram Sardar SinghRaghuvanghi and anr., [1975] 3 SCR 619, followed.(7) 1. Section 11(2) of the Corporation Act suffersfrom no ambiguity either by reason of the omission therefromof the expression "from time to time" or otherwise and itis, therefore, not permissible for a reference to be made tothe speech of the then Finance Minister in the matter ofinterpretation of the sections. [1180 B-C]Anandji Haridas & Co. (P) Ltd. v. Engineering MazdoorSangh & Anr., [1975] 3 SCR 542, applied.(7) 2. The power to alter the terms and conditions ofservice of the Corporation's employees which the CentralGovernment is authorised to exercise in the interests of theCorporation and its policy-holders must of necessity be apower which can be exercised as and when occasion sorequires. A contrary view would lead to absurd results incertain given situations. [1179 A-B]Himangsu Chakraborty and others v. Life InsuranceCorporation of India and others, 1977 Lab. I. C. 622; K. S.Ramaswamy anr. v. Union of India and ors. [1977] I LLJ 211;Harivadan K. Desai and others v. Life Insurance Corporationof India and others, (1977) Lab. I. C. 1072 (Guj), approved.Mazagaon Dock Ltd. v. Commissioner of Income Tax andExcess Profits Tax, [1959] SCR 848; Babu Manmohan Das Shah &Ors., v. Bishun Das, [1967] 1 SCR 836; Vasantlal MaganbhaiSanjanwala v. The State of Bombay and others, [1961] 1 SCR341, applied.(8) There being no challenge to the vires of section11(2) of the Corporation Act by either side and so long asthe section itself is good the exercise of the powerconferred by it cannot be attacked unless such exercise goesbeyond the limits of the section, either in its content ormanner. If the legislature was competent to confer a poweron the Central Government to alter the conditions of serviceof the employees of the Corporation to their detriment orotherwise, the fact that the power was exercised only to cutdown bonus would furnish no reason for striking down clause9 of the 1957 Order or Regulation 58 as being isolative ofArticle 14 or 19. [1181 E-F](9) Clause 9 of the 1957 Order is not violative ofArticle 14 or 16 of the Constitution of India. That clauseno doubt takes within its sweep only transferred employeesbecause clause 2 of the 1957 Order specifically states thatthe Order is restricted in its operation to employees ofthat category; but then no question of any discriminationwhatsoever is involved inasmuch as the transferred employeeshave not only been treated differently from other employeesof the Corporation but by reason of Regulation 58 they havebeen placed fully at par with the latter. [1181 G-H, 1182 A](10) Clause 9 of the Order of 1957 does not suffer fromthe maxim "Delegatus non-potest delegare". Clause 9 itselfstates in unmistakable terms that the Corporation may grantnon-profit sharing bonus to its employees in respect of anyparticular year subject to the previous approval of theCentral Government, and so the real bonus-granting authorityremains the Central Government. There is thus no delegationof any real power to the Corporation through thepromulgation of clause 9. [1182 B-D]1095(11) New contentions, not raised before the High Court,like "necessity for revising the terms and conditions ofservice through promulgation of clause 9" will not bepermitted to be raised at the Supreme Court level. Again inthe absence of any evidence to the contrary, it ispermissible to presume that official acts have beenregularly performed and that the preamble to thenotification therefore, is in accord with facts. [1182 E-G]12. When Regulation 2 of 1960 says that it shall applyto every whole-time employee of the Corporation "unlessotherwise provided by the terms of any contract, agreementor letter of appointment", all that it means is that if acontract, agreement or letter of appointment contains a termstating that the concerned employee or employees shall notbe governed by the Regulations, then such employee oremployees shall not be so governed. Regulation 2 isdefinitely not susceptible of the interpretation that if asettlement has been reached between the Corporation and itsemployees, the regulations shall not apply to them eventhough the settlement makes no provision in that behalf. Itis nobody's case that the 1974 settlements contain any suchprovision and Regulation 2, therefore, does not come intoplay at all. [1183 C-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2275 of1978.
Appeal by Special Leave from the Judgment and Orderdated 11-8-1978 of the High Court of Judicature at Lucknowin Writ Petition No. 1186/78.
WITHTransfer Case No. 1 of 1979.
S. V. Gupte, G. B. Pai, K. J. John and D. N. Mishra forthe Appellant in C.A. 2275/78.
R. K. Garg, Madan Mohan, V. J. Francis and D. K. Gargfor Respondents 1-3, in CA 2275/78.
M. K. Banerjee, Addl. Sol. Genl. R. N. Sachthey, R. B.Datar and Miss A. Subhashini for Respondent No. 4, in C.A.2275/78.
P. K. Chatterjee and Rathin Das for the Petitioner inTransfer Case No. 1/79.
M. K. Banerjee, Addl. Sol. Genl., R. B. Datar, R. N.Sachthey and Miss A. Subhashini for Respondent No. 1 inTransfer Case No. 1/79.
S. V. Gupte, G. B. Pai and K. J. John for RespondentNo. 6 in Transfer Case No. 1/79.
For the IntervenersP. K. Chatterjee and Rathin Das for All India EmployeesAssn.Adarsh Goel, Janardan and Sarwa Mitter for NationalOrganisation of Insurance Workers.
P. R. Kumaramanglam, Mukul Mudgal and K. Vasdev for G.Meenakshi Sundaram and K. Ramakrishnan.
1096R. K. Garg, Madan Mohan, V. J. Francis and D. K. Gargfor C. N. Sharma and Rajendra Nath Misra.
D. L. Sengupta, S. K. Nandy and P. S. Khera for AllIndia Life Insurance Employees Assn. and L.I.C. of Indiathrough its Chairman Bombay.
The following Judgments were delivered,KRISHNA IYER, J.
A Word of Explanation.-A preliminary divagation hasbecome necessary since application and enquiries had beenmade more than once about the postponement of the judgment.The first anniversary of the closure of oral submissions inthe above case is just over; and this unusual delay betweenargument and judgment calls from me, the presiding judge ofthe bench which heard the case, a word of explanation andclarification so that misunderstanding about the judges maymelt away in the light. A better appreciation of thiscourt's functional adversities and lack of researchfacilities will promote more compassion than criticism andin that hope I add this note.
The judicature, like other constitutionalinstrumentalities, has a culture of national accountability.Two factors must be highlighted in this context. A court ismore than a judge; a collegium has a personality whichexceeds its members. The price a collective process (freefrom personality cult, has to pay is long patience, freeexchange and final decision in conformity with the democracyof judicial functionality. Sometimes, when divergent strandsof thought haunt the mentations of the members, we pause,ponder and reconsider because we follow the words of OliverCromwell commended for courts by Judge Learned Hand: "Mybrethren, I beseech you, in the bowels of Christ, think itpossible that you may be mistaken." Utter incompatibilityexists between judicial democracy and dogmaticinfallibility; and so, in this case, we have taken time,more time and repeated extension of time to evolve a broadconsensus out of our initial dissensus. Not procrastinationbut plural toil, is the hidden truth behind the considerableinterval.
Secondly, when important issues demand the court'scollective judgment an informed meeting of instructed minds,in many ways, is a sine qua non. But the torrent oflitigation flooding the court drowns the judges in the dailydrudgery of accumulated dockets. To gain leisure forfundamental reflections with some respite from paper-loggedexistence and supportive research from trained law clerks isa1097consummation devoutly to be wished' if the final court is tofulfil its tryst with the Constitution and country. TheIndian judicial process, sui generis in some respects, hasits problems, Himalayan in dimension but hardly appreciatedin perspective and in true proportions two of which havebeen mentioned by me in extension of the great gap betweenclosure for judgment and its actual pronouncement. Havingsaid this, I must proceed to deal with the merits of thecase and the conclusions we have reached in our diverseopinions. By majority, any way, we dismiss the appeal andfind no merit in the contentions of the appellant.The fundamental differences in approachMy learned brother Koshal, J. has, after longreflection on the issues in this appeal, expressed hisconclusion with which I respectfully disagree. Ourdifference stems from basic divergence in legalinterpretation and judicial perspective.
Law is no cold-blooded craft bound by traditionaltechniques and formal forceps handed down to us from theIndo-Anglican era but a warm-blooded art, with a break fromthe past and a tryst with the present, deriving its soulforce from the Constitution enacted by the People of India.Law, as Vice President G. S. Pathak used to emphasise inseveral lectures, is a tool to engineer a peaceful `civilrevolution' one of the components of which is a fair deal tothe weaker human sector like the working class. The strikingsocial justice values of the Constitution impact on theinterpretation of Indian laws and to forget this essentialpostulate while relying on foreign erudition is to weakenthe vital flame of the Democratic, Socialist Republic ofIndia. Chief Justice Earl Warren of the United States hasspelt out with clarity and felicity the correct judicialapproach to the issues at stake in this case:
Our judges are not monks or scientists, butparticipants in the living stream of our national life,steering the law between the dangers of rigidity on theone hand and of formlessness on the other. Our systemfaces no theoretical dilemma but a single continuousproblems how to apply ever-changing conditions thenever-changing principles of freedom. (1)For the Indian judicial process, the nidus of these never-changing principles is the Constitution. The bearing of thisbroad observation on statutory construction will becomeevident as we get down to the discussion.
1098Now let me proceed to the merits, but, at the outset,underscore the constitutional bias towards social justice tothe weaker sections. including the working class, in theDirective Principles of State Policy-a factor which mustenliven judicial consciousness while decoding the meaning oflegislation. Victorian-vintage rules of construction cannotoverride this value-laden guide book.
The flawless flow of facts, so far as I am able toremember, aided by our notes, finds expression in the streamof narration in our learned brother's judgment and thatfrees me from a like exercise. But our consensus on thefacts is no less than our dissensus on the law. In the pagesthat follow I adopt, for convenience, the same acronyms andabbreviations as have been used by brother Koshal, J. in hisjudgment.
To begin with, I have to stress three key circumstanceswhich colour the vision of social justice: (a) the factum ofpayment of bonus, without break, since 1959 by theCorporation(1) to its employees, (b) the consciousness thatthe Management in this case is no asocial, purely profit-oriented private enterprise but a model employer, astatutory corporation, created by nationalisationlegislation inspired by socialistic objectives; and (c) theimportance of industrial peace for securing which a speciallegislation viz. the Industrial Disputes Act, 1947 (the IDAct, for short) has been in operation for 33 years. TheCorporation is itself a limb of the State as defined in Art.12 and Arts. 38, 39 and 43 which deal with workers' wealhave, therefore, particular significance.
The Corporation, to begin with, had to take over thestaff of the private insurers lest they should be thrown outof employment, on nationalisation. These private companieshad no homogeneous policy regarding conditions of servicefor their personnel, but when these heterogeneous crowdsunder the same management (the Corporation) divergentemoluments and other terms of service could not survive andbroad uniformity became a necessity. Thus, the statutorytransfer of service from former employers andstandardization of scales of remuneration and otherconditions of employment had to be and were taken care of bys. 11 of the Life Insurance Corporation Act, 1956 (forshort, the LIC Act). The obvious purpose of this provisionwas to enable the Corporation initially to absorb the motleymultitudes from many companies who carried with them varyingincidents of service so as to fit them into a fair pattern,regardless of their antecedent contracts of employment orindustrial settle-
1099ments or awards. It was elementary that the Corporationcould not perpetuate incongruous features of service ofparent insurers, and statutory power had to be vested tovary, modify or supersede these contracts, geared to fair,equitable and, as far as possible, uniform treatment of thetransferred staff. Unless there be unmistakable expressionof such intention, the ID Act will continue to apply to theCorporation employees. The office of s. 11 of the LIC Actwas to provide for a smooth take-over and to promote somecommon conditions of service in a situation where a jungleof divergent contracts of employment and industrial awardsor settlements confronted the State. Unless suchrationalisation and standardization were evolved the ensuingchaos would itself have spelt confusion, conflicts anddifficulties. This functional focus of s.11 of the LIC Actwill dispel scope for interpretative exercises unrelated tothe natural setting in which the problem occurs. Theinference is clear that s.11 does not repel the ID Act asthat is not its purpose. Farewell to the context andfanatical adherence to the text may lead to the tyranny ofliterality-a hazardous road which misses the meaning orreaches a sense which the author never meant. Lord Denninghas observed : "A judge should not be a servant of the wordsused. He should not be a mere mechanic in the power-house ofsemantics." Reed Dickerson has in his "The Interpretationand Application of Statutes" warned against `thedisintegration of statutory construction' and quoted Fullerto say :(1)....(W)e do not proceed simply by placing the wordin some general context.... Rather, we ask ourselves,What can this rule be for? What evil does it seek toavert?
....Surely the judicial process is something morethan a cataloguing procedure.
....a rule or statute has a structural orsystematic quality that reflects itself in some measureinto the meaning of every principal term in it.I lay so much emphasis on the guidelines to statutoryinterpretation as this case turns solely on the seemingmeaning of certain provisions (for e.g. s. 11) of the LICAct as capable of perpetual use, not only initial exercise,as the Minister in Parliament indicated. But, as we willpresently see, the decisive aspect of the case turns onanother point, viz. the competing claims for dominance asbetween the ID Act and the LIC Act in areas of conflict. Ofcourse,1100the problem of decoding the legislative intent is fraughtwith perils and pitfalls, as the learned author has noted :
(1)To do his cognitive job well, a judge must beunbiased, sensitive to language usages and shared tacitassumptions, perceptive in combining relevant elementsaffecting meaning, capable of reasoning deductively,and generously endowed with good judgment. In view ofthese formidable demands, it is hardly surprising thatjudges often disagree on the true meaning of a statute.Even so, legal engineering, in the province of decipheringmeaning, cannot abandon the essay in despair and I shall tryto unlock the legislative intent in the light of the textand as reflecting the context.
A capsulated presentation of the conspectus of factswill aid the discussion.
The battle is about current bonus, the employer is theLife Insurance Corporation and the employees belong toClasses III and IV in the service of the Corporation. TheLIC Act brought into being a statutory corporation, i.e. theLife Insurance Corporation and life was breathed into it asfrom September 1, 1956. Since there was nationalisation oflife insurance business under the LIC Act private insurers'assets and liabilities of employees were transferred to theCorporation. We are concerned only with the employees andtheir services and s.11 of the LIC Act covers this field. Imay extract the said provision to make it clear that itdeals with the remuneration, terms and conditions and otherrights and privileges of transferred employees :
11.(1) Every whole-time employee of an insurerwhose controlled business has been transferred to andvested in the Corporation and who was employed by theinsurer wholly or mainly in connection with hiscontrolled business immediately before the appointedday shall, on and from the appointed day, become anemployee of the Corporation, and shall hold his officetherein by the same tenure, at the same remunerationand upon the same terms and conditions and with thesame rights and privileges as to pension and gratuityand other matters as he would have held the same on theappointed day if this Act had not been passed, andshall continue to do so unless and until his employmentin the Corporation is terminated or until hisremuneration, terms and conditions are duty altered bythe Corporation :
1101Provided that nothing contained in this sub-section shall apply to any such employee who has, bynotice in writing given to the Central Government priorto the appointed day, intimated his intention of notbecoming an employee of the Corporation.(2) Where the Central Government is satisfied thatfor the purpose of securing uniformity in the scales ofremuneration and the other terms and conditions ofservice applicable to employees of insurers whosecontrolled business has been transferred to, and vestedin, the Corporation, it is necessary so to do, or that,in the interests of the Corporation and itspolicyholders, a reduction in the remuneration payable,or a revision of the terms and conditions of serviceapplicable, to employees or any class of them is calledfor, the Central Government may, notwithstandinganything contained in sub-section (1), or in theIndustrial Disputes Act, 1947, or in any other law forthe time being in force, or in any award, settlement oragreement for the time being in force, alter (whetherby way of reduction or otherwise) the remuneration andthe other terms and conditions of service to suchextent and in such manner as it thinks fit; and if thealteration is not acceptable to any employee, theCorporation may terminate his employment by giving himcompensation equivalent to three months' remunerationunless the contract of service with such employeeprovides for a shorter notice of termination.
Explanation.-The compensation payable to an employeeunder this sub-section shall be in addition to, andshall not affect, any pension, gratuity, provident fundmoney or any other benefit to which the employee may beentitled under his contract of service.
(3) If any question arises as to whether anyperson was a whole-time employee of an insurer or as towhether any employee was employed wholly or mainly inconnection with the controlled business of an insurerimmediately before the appointed day the question shallbe referred to the Central Government whose decisionshall be final.
(4) Notwithstanding anything contained in theIndustrial Disputes Act, 1947, or in any other law forthe time being in force, the transfer of the service ofany employee of an insurer to the Corporation shall notentitle any such employee to any compensation underthat Act or other law, and no such claim shall beentertained by any court, tribunal or other authority.
1102Recruitment of fresh employees is provided for by s.23. Ands.49 empowers the Corporation to make regulations in ageneral way for all the purposes of the Act, including theterms and conditions of service of the employees of theCorporation. Pursuant to its powers the Central Governmentpromulgated the Life Insurance Corporation (Alteration ofRemuneration and other Terms and Conditions of Service ofEmployees) Order 1957 (the 1957 Order, for short). Thisrelated to the conditions of service of the transferees andwas not confined only to Class III and Class IV employeesamong them. It was a general Order, not one limited toworkmen as defined in s.2(s) of the ID Act. Clause 9 of the1957 Order states that no bonus will be paid but certainother benefits of insurance, medical care etc., arementioned therein. Clause 9 was later amended providing fornon-profit sharing bonus to certain classes of employees.
Be that as it may, the Corporation, with the clearapproval of the Central Government, reached a settlementwith its employees on July 2, 1959 providing for payment ofcash bonus from September 1, 1956 to December 31, 1961.Obviously, this was under the ID Act and not under the LICAct and proceeded on the clear assumption that the ID Actprovisions regarding claims of bonus applied to workmen inthe employment of the Corporation.
In 1960, the Life Insurance Corporation of India(Staff) Regulations, 1960 (the 1960 Regulations) wereframed. Regulation 58 states:
The Corporation may, subject to such directions asthe Central Government may issue, grant non-profitsharing bonus to its employees and the payment thereof,including conditions of eligibility for the bonus,shall be regulated by instructions issued by theChairman from time to time.
Here again, it must be noted that the provision is generaland covers the entire gamut of employees of the Corporationand is not a specific stipulation regarding that class ofemployees who are workmen under the ID Act and whoseindustrial disputes will be governed ordinarily by the IDAct.
Consistently with the good relations between theCorporation and its workmen, the settlement of 1959 wasfollowed by those of 1963, 1970 and 1972 providing for bonusfor workmen in the service of the Corporation. Rocketingcost of living, rising aspirations and frustrations ofsocioeconomic life and the general expectations from modelemployers like the public sector enterprises, have ledworkmen in this country to make escalating demands forbetter emoluments,1103including bonus. Naturally, the workmen under theCorporation raised disputes for bonus and other improvedconditions. The employer, consistently with the long courseof conduct by both sides as if the ID Act did govern theirrelations, entered into settlements dated January 24, 1974and February 6, 1974, pursuant to the provisions of s.18read with s.2(p) of the ID Act. Clause 8 of thesesettlements specificated the scale of bonus and clause 12thereof is more general and may be read here:
Clause 8. Bonus:
(i) No profit sharing bonus shall be paid.
However, the corporation may, subject to suchdirections as the Central Government issue from time totime, grant any other kind of bonus to its Class IIIand IV employees.
(ii) An annual cash bonus will be paid to ClassIII and Class IV employees at the rate of 15% of theannual salary (i.e. basic pay inclusive of special pay,if any, and dearness allowance and additional dearnessallowance) actually drawn by an employee in respect ofthe financial year to which the bonus relates.
(iii) Save as provided herein all other terms andconditions attached to the admissibility and payment ofbonus shall be as laid down in the Settlement on bonusdated the 26th June 1972.
Clause 12:
(1) This settlement shall be effective from 1stApril 1973, and shall be for a period of four years,i.e., from 1st April, 1973 to 31st March, 1977.(2) The terms of the settlement shall be subjectto the approval of the Board of the Corporation and theCentral Government.
(3) This Settlement disposes of all the demandsraised by the workmen for revision of terms andconditions of their service.
(4) Except as otherwise provided or modified bythis Settlement, the workmen shall continue to begoverned by all the terms and conditions of service asset forth and regulated by the Life InsuranceCorporation of India (Staff Regulations), 1960 as alsothe administrative instructions issued from time totime and they shall, subject to the provisions thereofincluding any period of operation specified therein, beentitled to the benefits thereunder.
It is important and, indeed, is an impressive featurethat these two settlements cover a wide ground of whichbonus is but one item.
1104Equally significant is the fact that the Board of theCorporation and the Central Government, which presumablyknew the scope of the LIC Act and the ID Act, did approve ofthese settlements.
The thought of terminating the payment of bonus to theemployees covered by the 1974 settlements apparentlyoccurred to the Central Government a year later and thePayment of Bonus (Amendment) Ordinance, 1975, (replaced bythe Payment of Bonus (Amendment) Act, 1976), was broughtinto force to extinguish the effect of the 1974 settlementsand the claims for bonus put forward by the workersthereunder. This Act was successfully challenged and thiscourt struck down the said legislation in Madan Mohan Pathakv. Union of India(1) and directed the Corporation to pay toits Class III and IV employees bonus for the years 1-4-1975to 31-3-1977. Thereupon, the Corporation issued to itsworkmen certain notices under s.19(2) of the ID Act and s.9Aof the same Act. Likewise, the Central Government, on May26, 1978, issued a notification under s.49 of the LIC Actsubstituting a new Regulation for the old Regulation 58. Allthese three steps were taken to stop payment of bonus to theworkmen under the two settlements and led to a challenge oftheir validity in the Allahabad High Court under Art. 226 ofthe Constitution. If the two notices and the changedRegulation were good they did deprive the workmen of theirbenefits of bonus pursuant to the settlements reached underthe ID Act. But the workmen contended that the proceedingsunder the LIC Act could not prevail against the continuedflow of bonus benefits under the ID Act. The High Court(Lucknow Bench) struck down the appellant's actions as of noconsequence and void and sustained the claim for bonus basedon the settlements of 1974. The Corporation has come up inappeal to this Court assailing the findings of the HighCourt.
The Corporation is clearly an 'industry', and the'workmen' raised demands for bonus, the management respondedconstructively and for long years settlements, as envisionedby the ID Act, were entered into and the stream ofindustrial peace flowed smooth. Industrial settlementsmarked their relations the last of which were in 1974 but alater legislation marred this situation and led to alitigation. In 1976, the Life Insurance Corporation(Modification of Settlement) Act, 1976 (for short, the 1976Act) was enacted to abolish the efficacy of the right tobonus under the two settlements of 1974 but the challenge toits constitutionality was upheld. When the parliamentaryburial of bonus was stultified by judicial resurrection,other measures to effectuate the same purpose were resortedto, both1105under the LIC Act and the ID Act. These moves proved to beessays in futility because the High Court held that bonuswas still payable, that the ID Act prevailed over the LICAct in the area of industrial relations, the former being aspecial law, and that the steps taken both by theCorporation and the Central Government under the LIC Act andRegulations as well as under the ID Act, were of legalinconsequence. Against this judgment the Corporation hascome up in appeal and the questions raised are of greatmoment and of serious portent. If law allows administrativenegation of bonus, judges are not to reason why; but whetherlaw does allow nullification of industrial settlement is forjudges to decide, not for the Administration to say, whynot? That is Montesquien functionalism of sorts. So, againstthis backdrop, I will analyse the submissions, scan theirsubstance and pronounce upon their validity.
I may as well formulate, in more particularised form,the various contentions urged on either side-notexhaustively though, because that has been done by mylearned brothers. I propose to confine the discussion to thedecisive issues. First of all, we have to investigatewhether the two settlements of January 24, 1974 and February6, 1974, arrived at in pursuance of the provisions of s. 18read with s. 2(p) of the ID Act, have current validity,having regard to the notice given by the Management under s.19(2) of the ID Act terminating the settlements and under s.9A of its intention to vary the conditions of servicebearing on bonus. In case the settlements do not survive thenotices, the claim to bonus perishes and nothing moreremains to be decided. But in case I hold that despite theintention to change the service conditions under s. 9A anddetermination under s. 19(2), the terms of the settlementscontinue to operate until substituted by a new contractarrived at by mutual settlement or by an award, the furtherissue opens as to whether a settlement under the ID Actcannot be operative since the LIC Act contains provisionsvesting power in the Corporation and the Central Governmentto fix the terms and conditions of service of theCorporation employees and that power has been exercised toextinguish the bonus claim. The question will throw open forconsideration which statute prevails-the ID Act or the LICAct-when there is an apparent conflict between the two. Theproblem of the prevalence of a special statute at against ageneral statute and the determination of which, in a givensituation, is the special statute will engage my attentionat the appropriate stage. In the event of my holding thatthe ID Act prevails, as against the LIC Act, in the givensituation, the fate of the steps taken by the Corporationand the Central Government under the LIC Act and theRegulations framed thereunder will be sealed. Of course,1106if the holding is that the ID Act cannot operate as againstthe LIC Act and the Regulations framed thereunder, whendealing with the terms and conditions of service of theemployees of the Corporation, I may have to venture into thecontroversy about how effectual are the measures taken bythe two statutory authorities, i.e. the Corporation and theCentral Government, under the provisions of the LIC Act andthe Regulations. Every point has been emphatically contestedand argued by both sides with erudite niceties. However, thejudicial perspective will be the decisive factor in theultimate analysis. For, as Brennan, J. has observed: (1)"The law is not an end in itself, nor does itprovide ends. It is preeminently a means to serve whatwe think is right."
"Law is here to serve ! To serve what ? To serve,insofar as law can properly do so, within limits that Ihave already stressed, the realization of man's ends,ultimate and mediate. . . Law cannot stand aside fromthe social changes around it."
Judicial acceptance of social dynamics, as projected bythe Constitution, is the crucial factor in this case, if Imay anticipate myself.
The ID Act is a benign measure which seeks to pre-emptare extant even after the notice under s.9A and the formaltermination under s. 19(2) of the ID Act, Let me go to thebasics. Before that, a glance at the nature of the twosettlements, their ambit and ambience and their longevity,actual and potential, may be desirable, after sketching thebroad basics of the ID Act and its means and ends.
The ID Act is a benign measure which seeks to pre-emptindustrial tensions, provides the mechanics of disputeresolutions and set up the necessary infra-structure so thatthe energies of partners in production may not be dissipatedin counter-productive battles and assurance of industrialjustice may create a climate of goodwill. Industrial peaceis a national need and, absent law, order in any field willbe absent. Chaos is the enemy of creativity sans whichproduction will suffer. Thus, the great goal to which the IDAct is geared is legal mechanism for canalising conflictsalong conciliatory or adjudicatory processes. The objectiveof this legislation and the component of social justice itembodies were underscored in the Bangalore Water Supply andSewerage Board v. Rajappa (2) thus:
1107To sum up, the personality of the whole statute,be it remembered, has a welfare basis, it being abeneficial legislation which protects labour, promotestheir contentment and regulates situations of crisisand tension where production may be imperilled byuntenable strikes and blackmail lock-outs. Themechanism of the Act is geared to conferment ofregulated benefits to workmen and resolution, accordingto a sympathetic rule of law, of the conflicts, actualor potential, between managements and workmen. Its goalis amelioration of the conditions of workers, temperedby a practical sense of peaceful co-existence, to thebenefit of both-not a neutral position but restraintson Iaissez faire and concern for the welfare of theweaker lot Empathy with the statute is necessary tounderstand not merely its spirit, but also its sense.The ID Act deals with industrial disputes, provides forconciliation, adjudication and settlements and regulates therights of parties and the enforcement of awards andsettlements. When a reference is made of a dispute unders.10 or s.10A, the legal process springs into action. Unders.11 and award is made after a regular hearing if aconciliation under s.12 does not ripen into a settlement anda failure report is received. The award is published unders.17(1) and acquires finality by virtue of s.17(2) unlessunder s.17A(1) the appropriate government declares that theaward shall not be enforceable. Section 17A(4) which is ofsignificance reads thus:
(4) Subject to the provisions of sub-section (1)and sub-section (3) regarding the enforceability of anaward, the award shall come into operation with effectfrom such date as may be specified therein, but whereno date is so specified, it shall come into operationon the date when the award becomes enforceable undersub-section (1) or sub-section (3), as the case may be.
It is obvious from s. 18 that a settlement, like an award,is also binding. What I emphasise is that an award,adjudicatory or arbitral, and a settlement duringconciliation or by agreement shall be binding because ofstatutory sanction. Section 19 relates to the period ofoperation of settlements and awards and here also it isclear that both settlements and awards, as is evident from areading of s. 19(2) and (6), stand on the same footing.
Section 19 has a key role to play in the life and deathof awards and settlements and so we may read the text hereto enable closer comment. Particular attention must beriveted on s. 19(2), (3) and (6):
110819. (1) A settlement shall come into operation onsuch date as is agreed upon by the parties to thedispute, and if no date is agreed upon, on the date onwhich the memorandum of the settlement is signed by theparties to the dispute.
(2) Such settlement shall be binding for suchperiod as is agreed upon by the parties, and if no suchperiod is agreed upon for a period of six months (fromthe date on which the memorandum of settlement issigned by the parties to the dispute, and shallcontinue to be binding on the parties after the expiryof the period aforesaid, until the expiry of two monthsfrom the date on which a notice in writing of anintention to terminate the settlement is given by oneof the parties to the other party or parties to thesettlement.
(3) An award shall, subject to the provisions ofthis sections remain in operation for a period of oneyear (from the date on which the award becomesenforceable under section 17A).
Provided that the appropriate Government mayreduce the said period and fix such period as it thinksfit;
Provided further that the appropriate Governmentmay before the expiry of the said period, extend theperiod of operation by any period not exceeding oneyear at a time as it thinks fit so, however, that thetotal period of operation of any award does not exceedthree years from the date on which it came intooperation.
(4) Where the appropriate Government, whether ofits own motion or on the application of any party boundby the award, considers that since the award was made,there has been a material change in the circumstanceson which it was based, the appropriate Government mayrefer the award or a part of it to a Labour Court, ifthe award was that of a Labour Court or to a Tribunal,if the award was that of a Tribunal or of a NationalTribunal, for a decision whether the period ofoperation should not, by reasons of such change, beshortened and the decision of Labour Court or theTribunal, as the case may be on such reference shall befinal.
(5) Nothing contained in sub-section (3) shallapply to any award which by its nature, terms or othercircumstances does not impose, after it has been giveneffect to any continuing obligation on the partiesbound by the award.
1109(6) Notwithstanding the expiry of the period ofoperation under sub-section (3), the award shallcontinue to be binding on the parties until a period oftwo months has elapsed from the date on which notice isgiven by any party bound by the award to the otherparty or parties intimating its intention to terminatethe award.
(7) No notice given under sub-section (2) or sub-section (6) shall have effect, unless it is given to aparty representing the majority of persons bound by thesettlement or award, as the case may be.
Section 9A fetters the Management's right to change theconditions of service of workmen in respect of certainmatters including wages and allowances. We had better readit here:
9A. No employer who proposes to effect any changein the conditions of service applicable to any workmanin respect of any matter specified in the FourthSchedule, shall effect such change,-
(a) without giving to the workmen likely to beaffected by such change a notice in theprescribed manner of the nature of the changeproposed to be effected; or
(b) within twenty-one days of giving such notice:
It will be apparent that the ID Act substantiallyequates an award with a settlement, from the point of viewof their legal force. No distinction in regard to the natureand period of their effect can be discerned, especially whenwe read s. 19(2) and (6). I highlight this virtual identityof effect to bring home the fact that judicialpronouncements on this aspect, whether rendered in a case ofaward or settlement, will be a guideline for us and nothingturn on whether the particular is one of an award orsettlement. Indeed, there are reported cases on both.
The statutory regulation of industrial disputes iscomprehensive, as is manifest from the rest of the Act.Chapter V prohibits strikes and lock-outs; Chapter VA dealswith lay-off and retrenchment and Chapter VI puts teeth intothe provisions by enacting penalties. Importantly, s. 29,which proceeds on the footing of equal sanctity for awardsand settlements, punishes breaches:
29. Any person who commits a breach of any term ofany settlement or award, which is binding on him underthis Act shall be punishable with imprisonment for aterm which may extend1110to six months, or with fine, or with both, and wherethe breach is a continuing one, with a further finewhich may extend to two hundred rupees for every dayduring which the breach continues after the convictionfor the first, and the Court trying the offence, if itfines the offender, may direct that the whole or anypart of the fine realised from him shall be paid, byway of compensation, to any person who, in its opinionhas been injured by such breach.
There are miscellaneous provisions to take care ofother residuary matters and we get picture of aparliamentary project designed to deal, not piecemeal butwholesale, with a special subject of strategic concern tothe nation, viz., 'the investigation and settlement ofindustrial disputes'. Let us be perspicacious about thepurpose and sensitive about the social focus of the ID Actin a developmental perspective. Parliament has picked outthe specific subject of industrial disputes forparticularised treatment, whether the industry be in theprivate or public sector or otherwise. Our country, with somuch leeway to make up, cannot afford paralysing processesin production of goods and services and whoever be theemployer-Government, quasi-public, charitable or profit-making private enterprise-both sides viz., workmen andmanagement shall abide by the discipline adopting themechanics and using the machinery under the ID Act. TheBangalore Water Supply and Sewerage Board case(1) hashighlighted this core truth. To lose sight of the spinalnature of the legislation, viz., industrial disputes andtheir settlement through law, and to regard it as a mereenactment bearing on terms and conditions of service inenterprises is to miss the distinctive genre, particularflavour and legislative quintessence of the ID Act.
....(Interpretation) involves far more than picking outdictionary definitions of words or expressions used.Consideration of the context and the setting isindispensable properly to ascertain a meaning. Insaying that a verbal expression is plain or unambiguous, we mean little more than that we areconvinced that virtually anyone competent to understandit, and desiring fairly and impartially to ascertainits signification, would attribute to the expression inits context a meaning such as the one we derive ratherthan any other; and would consider any differentmeaning, by comparison, strained, or farfetched, orunusual, or unlikely.
1111... Implicit in the finding of a plain, clear meaningof an expression in its context, is a finding that suchmeaning is rational and "makes sense" in thatcontext.(1)Interpretative insight will suffer, even as thejudicial focus will blur, if the legislative target is notsharply perceived. Indeed, I lay so much stress on thisfacet because brother Koshal's otherwise faultless logichas, if I may say so with great deference, failed toconvince me because of this fundamental mis-focus. To repeatfor emphasis, the meat of the statute is industrial dispute,not conditions of employment or contract of service as such.The line of distinction may be fine but is real.
Be that as it may, a bird's eye view of the ID Actreveals the statutory structure and legal engineeringcentering round dispute settlement in industries accordingto the rule of law and away from fight with fists oreconomic blackmail. This large canvas once illumined, mayillustrate the sweep, of awards and settlements by referenceto the very agreement of 1974 we have before us. It goes farbeyond bonus and embraces a wide range of disputes andrainbow of settlements in a spirit of give and take. One mayvisualise the bargaining process. Give in a little on bonusand get a better deal on salary scale or promotionprospects; relent a wee-bit on hours of work but bargainbetter on housing facilities, and so on. The soul of thestatute is not contract of employment, uniformity of serviceconditions or recruitment rules, but conscionablenegotiations, conciliations and adjudications of disputesand differences animated by industrial justice, to avoid acollision which may spell chaos and imperil national effortat increasing the tempo of production.
If there is no dispute, the ID Act is out of bounds,while the LIC Act applies generally to all employees fromthe fattest executive to the frailest manual worker and hasno concern with industrial disputes. The former is a 'warmeasure' as it were; the latter is a routine power whenswords are not drawn if we may put it metaphorically. Whendisputes break out or are brewing, a special, sensitivesituation fraught with frayed tempers and fighting posturessprings into existence, calling for special rules ofcontrol, conciliatory machinery, demilitarising strategiesand methods of investigation, interim arrangements and finalsolutions, governed by special criteria for promotingindustrial peace and justice. The LIC Act is not a law for1112employment or disputes arising therefrom, but anationalisation measure which incidentally, like in anygeneral take-over legislation, provides for recruitment,transfers, promotions and the like. It is special vis-a-visnationalisation of life insurance but general regardingcontracts of employment or acquiring office buildings.Emergency measures are special, for sure. Regularnationalisation statutes are general even if theyincidentally refer to conditions of service.
The anatomy of the 1974 settlements is no more confinedto bonus than the physiology of man is limited to bones. Itis an integral, holistic and delicately balanced ensemble ofclauses, with cute calculations and hard bargaining on manymatters. To dissect is to murder, in the art of true poetryas in the craft of settlement in industry; and therefore, itis impermissible to single out a clause and extinguish it asthe totality is a living entity which does not permit ofdismemberment, limb by limb, without doing violence to thewholeness and identity of the settlement. Here, the 1974settlements have brought about a conflict-resolution on avariety of items including (a) scales of pay, (b) method offixation in the new scales, (c) dearness allowance, (d)house rent allowance, (e) city compensatory allowance, etc.Thus bonus is but one component of a multi-point agreement.Para 12 of the Settlement has some significance:
12. Period of Settlement.-(1) This Settlementshall be effective from 1st April, 1973 and shall befor a period of four years, i.e., from 1st April, 1973to 31st March, 1977.
(2) The terms of the settlement shall be subjectto the approval of the Board of the Corporation and theCentral Government.
(3) This Settlement disposes of all the demandsraised by the workmen for revision of terms andconditions of their service.
(4) Except as otherwise provided or modified bythis Settlement, the workmen shall continue to begoverned by all the terms and conditions of service asset forth and regulated by the Life InsuranceCorporation of India (Staff) Regulations, 1960 as alsothe administrative instructions issued from time totime and they shall, subject to the provisions thereofincluding any period of operation specified therein, beentitled to the benefits thereunder.
Likewise, the preamble has a purpose:
WHEREAS the parties representing the workmen,namely:
1. All India Insurance Employees Association;
2. All India LIC Employees Federation;
11133. All India Life Insurance Employees Associationand
4. National Organisation of Insurance Workers.
(hereinafter called the said Associations) submittedtheir Charter of Demands to the Life Ins. Corpn. ofIndia (hereinafter called the Corporation) for revisionof the scales of pay, allowances and other terms andconditions of service after the expiry of the award ofthe National Industrial Tribunal New Delhi on 31stMarch, 1973:
AND WHEREAS the Corpn. has carried on negotiationswith the said Associations between the period July 1973and January 1974 at which there has been free and frankexchange of views in regard to various mattersincluding the obligations of the Corpn. to the policy-holders and the community;
AND WHEREAS the said Associations solemnly agreeto cooperate with the management in maintainingdiscipline and in its endeavour to effect utmosteconomy in administration and to improve efficiency andproductivity so as to ensure that the growth inprofitability is maintained which alone will enable theCorpn. (i) to safeguard and (ii) to meet the legitimatedemands of the employees for wage revision.AND WHEREAS the said Associations further agreethat the management may issue administrativeinstructions in the interest of maintaining disciplineand peaceful atmosphere in the office.
NOW THEREFORE it is hereby agreed by and betweenthe parties hereto is as follows:
What stand out prominently in this Memorandum ofSettlement are:
(a) There was a previous settlement and newnegotiations were started in the light of newdemands for a substitutions of the earliersettlement by a new settlement without leaving aninterregnum of vacuum.
(b) There was a plurality of items unconnected withbonus as such and the overall settlement is acomposite fabric; and
(c) There is specific reference to the LIC (Staff)Regulations, 1960, and, so far as the Settlementprovided, it prevailed over the Regulations and sofar as the Settlement did not cover a topic theRegulations governed, thus making it clear thatthe Settlements did not become subordinate to theRegulations.
1114The core question that first falls for consideration isas to whether the Settlements of 1974 are still in force.There are three stages or phases with different legaleffects in the life of an award or settlement. There is aspecific period contractually or seatutorily fixed as theperiod of operation. Thereafter, the award or settlementdoes not become non est but continues to be binding. This isthe second chapter of legal efficacy but qualitativelydifferent as we will presently show. Then comes the lastphase. If notice of intention to terminate is given under s.19(2) or 19(6) then the third stage opens where the award orthe settlement does survive and is in force between theparties as a contract which has superseded the earliercontract and subsists until a new award or negotiatedsettlement takes its place. Like Nature, Law abhors a vacuumand even on the notice of termination under s. 19(2) or (6)the sequence and consequence cannot be just void but acontinuance of the earlier terms, but with liberty to bothsides to raise disputes negotiate settlements or seek areference and award. Until such a new contract or awardreplaces the previous one, the former settlement or awardwill regulate the relations between the parties. Such is theunderstanding of industrial law atleast for 30 years asprecedents of the High Courts and of this court beartestimony. To hold to the contrary is to invite industrialchaos by an interpretation of the ID Act whose primarypurpose is to obviate such a situation and to provide forindustrial peace. To distil from the provisions of s. 19 aconclusion diametrically opposite of the objective,intendment and effect of the Section is an interpretativestultification of the statutory ethos and purpose.Industrial law frowns upon a lawless void and under generallaw the contract of service created by an award orsettlement lives so long as a new lawful contract is broughtinto being. To argue otherwise is to frustrate the rule oflaw. If law is a means to an end-order in society-can itcommit functional harakiri by leaving a conflict situationto lawless void ?
Now we will move on to the precedents on the pointwhich have been summed up by Malhotra thus:(1)(3) Effect of termination of award under s. 19(6)on rights and obligations of parties.-Termination of anaward by either party under s. 19(6) does not have theeffect of extinguishing the rights flowing therefrom.The effect of termination of an award is only toprevent thereafter the enforcement of the obligationunder it in the manner prescribed, but the rights andobligations which flow from it are not wiped out.Evidently, by the termination1115of an award, the contract of employment is notterminated, the obligations created by the award orcontract could be altered by a fresh adjudication orfresh contract.(1).
In Judhisthir Chandra v. Mukherjee(2) the position asstated above was accepted as correct by the High Court. ADivision Bench of the Bombay High Court in MangaldasNarandas v. Payment of Wages Authority etc.(3) (Shah andGokhale, JJ) came to the same conclusion and neatly summedup the sequence of triple stages and the difference in legalconsequences, and upholding the contention that even aftertermination of an award under s. 19(6) the termsincorporated in the award continued as a contract betweenthe parties. So much so, no reversion to the pre-awardposition was permissible on the part of the employer. Thehead-note which is sufficiently lucid and luminous, sums upthe ratio thus:
Where an award is delivered by the industrialtribunal it has the effect of imposing a statutorycontract governing the relations of the employer andthe employe. It is true that statutory contract may beterminated in the manner prescribed by s. 19(6) of theIndustrial Disputes Act. After the statutory contractis terminated by notice, the employer by failing toabide by the terms of the award does not incur thepenalties provided by the Industrial Disputes Act, norcould the award be enforced in the manner prescribed bys. 20 of the Industrial Disputes (Appellate Tribunal)Act, 1950. But the termination of the award has not theeffect of extinguishing the rights flowing therefrom.Evidently by the termination of the award the contractof employment is not terminated. The employer and theemployee remain master and servant in the industry inwhich they are employed, unless by notice the employerhas also simultaneously with the termination of theaward terminated the employment of the employee. If theemployment is not terminated, it is difficult to holdthat the rights which had been granted under the awardautomomatically cease to be effective from the date onwhich notice of termination of the award becomeseffective. The effect of termination of the award isonly to prevent enforcement of the obligations under1116the award in the manner prescribed, but the rights andobligations which flow from the award are not wipedout. Termination of the award or lapsing of the awardhas not the effect of wiping out the liabilitiesflowing under the award.
An award has the effect of imposing fresh termsupon the contract of employment between the employerand the employee to which they have been assented. Thetermination of such award does not terminate thecontract. Even after the award is terminated in themanner provided by s. 19(6) of the Industrial DisputesAct, the obligation created by the award could be alterby a fresh contract or a fresh adjudication under theIndustrial Disputes Act and not otherwise.The Industrial Disputes Act has been enacted withthe object of securing harmonious relations in theworking of the industry between the employer and theemployees by providing a machinery for adjudication ofdisputes between them; and the object of thelegislature would be frustrated if after every fewmonths by unilateral action the employer or theemployees may be entitled to reopen the dispute andignore the obligations declared to be binding by theprocess of adjudication.
(emphasis added)There is a remarkable continuity in the Bombay HighCourt (a jurisdiction where industrial unrest is a sensitiveissue) because we find that another Division Benchinterpreting similar provisions in the Bombay IndustrialRelations Act has been persuaded by the same reasoning, wellbrought out in the Head Note which we excerpt:(1)The result of the award ceasing to have effect onnotice of termination being given under s. 116(1) ofthe Bombay Industrial Relations Act is that the awardceases to exist. The result of the award ceasing tohave effect is that it is open to either party give anotice of change under s. 42 of the Act and attempt ofbring about a change. Further it is open to theemployer in cases in which he could bring a changewithout a notice of change such as matters enumeratedin Sch. III to the Act to bring about a change, becausethe impediment placed in his way by s. 46(3) isremoved. But until a change is brought about by the acteither of employer or the employee after followingrelevant provisions in1117the Bombay Industrial Relations Act, 1946, the awardthat exists, shall continue to regulate the relationsbetween the employer and the employees. The effect oftermination of an award is not that the rights whichflow from that award cease to be available to theemployees, but the effect of termination is that theaward continues to govern the relations between theemployer and the employee until such time as a changeis effected in accordance with the provisions of theBombay Industrial Relations Act, 1946.
(emphasis added)Indeed, the precise submission that upon termination bynotice, the award ceased to have effect for all purposes andthe employees were not entitled to benefit thereunder wasraised and examined as a matter of great importance toindustrial relations. The court, in our view rightlyrejected the contention of the employer and with forcefulprecision argued to reach the conclusion which the onlysensible solution :(1)What this sub-section in effect provides is thatif a notice of termination is given by either party tothe award, then on the expiry of two months from thedate of such notice the registered agreement,settlement or award shall cease to have effect.......But the question that we have been called upon todetermine goes a little further than that and thequestion is by what is the relationship between theemployers and the employees regulated after an award isterminated ? Does termination of the award create avacuum and leave the employees to the tender mercy ofthe employer ? Does it, by providing that the awardshall cease to have effect, get rid of the award so asto bring about the result that any agreement thatgoverned the relations of the parties prior to the dateof the award is thereby revived; or does it preservesuch rights as the employees have, prior to the date oftermination, already enjoyed under the award or does itpreserve the whole of the award until it is changed bythe procedure prescribed by the Bombay IndustrialRelations Act for a change ? Now, quite obviously itswould not be possible for any court to take the viewthat the termination of the award creates a vacuum inwhich the employees are at the tender mercy of theemployer; nor does it appear to us to be possible tohold that by termination of the award the contract oragreement that governed the relations of the employerand the employees prior to the award is in some mannerrevived. Initially that contract or agreement hadbinding effect; but it ceased to have such effect onthe award1118taking effect and the moment the award became bindingon the parties, the antecedent contract or agreementwas superseded by the award. It is not a case of anantecedent contract or agreement being suspended,because there is no provision for suspension which caneven be spelt out from any of the sections of theBombay Industrial Relations Act. The award, or as thecase may be, a registered agreement or a settlementunder the Bombay Industrial Relations Act has obviouslythe effect of superseding the contract or agreementthat existed and that regulated the relations betweenthe employer and the employees prior to the registeredagreement, settlement or award taking effect under theprovisions of the Act. Then we come to the nextpossibility: Is only so much of the award preserved asrelates to the rights already enjoyed by the employeesbefore the termination of the award ? We find itdifficult so to hold. There is no principle or logic indealing with an award in this piecemeal manner andpreserving rights that have already been actuallyenjoyed and destroying those which, although they mayhave accrued, have to be enjoyed in future in terms ofthe award. Mr. Patel for the petitioners has arguedthat on the termination of the award the effect orrather the result that is brought about is that therights of parties are frozen as of that date. Assumingsuch a concept of freezing the rights was adopted, eventhe freezing would be in respect of rights that havealready accrued and it is not quite easy to conceive ofrights which would not accrue to an employee under anindustrial award and which can only be contingent. Inany event, if the original contract or agreement hasbeen superseded by the award, holding that the award isno longer what governs the relations between theemployer and the employees would necessarily create avacuum. Trying to save the creation of a vacuum bysplitting up the award into two parts, the award underwhich benefits have already been enjoyed and that partof the award under which benefits have not beenenjoyed, is dissecting the award in a manner notjustified in law or logic. There appears to be on thescene after the termination of the award only one thingthat can govern the relations between the employer andthe employees and that undoubtedly can be nothing elsethan the award itself. The result of the award ceasingto have effect is not that the award ceases to exist;the result of the award ceasing to have effect is, as Ihave already pointed out, that it is open to eitherparty to give a notice of change and to attempt tobring about a change.
(emphasis added)1119In the Madras jurisdiction the same view has prevailedas is apparent from 1961 I LLJ 105, 1971 I LLJ 310 and 1978I LLJ 227. A Division Bench of that Court in Sathya Studioscase(1) stressed the purpose of the ID Act and thepreference for that interpretation which will advance thatpurpose. The Head Note brings out the holding correctly:
...... a combined reading of s. 18(3), sub-ss. (1)to (3) and (6) of s. 19, s. 23 and s. 29 leave no doubtthat, bring about, conserve and promote industrialpeace, the termination of an award under s. 19(6) doesnot mean that the terms and conditions evolved by itand applied to the industrial relations concerned wouldbe set at large. All that that termination under s.19(6) would mean is that, thereafter, the parties willbe at liberty to raise a fresh industrial dispute ifthere is a basis therefor. But, so long as the awardterminated under s. 19(6) has not been substituted byan award, the industry concerned has to proceed on thebasis that the terms and conditions of the award wouldcontinue to govern the terms of employment.
(emphasis added)We need not labour the point further because we arebound, presidentially speaking, by three decisions of thisCourt. Chacko's case, (2) in a clinching passage, settlesthe proposition and the Indian Oil Corporation case(3)adopts a reasoning compelling the same conclusion even likeMohd. Quasim Larry(4) has done. Das Gupta, J. speaking for aBench of three judges studies the statutory scheme bearingon the triple periods after an award came into being andindicated, by purposive interpretation of the relevantprovisions, the legal stages of the life of an award. Afterquoting s. 19(6) of the ID Act, the Court observed(5):
This makes it clear that after the period ofoperation of an award has expired, the award does notcease to be effective. For, it continues to be bindingthereafter on the parties until notice has been givenby one of the parties of the intention to terminate itand two months have elapsed from the date of suchnotice.
1120The effect of s. 4 of the Industrial Disputes (BankingCompanies) Decision Act is that the award ceased to bein force after March 31, 1959. That however has nothingto do with question as to the period for which it willremain binding on the parties thereafter. The provisionin s. 19(6) as regards the period for which the awardshall continue to be binding on the parties is not inany way affected by s. 4 of the Industrial Disputes(Banking Companies) Decision Act, 1955.Quite apart from this, however, it appears to usthat even if an award has ceased to be in operation orin force and has ceased to be binding on the partiesunder the provisions of s. 19(6) it will continue tohave its effect as a contract between the parties thathas been made by industrial adjudication in place ofthe old contract. So long as the award remains inoperation under s. 19(3), s. 23(c) stands in the way ofany strike by the workmen and lock-out by the employerin respect of any matter covered by the award. Again,so long as the award is binding on a party, breach ofany of its terms will make the party liable to penaltyunder s. 29 of the Act, to imprisonment which mayextend to six months or with fine or with both. Afterthe period of its operation and also the period forwhich the award is binding have elapsed s. 23 and s. 29can have no operation. We can however see nothing inthe scheme of Industrial Disputes Act to justify aconclusion that merely because these special provisionas regards prohibition of strikes and lock-outs and ofpenalties for breach of award cease to be effective thenew contract as embodied in the award should also ceaseto be effective. On the contrary, the very purpose forwhich industrial adjudication has been given thepeculiar authority and right of making new contractsbetween employers and workmen makes it reasonable tothink that even though the period of operation of theaward and the period for which it remains binding onthe parties may elapse-in respect of both of whichspecial provisions have been made under ss. 23 and 29respectively-the new contract would continue to governthe relations between the parties till it is displacedby another contract. The objection that no such benefitas claimed accrue to the respondent after March 31,1959 must therefore be rejected.
(emphasis added)The power of reasoning, the purpose of industrialjurisprudence and the logic of the law presented with terseforce in this pronouncement cannot be missed. The newcontract which is created by an1121award continued to govern the relations between the parties"till it is displaced by another contract."
Another Bench of three judges, speaking through ChiefJustice Gajendragadkar, in Md. Quasim Larrys case(1) hasratiocinated on similar lines:
When an award is made and it prescribes a new wagestructure, in law the old contractual wage structurebecomes inoperative and its place is taken by the wagestructure prescribed by the award. In a sense, thelatter wage structure must be deemed to be a contractbetween the parties because that, in substance, is theeffect of industrial adjudication. The true legalposition is that when industrial disputes are decidedby industrial adjudication and awards are made, thesaid awards supplant contractual terms in respect ofmatters covered by them and are substituted forthem.... In this connection, we may incidentally referto the decision of this Court in the South Indian BankLtd. v. A. R. Chacko(2) where it has been observed bythis Court that the very purpose for which industrialadjudication has been given the peculiar authority andright of making new contracts between employers andworkmen makes it reasonable to think that even thoughthe period of operation of the award and the period forwhich it remains binding on the parties may elapse-inrespect of both of which special provisions have beenmade under sections 23 and 29 respectively-the newcontract would continue to govern the relations betweenthe parties till it is replaced by another contract.This observation clearly and emphatically brings outthat the terms prescribed by an award, in law, and insubstance, constitute a fresh contract between theparties.
(emphasis added)Again, a Bench of four Judges in the Indian OilCorporation case(3) reiterated the same principle in thecontext of s. 9A of the ID Act although the court did notspecifically advert to Chacko's case (supra). In the IndianOil Corporation case (supra) the question turned on themanagement seeking to effect changes in the service1122conditions of the workmen. The Court made observations whichhave pertinence to the non-extinguishment of the contract ofservice until a negotiated or adjudicated substitution comesinto being. Fazal Ali J. speaking for the bench observed:(1)In the circumstances, therefore, s. 9A of the Actwas clearly applicable and the non-compliance with theprovisions of this section would undoubtedly raise aserious dispute between the parties so as to givejurisdiction to the tribunal to give the award. If theappellant wanted to withdraw the Compensatory Allowanceit should have given notice to the workmen, negotiatedthe matter with them and arrived at some settlementinstead of withdrawing the compensatory allowanceovernight.
(emphasis added)This ruling shows (a) that unilateral variation by themanagement is an exercise in futility, and (b) an award orsettlement must take the place of the contract sought to bevaried. We have a similar situation in the present case vis-a-vis the notice under s. 9A and the ruling in the IndianOil case (supra) is a helpful guide.
A passing reference was made to a possible differencebetween an award and a settlement when it comes totermination of the terms. We have indicated already that acloser study of the scheme of the ID Act shows thedistinction, if any, to be no more than between Tweedledumand Tweedledee. A Division Bench of the Bombay High Courthad occasion to examine the effect of a notice under s.19(2) of the ID Act in terminating a settlement and thatruling deserves special mention because it deals with thethe survival beyond the two months notice of termination ofa settlement (not an award). Tarkunde J, speaking for theBench and following Chacko's case (supra) observed in thecontext of notice to terminate the settlement under s. 19(2): (2)Even if a notice of its intention to terminate thesettlement was given by either party, the settlementdid not automatically cease to be operative on theexpiry of two months from the date of the notice. Thelegal position is that the terms of a settlementcontinue to govern the relations between the partiesafter the notice of termination and the expiry of twomonths thereafter, until the settlement is replaced bya valid contract or award1123between the parties. This was laid down by the SupremeCourt in South Indian Bank Ltd. v. Chacko [1964] 1 LLJ19-AIR 1964 SC 1522, while dealing with the bindingeffect of an award under the provisions contained insub-section (6) of section 19 of the IndustrialDisputes Act. The Authority in the present case was,therefore, not justified in rejecting the workmen'sapplication on the ground that the settlement on whichthe workmen relied had ceased to be operative.
(emphasis added)A precedent, as Disraeli said, embalms a principle. Wehave pointed out the principle and cited the precedents.There is more to it than mere wealth of precedents or whatBurke called 'the deep slumber of a decided opinion'. Itenlivens industrial peace, avoids labour discontent andhelps to set the stage for next negotiations for betterterms for workers. Economic freedom of the weaker sectionsis behind these precedents, almost reminding us of Tennyson:
A land of settled government,A land of just and old renown,Where freedom slowly broadens down,From precedent to precedent.
The law is lucid and the justice manifest on terminationnotice or notice of change the award or settlement does notperish but survives to bind until reincarnation, in anymodified form, in a fresh regulation of conditions ofservice by a settlement or award. Precedents often broadlyguide but when on the same point willy-nilly bind. So here,even if I would, I could not and even if I could, I wouldnot depart from the wisdom in Chacko's case (supra) withconsistent case-flow-before and after. An aching void, anabhorrent vacuum, a legicidal situation of industrial clashcannot be a judicial bonus when the constitutional commandis social justice.
The catena of cases we have briefly catalogueddiscloses an unbroken stream of case-law binding on thiscourt, the ratio whereof, even otherwise, commends itself tous. The award or settlement under the ID Act replaces theearlier contract of service and is given plenary effect asbetween the parties. It is not a case of the earliercontract being kept under suspended animation but sufferingsupersession. Once the earlier contract is extinguished andfresh conditions of service are created by the award or thesettlement, the inevitable consequence is that even thoughthe period of operation and the span of binding forceexpire, on the notice to terminate the contract being given,the said1124contract continues to govern the relations between theparties until a new agreement by way of settlement orstatutory contract by the force of an award takes its place.If notice had not been given, the door for raising anindustrial dispute and fresh conditions of service would nothave been legally open. With action under s. 9A, s. 19(2) or(6), the door is ajar for disputes being raised andresolved. This, in short, is the legal effect not the lethaleffect of invitation to industrial trial of strength with nocontract of service or reversion to an obsolete and long ago'dead' contract of service.
It is inconceivable that any other alternativesubsists. For instance, imagine a case where for 30 years anaward or settlement might have given various benefits toemployees and at the end of 30 years a notice terminatingthe settlement were given by the employer. Does industriallaw absurdly condemn the parties to a reversion to whatprevailed between them 30 years ago? If the employees weregiven Rs. 100 as salary in 1947 and, thereafter, by awardsand settlements the salary scale was raised to Rs. 1000could it be the Management might, by unilateral yetdisastrous action give notice under s. 19(2) or (6)terminating the settlement or award, tell the workers thatthey would be paid Rs. 100 which was the original contractalthough in law that contract had been extinguished totallyby a later contract of settlement or by force of an award?The horrendous consequences of such an interpretation maybest be left to imagination. Moreover, if industrial peaceis the signature tune of industrial law, industrial violencewould be the vicious shower of consequences if parties wererelegated either to an ancient and obsolete contract or astate of lawless hiatus. No canon of interpretation ofstatutes can compel the court to construe a statutoryprovision in this manner. We have, no doubt, that theprecedents on the point, the principles of industrial law,the constitutional sympathy of Part IV and the sound rulesof statutory construction converge to the same point thatwhen a notice intimating termination of an award orsettlement is issued the legal import is merely that thestage is set for fresh negotiations or industrialadjudication and until either effort ripens into a fresh setof conditions of service the previous award or settlementdoes regulate the relations between the employer and theemployees. The court never holds justice as hostage with lawas janitor! Law, if at all, liberates justice through thejudicial process. Fundamental error can be avoided only byremembering fundamental values.
At this stage I may record my firm conclusion that forthe reasons already given the settlement under the ID Actdoes not suffer death merely because of the notice issuedunder s. 19(2). All that is done is a notice "intimating itsintention to terminate the award". The1125award even if it ceases to be operative qua award, continuesqua contract. Therefore, if the ID Act regulates the juralrelations between the LIC and its employees-an 'if' we willpresently scan-then the rights under the settlements of 1974remain until replaced by a later award or settlement.
In my view, to reverse the High Court's holding will beto disregard the consistent current of case-law-a step Ihesitate to take in the sensitive area of labour relationsunder a Constitution with social justice slant. LordHerscheli in Russell v. Russell [1897] AC 395 observed:(1)I have no inclination towards a blind adherence toprecedents. I am conscious that the law must be mouldedby adapting it on established principles to thechanging conditions which social development involves.The next logical question then is as to whether the IDAct is a general legislation pushed out of its provincebecause of the LIC Act, a special legislation in relation tothe Corporation employees. Immediately, we are confrontedwith the question as to whether the LIC Act is a speciallegislation or a general legislation because the legal maximgeneralia specialibus non derogant is ordinarily attractedwhere there is a conflict between a special and a generalstatute and an argument of implied repeal is raised. Craisestates the law correctly: (2)The general rule, that prior statutes are held tobe repealed by implication by subsequent statutes ifthe two are repugnant, is said not to apply if theprior enactment is special and the subsequent enactmentis general, the rule of law being, as stated by LordSelbourne in Mary Seward v. Veera Cruz(3) "that wherethere are general words in a later Act capable ofreasonable and sensible application without extendingthem to subjects specially dealt with by earlierlegislation, you are not to hold that earlier andspecial legislation indirectly repealed, altered, orderogated from merely by force of such general words,without any indication of a particular intention to doso." "There is a well-known rule which has applicationto this case, which is that a subsequent general Actdoes not affect a prior special Act by implication.That this is the law cannot be doubted, and the caseson the subject will be found collected in the thirdedition of Maxwell is generalia specialibus nonderogant-i.e. general1126provisions will not abrogate special provisions. "Whenthe legislature has given its attention to a separatesubject and made provision for it, the presumption isthat a subsequent general enactment is not intended tointerfere with the special provision unless itmanifests that intention very clearly. Each enactmentmust be construed in that respect according to its ownsubject matter and its own terms.
The crucial question which demands an answer before wesettle the issue is as to whether the LIC Act is a specialstatute and the ID Act a general statute so that the latterpro tanto repeals or prevails over the earlier one. What dowe mean by a special statute and, in the scheme of the twoenactments in question, which can we regard as the specialAct and which the general ? An implied repeal is the lastjudicial refuge and unless driven to that conclusion, israrely restored to. The decisive point is as to whether theID Act can be displaced or dismissed as a general statute.If it can be and if the LIC Act is a special statute theproposition contended for by the appellant that thesettlement depending for its sustenance on the ID Act cannothold good against s. 11 and s. 49 of the LIC Act, read withReg. 58 thereunder. This exercise constrains me to study thescheme of the two statutes in the context of the specificcontroversy I am dealing with.
There is no doubt that the LIC Act, as its long titlesuggests, is an Act to provide for the nationalisation oflife insurance business in India by transferring all suchbusiness to a Corporation established for the purpose and toprovide for the regulation and control of the business ofthe Corporation and for matters connected therewith orincidental thereto. Its primary purpose was to nationaliseprivate insurance business and to establish the LifeInsurance Corporation of India. Inevitably, the enactmentspelt out the functions of the Corporation, provided for thetransfer of existing life insurance business to theCorporation and set out in detail how the management,finance, accounts and audit of the Corporation should beconducted. Incidentally, there was provision for transfer ofservice of existing employees of the insurers to theCorporation and, sub-incidentally, their conditions ofservice also had to be provided for. The power to makeregulations covering all matters of management was alsovested in appropriate authorities. It is plain and beyonddispute that so far as nationalisation of insurance businessis concerned, the LIC Act is a special legislation, butequally indubitably, is the inference, from a bare perusalof the subject, scheme and sections and understanding of theanatomy of the Act that it has nothing to do with theparticular problem of disputes between employer and1127employees, or investigation and adjudication of suchdisputes. It does not deal with workmen and disputes betweenworkmen and employers or with industrial disputes. TheCorporation has an army of employees who are not workmen atall. For instance, the higher echelons and other types ofemployees do not fall within the scope of workmen as definedin s. 2(s) of the ID Act. Nor is the Corporation's mainbusiness investigation and adjudication of labour disputesany more than a motor manufacturer's chief business isspraying paints !In determining whether a statute is a special or ageneral one, the focus must be on the principal subjectmatter plus the particular perspective. For certainpurposes, an Act may be general and for certain otherpurposes it may be special and we cannot blur distinctionswhen dealing with finer points of law. In law, we have acosmos of relativity, not absolutes-so too in life. The IDAct is a special statute devoted wholly to investigation andsettlement of industrial disputes which providesdefinitionally for the nature of industrial disputes comingwithin its ambit. It creates an infrastructure forinvestigation into, solution of and adjudication uponindustrial disputes. It also provides the necessarymachinery for enforcement of awards and settlements. Fromalpha to omega the ID Act has one special mission-theresolution of industrial disputes through specialisedagencies according to specialised procedures and withspecial reference to the weaker categories of employeescoming within the definition of workmen. Therefore, withreference to industrial disputes between employers andworkmen, the ID Act is a special statute, and the LIC Actdoes not speak at all with specific reference to workmen. Onthe other hand, its powers relate to the general aspects ofnationalisation, or management when private businesses arenationalised and a plurality of problems which,incidentally, involve transfer of service of existingemployees of insurers. The workmen qua workmen andindustrial disputes between workmen and the employer assuch, are beyond the orbit of and have no specific, orspecial place in the scheme of the LIC Act. And wheneverthere was a dispute between workmen and management the IDAct mechanism was resorted to.
What are we confronted with in the present case, sothat I may determine as between the two enactments which isthe special ? The only subject which has led to thislitigation and which is the bone of contention between theparties is an industrial dispute between the Corporation andits workmen qua workmen. If we refuse to be obfuscated bylegal abracadabra and see plainly what is so obvious, theconclusion that flows, in the wake of study I have made, isthat1128vis a vis 'industrial disputes' at the termination of thesettlement as between the workmen and the Corporation the IDAct is a special legislation and the LIC Act a generallegislation. Likewise, when compensation on nationalisationis the question, the LIC Act is the special statute. Anapplication of the generalia maxim as expounded by Englishtext-books and decisions leaves us in no doubt that the IDAct being special law, prevails over the LIC Act which isbut general law.
I am satisfied in this conclusion by citations but Icontent myself with a recent case where this Court tacklinga closely allied question came to the identicalconclusion.(1) The problem that arose there was as towhether the standing orders under the Industrial Employment(Standing Orders) Act, 1946, prevailed as againstRegulations regarding the age of superannuation made by theElectricity Board under the specific power vested by s.79(c) of the Electricity (Supply) Act, 1948 which wascontended to be a special law as against the IndustrialEmployment (Standing Orders) Act. This court (a bench ofthree judges) speaking through Chinnappa Reddy, J.observed:(2)The maxim "Generalia specialibus non derogant" isquite well known. The rule flowing from the maxim hasbeen explained in Mary Seward v. The owner of the VeeraCruz (3) as follows:
"Now if anything be certain it is this, that wherethere are general words in a later Actcapable of reasonable and sensibleapplication without extending them tosubjects specially dealt with by earlierlegislation, you are not to hold that earlierand special legislation indirectly repealed,altered, or derogated from merely by force ofsuch general words, without any indication ofa particular intention to do so."
In J. K. Cotton Spinning & Weaving Mills Co. Ltd. v.State of Uttar Pradesh this Court observed (at page 1174)(4)"The rule that general provisions should yield tospecific provisions is not an arbitrary principle madeby lawyers and judges but springs from the commonunderstanding of men and women that when the sameperson gives two directions one covering large numberof matters in general and another to only some of themhis intention is that these latter directions should1129prevail as regards these while as regards all the restthe earlier direction should have effect".We have already shown that the IndustrialEmployment (Standing Orders) Act is a special Actdealing with a specific subject, namely with conditionsof service, enumerated in the Schedule, of workmen inindustrial establishments. It is impossible to conceivethat Parliament sought to abrogate the provisions ofthe Industrial Employment (Standing Orders) Actembodying as they do hardwon and precious rights ofworkmen and prescribing as they do an elaborateprocedure, including a quasi-judicial determination, bya general, incidental provision like sec. 79(c) of theElectricity (Supply) Act. It is obvious that Parliamentdid not have before it the Standing Orders Act when ispassed the Electricity (Supply) Act and Parliamentnever meant that the Standing Orders Act should standpro tanto of the view that the provisions of theStanding Orders Act repealed by Sec. 79(c) of theElectricity Supply Act. We are clearly of the view thatthe provisions of the Standing Orders Act applies.I respectfully agree and apply the reasoning and theconclusion to the near-identical situation before me andhold that the ID Act relates specially and specifically toindustrial disputes between workmen and employers and theLIC Act, like the Electricity (Supply) Act, 1948, is ageneral statute which is silent on workmen's disputes, eventhough it may be a special legislation regulating the take-over of private insurance business.
A plausible submission was made by the appellants,which was repelled by the High Court, that the LIC Actcontained provisions regarding conditions of service ofemployees and they would be redundant if the ID Act was heldto prevail. This is doubly fallacious. For one thing, theprovisions of ss. 11 and 49 are the usual general provisionsgiving a statutory corporation (like a municipality oruniversity) power to recruit and prescribe conditions ofservice of its total staff-not anything special regarding'workmen'. This Court in Bangalore Water Supply and Seweragecase (7 judges' bench) (1) and long ago in D. N. Banerji v.P. R. Mukherjee & Ors (5 judges' bench(2) has held that theID Act applied to workmen1130employed by those bodies when disputes arose. The generalprovision would still apply to other echelons and even toworkmen if no industrial dispute was raised. Secondly, nocase of redundant words arose because the Corporation, likea University, employed not only workmen but others also andto regulate their conditions of service, power was needed.Again, in situations where no dispute arose, power in theemployer to fix the terms of employment had to be vested.This is a common provision of a general sort, not aparticularised provision to canalise an industrial dispute.
What is special or general is wholly a creature of thesubject and context and may vary with situation,circumstances and angle of vision. Law is no abstraction butrealises itself in the living setting of actualities. Whichis a special provision and which general, depends on thespecific problem, the topic for decision, not the broadrubric nor any rule of thumb. The peaceful coexistence ofboth legislations is best achieved, if that be feasible, byallowing to each its allotted field for play. Sense andsensibility, not mechanical rigidity gives the flexiblesolution. It is difficult for me to think that when theentire industrial field, even covering municipalities,universities, research councils and the like, is regulatedin the critical area of industrial disputes by the ID Act,Parliament would have provided as oasis for the Corporationwhere labour demands can be unilaterally ignored. Thegeneral words in ss. 11 and 49 must be read contextually asnot covering industrial disputes between the workmen and theCorporation. Lord Haldane had, for instance, in 1915 AC 885(891) observed that (1):
"general words may in certain cases properly beinterpreted as having a meaning or scope other than theliteral or usual meaning. They may be so interpretedwhere the scheme appearing from the language of theLegislature, read in its entirety, points toconsistency as requiring modification of what would bethe meaning apart from any context, or apart from thegeneral law."
To avoid absurdity and injustice by judicial servitude tointerpretative literality is a function of the court andthis leaves me no option but to hold that the ID Act holdswhere disputes erupt and the LIC Act guides where othermatters are concerned. In the field of statutoryinterpretation there are no inflexible formulae or fool-proof mechanisms. The sense and sensibility, the setting andthe scheme, the perspective and the purpose-these help thejudge navigate towards the harbour of true intendment andmeaning. The legal dynamics of social justice also guide thecourt in statutes of the type1131we are interpreting. These plural considerations led me tothe conclusion that the ID Act is a special statute whenindustrial disputes, awards and settlements are the topic ofcontroversy, as here. There may be other matters where theLIC Act vis a vis the other statutes will be a special law.I am not concerned with such hypothetical situations now.
I have set out, right at the outset, that myperspective must be benign in tune with Part IV of theConstitution. In the UP State Electricity Board case(1) thisCourt underscored the same approach:
Before examining the rival contentions, we remindourselves that the Constitution has expressed a deepconcern for the welfare of workers and has provided inArt. 42 that the State shall make provision forsecuring just and humane conditions of work and in Art.43 that the State shall endeavour to secure, bysuitable legislation or economic organisation or in anyother way, to all workers, agricultural, industrial orotherwise, work, a living wage, conditions of workensuring a decent standard of life and full enjoymentof leisure etc. These are among the 'DirectivePrinciples of State Policy'. The mandate of Article 37of the Constitution is that while the DirectivePrinciples of State Policy shall not be enforceable byany Court, the principles are 'nevertheless fundamentalin the governance of the country' and 'it shall be theduty of the State to apply these principles in makinglaws'. Addressed to Courts, what the injunction meansis that while courts are not free to direct the makingof legislation, courts are bound to evolve, affirm andadopt principles of interpretation which will furtherand not hinder the goals set out in the DirectorPrinciples of State Policy. This command of theConstitution must be ever present in the minds ofjudges when interpreting statutes which concernthemselves directly or indirectly with matters set outin the Directive Principles of State Policy.Whatever be the powers of regulation of conditions ofservice, including payment or non-payment of bonus enjoyedby the employees of the Corporation under the LIC Act,subject to the directives of the Central Government, theystem from a general Act and cannot supplant, subvert orsubstitute the special legislation which specifically dealswith industrial disputes between workmen and theiremployers. In this view, other questions, which have beenargued at length and considered by my learned brother, donot demand my1132discussion. The High Court was right in its conclusion and Iaffirm its judgment. I, therefore, direct the Corporation tofulfill its obligations in terms of the 1974 settlements andstart negotiations, like a model employer, for a fairsettlement of the conditions of service between itself andits employees having realistic and equitable regard to theprevailing conditions of life, principles of industrialjustice and the directives underlying Part IV of theConstitution.
Judicial review of administrative action and judicialinterpretation of legislative provisions have seriouslimitations. Nevertheless, that power is a constitutionalfundamental which must be exercised circumspectly butwithout being scared by statutory omnipotence or executivefinality. The words of Prof. Wade come to one's mind:
The law is still developing, but the importantthing is that the courts once again accept, as they hadalways done except in their period of amnesia, thatpart of their duty was to require public authorities torespect certain basic rules of fairness in exercisingpower over the citizen.
I dismiss the appeal with costs. This disposes ofTransfer Case No. 1 of 1979 also in which the order has tobe that a writ will issue to the Corporation compelling itto carry out the terms of the Settlements of 1974 andinjuncting it from acting upon or giving effect to theimpugned notices, circulars and the said amended GovernmentOrder the said amended Staff Regulations being Annexures F,H, J, K and L thereto.
PATHAK, J.-I have read with great respect the separatejudgments of my brother Krishna Iyer and my brother Koshalbut in view of the importance of the questions raised Ipropose to deliver a separate judgment.
The facts of the case have already been set out in thejudgments prepared by my learned brothers. I need mentionagain a few only. Clause (8) of the two settlements of 24thJanuary, 1974 and 6th February, 1974 made the followingprovisions respecting bonus:
"(i) No profit sharing bonus shall be paid. However,the Corporation may, subject to such directions asthe Central Government may issue from time totime, grant any other kind of bonus to its classIII and IV employees.
(ii) An annual cash bonus will be paid to all class IIIand class IV employees at the rate of 15% of theannual1133salary.... actually drawn by an employee inrespect of the financial year to which the bonusrelates.
(iii) Save as provided herein all other terms andconditions attached to the admissibility andpayment of bonus shall be as laid down in thesettlement on bonus dated the 26th June, 1972."
The settlements were operative from 1st April, 1973 to31st March, 1977. On 3rd March, 1978 the Life InsuranceCorporation (the "Corporation") issued a notice, purportedlyunder s. 19(2), Industrial Disputes Act, 1947, of itsintention to terminate the settlements on the expiry of twomonths because of economic and other reasons. The notice,however, recited the reservation that the materialprovisions of the Industrial Disputes Act did not apply tothe Corporation and that the notice was not necessary.Another notice, this time under s. 9A, Industrial DisputesAct and issued on the same date, stated that it was intendedto effect a change in the conditions of service of theworkmen with effect from 1st June, 1978. The change notifiedrelated to the existing provision for bonus. A new clausewas proposed.
The Life Insurance Corporation (Alteration ofRemuneration and other Terms and Conditions of Service ofEmployees) Order, 1957 (the "Standardisation Order") wasamended under s. 11(2), Life Insurance Corporation Act (the"Corporation Act") on 26th May, 1978 with effect from 1stJune, 1978 substituting a new clause (9) for the originalclause in respect of bonus. On the same date, theCorporation acting under clauses (b) and (bb) of s. 49(2) ofthe same Act amended the Life Insurance Corporation (Staff)Regulations, also with effect from 1st June, 1978 andsubstituted for the existing provision a new Regulation 58along the same lines. Clause (9) of the StandardisationOrder and Regulation 58 of the (Staff Regulations) now readas follows:
"No employee of the Corporation shall be entitled toprofit-sharing bonus. However, the Corporation may,having regard to the financial condition of theCorporation, in respect of any year and subject to theprevious approval of the Central Government, grant non-profit-sharing bonus to its employees in respect ofthat year at such rates as the Corporation may thinkfit and on such terms and conditions as it may specifyas regards the eligibility of such bonus."
1134The amendments made in the Standardisation Order andthe Staff Regulations, in their application to the workmenof the Corporation, were made for the purpose of nullifyingany further claim to annual cash bonus in terms of thesettlements of 1974. The workmen challenged the validity ofthe amendments in so far as it affected their claim to thebonus, and the Allahabad High Court having found in theirfavour, the Corporation has appealed to this Court. Anidentical controversy is the subject-matter of a writpetition filed in the Calcutta High Court and transferred tohis Court.
The first question is whether the new clause (9) of theStandardisation Order succeeds in defeating the claim of theworkmen. To determine that, s. 11 of the Corporation Actmust be examined. Sub-s. (1) guarantees to the transferredemployee the same tenure, at the same remuneration and uponthe same terms and conditions on the transfer to theCorporation as he enjoyed on the appointed day under theinsurer, and he is entitled to then until they are dulyaltered by the Corporation or his employment in theCorporation is terminated. The sub-section envisagesalteration by the Corporation.
Sub-s. (2) of s. 11, by its first limb, confers poweror the Central Government to alter the scales ofremuneration and other terms and conditions of serviceapplicable to transferred employees. Predictably, when thetransferred employees of different insurers were broughttogether in common employment under the Corporation theywould have been enjoying different scales of remunerationand other terms and conditions of service. The power underthis part of sub-s. (2) is intended for the purpose ofsecuring uniformity among them. The second limb of sub-s.(2) is the source of controversy before us. It empowers theCentral Government to reduce the remuneration payable orrevise the other terms and conditions of service. That poweris to be exercised when the Central Government is satisfiedthat the interests of the Corporation and its Policy holdersrequire such reduction or revision. The question is whetherthe provision is confined to transferred employees only orextends to all employees generally. In my opinion, it isconfined to transferred employees. The provision is a partof the scheme enacted in Chapter IV providing for thetransfer of existing life insurance business from theinsurers to the Corporation, and the attendant concomitantsof that process. There is provision for the transfer of theassets and liabilities pertaining to the business, ofprovident funds, superannuation and other like funds, of theservices of existing employees of insurers to theCorporation and also of the services of existing employeesof chief agents of the1135insurers to the Corporation, and finally for the payment ofcompensation to the insurers for the transfer of thebusiness to the Corporation. They are all provisionsrelating to the process of transfer. Sub-s. (2) of s. 11 isa part of that process, involving as it does the integrationof the Corporation's staff and labour force. While the firstlimb of the sub-section provides for securing uniformityamong the transferred employees in regard to the scales ofremuneration and other terms and conditions of service, thesecond limb provides that if after such uniformity has beensecured, or even in the process of securing such uniformity,the Central Government finds that the interests of theCorporation and its policy holders require a reduction inthe remuneration payable or revision of the other terms andconditions of service applicable to those employees, it maymake an order accordingly. It is true that the words"employees or any class of them" in the second limb are notprefaced by the qualifying word "transferred" or "such". Butthat was hardly necessary when regard is had to the mosaicof sections in which the provision is located. Admittedly,the first limb of sub-s. (2) relates to transferredemployees only, and it must be held that so does the secondlimb. Both provisions are intended to constitute a compositeprocess for rationalising the scales of remuneration andother terms and conditions of service of transferredemployees with a view not only to effecting astandardisation between the transferred employees but alsoto revising their scales of remuneration, and terms andconditions of service to a pattern which will enable thenewly established Corporation to become a viable andcommercially successful enterprise. The standpoint of thesecond limit of the sub-section, as its language plainlyindicates, is provided by the interests of the Corporationand its policy holders. For that reason, it is open to theCentral Government under the sub-section to ignore theguarantee contained in sub-section (1) of s. 11 in favour ofthe employees, or anything contained in the IndustrialDisputes Act, 1947, or any other law for the time being inforce or any award, settlement or agreement for the timebeing in force. Benefits conferred thereunder on theemployees must yield to the need for ensuring that theCorporation and its policy holders do not sufferunreasonably from the burden of such benefits. The need forsuch a provision arises because it is a burden by which theCorporation finds itself saddled upon the transfer a burdennot of its own making. Unless the statute provided for suchrelief, the weight of that burden could conceivably cripplethe successful working of the Corporation from its inceptionas a business organisation. It is situation to bedistinguished from what1136happens when the Corporation, launched on its normal course,voluntarily assumes, in the course of its working,obligations in respect of its employees or becomes subjectto such obligations by reason of subsequent industrialadjudication. Like any other employer, the Corporation isthen open to the normal play of industrial relations incontemporary or future time. That the two provisions of sub-s. (2) are linked with the process of transfer andintegration is further indicated by the circumstance thatthe power thereunder is vested in the Central Government.The scheme of the sections in Chapter IV indicates generallythat Parliament has appointed the Central Government as theeffective and direct instrumentality for bringing about thetransfer and integration in the different sectors of thatprocess.
There is no danger of an order made by the CentralGovernment under the second limb of sub-s. (2) in respect oftransferred employees being struck down on the ground thatit violates the equality provisions of Part III of theConstitution because similar action has not been taken inrespect of newly recruited employees. So long as such orderis confined to what is necessitated by the process oftransfer and integration, the transferred employeesconstitute a reasonably defined class in themselves and formno common basis with newly recruited employees.
I am unable to subscribe to the view that the secondlimb to sub-s. (2) of s. 11 is related to employeesgenerally, that is to say, both transferred and newlyrecruited employees, of the Corporation.
Another point is whether the power under the secondlimb of sub-s. (2) of s. 11 can be exercised more than once.Clearly, the answer must be in the affirmative. Toeffectuate the transfer appropriately and completely it maybe necessary to pass through different stages, and at eachstage to make a definite order. So long as the complex oforders so made is necessarily linked with the process oftransfer and integration, it is immaterial that a successionof orders is made. I am not impressed by the circumstancethat the original Bill moved in Parliament for amending sub-s. (2) of s. 11 contained the words "from time to time" andthat those words were subsequently deleted when enactmenttook place. The intent of the legislative provision must bediscovered primarily from the legislation itself.
Now turning to the notification dated 26th May, 1978which inserted the new clause (9) in the standardisationOrder, it is1137evident from the recital with which it opens that it isintended to apply to transferred employees only. It declaresexplicitly that the Central Government is satisfied that arevision of the terms and conditions of service of thetransferred employees is considered necessary. However,there is nothing to show that the amendment is related tothe process of transfer and integration. On the contrary,the circumstance that an identical provision has been madeby the Corporation, with the prior approval of the CentralGovernment, in the new Regulation 58 by a notificationissued under both clauses (b) and (bb) of the s. 49(2), thatis to say, in respect of both newly recruited as well astransferred employees, demonstrates that the provision hasno particular relationship with that process. Accordingly, Iam of opinion that the notification dated 26th May, 1978purporting to amend the Standardisation Order is invalid. Ithas no effect on the right to bonus claimed by the workmen.
That takes us to question whether the new Regulation 58inserted in the (Staff) Regulations by the Life InsuranceCorporation of India (Staff) Second Amendment Regulations,1978 can be invoked against the workmen of the Corporation.
The workmen contend that the Industrial Disputes Actconstitutes special legislation for the resolution ofindustrial disputes and inasmuch as it has been speciallyenacted for the promotion of harmonious relations betweenan employer and his workmen all matters concerning theworkmen must be regarded as falling within the scope of theIndustrial Disputes Act. The Corporation Act, it is said,has a different orientation. It is concerned primarily withthe nationalisation of life insurance business; and theemployment of a staff, and their terms and conditions ofservice as well as disputes concerning them, are subsidiaryto the main purpose of nationalisation. The workmen, it isurged, are a special category of the total staff employed bythe Corporation, and as regards them it is the IndustrialDisputes Act and not the Corporation Act which governs.Accordingly, the argument goes, a settlement effected unders. 18 of the Industrial Disputes Act must continue to haveforce as determined by s. 19(2) of the Act and eventhereafter, and nothing contained in the Corporation Act orthe Regulations made thereunder can be permitted to affectthe operation of its terms. It is urged that Regulation 58cannot be applied in the case of those employees of theCorporation who are "workmen" within the meaning of theIndustrial Disputes Act.
1138The case of the Corporation and the Union of India isthat Regulation 58 was framed when the settlements hadceased to be operative and binding under s. 19(2),Industrial Disputes Act, that even if it be assumed that acontract existed between the parties at the time it mustyield to Regulation 58, which had the force of law. It wascontended that as regards the workmen of the Corporation,the Corporation Act, is a special law and the IndustrialDisputes Act is the general law and, therefore, Regulation58 must prevail over any transaction under the IndustrialDisputes Act.
Before any thing more, it is necessary to ascertain thetrue relationship of the parties in respect of thesettlements of 1974 at the time when Regulation 58 wasframed. The settlements were to remain in operation for aperiod of four years ending 31st March, 1977. Admittedly,they were settlements reached under the Industrial DisputesAct. There is no dispute that they were settlements governedby s. 19, Industrial Disputes Act. Therefore, by virtue ofs. 19(2) they were binding upto 31st March, 1977, the periodagreed upon by the parties and they continued to be bindingon the parties there after until the expiry of two monthsfrom the date on which written notice of the intention toterminate the settlement was given by one of the parties tothe other.
It is desirable to appreciate what is a settlement asunderstood in the Industrial Disputes Act. In essence, it isa contract between the employer and the workmen prescribingnew terms and conditions of service. These constitute avariation of existing terms and conditions. As soon as thesettlement is concluded and becomes operative, the contractembodied in it takes effect and the existing terms andconditions of the workmen are modified accordingly. Unlessthere is some thing to the contrary in a particular term orcondition of the settlement the embodied contract enduresindefinitely, continuing to govern the relation between theparties in the future, subject of course to subsequentalteration through a fresh settlement, award or validlegislation. I have said that the transaction is a contract.But it is also something more. Conceptually, it is a"settlement". It concludes or "settles" a dispute.Differences which had arisen and were threatening industrialpeace and harmony stand resolved in terms of a new contract.In order that the new contract be afforded a chance of beingeffectively worked out, a mandate obliging the parties tounreservedly comply with it for a period of time isdesirable. It was made "binding" by the statute for suchperiod. Section 19(2) was enacted. The spirit ofconciliation, the1139foundation of the settlement, was required by law to bindthe parties for the time prescribed. Immediate reagitationin respect of matters covered by the settlement was banned.Section 23 (c) prohibited strikes by the workmen in breachof the contract and lockouts by the employer in respect ofsuch matters. A breach of any term was made punishable by s.
29. Certainty in industrial relations is essential toindustry, and a period of such certainty is ensured by s.19(2). On the expiry of the period prescribed in the sub-section, the conceptual quality of the transaction as a"settlement" comes to an end. The ban lifts. The parties areno longer bound to maintain the industrial status quo inrespect of matters covered by the settlement. They are atliberty to seek an alteration of the contract. But untilaltered, the contract continues to govern the relationsbetween the parties in respect of the terms and conditionsof service.
The position seems comparable with what happens in thecase of an award. Section 19(3) and s. 19(6) contain similarprovisions. In the case of an award this Court has laid downin South Indian Bank Limited v. A. R. Chacko(1) that afterthe period of operation of an award has expired, the awarddoes not cease to be effective. It continues to be bindingon the parties, by virtue of s. 19(6), until notice has beengiven by one of the parties of the intention to terminate itand two months have elapsed from the date of such notice.Thereafter, "it will continue to have its effect as acontract between the parties that has been made byindustrial adjudication in place of the old contract.... ,the very purpose for which industrial adjudication has beengiven the peculiar authority and right of making newcontracts between employers and workmen makes it reasonableto think that even though the period of operation of theaward and the period for which it remains binding on theparties may elapse-in respect of both of which specialprovisions have been made under ss. 23 and 29 respectively-may expire, the new contract would continue to govern therelations between the parties till it is displaced byanother contract." Later in Md. Qasim Larry, FactoryManager, Sasamusa Sugar Works v. Muhammad Samsuddin AndAnother,(2) the court held that when an award was made andit prescribed a new wage structure, in law the oldcontractual wage structure became inoperative and its placewas taken by the wage structure prescribed by the award. Thecourt said:
1140"In a sense, the latter wage structure must be deemedto be a contract between the parties, because that, insubstance, is the effect of industrial adjudication.The true legal position is that when industrialdisputes are decided by industrial adjudication andawards are made, the said awards supplant contractualterms in respect of matters covered by them and aresubstituted for them."
Learned counsel for the Corporation and the Union ofIndia submit that the law declared by this Court in respectof an award does not hold true in the case of a settlement.I am unable to agree. Not only are the statutory provisionspertaining to a settlement and an award comparable in thisregard but, if anything, the observations if read in respectof a settlement, which after all is a voluntary agreementbetween the parties, would seem to hold more strongly.
The contract between the parties embodied in thesettlements of 1974 set forth the terms and conditions ofservice when Regulation 58 was substituted in the (Staff)Regulations under clauses (b) and (bb) of s. 49(2) of theCorporation Act. The question is whether Regulation 58 willprevail over the "settlement" contract. For that purpose, itis necessary to examine the controversy whether theCorporation Act is the general law and the IndustrialDisputes Act the special law or vice-versa.
It will be noticed that the Corporation Act was enactedprimarily for effecting the nationalisation of lifeinsurance business by transferring all such business to aCorporation established for the purpose. The principalprovision in the Corporation Act is s. 7, which provides forthe transfer to, and vesting in, the Corporation of all theassets and liabilities appertaining to the controlledbusiness of the insurers. The central purpose being assured,the concomitant provisions followed. These included makingavailable to the insurers' employees, under s. 11(1), acontinuous and unbroken tenure of employment on terms andconditions to which they would have been entitled on the"appointed day" as if the Corporation Act had not beenpassed. It was evidently intended that in running thebusiness the Corporation should broadly take off where theinsurers had ceased. For the purpose of enabling it todischarge its functions under the Act, the Corporation hasbeen empowered by s. 23 to employ such number of persons asit thinks fit. The power conferred in clauses (b) and (bb)of s. 2(2) to make regulations prescribing the terms andconditions of service of newly recruited as well astransferred employees has been conferred for the samepurpose, that is1141to say, the purpose, specifically mentioned in s. 49(1), ofgiving effect to the provisions of the Act. Clearly, theobject behind s.11(1), s. 23 and clauses (b) and (bb) of s.49(2) is to provide staff and labour for the purpose of theproper management of the nationalised life insurancebusiness. On the other hand, the Industrial Disputers Actdeals specifically with a special subject matter, theinvestigation and settlement of industrial disputes betweenan employer and his workmen. An "industrial dispute" asdefined by s. 2(k) is a collective dispute. It is a specialkind of dispute. Except for a case under s. 2A, the entirebody of workmen or a substantial number of them constitutesa party to the dispute. And all the employees of an employerare not "workmen". Those employees are "workmen" who satisfythe definition contained in s. 2(s). A restricted categoryof employees is contemplated, and in an industrial disputethat category alone of all the employees can be interested.The resolution of industrial disputes under the Act isenvisaged through the particular machinery and processesdetailed therein. A special jurisdiction is created for thepurpose. Industrial disputes, according to the Act, can beresolved by settlement or award. There are provisionssetting forth the consequences of a settlement or an award,and there are also provisions indicating how a change can beinitiated in the resulting industrial relations. Otherchapters in the Industrial Disputes Act lay down the law inrespect of strikes and lock-outs, lay off, retrenchment andclosure and penalties for breach of its provisions. Plainly,if a settlement resolves an industrial dispute under theIndustrial Disputes Act, it pertains to the central purposeof that Act. The Act constitutes special law in respect of asettlement reached under its auspices between an employerand his "workmen" employees. The consequences of suchsettlement are the product of the special law. TheCorporation Act does not possess the features outlinedabove. It deals only generally in regard to a staff andlabour force. They are referred to compendiously as"employees". No special provision exists in regard toindustrial disputes and their resolution and theconsequences of that resolution. The special jurisdictioncreated for the purpose under the Industrial Disputes Act isnot the subject-matter of the Corporation Act at all. Itwould be correct to say that no corresponding provision inthe Corporation Act, subsequent enactment, deals with thesubject matter enacted in the industrial Disputes Act. YetParliament intended to provide for the Corporation's"workmen" employees the same opportunities as are availableunder the Industrial Disputes Act to the workmen of otheremployers. That is demonstrated by s. 2(a)(i) of that Act.The expression "appropriate1142Government" is specifically defined by it in relation to anindustrial dispute concerning the Life InsuranceCorporation. Both the Central Government and the Corporationunderstood the Industrial Disputes Act in that light, forone finds that Regulation 51(2) of the (Staff) Regulationsmade by the Corporation under clauses (b) and (bb) of s.49(2) of the Corporation Act, with the previous approval ofthe Central Government, speaks of giving effect to arevision of scales of pay, dearness allowances or otherallowances "in pursuance of any award, agreement orsettlement".
In my opinion, it is difficult to resist the conclusionthat the Industrial Disputes Act is a special law and mustprevail over the Corporation Act, a general law, for thepurpose of protecting the sanctity of transactions concludedunder the former enactment. It is true that as laid down inLife Insurance Corporation of India v. Sunil KumarMukherjee(1) and reiterated in Sukhadev Singh v. BhagatRam,(2) the Regulations framed under the Corporation Acthave the force of law. But that is of little moment if noreference is permissible to the Regulations when consideringthe validity and operation of the "settlement" contract.Accordingly, Regulation 58, a product of the CorporationAct, cannot supersede the contract respecting bonus betweenthe parties resulting from the settlements of 1974. Supportis derived for this conclusion from U. P. State ElectricityBoard & Ors. v. Hari Shanker Jain & Ors.(3) where referencehas been made to Mary Sewards v. The Owner of the VeraCruz(4) and J. K. Cotton Spinning & Weaving Mills Ltd. v.State of Uttar Pradesh(5).
At the same time, it is pertinent to note that the"workmen" employees of the Corporation continue to begoverned in matters not covered by the settlements by the(Staff) Regulations, and that position is expresslyrecognised in clause 12(4) of the settlements of 1974.Clause 12(4) declares:
"Except as otherwise provided or modified by thissettlement, the workmen shall continue to be governedby all the terms and conditions of service as set forthand regulated by the Life Insurance Corporation ofIndia (Staff) Regulations, 1960..... as also theadministrative instructions...."
1143Our attention has been drawn to s. 11(1), CorporationAct which empowers the Corporation to duly alter the termsand conditions of service of transferred employees. Inconstruing the scope of the Corporation's powers in thatbehalf, it seems to me that appropriate importance should beattached to the qualifying word "duly". When the Corporationseeks to alter the terms and conditions of transferredemployees, it must do so in accordance with law, and thatrequires it to pay proper regard to the sanctity of rightsacquired by the "workmen" employees under settlements orawards made under the Industrial Disputes Act. The onlyprovision, so far as I can see where the Corporation Actpermits disregard of the Industrial Disputes Act and awards,settlements or agreements is the second limb of s. 11(2).And the scope of that provision, as I have explained, isconfined to the peculiar circumstance in which theCorporation immediately on coming into existence, findsitself saddled with a recurring financial burden, by virtueof the service of the transferred employees, too heavy forits own viability as a business organisation. No suchprovision is to be found elsewhere in the Corporation Act.It is conspicuous by its absence in clauses (b) and (bb) ofs. 49(2). The provision in s. 11(2) has been made for thepurpose of protecting the interests of the Corporation andits policyholders. The policyholders constitute an importantand significant sector of public interest. Indeed, theavowed object of the entire Corporation Act is to provideabsolute security to the policyholders in the matter oftheir life insurance protection. That is assured by a wisemanagement of the Corporation's business, and by ensuringthat when settlements are negotiated between the Corporationand its workmen or when industrial adjudication is initiatedin labour courts and industrial tribunals, the protection ofthe policyholders will find appropriately significantemphasis in the deliberations.
In the view that the notification dated 26th May, 1978purporting to amend the Standardisation order bysubstituting clause (9) is invalid and the newly enactedRegulation 58 does not effect the contract in respect ofbonus embodied in the settlements of 1974 between the LifeInsurance Corporation and its "workmen" employees, effectmust be given to that contract and this appeal must fail andthe writ petition, transferred from the Calcutta High Court,must succeed. If the terms and conditions of service createdby the contract need to be reconsidered, recourse must behad to the modes recongnised by law-negotiated settlement,industrial adjudication or appropriate legislation.
1144In the result, Civil Appeal No. 2275 of 1978 isdismissed with costs to the first, second and thirdrespondents. The fourth respondent shall bear its own costs.The Transfer Petition No. 16 of 1979 is allowed in the termsset out above, costs to be paid to the petitioners by thesecond respondent.
KOSHAL, J.-By this judgment I shall dispose of CivilAppeal No. 2275 of 1978 which has been instituted by specialleave granted by this Court against a judgment dated August11, 1978 of a Division Bench of the Allahabad High Courtallowing a petition under article 226 of the Constitution ofIndia and issuing a writ of mandamus to the Life InsuranceCorporation of India (hereinafter referred to as theCorporation) directing it not to give effect to a noticedated the 6th May, 1978, issued by it under section 9A ofthe Industrial Disputes Act (I. D. Act for short) as also toa notification dated the 26th May, 1978 issued under sub-section (2) of section 11 of the Life Insurance CorporationAct, 1956 (hereinafter called the L. I. C. Act). Thisjudgment shall also cover Transfer Case No. 1 of 1979 inwhich another petition under article 226 aforesaidinstituted before the High Court of Calcutta and raising thesame questions which fall for decision in the said appeal isawaiting disposal by us as that petition was transferred tothis Court by its order dated the 10th September, 1979.
2. The petition decided by the Allahabad High Court wasfiled by the Class III and Class IV employees of theCorporation challenging the right of the employer and theUnion of India to change to the detriment of the saidemployees a condition of service regarding the payment tothem of bonus to which they had earlier become entitledthrough a settlement with the Corporation made under section18 of the I. D. Act.
3. The petition last mentioned arose in circumstanceswhich may be set out in some detail. The Corporation cameinto existence on the 1st September, 1956, as a statutoryauthority established under the L. I. C. Act. As from thesaid date all institutions carrying on life insurancebusiness in India were nationalised to the extent of suchbusiness and their corresponding assets and liabilities weretransferred to the Corporation. Section 11 of the L. I. C.Act provided for the transfer of service of those employeesof such institutions who were connected with life insurancebusiness (described in the Act as "controlled business")immediately before the said date to the Corporation and forsome other matteds. As it is the interpretation of thatsection which is mainly in controversy before us, it may beset out here in extenso:
1145"11.(1) Every whole-time employee of an insurerwhose controlled business has been transferred to andvested in the Corporation and who was employed by theinsurer wholly or mainly in connection with hiscontrolled business immediately before the appointedday shall, on and from the appointed day, become anemployee of the Corporation, and shall hold his officetherein by the same tenure, at the same remunerationand upon the same terms and conditions and with thesame rights and privileges as to pension and gratuityand other matters as he would have held the same on theappointed day if this Act had no: been passed, andshall continue to do so unless and until his employmentin the Corporation is terminated or until hisremuneration, terms and conditions are duly altered bythe Corporation:
"Provided that nothing contained in this sub-section shall apply to any such employee who has, bynotice in writing given to the Central Government priorto the appointed day, intimated his intention of notbecoming an employee of the Corporation."(2) Where the Central Government is satisfiedthat for the purpose of securing uniformity in thescales of remuneration and the other terms andconditions of service applicable to employees ofinsurers whose controlled business has been transferredto, and vested in, the Corporation, it is necessary soto do, or that, in the interests of the Corporation andits policy-holders, a reduction in the remunerationpayable, or a revision of the other terms andconditions of service applicable, to employees or anyclass of them is called for, the Central Governmentmay, notwithstanding anything contained in sub-section(1), or in the Industrial Disputes Act 1947, or anyother law for the time being in force, or in any award,settlement or agreement for the time being in force,alter (whether by way of reduction or otherwise) theremuneration and the other terms and conditions ofservice to such extent and in such manner as it thinksfit; and if the alteration is not acceptable to anyemployee, the Corporation may terminate his employmentby giving him compensation equivalent to three months'remuneration unless the contract of service with suchemployee provides for a shorter notice of termination.
"Explanation.-The compensation payable to anemployee under this sub-section shall be in additionto, and shall not affect, any pension, gratuity,provident fund money or any other1146benefit to which the employee may be entitled under hiscontract of service.
"(3) If any question arises as to whether anyperson was a whole-time employee of an insurance or asto whether any employee was employed wholly or mainlyin connection with the controlled business of aninsurer immediately before the appointed day thequestion shall be referred to the Central Governmentwhose decision shall be final.
"(4) Notwithstanding anything contained in theIndustrial Disputes Act, 1947, or in any other law forthe time being in force, the transfer of the servicesof any employee of an insurer to the Corporation shallnot entitle any such employee to any compensation underthat Act or other law, and no such claim shall beentertained by any court, tribunal or other authority."
Section 23 of the L. I. C. Act gave to the Corporationthe power to employ such number of persons as it thought fitfor the purpose of enabling it to discharge its functionsunder the Act and declared that every person so employed orwhose services stood transferred to the Corporation undersection 11 would be liable to serve anywhere in India.Section 49 conferred on the Corporation the power to makeregulations for the purpose of giving effect to theprovisions of the Act with the previous approval of theCentral Government. Sub section (2) of that sectionenumerated various matters in relation to which such powerwas particularly conferred. Clauses (b) and (bb) of sub-section (2) read thus:
"(b) the method of recruitment of employees and agentsof the Corporation and the terms and conditions ofservice of such employees or agents;
"(bb) the terms and conditions of service of personswho have become employees of the Corporation undersub-section (1) of section 11;"
On the 1st June, 1957, the Central Government, inexercise of the powers conferred on it by sub-section (2) ofsection 11 of the L. I. C. Act, promulgated the LifeInsurance Corporation (Alteration of Remuneration and otherTerms and Conditions of Service of Employees) Order, 1957(for short "the 1957 order") altering the remuneration andother terms and conditions of service of those employees ofthe Corporation whose services had been transferred to itunder sub-section (1) of that section (referred tohereinafter as the transferred employees). Clause 9 of the1957 order declared that1147no bonus would be paid but directed that the Corporationwould set aside an amount every year for expenditure onschemes of general benefit scheme and on other amenities tothem. On the 26th June 1959, the Central Government amendedclause 9 of the 1957 order so as to provide that non-profitsharing bonus would be paid to those employees of theCorporation whose salary did not exceed Rs. 500/ per month.
On the 2nd July, 1959 there was a settlement betweenthe Corporation and its employees providing for payment tothem of cash bonus at the rate of 1/2/1 months' basic salaryfor the period from the 1st September, 1956 to the 31stDecember, 1961.
In the year 1960 were framed, under section 49 of L. I.C. Act, the Life Insurance Corporation of India (Staff)Regulations, 1960 (the 1960 regulations, for brevity),whereof regulation 58 ran thus:
"The Corporation may, subject to such directions as theCentral Government may issue, grant non-profit sharingbonus to its employees and the payment thereof,including conditions of eligibility for the bonus,shall be regulated by instructions issued by theChairman from time to time."
Orders were again passed on 14th April, 1962 and 3rdAugust, 1963, the effect of which was to remove the limit ofRs. 500/- on the basic salary as a condition of eligibilityfor payment of bonus.
The settlement dated the 2nd July, 1959 was followed bythree others which were arrived at on the 29th January,1963, the 20th June, 1970 and the 26th June, 1972,respectively and each one of which provided for payment ofbonus at a particular rate.
Disputes between the Corporation and its workmen inregard to the latter's conditions of service persistednevertheless, but were resolved by two settlements dated the24th January, 1974 and the 6th February, 1974, arrived at inpursuance of the provisions of section 18 read with section2(p) of the I. D. Act. The Corporation was a party to boththe settlement, which were identical in terms. However,while four of the five Unions of workmen subscribed to thefirst settlement, the fifth Union was a signatory to thesecond. The settlements provided for revised scales of pay,the method of their fixation and dearness and otherallowances as well as bonus. Clause 8 of each of thesettlements was to the following effect:
1148"Bonus"(i) No profit sharing bonus shall be paid. However,the Corporation may, subject to such directions asthe Central Government may issue from time totime, grant any other kind of bonus to its ClassIII & IV employees.
(ii) An annual cash bonus will be paid to all Class IIIand Class IV employees at the rate of 15% of theannual salary (i.e. basic pay inclusive of specialpay, if any, and dearness allowance and additionaldearness allowance) actually drawn by an employeein respect of the financial year to which thebonus relates.
(iii) Save as provided herein all other terms andconditions attached to the admissibility andpayment of bonus shall be as laid down in theSettlement on bonus dated the 26th June 1972."
Clause 12 of each settlement provided:
"(1) This settlement shall be effective from 1st April,1973. and shall be for a period of four years,i.e., from 1st April, 1973 to 31st March, 1977.(2) The terms of the settlement shall be subject tothe approval of the Board of the Corporation andthe Central Government.
(3) This Settlement disposes of all the demands raisedby the workmen for revision of terms andconditions of their service.
(4) Except as otherwise provided or modified by thisSettlement, the workmen shall continue to begoverned by all the terms and conditions ofservice as set forth and regulated by the LifeInsurance Corporation of India (StaffRegulations), 1960 as also the administrativeinstructions issued from time to time and theyshall, subject to the provisions thereof includingany period of operation specified therein, beentitled to the benefits thereunder."
It is not disputed that the settlements were approvedby the Board of the Corporation as also by the CentralGovernment.
Under clause 11 of each settlement every employee ofthe Corporation had the option to elect to be governedeither by the new scale of pay applicable to him or thescale which he had been enjoying hitherto. It is commonground between the parties that all the employees of theCorporation opted for the new scales of pay and1149that bonus was paid in accordance therewith for the years1973-74 and 1974-75 in April 1974 and April 1975respectively.
On 25th September 1975, the Payment of Bonus(Amendment) Ordinance, 1975 was promulgated by the Presidentof India and was subsequently replaced by the Payment ofBonus (Amendment) Act, 1976 which was brought into forcewith effect from the date last mentioned. This amending lawconsiderably curtailed the rights of employees of industrialundertakings to bonus, but was inapplicable to theCorporation by virtue of the provisions of section 32 of thePayment of Bonus Act. However, the payment of bonus for theyear 1975-76 to the employees of the Corporation was stoppedunder instructions from the Central Government, whose actionin that behalf was challenged by the employees through apetition under article 226 of the Constitution of India inthe High Court of Calcutta, a single Judge of which issued awrit of mandamus directing the Corporation to act inaccordance with the terms of the settlement dated the 24thJanuary, 1974. The Corporation preferred a Letters Patentappeal against the decision of the learned single Judge andthat appeal was pending disposal when the Centrallegislature promulgated the Life Insurance Corporation(Modification of Settlement) Act, 1976 (for short, the 1976Act) section 3 of which laid down:
"Notwithstanding anything contained in the IndustrialDisputes Act, 1947, the provisions of each of thesettlements, in so far as they relate to the payment ofan annual cash bonus to every Class III and Class IVemployee of the Corporation at the rate of fifteen percent of his annual salary, shall not have any force oreffect and shall not be deemed to have any force oreffect on and from 1st day of April, 1975."
The 1976 Act was enacted on 29th May, 1976 and waschallenged by the workmen in this Court which, on the 21stof February, 1978, declared it to be void as offendingarticle 31(2) of the Constitution of India through ajudgment which is reported as Madan Mohan Pathak v. Union ofIndia , [1978] 3 S. C. R. 334, and directed the Corporationto forbear from implementing the 1976 Act and to pay to itsClass III and Class IV employees bonus for the years 1-4-1975 to 31-3-1976 and 1-4-1976 to 31-3-1977 in accordancewith the terms of sub-clause (ii) of clause 8 of eachsettlement.
On the 3rd March, 1978, the Corporation issued to itsworkmen a notice under sub-section (2) of section 19 of theI. D. Act declaring its intention to terminate thesettlements on the expiry of a period of two months from thedate the notice was served. The notice, however, mentionedin express terms that according to the Corporation1150no such notice was really necessary for termination of thesettlements. On the same date, another notice was issued bythe Corporation under section 9A of the I. D. Act statingthat it intended to effect a change in accordance with thecontents of the annexure to the notice, as from the 1stJune, 1978, in the conditions of service of its workmen. Thesaid annexure contained the following clause:
"AND WHEREAS for economic and other reasons it wouldnot be possible for the Life Insurance Corporation ofIndia to continue to pay bonus on the aforesaid basis;"NOW, therefore, it is our intention to pay bonus tothe employees of the Corporation in terms reproducedhereunder;
"No employee of the Corporation shall be entitledto profit sharing bonus. However, the Corporationmay, having regard to the financial condition ofthe Corporation in respect of any year and subjectto the previous approval of the CentralGovernment, grant non-profit sharing bonus to itsemployees in respect of that year at such rate asthe Corporation may think fit and on such termsand conditions as it may specify as regards theeligibility of such bonus'."
The workmen sent a reply to the two notices just abovementioned and took the stand that the Corporation had noright to render inoperative the clause regarding bonuscontained in the two settlements.
On 26th May, 1978, the Corporation issued anotification under section 49 of the L. I. C. Actsubstituting a new regulation for the then existingregulation bearing serial number 58. The new regulation wasto come into force from the 1st June, 1978, and stated:
"58. No employee of the Corporation shall beentitled to profit sharing bonus. However, theCorporation may, having regard to the financialcondition of the Corporation in respect of any year andsubject to the previous approval of the CentralGovernment grant non-profit sharing bonus to itsemployees in respect of that year at such rate as theCorporation may think fit and on such terms andconditions as it may specify as regards the eligibilityfor such bonus."
Simultaneously an amendment on the same lines was madein the 1957 order (which, as already stated, was restrictedin its application to transferred employees only) by thesubstitution of a new clause for the then existing clause 9in pursuance of the provisions of sub-section (2) of section11 of the L. I. C. Act. The new clause is in the followingterms:
1151"9. No employee of the Corporation shall beentitled to profit sharing bonus. However, theCorporation may, having regard to the financialcondition of the Corporation in respect of any year andsubject to the previous approval of the CentralGovernment, grant non-profit sharing bonus to itsemployees in respect of that year at such rate as theCorporation may think fit and on such terms andconditions as it may specify as regards the eligibilityfor such bonus."
It was the issuance of the two notices by theCorporation on the 3rd March, 1978, under section 19(2) and9A of the I. D. Act respectively and the action taken by theCentral Government on the 26th May, 1978, by making newprovisions in regard to the payment of bonus to theCorporation's employees that furnished the cause of actionfor the latter to petition to the Allahabad High Court underarticle 226 of the Constitution of India.
4. After consideration of the various contentionsraised before it the Allahabad High Court arrived at thefollowing conclusions:
I. The I. D. Act is an 'independent Act' whichdeals with adjudication and settlement of matters indispute between an employer and his workmen. It is thusa special law which would override the provisions of ageneral law like the L. I. C. Act.
II. Three corollaries follow from conclusion 1:
(a) Section 23 of the L. I. C. Act whichenvisages employment of persons by theCorporation implies settlement of conditionsof service which may legally be superseded(only) by another settlement arrived at undersection 18 of the I. D. Act.
(b) The new regulation 58 framed under section 49of the L. I. C. Act and the notificationissued under subsection (2) of section 11thereof substituting a new clause 9 in the1957 Order are wholly ineffective against theoperation of the 1974 settlements which werearrived at in pursuance of the provisions ofthe I. D. Act and which therefore, continueto govern the parties thereto.
(c) After the issuance of the notices undersections 19(2) and 9A of the I.D. Act, theCorporation had no power to alter thecondition of service of its employees inregard to bonus by a unilateral act asneither of the two sections confers suchpower on an employer.
1152III. Corollary (b) in conclusion II is in fullaccord with the view expressed in Madan Mohan Pathak'scase (supra) by the Supreme Court in as much as itupheld the two settlements even though it did notadvert to regulation 58 and further ruled that theconditions of service laid down in those settlementscould be varied only by a fresh settlement or awardmade under the provisions of the I. D. Act and thattill then sub-clause (ii) of clause 8 of eachsettlement (which is independent of clause (i) thereof)would remain in full force. None of the authoritiesreported as C. Sankararskavanon v. The State of KeralaRoshan Lal v. Union, Sukhdev v. Bhagatram,(3) KalvammalBhandari v. State of Rajasthan,(4) State of U.P. v.Babu Ram Upadhya,(5) I.T.O. v. M. C. Ponnoose(6) andcited on behalf of the Corporation lays down any ruleto the contrary.
IV. In spite of clause 12 of the two settlements theydid not cease to be binding on the parties thereto evenafter the expiry of the period of 4 years mentioned in thatclause and the notice under section 19(2) of the I. D. Actissued by the Corporation would not terminate thesettlements but would have the effect merely of paving theway for fresh negotiations. This proposition follows fromSouth Indian Bank Ltd. v. A. R. Chacko,(7) and Indian LinkChain Ltd. v. Workmen,(8) and is not negatived by thedecision in Premier Auto v. K. S. Wadke(9). AlthoughChacko's case dealt in terms with an award and not asettlement, no distinction exists between the two and theystand on the same footing for the purpose of judging theeffect of a notice under section 19(2) of the I. D. Act.
V. There is no dispute that no petition under article226 of the Constitution of India would lie merely for theenforcement of a contract or for the recovery of an amountpayable by the Corporation to its employees where the latterhad an alternative remedy under section 10 or 33-C of the I.D. Act. However, the relief sought by the workmen in thepresent case is directed only against the action taken bythe Corporation and the Union of India under sections 19 and9A of the I. D. Act and sections 11(2) and 49 of the L. I.C. Act-a relief similar to that granted by this Court inMadan Mohan Pathak's case (supra). The contention raised onbehalf of the Corpo-
1153ration about the non-maintainability of the petition istherefore without force.
It was on the basic of these conclusions that the writof mandamus mentioned in the opening paragraph of thisjudgment was issued by the High Court to the Corporation onwhose behalf the first four of those conclusions have beenimpugned before us and I proceed to examine the same in thelight of arguments advanced at length by learned counsel forthe parties and for the Class II employees of theCorporation who were permitted to intervene in the appealbefore us.
5. As conclusion II consists merely of corollariesderived directly from conclusion I and it is the correctnessor otherwise of the latter that would determine thesustainability of the former, the two may legitimately bedealt with together, although it is conclusion I on which Iwould primarily concentrate.
6. For convenience of examination, conclusion I may besplit up into two propositions:
(a) The I. D. Act is a special law because it dealswith adjudication and settlement of matters indispute between an employer and his workmen whilethe L. I. C. Act is a general law.
(b) The I. D. Act, being a special law, would overridea general law like the L. I. C. Act.
7. Now in relation to proposition (a) it cannot begain-said that the I. D. Act deals with the adjudication orsettlement of disputes between an employer and his workmenand would, therefore, be a special law vis-a-vis anotherstatute which covers a larger field and may thus beconsidered "general" as compared to it. It cannot, however,be regarded as a special law in relation to all other lawsirrespective of the subject-matter dealt with by them. Infact a law may be special when considered in relation toanother piece of legislation but only a general one vis-a-vis still another. An example will help illustrate thepoint. A law governing matters pertaining to medicaleducation would be a special law in relation to a statuteembracing education of all kinds but must be regarded as ageneral law when preference over it is claimed for what Imay call a more special law, such as an Act dealing withonly one aspect of medical education, say, instruction inthe field of surgery. And even this "more special' law maybecome general if there is a conflict between it and anotheroperating in a still narrower field, e.g., thoracic surgery.
"Special" and "general" used in this context are relativeterms and it is the content one statute as compared to theother that will determine1154which of the two is to be regarded as special in relation tothe other. Viewed in this light proposition (a) cannot standscrutiny. The I. D. Act would no doubt be a special Act inrelation to a law which makes provision for matters widerthan but inclusive of those covered by it, such as theIndian Contract Act as that is a law relating to contractsgenerally (including those between an industrial employerand his workmen), but it would lose that categorisation andmust be regarded as a general law when its rival is shown tooperate in a field narrower than its own. And such a rivalis that part of the L. I. C. Act which deals with conditionsof service of the employees of the L.I.C.-a singleindustrial undertaking (of a special type) as opposed to allothers of its kind which fall within the ambit of the I.D.Act. Where the competition is between these two Acts,therefore, the L. I. C. Act must be regarded as a speciallaw and (in comparison thereto) the I. D. Act as a generallaw.
8. Proposition (b) is equally insupportable even if theI. D. Act is regarded as a special law in comparison to theL. I. C. Act. The High Court appears to have somehow triedto apply the maximum generalia specialibus non derogant tothe situation with which it was concerned. But does thatmaxim lead to the proposition under discussion?
The general rule to be followed in the case of aconflict between two statutes is that the later abrogatesthe earlier one (Leges posteriores priores contrariasabrogant). To this general rule there is a well knownexception, namely, generalia specialibus non derogant(general things do not derogate from special things), theimplications of which are thus stated succinctly by WarlJowitt in 'The Dictionary of English Law':
"Thus a specific enactment is not affected by asubsequent general enactment unless the earlierenactment is inconsistent with the later enactment, orunless there is some express reference in the laterenactment to the earlier enactment, in either of whichcases the maxim leges posteriores priores contrariasabrogant applies."
In other words a prior special law would yield to a latergeneral law, if either of the following two conditions issatisfied:
(i) The two are inconsistent with each other.
(ii) There is some express reference in the later tothe earlier enactment.
If either of these conditions is fulfilled the laterlaw, even though general, will prevail.
1155The principles enunciated in Chapter 9 of 'Maxwell onthe Interpretation of Statutes' are to the same effect:
"A later statute may repeal an earlier one eitherexpressly or by implication. But repeal by implicationis not favoured by the courts..........If, therefore,earlier and later statutes can reasonably be construedin such a way that both can be given effect to, thismust be done.............. If, however, the provisionsof a later enactment are so inconsistent with orrepugnant to the provisions of an earlier one that thetwo cannot stand together, the earlier is abrogated bythe later.............. Wherever Parliament in anearlier statute has directed its attention to anindividual case and has made provision for itunambiguously, there arises a presumption that if in asubsequent statute the Legislature lays down a generalprinciple, that general principle is not to be taken asmeant to rip up what the Legislature had beforeprovided for individually, unless an intention to doso, is specially declared." (emphasis supplied)The same principles have been thus reiterated in Chapter 15of Craies on Statute Law:
"Parliament, in the exercise of its supreme legislative capacity, can extend, modify, vary, or repeal Acts passed in the same or previous sessions................ The provisions of an earlier Act may be revoked or abrogated in particular cases by a subsequent Act, either from the express language used being addressed to the particular point, or from implication or inference from the language used................. Where two Acts are inconsistent or repugnant, the latter will be read as having implieose. To the extent, therefore, that section 11(1) read with that clause confers on the Corporation the power to alter the terms and conditions in question-a power not enjoyed by it under the provisions of the I. D. Act-it is inconsistent with the I. D. Act and being a later law, would override that Act despite the absence of the non- obstante clause, the inconsistency having arisen from express language and not from mere implication.
1158 But the matter does not end here as sub-sections (2) and (4) of section 11 and clause (b) of sub-section (2) of section 49 of the L. I. C. Act pose other insurmountable hurdles in the way of the acceptance of proposition (b). The scope of sub-section (2) of section 11 was stated in Life Insurance Corporation of India v. Sunil Kumar Mukherjee & Ors (supra) by Gajendragadkar, J., in the following terms:
"Section 11(2) as it originally stood was substantially modified in 1957, and the plain effect of the provisions contained in the said sub-section as modified is that the Central Government is given the power to alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of service to such extent and in such manner as it thinks fit. It is significant that this power can be exercised by the Central Government notwithstanding anything contained in sub-section (1) or in the Industrial Disputes Act, 1947, or in any other law, or in any award, settlement or agreement for the time being in force. It was thought a that for a proper functioning of the Corporation it was essential to confer upon the Central Government an overriding power to change the terms and conditions of employees who were wholly or mainly employed by the insurers prior to the appointed day. Having conferred such wide power on the Central Government, section 11(2) further provides that if the alternation made by the Central Government in the terms and conditions of his service is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months' remuneration unless the contract of service with such employee provides for a shorter notice of termination. It is thus clear that in regard to cases fall under section 11(2), if as a result of the alteration made by the Central Government any employee does not want to work with the Corporation, he is given the option to leave its employment on payment of compensation provided by the last part of section 11(2). Thus, the scheme of the two sub-sections of section 11 is clear. The employees of the insurers whose controlled business has been taken over, become the employees of the Corporation, then their terms and conditions of service continue until they are altered by the Central Government, and if the alteration made by the Central Government is not acceptable to them, they are entitled to leave the employment of the Corporation on payment of compensation as provided by section 11(2)." (emphasis supplied) 1159 In other words sub-section (2) of section 11 not only given to the Central Government the power to alter the terms and conditions of service of the employees of the Corporation in certain situations, and to alter them even to the detriment of such employees, to such extent and in such manner as it thinks fit, but also states in so many words that such power shall be exercisable-
"Notwithstanding anything contained in sub-section (1) or in the Industrial Disputes Act, 1947 or in any other law for the time being in force, or in any award, settlement or agreement for the time being in force."
The mandate of the legislature has been expressed in clear and unambiguous terms in this non-obstante clause and is to the effect that the power of the Central Government to alter conditions of service of the employees of the Corporation shall be wholly unfettered and that any provisions to the contrary contained in the I. D. Act or for that matter, in any other law for the time being in force, or in any award, settlement, or agreement for the time being in force, would not stand in the way of the exercise of that power even if such exercise is to the detriment of the employees of the Corporation. The conferment of the power in thus in express supersession of the I. D. Act and of any settlement made thereunder. The provisions of that Act and the two settlements of 1974 must, therefore, yield to the dictates of section 11(2) and to the exercise of the power conferred thereby on the Central Government.
Sub-section (4) of section 11 is again illuminating as in the matter of compensation to be paid to a transferred employee it provides specifically that the provisions of sub-section (2) of that section shall override those of the I. D. Act and of any other law for the time being in force and that no claim to the contrary shall be entertained by any court, tribunal or other authority. In the face of an express provision like this it is not open to the employees to contend that the law laid down in the I. D. Act and not sub-section (2) of section 11 would govern them.
The rule-making power conferred on the Corporation by section 49 of the L. I. C. Act must also be held to be exercisable notwithstanding the provisions of the I. D. Act. In clause (b) of sub-section (2) thereof the method of recruitment of employees and agents of the Corporation and the terms and conditions of their service are stated to be matters which the Corporation may deal with through regulations subject, however, to the previous approval of the Central Government. This power is expressly conferred on the Corporation in addition to that with which it is invested under clause (bb) 1160 of the same sub-section. If these two clauses were not meant to override the provisions of the I. D. Act on the same subject they would be completely meaningless, and that is a situation, as already pointed out, running directly counter to one of the accepted principles of interpretation of statutes. Besides, these two clauses are not to be read in isolation from section 11. The subject matter of the clauses and the section is overlapping and together they form an integrated whole. The clauses must, therefore, be read in the light of section 11. Sub-section (1) of that section confers power on the Corporation to alter the terms and conditions of service of the transferred employees and by necessary implication gives a go-bye to the I. D. 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|2001|03/27/2001|03/06/2001|08/15/1947| APP |124 |2001|08/23/2001|08/09/2001|08/15/1947| APP |124 |2001|08/27/2001|08/23/2001|08/15/1947| ARBAP|124 |2001|09/21/2001|08/15/1947|08/15/1947| ARBP |124 |2001|03/19/2001|08/15/1947|08/15/1947| CHSW |124 |2001|01/28/2002|08/15/1947|08/15/1947| CHSW |124 |2001|08/15/1947|01/28/2002|08/15/1947| CP |124 |2001|01/31/2001|08/15/1947|08/15/1947| CP |124 |2001|06/29/2001|06/28/2001|08/15/1947| CP |124 |2001|08/15/1947|07/06/2001|08/15/1947| CP |124 |2001|07/25/2001|07/18/2001|08/15/1947| EXAL |124 |2001|06/24/2001|08/15/1947|08/15/1947| ITAL |124 |2001|08/14/2001|08/15/1947|08/15/1947| WP |124 |2001|01/24/2001|01/15/2001|08/15/1947| WP |124 |2001|01/29/2001|01/24/2001|08/15/1947| APP |124 |2002|03/20/2002|03/18/2002|08/15/1947| CA |124 |2002|03/01/2002|08/15/1947|08/15/1947| CP |124 |2002|03/14/2002|02/01/2002|08/15/1947| NMS |124 |2002|02/06/2002|08/15/1947|08/15/1947| WP |124 |2002|02/04/2002|08/15/1947|08/15/1947| S |1242 |1980|11/08/1997|12/09/1996|08/15/1947| S |1242 |1980|08/15/1947|08/18/1999|08/15/1947| S |1242 |1988|12/01/1996|02/26/1996|08/15/1947| CHS |1242 |1990|09/25/1997|06/29/1997|08/15/1947| NMS |1242 |1993|08/17/1996|08/11/1996|08/15/1947| S |1242 |1993|04/28/1999|08/15/1947|08/15/1947| CHS |1242 |1994|08/30/1996|08/15/1947|08/15/1947| S |1242 |1994|02/10/1999|02/03/1999|08/15/1947| APP |1242 |1996|12/23/1996|11/26/1996|08/15/1947| CHS |1242 |1996|09/19/1997|09/12/1997|08/15/1947| NMS |1242 |1996|01/26/1999|11/11/1998|08/15/1947| WP |1242 |1996|07/08/1996|08/15/1947|08/15/1947| APP |1242 |1998|01/11/1999|12/08/1998|08/15/1947| APPL |1242 |1998|02/16/1999|08/15/1947|08/15/1947| CHOL |1242 |1999|11/18/1999|08/15/1947|08/15/1947| CHS |1242 |1999|04/20/2000|04/06/2000|08/15/1947| CHS |1242 |1999|02/07/2001|01/11/2001|08/15/1947| CP |1242 |1999|12/06/1999|08/15/1947|08/15/1947| CP |1242 |1999|06/28/2000|02/01/2000|08/15/1947| SJ |1242 |1999|08/15/1947|01/08/2002|08/15/1947| WP |1242 |1999|05/04/1999|08/15/1947|08/15/1947| WP |1242 |1999|08/15/1947|06/11/1999|08/15/1947| WPL |1242 |1999|05/06/1999|05/05/1999|08/15/1947| CHS |1242 |2000|10/16/2009|08/15/1947|08/15/1947| CHS |1242 |2000|10/16/2000|10/16/2009|08/15/1947| CHS |1242 |2000|11/09/2000|10/16/2000|08/15/1947| CHS |1242 |2000|03/08/2001|05/01/2001|08/15/1947| APP |1242 |2001|03/26/2002|03/18/2002|08/15/1947| WP |1242 |2001|06/11/2001|08/15/1947|08/15/1947| WP |1242 |2001|06/25/2001|06/12/2001|08/15/1947| S |1243 |1983|11/08/1996|11/04/1996|08/15/1947| S |1243 |1988|02/16/2002|01/19/2002|08/15/1947| SMN |1243 |1991|08/15/1947|08/27/2000|08/15/1947| NMS |1243 |1993|08/26/1996|08/21/1996|08/15/1947| CHS |1243 |1994|12/15/1994|08/29/1996|08/15/1947| NMS |1243 |1994|01/16/1998|01/25/1998|08/15/1947| S |1243 |1994|06/01/1998|02/03/1999|08/15/1947| APP |1243 |1996|11/27/1996|11/26/1996|08/15/1947| CHS |1243 |1996|02/11/1rcumstances to vary the terms and conditions of service of the Corporation's employees. When the two clauses, therefore, say that the Corporation shall have the power to frame regulations in regard to the terms and conditions of its employees including transferred employees, subject, of course, to previous approval of the Central Government, the power may well be exercised in conformity with the provisions of section 11. And if it is so exercised the resultant regulations cannot be said to go beyond the limits specified in the statute. In this view of the matter Hukam Chand etc. v. Union of India and others,(1) and B. S. Vadera v. Union of India & Ors,(2) which lay down that the authority vested with the power of making subordinate legislation must act within the limits of and cannot transgress its power, are of no help to the case of the employees on whose behalf they have been cited.
Another proposition put forward by learned counsel for the employees may be noticed here. It was contended that section 49 conforms on the Corporation "ordinary" powers of framing subordinate legislation and that the Corporation has not been invested with any right to unilaterally promulgate a regulation altering the conditions of service of its employees to their detriment and that such regulations cannot override the provisions of the I. D. Act and the settlements reached thereunder. Reliance for the proposition was placed on U. P. State Electricity Board and Ors. v. Hari Shanker Jaing and Ors.(3) and Bangalore Water-Supply & Sewerage Board, etc. v. R. Rajappa & Others,(4). In the former the case of the employees was that they were governed by the Industrial Employment (Standing Orders) Act which, according to them, was a special Act laying down 1161 provision in relation to their conditions of service and which could not, therefore, be superseded by section 79 of the Electricity Supply Act, 1948. In holding that the section last mentioned was a general law which did not override the provisions of the Industrial Employment (Standing Order) Act, this court observed:
"Chapter VII (from section 70 to section 83) which is headed "Miscellaneous" contains various miscellaneous provisions amongst which are section 78 which empowers the Government to make rules and section 79 which empowers the Board to make regulations in respect of matters specified in clauses (a) to (k) of that section. Clause (c) of section 79 is 'the duties of Officers and servants of the Board, and their salaries, allowances and other conditions of service'. This, of course is no more than the ordinary general power, with which every employer is invested in the first instance, to regulate the conditions of service of his employees. It is an ancillary or incidental power of every employer. The Electricity Supply Act does not presume to be an Act to regulate the conditions of service of the employees of State Electricity Boards. It is an Act to regulate the coordination Development of electricity. It is a special Act in regard to the subject of development of electricity, even as the Industrial Employment (Standing Orders) Act in a special Act in regard to the subject of conditions of service of workmen in industrial establishments. If section 79(c) of the Electricity Supply Act generally provides for the making of regulations providing for the conditions of service of the employees of the Board, it can only be regarded as a general provision which must yield to the special provisions of the Industrial Employment (Standing Orders) Act in respect of matters covered by the latter Act."
Quite clearly there was no provision in the Electricity Supply Act such as we find in section 11 of the L. I. C. Act which, as already shown, is a special law in relation to the terms and conditions of service of the employees of the Corporation very much in derogation of what the I. D. Act lays down and the case cited, therefore, presents no parallel to the case in hand.
In Bangalore Water-Supply & Sewerage Board, etc. v. R. Rajappa & others (supra) the question was whether the employees of a statutory Corporation would or would not be governed by the provisions of the I. D. Act. The question was answered in the affirmative by this Court and Beg, C.J., while concurring with Bhagwati, Krishna Iyer and Desai, JJ., on that point, observed:
1162 "I am impressed by the argument that certain public utility services which are carried out by governmental agencies or corporations are treated by the Act itself as within the sphere of industry. If express rules under other enactments govern the relationship between the State as an employer and its servants as employees it may be contended; on the strength of such provisions, that a particular set of employees are outside the scope of the Industrial Disputes Act for that reason. The special excludes the applicability of the general. We cannot forget that we have to determine the meaning of the term 'industry' in the context, of and for the purposes of matters provided for in the Industrial Disputes Act only............ Hence, to artificially exclude State-run industries from the sphere of the Act, unless statutory provisions, expressly or by a necessary implication, have that effect, would not be correct." (emphasis supplied) Far from assisting the case of the employees these observations only support the conclusion arrived at by me above in as much as they specifically state that if express provision has been made under a particular enactment governing the relationship of an employer and his employees, such special provision would govern those employees in supersession of the dictates of the I. D. Act.
9. I thus hold that section 11 and clauses (b) and (bb) of subsection (2) of section 49 of the L. I. C. Act were intended to be and do constitute an exhaustive and overriding law governing the conditions of service of all employees of the Corporation including transferred employees. Proposition (b) forming part of conclusion I is consequently found to be incorrect.
10. Conclusion I reached by the High Court being faulty in both its material aspects, the three corollaries flowing from it and set out above as part of conclusion II must also be held to be unsustainable.
Section 23 of the L. I. C. Act, envisages employment of persons by the Corporation no doubt implies settlement of conditions of service but that does not mean that once a settlement is arrived at the same is not liable to be altered except by another settlement reached under section 18 of the I. D. Act. As already pointed out the provisions of sub-sections (1), (2) and (4) of section 11 of the L. I. C. Act and clauses (b) & (bb) of sub-section (2) of section 49 thereof have overriding effect and the terms and conditions of service of the employees of the Corporation forming part of a settlement under the I. D. Act cannot last after they have been altered in exercise of the powers conferred on the Corporation or the Central Government by 1163 those provisions, as was done when the new regulation 58 was framed under section 49 by the Corporation and the new clause 9 was inserted in the 1957 Order by the Central Government. Nor can any action taken under sections 19(2) and 9A of the I. D. Act have any relevance to the exercise of those powers so long as such exercise conforms to the provisions of the L. I. C. Act.
Conclusion II is, therefore, held to be erroneous in its entirety.
11. Conclusion III also does not stand scrutiny as the reliance of the High Court on Madan Mohan Pathak's case (supra) for support to proposition (b) stated above is wholly misplaced. That case was decided by a Bench of seven judges of this Court before whom were canvassed two main points which were thus crystallized by Bhagwati, J., who delivered the judgment on behalf of himself, Iyer and Desai, JJ.:
"A. The right of class III and Class IV employees to annual cash bonus for the years 1st April, 1975 to 31st March, 1976 and 1st April, 1976 to 31st March, 1977, under clause 8(ii) of the Settlement was property and since the impugned Act provided for compulsory acquisition of this property without payment of compensation, the impugned Act was violative of Article 31(2) of the Constitution and was hence null and void."
"3. The impugned Act deprived Class III and Class IV employees of the right to annual cash bonus for the years 1st April, 1975 to 31st March, 1976 and 1st April 1976 to 31st March, 1977, which was vested in them under clause 8(ii) of the Settlement and there was, therefore, clear infringement of their fundamental right under Article 19(1)(f) and since this deprivation of the right to annual cash bonus, which was secured under a Settlement arrived at as a result of collective bargaining and with full and mature deliberation on the part of the Life Insurance Corporation and the Central Government after taking into account the interests of the policy-holders and the community and with a view to approximating towards the goal of a living wage as envisaged in Article 4 of the Constitution, amounted to an unreasonable restriction, the impugned Act was not saved by Article 19(5) and hence it was liable to be struck down as invalid."
In relation to point A the argument raised on behalf of the Corporation was that under the then existing regulation 58 the grant of annual cash bonus was subject to such directions as the Central Government might issue and that the right of Class III and Class IV 1164 employees to receive such bonus could not therefore be said to be an absolute right which was not liable to be set at naught by any direction that might be issued by the Central Government. Bhagwati, J., appreciated the force of regulation 58 and remarked:
"Regulation 58 undoubtedly says that non-profit sharing bonus may be granted by the Life Insurance Corporation to its employees, subject to such directions as the Central Government may issue and, therefore, if the Central Government issues a direction to the contrary, non-profit sharing bonus cannot be granted by the Life Insurance Corporation to any class of employees."
He further observed, however:
"But here, in the present case, grant of annual cash bonus by the Life Insurance Corporation to Class III and Class IV employees under Cl. 8(ii) of the Settlement was approved by the Central Government as provided in Cl. 12 and the 'direction' contemplated by Regulation 58 was given by the Central Government that annual cash bonus may be granted as provided in Cl. 8(ii) of the Settlement. It was not competent to the Central Government thereafter to issue another contrary direction which would have the effect of compelling the Life Insurance Corporation to commit a breach of its obligation under S. 18, sub-s. (1) of the Industrial Disputes Act, 1947 to pay annual cash bonus in terms of Cl. 8(ii) of the Settlement."
It was further held by Bhagwati, J., that clause 8(ii) was a clause independent of clause 8(i) and was subject only to the approval mentioned in clause 12(2) which, as already pointed out, had been accorded by the Central Government He went on to hold that the right to bonus for the two years (1st April, 1975 to 31st March, 1976 and 1st April, 1976 to 31st March, 1977) was property of which the concerned employees could not be deprived without adequate compensation. Repelling another argument advanced on behalf of the Corporation, Bhagwati, J., held that the extinguishment of the right to bonus really meant a transfer of ownership to the Corporation of the debt available to the employees under that right and that such extinguishment amounted to acquisition of property without compensation so that it was hit by article 31 (2) of the Constitution of India. In view of this conclusion Bhagwati, J., considered it unnecessary to consider point B. 1165 Chandrachud, Fazal Ali and Shinghal, JJ., agreed with the conclusion arrived at by Bhagwati, J., on point A. Beg, C.J., however, delivered a separate judgment seriously doubting the correctness of the proposition enunciated by Bhagwati, J., that the extinguishment of the right to bonus amounted to acquisition of property, and deciding point B in favour of the employees with a finding that in view of the provisions of article 43 of the Constitution the 1976 Act was vitiated by the provisions of article 19(1)(f) of the Constitution and was not saved by clause (6) of that article. Beg, C.J., was further of the opinion that the 1976 Act was violative of article 14 of the Constitution.
Three factors are noteworthy:
(a) Points A and B detailed above were specifically limited to the duration of the settlements as appearing in clause 12 thereof and the judgment, therefore, does not cover any period subsequent to 31st March, 1977, as has been rightly contended by learned counsel for the Corporation.
(b) No finding at all was given nor was any observation made by Bhagwati, J., to the effect that sections 11 and 49 of the L.I.C. Act or the action taken thereunder (the promulgation of the new regulation 58 and the new clause 9 of the 1957 Order) was ineffective against the operation of the provisions of the I.D. Act or of the 1974 settlements. On the other hand, his judgment very specifically proceeded on the ground that the two settlements had to and did fully conform to the provisions of regulation 58 in as much as the Central Government had accorded its approval to them. The High Court thus not only erred in observing that those settlements had been upheld by this Court "even though it did not advert to regulation 58", but also failed to take notice of the clearly expressed opinion of Bhagwati, J., that bonus under the two settlements could not have been paid if they had run counter to the requirements of regulation 58. Far from supporting corollary (b) of conclusion II, therefore, Madan Mohan Pathak's case rules to an opposite effect.
(c) Although Bhagwati, J., did hold clearly (and, if I may say so with all respect, quite correctly) that sub-clause (ii) of clause 8 of the 1974 settlements stood independently of sub-clause (i) thereof, his judgment contains no finding 1166 whatsoever to the effect that the conditions of service laid down in those settlements could be varied only by a fresh settlement or award made under the provisions of the I.D. Act and that till then sub-clause (ii) aforesaid would remain in full force. The High Court clearly erred in observing that such a finding formed part of the majority judgment in Madan Mohan Pathak's case.
Conclusion III also, therefore, is negatived.
12. We now take up for consideration the High Court's conclusion IV which is based on the interpretation of section 19 of the I.D. Act by this Court in South Indian Bank Ltd. v. A. R. Chacko (supra). That section may with advantage be extracted here in extenso for facility of reference:
"19(1) A settlement shall come into operation on such date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on the date on which the memorandum of the settlement is signed by the parties to the dispute.
"(2) Such settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of six months from the date on which the memorandum of settlement is signed by the parties to the dispute, and shall continue to be binding on the parties after the expiry of the period aforesaid, until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement.
"(3) An award shall, subject to the provisions of this section, remain in operation for a period of one year from the date on which the award becomes enforceable under section 17A:
"Provided that the appropriate Government may reduce the said period and fix such period as it thinks fit:
"Provided further that the appropriate Government may, before the expiry of the said period, extend the period of operation by any period not exceeding one year at a time as it thinks fit so, however, that the total period of operation of any award does not exceed three years from the date on which it came into operation.
"(4) Where the appropriate Government, whether of its own motion or on the application of any party bound by the award, considers that since the award was made, there has been 1167 a material change in the circumstances on which it was based, the appropriate Government may refer the award or a part of it to a Labour Court, if the award was that of a Labour Court or to a Tribunal, if the award was that of a Tribunal or of a National Tribunal for decision whether the period of operation should not, by reason of such change, be shortened and the decision of Labour Court or the Tribunal, as the case may be, on such reference shall be final.
"(5) Nothing contained in sub-section (3) shall apply to any award which by its nature, terms or other circumstances does not impose, after it has been given effect to, any continuing obligation on the parties bound by the award.
"(6) Notwithstanding the expiry of the period of operation under sub-section (3), the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award.
"(7) No notice given under sub-section (2) or sub-
section (6) shall have effect unless it is given by a party representing the majority of persons bound by the settlement or award, as the case may be."
Sub-section (2) of the section makes it clear that a settlement reached under the I.D. Act shall be binding on the parties thereto-
(a) for the period agreed upon, and if no such period is agreed upon for a period of six months from the date on which the memorandum of settlement is signed by the parties; and
(b) for a further period ending with a span of two months reckoned from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties thereto to the others.
Sub-sections (3), (4) and (5) provide for the period of operation of an award and its extension and reduction, while sub-section (6) lays down that after such period has expired the award shall continue to be binding on the parties to it for a further period ending with a span of two months reckoned in the same manner as the span mentioned earlier.
In so far as the explicit language of the section is concerned there is no ambiguity involved. The difficulty arises regarding the period (hereinafter called the 3rd period) subsequent to the date 1168 on which the said span of two months expires in either case, because the I.D. Act is silent about it and it is that difficulty which this Court resolved in Chacko's case. The parties before the Court in that case were the South Indian Bank Ltd. and one of its clerks named A. R. Chacko who had been promoted as an accountant with effect from the 13th July 1959 and claimed certain allowances for periods subsequent to that date in terms of what is called the Sastry award. On behalf of the Bank reliance was placed on section 4 of the Industrial Disputes (Banking Companies) Decision Act, 1955 which runs thus:
"Notwithstanding anything contained in the Industrial Disputes Act, 1947, or the Industrial Disputes (Appellate Tribunal) Act, 1950 the award as now modified by the decision of the Labour Appellate Tribunal in the manner referred to in section 3 shall remain in force until March 31, 1959."
and a contention was raised that the non-obstante clause contained in this section made the provisions of section 19(6) of the I.D. Act inapplicable to the Sastry award which therefore, became dead for all purposes after the 31st March, 1959. Repelling the contention this Court observed:
"The effect of section 4 of the Industrial Disputes (Banking Companies) Decision Act is that the award ceased to be in force after March 31, 1959. That however has nothing to do with the question as to the period for which it will remain binding on the parties thereafter. The provision in section 19(6) as regards the period for which the award shall continue to be binding on the parties is not in any way affected by section 4 of the Industrial Disputes (Banking Companies) Decision Act, 1955."
The Court then proceeded to consider specifically the situation that would obtain in the 3rd period in relation to an award and held:
"Quite apart from this, however, it appears to us that even if an award has ceased to be in operation or in force and has ceased to be binding on the parties under the provisions of section 19(6) it will continue to have its effect as a contract between the parties that has been made by industrial adjudication in place of the old contract. So long as the award remains in operation under section 19(3), section 23(c) stands in the way of any strike by the workmen and lock-out by the employer in respect of any matter covered by the award. Again so long as the award is binding on a party, breach of any of its terms 1169 will make the party liable to penalty under section 29 of the Act, to imprisonment which may extend to six months or with fine or with both. After the period of its operation and also the period for which the award is binding have elapsed section 23 and section 29 can have no operation. We can however see nothing in the scheme of the Industrial Disputes Act to justify a conclusion that merely because these special provisions as regards prohibition of strikes and lock-outs and of penalties for breach of award cease to be effective the new contract as embodied in the award should also cease to be effective. On the contrary, the very purpose for which industrial adjudication has been given the peculiar authority and right of making new contracts between employers and workmen makes it reasonable to think that even though the period of operation of the award and the period for which it remains binding on the parties-in respect of both of which special provisions have been made under sections 23 and 29 respectively-may expire, the new contract would continue to govern the relations between the parties till it is displaced by another contract. The objection that no such benefit as claimed could accrue to the respondent after March 31, 1959 must therefore be rejected." (emphasis supplied) It is the underlined portion of this paragraph which impelled the High Court to come to the conclusion that even a notice under section 19(6) of the I.D. Act would not terminate a settlement (which, according to the High Court, stands on the same footing as an award and, in fact is indistinguishable therefrom for the purpose of section 19) but would have the effect of merely paving the way for fresh negotiations resulting ultimately in a new settlement- a conclusion which has been seriously challenged on behalf of the Corporation with the submission that Chacko's case has no application whatsoever to the present controversy in as much as the special law comprised of section 11 and 49 of the L.I.C. Act fully covers the situation in the 3rd period following the expiry of the 1974 settlements. The submission is well based. In Chacko's case this Court was dealing with the provisions of the I.D. Act alone when it made the observations last extracted and was not concerned with a situation which would cover the 3rd period in relation to an award (or for that matter a settlement) in accordance with a specific mandate from Parliament. The only available course for filling the void created by the Sastry award was a continuation of its terms till they were replaced by something else legally enforceable which, in the circumstances before the Court, could only be another 1170 contract (in the shape of an award or a settlement), there being no legal provision requiring the void to be filled otherwise. In the present case the law intervenes to indicate how the void which obtains in the 3rd period shall be filled and, if it has been so filled, there is no question of its being filled in the manner indicated in Chacko's case wherein, as already pointed out, no such law was available. The observations in that case must thus be taken to mean that the expired award would continue to govern the parties till it is displaced by another contract or by a relationship otherwise substituted for it in accordance with law.
13. Indian Link Chain Manufacturers Ltd. v. Their Workmen which also the High Court pressed into service in arriving at conclusion IV is really not relevant for the present discussion as it deals only with the two periods expressly covered by sub-sections (2) and (6) of section 19 of the I.D. Act and not at all with the 3rd period. The same is true of Shukla Manseta Industries Pvt. Ltd. v. The Workmen Employed under it in which the only question canvassed before the Court and answered by it was whether the law required that notice of termination under section 19(2) had to be given only after the date of expiry of a settlement. However, it may be pointed out that in both those cases as also in Haribhau Shinde and another v. F. H. Lala Industrial Tribunal, Bombay and another, which has been relied upon by learned counsel for the employees, this Court was not concerned with any special law as I find in a combined reading of sections 11 and 49 of the L.I.C. Act; and for that reason also none of these three decisions is of any assistance for the determination of the point in controversy before us.
14. Some arguments were addressed to us on a proposition advanced by learned counsel for the Corporation to the effect that a settlement could not be treated at par with an award for the purpose of the I.D. Act and that Chacko's case, therefore, could furnish no proper basis for the High Court's conclusion IV. I do not propose to deal with that proposition which is merely of academic interest in view of the material distinction already pointed out, namely, that in the present case there is a special mandate by Parliament to fill the void of the 3rd period which did not obtain in Chacko's case. However, I may briefly dwell on another aspect of the same distinction and that consists of the circumstance that while in Chacko's case the employer was the South Indian Bank 1171 Ltd.-a non-statutory banking company-the employer before us now is the creation of the L.I.C. Act itself and therefore a statutory corporation. This circumstance coupled with the contents of the L.I.C. Act leads to the following deductions, as laid down in Suchdev Singh & Ors v. Bhagataram Sardar Singh Raghuvanshi and anr.(1).
(a) The Corporation carries on the exclusive business of life insurance as an agency of the Government by which it is managed and which alone can dissolve it. It is, therefore, an authority within the meaning of article 12 of the Constitution of India. The status of persons serving the Corporation thus carries with it the element of public employment.
(b) The L.I.C. Act enables the Corporation to make regulations which may provide, inter alia for the terms and conditions of service of its employees. Such regulations cannot be equated with those framed by a company incorporated under the Companies Act and, on the other hand, have the force of law which must be followed both by the Corporation and those who deal with it.
It is obvious that an application of these deductions to the situation prevailing in the present case would rule out the relevance of Chacko's case because regulation 58 framed under section 49 of the L.I.C. Act specifically governs the 3rd period following the expiry of the 1974 settlements.
15. I need not go into the correctness or otherwise of conclusion V reached by the High Court as no arguments in relation thereto were addressed to us. I shall now proceed, however, to discuss certain other contentions raised before us on behalf of the employees although the same were not canvassed before the High Court.
16. It was argued that both sub-sections (1) and (2) of section 11 of the L.I.C. Act relate exclusively to the case of employees and that sub-section (2) does not embrace the case of employees recruited under section 23. In this connection an analysis of section 11 would be helpful. In so far as sub-section (1) is concerned it is quite clear that it cannot be extended to cover employees recruited under section 23, and that it is restricted in its operation only to the transferred employees. This follows from the clear language used. Sub-section (2) however, is differently worded. It may be split up as follows:
(a) The Central Government may alter (whether by way of reduction or otherwise) the remuneration and the other 1172 terms and conditions of service (of .............) to such extent and in such manner as it thinks fit.
(b) The Central Government may take the action detailed in (a) above notwithstanding anything contained in sub-section (1) or the I.D. Act, or in any other law for the time being in force or in any award, settlement or agreement for the time being in force.
(c) The action detailed in (a) can be taken only if the Central Government is satisfied-
(i) that for the purpose of securing uniformity in the scales of remuneration and the other terms and conditions of service applicable to transferred employees, it is necessary so to do;
(ii) that, in the interests of the Corporation and its policyholders a reduction in the remuneration payable or a revision of the other terms and conditions of service applicable, to employees or any class of them is called for.
According to learned counsel for the employees the expression "employees or any class of them" occurring in sub-clause (i) of the above analysis must be interpreted to mean transferred employees or any class thereof and the expression does not cover the employees recruited under section 23. Support for the contention is sought from the circumstance that the section is not only a part of Chapter IV of the L.I.C. Act, which is headed "Transfer of existing Life Insurance Business to the Corporation" but also carries the marginal note "Transfer of service of existing employees of insurers to the Corporation". This circumstance is wholly immaterial not only for the reason that headings of chapters and marginal notes cannot be looked into for the purpose of ascertaining the intention of the Legislature unless the language employed by it is ambiguous but also because the absorption of the transferred employees into the Corporation may itself necessitate a change in the conditions of service of the employees recruited under section 23. It is not disputed that transferred employees, amongst themselves, were governed by widely different conditions of service and that was so for the simple reason that they had come from different companies, each having its own scales of pay applicable to its servants. Then the Corporation came into existence, recruitment under section 23 need not have waited for action under section 11(2) and the process of examination of different scales of pay of the transferred employees as compared to 1173 those pertaining to hands recruited under section 23, as also the appropriate action which should have been taken as a result of such examination, was bound to be time- consuming; and the result may well have entailed a decision to equalise the scales of pay not only by raising or reducing those of the transferred employees but also those of the employees recruited under section 23. And that appears to be only reason why the legislature chose the comprehensive expression "employees or any class of them" in sub-section (2) in spite of the fact that not only in sub- sections (1) and (4) but also in sub-section (2) itself the detailed description "employee of an insurer whose controlled business has been transferred to and vested in the Corporation" or words to that effect have been used to denote a transferred employee. Again, wherever a transferred employee was meant but a detailed description in relation to him was not given, the expression "such employee" was used with reference to that description. Examples in point are the proviso to sub section (1) and the latter part of sub- section (4). If the expression "employees or any class of them" was intended to be restricted to transferred employees, it would certainly have been preceded by the word 'such' so that it could be referable to the detailed description of employees of that kind occurring in an earlier part of the sub section. From the circumstance that no such device was pressed into service the conclusion is irresistible that the expression last mentioned was intended to convey a meaning different from that which was deducible from the detailed description otherwise employed in the section- a conclusion based on the well-known principle of interpretation of statutes thus stated by Maxwell in Chapter 12 of his celebrated work earlier cited:
"From the general presumption that the same expression is presumed to be used in the same sense throughout an Act or a series of cognate Acts, there follows the further presumption that a change of working denotes a change in meaning."
17. The matter may also be looked at from another angle. As stated in clause (c) of the above analysis the Central Government is empowered to take action under sub- section (2) of section 11 if it is satisfied about the existence of either of two conditions. It may take such action if it is satisfied that for the purpose of securing uniformity in the scales of remuneration, etc., applicable to transferred employees it is necessary to do so. But then if no action is intended to be taken for that purpose it may still be taken provided the Central Government is satisfied that it is in the interests of the Corporation and its policy-holders to make a reduction in the remuneration payable or a revision of the other terms and conditions 1174 applicable to its employees. Now the first condition which envisages the securing of uniformity in the scales of remuneration clearly applies to transferred employees only but the same is not true of the second condition. At a particular juncture in the life of the Corporation it may become necessary to make a reduction in the remuneration payable to its employees or a revision of the other terms and conditions of service applicable to them. But then this must follow from the satisfaction of the Government that it is in the interest of the Corporation and its policy-holders to do so. It is obvious that this condition envisages the change in conditions of service, etc., of all the employees of the Corporation and not only transferred employees. If it were otherwise the sub-section may well lead to discrimination and render the provision unconstitutional. Even if, therefore, the expression "employees or any class of them" occurring in sub-section (2) was capable of being regarded as ambiguous, the Court would choose that interpretation which would conform to the constitutionality of the provision. This well known principle of satutory construction was made use of by a learned single Judge of the Calcutta High Court in Himrangsu Chakraborty and others v. Life Insurance Corporation of India and others(1) wherein he dealt with sub-section 11(2) thus:
"According to Mr. Chatterjee section 11(2) of the Act contains two limbs. The first limb confers power on the Central Government to revise the terms and conditions of service of the employees of the Corporation. Its power is, however, confined only to those employees whose services have been transferred to and vested in the Corporation by reason of the commencement of the Act. The second limb confers power on the Central Government to alter the terms and conditions of the service applicable to all employees of the Corporation irrespective of whether they are transferred employees or are directly recruited after the inception of the Corporation. Strong emphasis is placed on the expression 'terms and conditions of service applicable to employees of insurers whose controlled business has been transferred to and vested in the Corporation' and 'terms and conditions of service applicable to employees or any class of them'. Mr. Chatterjee submits that the latter clause does not contain the expression 'such employees' and therefore should be construed to confer a power on the Central Government to alter the conditions of service of all employees..... In my view, this contention of Mr. Chatterjee is sound and should 1175 be accepted. On a plain reading of section 11(2) of the Act it seems to contain two distinct and separate powers. The first part relates to the power of the Central Government in relation to "transferred employees" whereas the second part appears to apply to all employees of the Corporation irrespective of whether they are transferred or directly recruited."
I find myself in complete agreement with this view for the reasons already stated.
18. In order to steer clear of the above interpretation of section 11(2) learned counsel for the employees put forward the argument that the word 'for' occurring in the section should not be read as a disjunctive and should be given the meaning 'and' so that the two clauses forming the conditions about which the Central Government has to be satisfied before it can act under the section are taken to be one single whole; but we do not see any reason why the plain meaning of the word should be distorted to suit the convenience or the cause of the employees. It is no doubt true that the word 'or' may be interpreted as 'and' in certain extraordinary circumstances such as in a situation where its use as a disjunctive could obviously not have been intended. (see Mazagaon Dock Ltd. v. The Commissioner of Income-tax and Excess Profits Tax.(1) Where no compelling reason for the adoption of such a course is however, available, the word 'or' must be given its ordinary meaning, that is, as a disjunctive. This rule was thus applied to the interpretation of clause (c) of section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 in Babu Manohan Das Shah & Ors. v. Bishun Das,(2) by Shelat, J:
"The clause is couched in simple and unambiguous language and in its plain meaning provided that it would be a good ground enabling a landlord to sue for eviction without the permission of the district Magistrate if the tenant has made or has permitted to be made without the landlord's consent in writing such construction which materially alters the accommodation or is likely substantially to diminish its value. The language of the clause makes it clear that the legislature wanted to lay down two alternatives which would furnish a ground to the landlord to sue without the District Magistrate's permission, that is, where the tenant has made such construction which would materially alter the accommodation or which would be likely to substantially diminish its value. The ordinary rule of construction is 1176 provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as where a literal construction would reduce the provision to absurdity or prevent the manifest intention of the legislature from being carried out. There is no reason why the word 'or should be construed otherwise than in its ordinary meaning."
In my view this reasoning is fully applicable to the case in hand and there is every reason why the word 'or' should be given its ordinary meaning. This was also the view taken by a learned single Judge of the Madras High Court in K. S. Ramaswamy and anr. v. Union of India and ors.(1), of which I fully approve.
19. Still another argument calculated to mould the interpretation of section 11(2) in favour of the employees was that the power conferred on the Central Government by it was intended to be used only once and that too for one purpose, namely, to achieve uniformity in the scales of pay, etc. In this connection our attention was drawn to two factors, namely, that the words 'from time to time' forming part of the section as it originally stood were deleted therefrom when it was amended in 1957 and that while the amendment of the section at that time was under
consideration of Parliament the then Finance Minister had given an assurance in that behalf. The argument is wholly unacceptable to me. One good reason is available in the provisions of section 14 of the General Clauses Act which runs thus:
"14(1) Where, by any Central Act or Regulation made after the commencement of this Act, any power is conferred, then unless a different intention appears, that power may be exercised from time to time as occasion requires.
"(2) This section applies also to all Central Acts and Regulations made on or after the fourteenth day of January, 1887."
In view of the clear language of the section, no Central law, while conferring a power, need say in so many words that such power may be exercised from time to time; and if a law does make use of such an expression that would not change the position. The deletion of such an expression by the legislature at a given point of time may, therefore, follow the detection of the superfluity and that would not mean, all by itself, that the legislature intended to 1177 limit the exercise of such power to a single occasion. This is precisely the view that was taken by this Court in a similar situation in Vasantlal Maganbhai Sanjanwala v. The State of Bombay and Others(1). In that case the Court was dealing with section 6(2) of the Bombay Tenancy and Agricultural Lands Act, 1948, which ran thus:
"The Provincial Government may, by notification in the official Gazette, fix a lower rate of the maximum rent payable by the tenants of lands situate in any particular area or may fix such rate on any other suitable basis as it thinks fit."
It was pointed out to the Court that in this section the words 'from time to time' which found a place in the corresponding section of the earlier tenancy legislation were missing although the expression 'from time to time' was retained in section 8(1) of the Act. The contention raised was that the power delegated under section 6(2) was intended to be used only once but was rejected as fallacious with the following observations:
"Why the Legislature did not use the words 'from time to time" in section 6(2) when it used them in section 8(1) it is difficult to understand; but in construing section 6(2) it is obviously necessary to apply the provisions of section 14 of the Bombay General Clauses Act, 1904 (I of 1904). Section 14 provides that where by any Bombay Act made after the commencement of this Act any power is conferred on any Government then that power may be exercised from time to time as occasion requires. Quite clearly if section 6(2) is read in the light of section 14 of the Bombay General Clauses Act it must follow that the power to issue a notification can be exercised from time to time as occasion requires. It is true that section 14 of the General Clauses Act, 1897 (X of 1897), provides that where any power is conferred by any Central Act or Regulation then, unless a different intention appears, that power may be exercised from time to time as occasion requires. Since there is a specific provision of the Bombay General Clauses Act relevant on the point it is unnecessary to take recourse to section 14 of the Central General Clauses Act; but even if we were to assume that the power in question can be exercised from time to time unless a different intention appears we would feel no difficulty in holding that no such different intention can be attributed to the Legislature when it enacted section 6(2). It 1178 is obvious that having prescribed for a maximum by section 6(1) the Legislature has deliberately provided for a modification of the said maximum rent and that itself shows that the fixation of any maximum rent was not treated as immutable. If it was necessary to issue one notification under section 6(2) it would follow by force of the same logic that circumstances may require the issue of a further notification. The fixation of agricultural rent depends upon so many uncertain factors-which may vary from time to time and from place to place that it would be idle to contend that the Legislature wanted to fix the maximum only once, or, as Mr. Limaye concedes, twice. Therefore the argument that the power to issue a notification has been exhausted cannot be sustained."
The language of section 14 of the General Clauses Act being identical with that of the Bombay General Clauses Act this reasoning is fully applicable to the interpretation of section 11(2) of the L.I.C. Act. The same view was taken by a Division Bench of the Gujarat High Court in Harivadan K. Desai and others v. Life Insurance Corporation of India and others(1), in the following words:
"While construing a statutory provision, it is not permissible to traverse beyond the language of the provision unless the legislative intent cannot be gathered from the clear and definite language of the provision. It is true that often Courts do look into the debates in the Legislature and also the marginal notes to ascertain the scope of a particular provision of the statute. But that is only in exceptional cases. The language of section 11(2) is very clear. There is nothing to indicate or suggest even remotely that the powers vested in the Central Government under section 11(2) get exhausted when once the Central Government exercises that power. Section 14 of the General Clauses Act, 1897 further strengthens our view. Section 14 lays down that where by an Central Act or Regulation made after the commencement of the Act, any power is conferred, then unless a different intention appears, that power may be exercised from time to time as occasion requires. We are unable to gather any different intention from section 11(2) so as to injunct the Government from exercising their power after the issuance of the Blue Order; in other words, after they once exercised that power."
1179 20. I may further point out that part of the power to alter the terms and conditions of service of the Corporation's employees which the Central Government is authorised to exercise in the interests of the Corporation and its policy-holders must of necessity be a power which can be exercised as and when occasion so requires. A contrary view would lead to absurd results in certain given situations. Let us assume that the affairs of the Corporation did not present a rosy picture to begin with and that therefore, a drastic reduction in the scales of pay of its employees was called for and was achieved by an order made by the Central Government in exercise of its power under section 11(2). Does that mean that if later on the Corporation develops its business and makes sizeable progress in the way of earning profits, the power conferred on the Central Government would not be exerciseable to give better pay scales to the employees? An answer to this question in the negative would obviously not meet the exigencies of the situation and in my opinion leads to an absurdity. Again, if the scales of remuneration of the transferred employees are adjusted by the Central Government so as to smooth out anomalies and discrepancies, would that put an end to the exercise of the power so that it cannot be used subsequently for the amelioration of the service conditions of the employees when the affairs of the Corporation so warrant? To put such a restricted meaning on the language used does not appear to be warranted for any reason whatsoever.
21. In so for as the proceedings of Parliament and speeches made during the course thereof are concerned, they are not admissible for the purpose of interpretation of the resultant statute unless the language used therein is ambiguous and impels the Court to resort to factors outside the statute for the purpose of ascertaining the intention of the law-makers. This is what was clearly held this Court in Anandji Haridas & Co. Pvt. Ltd. v. Engineering Mazdoor Sangh & Anr.,(1) by Sarkaria, J. who delivered the judgment on behalf of himself and Alagiriswami,J., and the observations made therein are worth repetition:
"As a general principle of interpretation, where the words of a statute are plain, precise and unambiguous, the intention of the Legislature is to be gathered from the language of the statute itself and no external evidence such as Parliamentary Debates, Reports of the Committees of the Legislatures or even the statement made by the Minister on the introduction of a measure or by the framers of the Act is admissible to construe 1180 those words. It is only where a statute is not exhaustive or where its language is ambiguous, uncertain, clouded or susceptible of more than one meaning or shades of meaning, that external evidence as to the evils, if any, which the statute was intended to remedy, or of the circumstances which led to the passing of the statute may be looked into for the purpose of ascertaining the object which the Legislature had in view in using the words in question."
These observations amply cover the situation in hand. Section 11(2) suffers from no ambiguity either by reason of the omission therefrom of the expression "from time to time"
or otherwise and it is, therefore, not permissible for a reference to be made to the speech of the then Finance Minister in the matter of interpretation of the section.
22. The next contention for the employees which raises a question of the vires of clause 9 of the 1957 order and of regulation 58 is based on the following passage in the judgment of Beg, C.J., in M. M. Pathak's case (supra):
"He submits that article 43 casts an obligation on the State to secure a living wage for the workers and is part of the principles "declared fundamental in the governance of the country". In other words, he would have us use article 43 as conferring practically a fundamental right which can be enforced. I do not think that we can go so far as that because, even though the directive principles of State policy, including the very important general ones contained in article 38 and 39 of the Constitution, give the direction in which the fundamental policies of the State must be oriented, yet, we cannot direct either the Central Government or Parliament to proceed in that direction. Article 37 says that they 'shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the State to apply these principles in making laws.' Thus, even if they are not directly enforceable by a court they cannot be declared ineffective. They have the life and force of fundamentals. The best way in which they can be, without being directly enforced, given vitality and effect in Courts of law is to use them as criteria of reasonableness, and therefore, of validity, as we have been doing. Thus, if progress towards goals found in articles 38 and 39 and 43 is desired, there should not be any curtailment of wage rates arbitrarily without disclosing any valid reason for it as is the case here. It is quite reasonable, in my opinion, to submit that 1181 the measure which seeks to deprive workers of the benefits of a settlement arrived at and assented to by the Central Government, under the provisions of the Industrial Disputes Act, should not be set at naught by an Act designed to defeat a particular settlement. If this be the purpose of the Act, as it evidently is, it could very well be said to be contrary to public interest, and therefore, not protected by article 19(6) of the Constitution."
These observations are of no help to the case of the employees as they were made in relation to the change of conditions of service of employees in an industrial establishment under a settlement which was then in operation and therefore, covered only the first period mentioned in section 19(2) of the I.D. Act--a period with which we are not concerned. As pointed out by Bhagwati, J., in his separate judgment, the bonus for the period up to the 31st March 1977 had actually vested in the employees and had become a debt due to them and that was why the majority of six held that the 1976 Act was violative of article 31, a view which Beg, C. J., doubted. Besides, the opinion expressed in the observations just above extracted, was perhaps not shared by the other six judges who chose not to decide the question as to whether the 1976 Act was or was not hit by articles 14 and 19 of the Constitution of India. In these premises the employees cannot draw any benefit from Beg, C. J.'s observations. On the other hand, no challenge to the vires of section 11(2) was made from either side and so long as the section itself is good the exercise of the power conferred by it cannot be attacked unless such exercise goes beyond the limits of the section, either in its content or manner. If the legislature was competent to confer a power on the Central Government to alter the conditions of service of the employees of the Corporation to their detriment or otherwise, the fact that the power was exercised only to cut down bonus would furnish no reason for striking down clause 9 of the 1957 order or regulation 58 as being violative of article 14 or 19.
23. Clause 9 of the 1957 order was also attacked as contravening articles 14 and 16 of the Constitution of India for the reason that it applied only to transferred employees who were discriminated against in the matter of equality before the law and of opportunity of employment. That clause no doubt takes within its sweep only transferred employees because clause 2 of the 1957 order specifically states that the order is restricted in its operation to employees of that category; but then no question of any discrimination whatsoever is involved in as much as the transferred employees have not only not been treated differently from other employees of the Corporation 1182 but by reason of regulation 58 they have been placed fully at par with the latter. The argument would have had plausibility only in the absence of regulation 58 (which applies to all the employees of the Corporation) and is wholly devoid of force.
24. Another attack levelled against clause 9 was that it suffered from a contravention of the well-known maxim delegatus non potest delegare. It was urged that the Central Government having been invested with the power of altering the terms and conditions of service of the employees of the Corporation, it was bound in law to exercise that power itself and that it could not delegate that power to the Corporation as it has done in clause 9. This argument is again without substance. The clause itself states in unmistakable terms that the Corporation may grant non-profit sharing bonus to its employees in respect of any particular year subject to the previous approval of the Central Government, and so the real bonus-granting authority remains the Central Government and not the Corporation. There is thus no delegation of any real power to the Corporation through the promulgation of clause 9.
25. Clause 9 was also challenged on the ground that although the notification promulgating it began with the preamble "whereas the Central Government is satisfied that in the interests of the Corporation and its policy-holders it is necessary to revise the terms and conditions of service.. " there is nothing to show that the Central Government was actually so satisfied. This is a stand which cannot be allowed to be raised at this late stage in as much as it involves questions of fact. which cannot be determined without the Central Government being given a full opportunity to rebut it. Had the contention been raised before the High Court, documentary evidence could have been produced to establish that the requirement of the section had been fully met in regard to the relevant satisfaction of the Central Government. Again, in the absence of any evidence to the contrary, it is permissible to presume that official acts have been regularly performed and that the preamble to the notification, therefore, is in accord with facts.
26. Another contention raised on behalf of the employees was that the new clause 9 and the new regulation 58 were both hit by the provisions of articles 14 and 19 of the Constitution of India in as much as they singled out the employees of only one statutory corporation for a special rule regarding bonus in derogation of the terms hithertofore prevailing, no other Corporation in the public sector having been so touched. The contention cannot prevail in the absence of evidence that the total emoluments of any employee to be affected by the new clause and the new regulation (regardless 1183 of bonus) would be less than those of his counterpart in any other statutory corporation. In this connection also we may point out that the contention was not raised before the High Court and no foundation was laid for it at any stage.
27. The only other contention raised on behalf of the employee was that regulation 58 could not operate to make in-applicable the 1974 settlements to the 3rd period in as much as all settlements reached under the I.D. Act were protected by the provisions of regulation 2 which thus specifies the employees of Corporation to whom the 1960 regulations apply:
"2. They shall apply to every wholetime salaried employee of the Corporation in India unless otherwise provided by the terms of any contract, agreement or letter of appointment."
It is impossible to accept the argument under examination in view of the language of regulation 2 which merely signifies the persons to whom the regulations are to apply. When it says that it shall apply to every wholetime employee of the Corporation "unless otherwise provided by the terms of any contract, agreement or letter of appointment", all that it means is that if a contract, agreement or letter of appointment contains a term stating that the concerned employee or employees shall not be governed by the regulations, then such employee or employees shall not be so governed. Regulation 2 is definitely not susceptible of the interpretation that if a settlement has been reached between the Corporation and its employees, the regulations shall not apply to them even though the settlement makes no provision in that behalf. It is nobody's case that the 1974 settlements contain any such provision and regulation 2, therefore, does not come into play at all.
28. In the result appeal No. 2275 of 1978 succeeds and is accepted. The impugned judgment is set aside and the petition under article 226 of the Constitution of India decided thereby is dismissed along with transfer case No. 1 of 1979. In the circumstances of the case, however, the parties are left to bear their own costs.
ORDER In view of the opinion expressed by the majority, the appeal is dismissed with costs to the first, second and third respondents, and the Transfer Petition No. 1 of 1979 stands allowed insofar that a writ will issue to the Life Insurance Corporation directing it to give effect to the terms of the settlements of 1974 relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation. Costs in respect of the Transfer Petition will be paid to the petitioners by the second respondent.
V.D.K. Appeal dismissed. 1184
