Supreme Court Decision - GIC
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K. S. Raina.
- ------------Petitioner.
Versus
Union
of India and others. --------Respondents.
Coram:
The Hon’ble Mr. Justice Rajiv Sharma,
Judge.
Whether
approved for reporting?* Yes.
For the Petitioner: Ms.
Ranjana Parmar, Advocate.
For Respondent No. 1: Ms.
Shilpa Sood,
Central
Government Counsel.
For
Respondents No. 2 & 3: Mr.
Ashwani Sharma, Advocate.
Rajiv Sharma, J.
The brief facts
necessary for the adjudication of this petition are that the petitioner started
his career in respondent No. 2 – Company as an Assistant in the year 1969. He
submitted application seeking voluntary retirement under Special Voluntary
Scheme on 4th February 2004. The request was accepted by the
employer on 5th March 2004 and he was permitted to retire with
effect from 15th March 2004. Respondent No. 1 had issued
notification dated 21st December 2005 under Section 17A of the
General Insurance Business (Nationalisation) Act, 1972 whereby the Scheme
called as the General Insurance (Rationalisation of Pay Scales and other
Conditions of service of Officers) second Amendment Scheme, 2005 was framed.
The Scheme has come into force with effect from 1st August 2002.
Under the Scheme the scales of the Officers working in the company were
revised. While implementing the Notification on 21st December 2005
the category to which the petitioner belongs, i.e. who had sought voluntary
retirement under 2004 Scheme was excluded except for the limited relief. The
petitioner had approached this Court for the following reliefs:-
(i) That the General Insurance
(Rationalisation of Pay Scales and Conditions of service of Officers) second
Amendment Scheme, 2005 may be quashed and set aside to the extent it excludes
the Officers who have sought Special Voluntary Retirement under Special
Voluntary Retirement Scheme 2004 (S.O 7(E) dated 1.1.2004 and the General
Insurance Corporation of India Officers’ Special Voluntary Retirement Scheme
2004 (S.O 455(E) dated 1st April 2004) and were relieved prior to
the date of notification dated 21.12.2005 resulting in deprivation of the
revised pay scale to the petitioner.
* Whether reporters of local papers are allowed to see
the judgment? Yes.
(ii) That after quashing the proviso under
3A and B, the respondents may be directed to revise the pay scale of the
petitioner as per the notification dated 21.12.2005 and to pay him the arrears
alongwith interest at some nationalised bank rate.
(iii) That the respondents may further be
directed to revise the pensionary benefits to the petitioner after such pay
fixation as directed by this Hon’ble Court alongwith arrears with interest at
some nationalized bark rate.
(iv) That the cost of this litigation may
be burdened upon the respondents.
(v) Any other order deemed just and proper
in the facts and circumstances of the case may also be passed in favour of the
petitioner.
Ms. Ranjana Parmar has strenuously argued that second proviso of
para 3 of the Notification dated 21st December 2005 as applicable to
her client is violative of Articles 14 and 16 of the Constitution of India. She
then contended that the category to which the petitioner belongs could not be
excluded on the basis of the Notification dated 21st December 2005
and her client is entitled to revised pay scale with effect from 1st
August 2002.
Mr.
Ashwani Sharma was supported the Notification dated 21st December
2005 and has strenuously argued that since the petitioner had sought voluntary
retirement under Special Voluntary Retirement Scheme 2004, he is precluded from
challenging the vires of conditions enumerated in Para 3 of the Scheme.
I
have heard the learned counsel for the parties and perused the cord.
To
appreciate the rival submissions of the parties, it will be appropriate to
consider the salient features of the Schemes which were invogue in respondent
No. 2 – Company from time to time. The first Scheme under which an employee of
the company can seek voluntary retirement is called the General Insurance
(Employees’) Pension Scheme, 1995. Para 30 of the Scheme provides that at any
time after an employee has completed twenty years of qualifying service, he may
by giving notice of not less than ninety days, in writing to the appointing
authority, retire from service. Para 30 is reproduced in its entirely, which
reads thus:-
“(30) Pension on
voluntary retirement:-
(1) At any time after an employee has
completed twenty years of qualifying service, he may, by giving notice of not
less than ninety days, in writing to the appointing authority, retire from
service:
Provided
that this sub – paragraph shall not apply to an employee who is on deputation
unless after having been transferred or having been returned in India he has
served for a period not less than one year:
Provided
further that this sub – paragraph shall not apply to an employee who seeks
retirement from service for being absorbed permanently in an autonomous body or
a public sector undertaking to which he is on deputation at the time of seeking
voluntary retirement.
(2) The notice of voluntary retirement
given under sub – paragraph (1) shall require acceptance by the appointing
authority:
Provided
that where the appointing authority does not refuse to grant the permission for
retirement for retirement before the expiry of the period specified in the said
notice, the retirement shall before effective from the date of expiry of the
said period.
(3) (a) An employee referred to in sub
paragraph (1) may make a request in writing to the appointing authority to
accept notice of voluntary retirement of less than ninety days giving reasons
therefore.
(b)
On receipt of request under clause (a), the appointing authority may, subject
to the provisions of sub – paragraph (2), consider such request for the
curtailment of the period of notice of ninety days on merits and it he is
satisfied that the curtailment of the period of notice will not cause any
administrative inconvenience, the appointing authority may leave the
requirement of the notice if ninety days in the condition that the employee
shall not apply for commutation of a part of his pension before the expiry of
the notice of ninety days.
(4) An employee who has elected to retire
under this paragraph and has given necessary notice to that effect to the
appointing authority shall be precluded from withdrawing his notice except with
the specific approval of such authority:
Provided
that the request for such withdrawal shall be made before the intended date of
his retirement.
(5) The qualifying service of an employee
retiring voluntarily under this paragraph shall be increased by a period not
exceeding five years, subject to the condition that the total qualifying
service rendered by such employee shall not in any case exceed thirty three
years and it does not take him beyond the date of retirement.
(6) The pension on an employee retiring
under this paragraph shall be based on the average emoluments as defined under
clause (d0 of paragraph 2 of this scheme and the increase not exceeding five
years in his qualifying service, shall not entitle him to any notional fixation
of pay for the purpose of calculating his pension:
Explanation:- For the purpose of this paragraph, the
appointing authority shall be the appointing authority specified in Appendix –
1 to this Scheme.”
The petitioner had sought retirement
under the Special Voluntary Retirement Scheme, 2004. Para 3 of the Scheme
prescribes the eligibility criteria and the period of operation of the scheme
is provided under Para 4 and the amount of ex-gratia has been stipulated under
Para 5 and other benefits to which an employee has been held entitled, has been
stipulated under Para 6.
The petitioner submitted the
application under Special Voluntary Retirement Scheme, 2004 on 4th
February 2004, which was accepted by the employer on 5th March 2004
and he was permitted to retire with effect from 15th March 2004.
Respondent No. 1 had issued the Notification dated 21st December
2005 framing a Scheme called the General Insurance (Rationalisation of Pay
Scales and other Conditions of service of Officers) second Amendment Scheme,
2005, it will be apt to reproduce para 3 of the scheme in its entirety to go
into the entire gamut of the issues involved in this petition. Para 3 reads
thus:-
“(3)
This scheme shall be applicable to those Officers who were in the service of
the Corporation or Company as on or after the 1st August 2002.
Provided
that the officers, whose resignations had been accepted or whose services had
been terminated during the period from the 1st day of August 2002
and the date of publication of this scheme, shall not be eligible for the
arrears on account of revision under this Scheme.
Provided
further that the officers, who had sought Special Voluntary Retirement under:-
a. The General Insurance Officers’
Special Voluntary Retirement Scheme 2004 (S.O 7(E) dated 1st January
2004), in the case of Company, or
b. The General Insurance Corporations of
India Officers’ Special Voluntary Retirement Scheme 2004 (S.O 455(E) dated 1st
April 2004), in the case of Corporation.
And
have been relieved thereunder prior to the date of this notification, shall not
be eligible for any benefit arising from this Scheme other than that provided
for by sub – paragraph 2 of paragraph 5 of the General Insurance Officers’
Special Voluntary Retirement Scheme 2004, or, the General Insurance
Corporations of India Officers’ Special Voluntary Retirement Scheme 2004, as
the case may be.”
It
has come in the supplementary affidavit filed on behalf of respondent No. 2
that the wage revision of the employees of the nationalized insurance companies
follows a periodicity of five years, i.e. 1st August 1987, 1st
August 1992, 1st August 1997 and 1st August 2002. Thus,
it is evident that in normal circumstances wage revision should have taken
place in the year 2002 instead of 2005.
The
General Insurance (Rationalisation of Pay Scales and other Conditions of
service of Officers) second Amendment Scheme, 2005 has come into force with
effect from 1st August 2002. The petitioner had sought retirement
with effect from 15th March 2004. In the normal circumstances the
petitioner was entitled to get the wage revision in the basis of the
Notification on 21st December 2005 since the same had been made
applicable with effect from 1st August 2002, but the petitioner and
similarly situate persons who had sought voluntary retirement under the Special
Voluntary Retirement Scheme 2004 had been excluded from getting the benefit of
revision in pay scales on the basis of Para 3.
The
only ground taken to deny the benefit of revision of pay scale is that the
petitioner had agreed to the terms and conditions of 2004 scheme and after his
retirement under the Special Voluntary Retirement Scheme the contract has come
into existence between the employer and the employee. The ground taken to deny
the petitioner the benefit of revised pay scale with effect from 1st
August 2002 is not sustainable on the following grounds:
Firstly,
the persons who had sought voluntary retirement either under the General
Insurance (Employees’) Pension Scheme 1995 or under 2004 Scheme constitute a
homogeneous class. It is evident from the contents of para 3 of 2005 Scheme
that the persons who are governed under the General Insurance (Employees’)
Pension Scheme 1995 are not precluded from getting the benefit of revised pay
scale and it is only the petitioner and similarly situate persons who had
sought the retirement under 2004 scheme, who have been excluded from getting
the revised pay scales. There is no intelligible differentia so as to
distinguish the employees who had sought the voluntary retirement under 2004
Scheme or under the General Insurance (Employees’) Pension Scheme 1995. Classification made by the employer on the basis of seeking
premature retirement on the basis of two sets of retirement schemes is not
sustainable being irrational and discriminatory. The petitioner had
submitted his papers for seeking retirement on 4th February 2004,
which was accepted by the employer on 5th March 2004 and he was
permitted to seek retirement with effect from 15th March 2004. The
wage revision as per the pleadings of respondents No. 2 and 3 takes place every
five years. The pay scales were to be revised in the year 2002, but for the reasons
mentioned in the reply it took place in the year 2005. A conscious decision has
been taken to implement the same with effect from 1st August 2002.
Undoubtedly the petitioner was in employment in 1st August 2002 with
respondent No. 2 – Company. He cannot be deprived of the revision of the pay
scales with effect from 1st August 2002 to 15th March
2004 only on the ground that he had sought voluntary retirement in the year
2004 and had agreed to the terms and conditions of the Scheme. Learned counsel
appearing on behalf of respondents No. 2 and 3 has not placed any
contemporaneous record to substantiate that the petitioner has agreed to waive
to get the benefits of the revised pay scale. This position was not visualized
by the employer in the year 2004 since no revision has taken place on that date
i.e. 15th March 2004. The matter can be viewed from another angle
also. The petitioner has a constitutional right to get
his pay including the revision in the pay scale and it is settled law by law
the fundamental rights can neither be waived off nor bartered away.
Secondly,
it is also held that the petitioner had never acquiesced even as per 2004
Scheme to get the revised pay scale which had been made applicable with effect
from 1st August 2002.
Thirdly,
the object sought to be achieved by the issuance of the Notification dated 21st
December 2005 was to give the revised pay scales which were due in 2002. In
fact, this has been done by giving retrospective effect vide Notification dated
21st December 2005. It is, thus, held that classification created on
the basis of insertion of sub-clauses (a) and (b) in second proviso of Para 3
is violative of Articles 14 and 16 of the Constitution of India.
Their
Lordships of the Hon’ble Supreme Court in State of Haryana and Another versus Jai
Singh, (2003) 9 SCC 114 have laid down the following tests for valid
classification under Article 14 of the Constitution of India:
“We will first take up for
consideration the argument accepted by the High Court in the impugned judgment
that the impugned classification is arbitrary, unreasonable and violative of
Article 14 of the Constitution. While considering the challenge based on Article
14 as to the arbitrariness in the impugned classification, the court has to
examine whether the impugned classification satisfies certain constitutional
mandates or not. They are (i) that the classification must be founded on an
intelligible differentia which distinguish persons or things that are grouped
together from others left out of the group; (ii) that the differentia must have
a rational relationship with the objects sought to be achieved by the Act. (See Kathi Raning Rawat v. State of Saurashtra.)”
Fourthly,
the respondent No.2 being the “State” within the meaning of Article 12 of the
Constitution of India its actions are subject to the constitutional limits and
the same are to be judged in the light of the fundamental rights granted by
Part-III of the Constitution. The action of an instrumentality or the agency of
the State must be in conformity with Article 14 of the Constitution. The option
given by the petitioner cannot bind him as it is violative of Article 14 of the
Constitution of India and it also runs against the public policy. The action of
the respondents is not supported by any rational basis or intelligible
differentia.
The
ratio of the judgment of (2006) 3 SCC 708 cited by Mr. Ashwani Sharma is not
applicable to the facts of the present case for the simple reason that in the
present case the petitioner was in fact in employment as on 1st
August 2002, the date from which the Notification (Annexure P-4) dated 21st
December 2005 has been made applicable.
Consequently,
in view of the observations made above, send
proviso of Para 3 of the Notification dated 21st December 2005 is
struck sown being ultra vires to the extent it deprives the petitioner and
other similarly situate persons to get the benefit of revised pay scale with
effect from 1st August 2002 after applying the principle of
severability.
According, the petition is allowed.
The petitioner is held entitled to get the revised pay scale corresponding to
his post he was occupying as on 1st August 2002 till 15th
March 2004. The respondents are directed to work out the arrears etc. within
six weeks from today.
December 3, 2007 (Rajiv
Sharma), J.
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Source: Supreme Court and High Court judgments relating to Insurance.
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In my opinion, once the Supreme Court has decided that "the said proviso of Para 3 is struck sown being ultra vires", in a case regarding the General Insurance Charter, the same will apply to the Life Insurance Charter too.
The Charters of LIC and GIC are identical with respect to the Provisions of Para 3 and its clauses A and B.
Why should the resigning ex-employees be expected to get this order again and again, wasting their and the Courts' time, efforts and money? The management is just shirking its responsibility to pay dues immediately and buying time!
Kindly note that LIC had asked me to approach the Court for my dues.
