LIFE INSURANCE CORPORATION OF INDIA & ANOTHER ETC. v. S.S. SRIVASTAVA & OTHERS

B The Judgment of the Court was delivered by

VENKATARAMIAH J. The question involved in these appeals by special leave which are filed against the judgment dated August 17, 1985 of the High Court of Allahabad in Civil Miscellaneous Writ No. 6849 of 1984 relates to the constitutional validity of regulation 19(2) of the Life Insurance Corporation of India (Staff) Regulations, 1960 c (hereinafter referred to as 'the (Staff) Regulations, 1960'}, as amended on 21. !. 1977 by the Life Insurance Corporation of India (hereinafter referred to as 'the Corporation') which provides that an employee belonging to Class I or Class II appointed to the service of the Cor- poration on or after 1st September, 1956 shall retire on completion of D 58 years of age but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such emp- loyee to retire on completion of 50 years of age and at any time there- after on giving him three months' notice or salary in lieu thereof.

Prior to January, 1955 tl~ere were more than 200 insurers carry- E ing on life insurance business in India. As it came to the notice of the Government that the Indian life insurers, with a few exceptions, were virtually controlled by few individuals who were utilising the funds of those companies to the detriment of the industry and the policy- holders, the Government decided to nationalise the life insurance business. Pursuant to the said decision, the President of India promul- F gated the Life Imurance (Emergency Provisions) Ordinance, 1956 on January 19, 19.56 providing for the vesting of the management of the life insurance business (which was called the controlled business under the Ordinance) which was being carried on by any insurer in India on that day in the Central Government and providing for its management. On the passing of the said Ordinance the management of the control- G led business of all the insurers in India thus vested in the Central Government and pending the appointment of the custodians for the controlled business of any insurer the person in charge of the manage- ment of such business immediately before the passing of the Ordinance was required to be in charge of the management of the business for and on behalf of the Central Government. The Ordinance contained de- H tailed provisions for the carrying on of the life insurance business by

L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH. J.) 189

the Government for the time being. The Ordinance was replaced by A the Life Insurance (Emergency Provisions) Act, 1956 which was published on 21st of March, 1956. The said Act was followed by the Life Insurance Corporation Act, 1956 (Act 31 of 1956) (hereinafter referred to as 'the Act') which was published in the Gazette on 18th June, 1956. The Act, however, came into force on ]st July, 1956. The Act provided for the establishment and incorporation of the Corpora- B tion. The Corporation was accordingly established on fat September,

1956. Under the Act the expression 'appointed day' is defined as the date on which the Corporation is established. The appointed day for the purposes of the Act is, therefore, September 1, 1956. By virtue of section 7 of the Act on the appointed day all the assets and liabilities appertaining to the controlled business of all insurers, the manage- ment of which it had been taken over earlier by the Central Goven- c ment, stood transferred to and vested in the Corporation. When the Corporation thus came into existence it had no empioyees of its own to carry on the vast business of the large number of ins'1rers which had been taken over by it. It, therefore, became necessary to transfer the services of the existing employees of the insurers to the Corporation D beca!lse without the services of those employees it was almost impossi- ble for the Corporation to run the life insurance business in India which involved management of the various offices situated in different parts of India, servicing nf lakhs of insurance policies, the administra- tion of the assets taken over from the insurers and several other activities connected with the life insurance business. The nature of the E work of the Corporation was such that it required the services of the employees with sufficient experience and expertise in running the life insurance business. In order to meet the above need section 11 of the Act came to be enacted. Section 11 of the Act originally stood as follows: F "11. Transfer of service of existing employees of insurers to the Corporation-

( l) Every whole-time employee of an insurer whose controlled business has been transferred to and vested in the Corporation and who was employed by the insurer G wholly or mainly in connection with his controlled business immediately before the appointed day shall, on and from the appointed day, become an employee of the Corpora- tion, and shall hold his office therein by the same tenure, at the same remuneration and upon the same terms and con- ditions and with the same rights and privileges as to pen- H

p. 190 Copy page pinpoint

A sion and gratuity and other matters as he would have held the same on the appointed day if this Act had not been passed, and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation: B Provided that nothing contained in this sub-section shall apply to any such employee who has, by notice in ·+ writing given to the Central Government prior to the appointed day, intimated his intention of not becoming an • employee of the Corporation. c (2) Notwithstanding anything contained in sub-sec- tion (1) or in any contract of service, the Central Govern- ment may, for the purposes of rationalising the pay scales y of employees of insurers whose controlled business has been transferred to and vested in it or for the purpose of reducing the remuneration payable to employees in cases where in the interest of the Corporation and its policy- holders a reduction is called for, alter the terms of service of the employees as to their remuneration in such manner as it thinks fit; and if the alteration is not acceptable to any employee the Corporation may terminate his employment on giving him compensation equivalent to three months' remuneration unless the contract of service with such emp- loyee provides for a shorter notice of termination.

Explanation: The compensation payable to an emp- lGyee under this sub-section shall be in addition to and shall not affect any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service.

(3) If any question arises as to whether any person was a whole-time employee of an insurer or as to whether any employee was employed wholly or mainly in connec- tion with the controlled business of an insurer immediately before the appointed day the question shall be referred to the Central Government whose decision shall be final.

(4) Notwithstanding anything contained in the H Industrial Disputes Act, 1947 (14 of 1947), or in any other

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law for the time being in force, the transfer of the services of any employee of an insurer to the Corporation shall not entitle any such employee to any compensation under that Act or other law, and no such claim shall be entertained by any Court, tribunal or other authority."

Sub-section (1) of section 11 of the Act provided that every whole-time employee of an insurer whose controlled business had been transferred to and vested in the Corporation and who was emp- loyed by the insurer wholly or mainly in connection with the controlled business immediately before the appointed day, i.e., September 1, 1956, would on and from the appointed day become an employee of the Corporation, and would hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions and c with the same rights and privileges as to pension and gratuity and other matters as he would have held the sam~ on the appointed day if the Act had not been passed, and would continue to do so unless and until his employment in the Corporation was tern1inated and until his re- muneration, terms and conditions were duly altered by the Corpora- D tion. The proviso to that sub-section provided that nothing contained in sub-section (1) of section 11 of the Act would apply to any such employee who had by notice in writing given to the Central Govern- ment prior to September 1, 1956 intimated his intention of not becom- ing an employee of the Corporation. The whole-time employees of the erstwhile insurers whose services were thus transferred to the Corpo- E ration are hereinafter referred to as 'the transferred employees' of the Corporation. As mentioned earlier, there were more than 200 insurers whose controlled business had been taken over by the Corporation and we are informed that there were about 27 ,000 whole-time employees working in them. The conditions of service of these transferred emp- loyees of the Corporation whose services were transferred to the F Corporation under section 11(1) of the Act were not uniform. It was naturally difficult to continue after the establishment of the Corpora- tion in the cases of all the transferred employees, the conditions of service enjoyed by them when they were in the employment of the former insurers. The conditions governing the retirement of those offi- cials with which we are concerned in these appeals were also diverse G and different. In some cases the age of retirement had been fixed at 55 years, in some at 58 years and in some others at 60 years. In many cases the insurers had permitted their employees to continue in their service even beyond 60 years depending upon their efficiency and physical capacity. The conditions of service of employees and in particular the terms of remuneration prevalent in some of the former H

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A insurance organisations were also disadvantageous to the policy- holders. It, therefore, became necessary to bring about uniformity in the conditions of service of the transferred employees. Parliament, therefore, enacted sub-section (2) of section 11 of the Act which pro- vided that notwithstanding anything contained in sub-section (I) of section 11 or in any contract of service, the Central Government might for the purposes of rationalising the pay scales of employees of insurers whose controlled business had been transferred to and vested in it or for the purposes of reducing the remuneration payable to those emp- loyees in cases where in the interest of the Corporation and its policy- holders a reduction was called for, alter the terms of service of the employees as to their remuneration in such manner as it thought fit and if the alteration was not acceptable to any employee the Corpora- tion might terminate his employment on giving him compensation equivalent to three months' remuneration unless the contract of service with such employee provided for a shorter notice of termina- tion. Doubts arose as regards the meaning of sub-section (2) of section 1i of the Act. In Christopher Pimenta and Others v. Life Insurance P Corporation of India, A.LR. 1958 Bombay 451 the High Court of Bombay opined that under section 11(2) of the Act the Central Government could alter the terms and conditions of service of the employees only as to the remuneration and that the said sub-section had no reference to the other terms and conditions of the service. The above decision of the Bombay High Court was delivered on 16.4.1957. E It is stated that there were cases pending in other courts also question- ing the scope and ambit of sub-section (2) of section 11 of the Act as it stood originally. Hence in order to remove all doubts the President of India promulgated an ordinance (which was replaced by Act 17/1957) substituting a new sub-section in the place of the original sub-section (2) of section 11'of the Act making it more comprehensive and thus enabling the Central Government to alter suitably all conditions of service of the transferred employees. The new sub-section (2) of sec- tion 11 of the Act was further modified by Act 36 of 1957. Thereafter sub-section (2) of section 11 of the Act read as follows:

"(2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of re- muneration and the other terms and conditions of service applicable to employees of insurers whose controlled busi- ness has been transferred to, and vested in the Corpora- tion, it is necessary so to do, or that, in the interest of the Corporation and its policy-holders, a reduction in the re- H muneration payable, or a revision of the other terms and

L.1.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 193 }- conditions of service applicable, to employees or any class A of them is called for, the Central Government may, not- withstanding anything contained in sub-section (1), or in the Industrial Disputes Act, 1947, or in any other law for the titn~ being in force, or in any award, settlement or agreement for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the B f other terms and conditions of service to such extent and in such manner as it thinks fit, and if the alteration is not acceptable to any employee, the Corporation may termi- nate his employment by giving him compensation equiva- lent to three months' remuneration unless the contract of service with such employee provides for a shorter notice of termination.

Explanation-The compensation payable to an employee under this sub-section shall be in addition to, and shall not affect, any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service."

Section 49(1) of the Act conferred powers on the Corporation to make with the previous approval of the Central Government regula- tions not inconsistent with the Act and the rules made thereunder. It provided for making regulations to provide for all matters for which provision was expedient for the purposes of giving effect to the provi- sions of the Act. Clause (b) of sub-section (2) of section 49 of the Act in particular conferred power on the Corporation to make regulations as regards the method of recruitment of employees and agents of the Corporation and the terms and conditions of such employees or agents. It was felt that clause (b) of section 49(2) of the Act was not in terms applicable to the transferred employees who became the emp- loyees of the Corporation under sub-section ( 1) of section 11 of the Act but only referred to the employees and agents of the Corporation who were employed after the Corporatin was established, that is, after 1st September 1956. To remove the above doubt by Act 17 of 1957 section 49 of the Act was amended by introducing clause (bb) in sub-section (2) of section 49 of the Act which expressly conferred power on the Corporation to make regulations with the previous approval of the Central Government as regards 'the terms and condi- tions of service of persons who have become employees of the Corpo- ration under sub-section (1) of section 11'. The above clause was intro- duced into the Act with retrospective effect along with the new sub- H

19-1 SUPREME COURT REPORTS [1987] 3 S.C.R.

A section (2) of section 11 of the Act. It is this to be seen that the conditions of service of the transferred employees were to be regulated by the provisions of the Act, by an order made by the Central Govern- ment under section 11(2) of the Act and the regulations made under clause (bb) of section 49(2) of the Act. Even before clause (bb) was actually introduced into the Act with retrospective effect by Act 17 of lJ 1957 the Corporation had promulgated the Life Insurance Corpora- tion of India (Staff) Regulations, 1956 (hereinafter referred to as 'the (Staff) Regulations, 1956'). Under regulation 21 of the (Staff) Regula- tions, 1956 provision was made regarding superannuation and retire- ment of the employees of the Corporation. Regulation 21 reads as follows: c "21. An employee shall retire at fifty-five years of age pro- vided that the appointing authority may at its discretion extend the service every year upto 60 years of age.

Provided, however, that in respect of some of the D employees of insurers who are allowed to continue in service beyond age 60 because of the terns and conditions of employment having not been favourable in the past, the Executive Committee may at its discretion extend their service every year upto age 65.

E Provided further that during the three years, begin- ning from 1st September, 1956, the Executive Committee may, at its discretion, extend the service of a class I emp- loyee, who has completed sixty years of age for such period as may be specified but not exceeding one year at a time if such extension is considered necessary in the interest of the F Corporation.

Explanation-Notwithstanding anything contained in this Regulation, where an employee has privilege leave earned but not availed of as on the date of retirement as prescribed in the above Regulation he may be permitted to avail of the leave and in that case the employee will be deemed to retire from service at the expiry of the leave."

The above regulation fixed the age of retirement of an employee at 55 years while empowering the authority to extend the service of an employee, at its discretion, every year upto 60 years of age. The first proviso to regulation 21 of the (Staff) Regulations, 1956, however,

L.1.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 195

authorised the Corporation to allow some of the employees of insurers who were allowed to continue in service beyond the age of 60 years for the reasons mentioned therein. The above regulation thus made a distinction between an employee who entered the service of the Corporation after it was established, i.e., after 1st September, 1956 and the transferred employees insofar as the age of retirement was concerned. B

Pursuant to the power conferred on it under sub-section (2) of section 11 of the Act the Central Government issued an order on 1.6.1957 called the Life Insurance Corporation of India (Alteration of Remuneration and other Terms & Conditions of Service of Employ- ees) Order, 1957 which came into force retrospectively from 1st C September, 1956. This order is called the 'standardisation order'. This Order applied to all transferred employees who had become emp- loyees of the Corporation under section 11( 1) of the Act and who were in supervisory, clerical and subordinate grades (now classified as Class III and Class IV employees) of the erstwhile insurers on 31st August,

1956. Clause 13 of the above Order, which related to the age of superannuation read as follows:

"13. Retirement:

The normal age of retirement shall be 60. But the Corporation may require any employee who has attained the age of 55 to retire if his efficiency is found to have been impaired."

Clause 13 of the above Order, therefore, modified regulation 21 of the (Staff) Regulations, 1956 to the extent indicated therein with effect from the commencement of the Corporation. After the promul- F gation of the Order the transferred employees to whom it applied were entitled to continue in the service of the Corporation till they attained the age of 60 years subject to the Corporation exercising its powers to retire a transferred employee on his attaining the age of 55 years if his efficiency was found to have been impaired. In the case 'lf the other employees who joined service subsequent to 1st September, ~956 regu- G lation 21 of the (Staff) Regulations, 1956, which prescribed the age of retirement at 55 years subject to the appointing authority at it; discre- tion extend the age of retirement to 60 years as provided therein, continued to apply. This Order applied to the members of foe staff of the Corporation belonging to Class III and Class IV categories. As regards the transferred officers belonging to the Class II category, H

196 SUPREME COURT REPORTS [1987] 3 S.C.R.

A namely, the Field Officers, a standardisation order was made under sub-section (2) of section 11 of the Act on 30th December, 1957. Clause 6 of that order originally read as follows:

"6. Leave and retirement-In the matter of leave and retirement, Field Officers shall be governed by the same B regulations as are applicable to Class I officers of the + Corporation."

The above clause 6 was substituted by a new clause on 25 .11.1962 which read as follows:

c "6. Leave and retirement-In the matter of leave and re- tirement, Development Officers shall be governed by the Life Insurance Corporation of India (Staff) Regulations, 1960, as amended from time to time."

It may be noted that the Field Officers referred to in the former clause 6 had been redesignated as the Development Officers before it was substituted by the later clause 6 of the standardisation order. y Insofar as the transferred officers belonging to Class I were concerned, the question of determination of their age of superannuation was taken up for consideration by the Services and Budget Committee of the Corporation on 20th November, 1959. Para 9 of the office note circulated amongst the members of that committee gave a true picture of the conditions prevailing then. It read thus:

"9. As regards retirement, the Government has men- tioned that the Department of Expenditure has objected to raising the date of superannuation to 58 years of age on the ground that other statutory Corporations a1e also demand- ing the same benefit on the analogy of the Life Insurance Corporation's proposal. Standardisation Order provides that an employee shall retire at 60 years of age, but the competent authority may require an employee to retire at any time after 55 years of age if his efficiency is found to have been impaired. In the amended Regulations approved by the Board, this provision of the Standardisation Order was incorporated as far as employees in Classes III & IV are concerned but in the case of transferred officers and Field Officers, the retirement age was fixed at 55 extensible to 58 with a further proviso that in special circumstances only the competent authority may extend the services

L.J.C. v. S.S. SRIVASTAVA (VENKATARAMIAH, J.) 197

beyond age 58 and upto 60 years of age. The Board has also decided that administratively we shall grant extension upto 60 liberally till the end of 1963. Most of the insurers permit- ted their officers to continue in service upto 60 years of age and even beyond, depending upon their efficiency. There is no reason why there should be distinction between officers and staff in this matter as both of them had similar privileges with regard to retirement in the past. There is thus a strong case for extending the provisions of the Standardisation Order regarding retirement to the transfer- red officers also. As regards new recruits, it was thought that there was no justification to bring down the retirement age from 60 to 55 all of a sudden nor was it considered necessary to maintain any distinction between officers and staff. All the employees have often reJ1lfesented that the age of retirement should be raised to 60. A compromise was, therefore, struck by fixing the age at 58. In the light of the above it is suggested that the provisions of the Standardisation Order may be extended to transferred officers and the retirement age may be retained at 58 for persons recruited on or after 1st January 1959. It may be added that this would mean a modification of the earlier decision of the Board in this matter."

After the matter was duly considered by the Services and the E Budget Committee and by the Corporation, regulations were framed under clauses (b) and (bb) of section 49(2) of the Act prescribing the ages of retirement of the employees of the Corporation belonging to different categories with the previous approval of the Central Govern- ment and were incorporated in the (Staff) Regulations, 1960 made by the Corporation which came into effect on July 1, 1960. Regulation 19 F of the (Staff) Regulations, 1960 dealt with the subject of superannua- tion and retirement of the employees of the Corporation. It reads thus:

"Superannuation and Retirement:

19(1). A transferred employee shall retire on completion G of age 60; but the appointing authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been impaired.

(2) An employee appointed to the service of the H

198 SUPREME COURT REPORTS [1987] 3 S.C.R.

A Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age; but the appointing authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been impaired. B "

It is seen from the above regulation that the cases of all transfer- red employees were dealt with by sub-regulation (1) of regulation 19 and the cases of employees appointed to the service of the Corporation that year after !st September, 1956 were dealt with by sub-regulation (2)of regulation 19. All the transferred employees were entitled to remain in service till they completed 60 years of age but the appointing authority was empowered to retire any such transferred employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been impaired. All employees appointed to the service of the Corporation on or after !st September, 1956 were required to retire on completion of 58 years of age but the appointing authority was empowered to retire any such employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been impaired. This regulation was made in supersession of all other earlier regulations. In the case of the transferred employees the regulation was in conformity with the standardisation order passed in respect of E Class III and Class IV transferred employees in whose case the age of retirement was fixed at 60 years. The result was that the regulation made a clear and distinct classification of all the employees of the Corporation belonging to all classes into two groups-transferred employees and the employees appointed after 1st September, 1956, for purposes of the age of retirement having regard to the historical reasons. It would appear that an industrial dispute arose between the Class III and Class IV employees who entered the service of the Corporation on or after 1st September, 1956 and the Corporation and one of the points of dispute related to the age of retirement. These employees demanded that their age of retirement should also be fixed at 60 years as in the case of Class III and Class IV employees belonging to the category of transferred employees. The dispute ultimately ended in a settlement which was incorporated in the Memorandum of Settlement arrived at under section 2(p) and section 18(1) of the Industrial Disputes Act, 1947 and rule 58 of the Industrial (Central) Disputes Rules, 1957 dated 29th January, 1965. The relevant part of the settlement arrived at between the parties to the said industrial dispute as regards the age of retirement of class III and class IV emp-

L.I.C. v. S..S. SRIVASTAVA [VENKATARAMIAH, J.) 199

loyees who entered the service of the Corporation on or after 1st A September, 1956 read as follows:

"1. Retirement age for new employees:

There will be no distinction between Class III and Class IV 'transferred employees' and Class III and Class IV B employees who entered the service of the Corporation on or after 1. 9.1956 in regard to retirement age which shall be 60."

After the above settlement was arrived at regulation 19 of the (Staff} Regulations, 1960, which had been brought into force with c effect from July l, 1960, was suitably amended to bring it in con- formity with the settlement. The relevant part of the amended regula- tion 19which was notified on 19.6.1965 read thus:

" 19( 1). An employee belonging to Class III or Class IV and a transferred employee belonging to Class I or Class II D shall retire on completion of age 60; but the appointing y authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been impaired.

(2) .An employee belonging to Class I or Class II E appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age, but the appointing authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been impaired. F (2A) Notwithstanding what is stated in sub-regula- tions (1) and (2) above, an employee may be permitted to retire at any time after he has completed age 55. "

On account of the settlement arrived at between Class III G and Class IV employees, who were appointed subsequent to 1st t September, 1956 and the Corporation, which was followed up by the amendment of the (Staff} Regulations with effect from 19.6.1965, the employees of the Corporation were divided both longitudinally and latitudinally insofar as the age of superannuation was concerned. The longitudinal division of the employees was as follows. All the transfer- H

200 SUPREME COURT REPORTS [1987] 3 S.C.R.

A red employees belonging to Class I and Class II became entitled to ) continue in service till they attained the age of 60 years subject of course to the power of the Corporation to retire any of them prema- turely on completion of 55 years of age if his efficiency was found to have been impaired and all the Class I and Class II officers appointed to the service of the Corporation on or after 1st September, 1956 had B to retire on completion of 58 years of age subject again to the power of the Corporation to retire any such employee on completion of 55 years ~· of age or at any time thereafter if his efficiency was found to have been impaired. The employees of the Corporation were divided latitudi- nally into two groups. All the employees belonging to Class III and "" Class IV irrespective of the fact whether they were transferred emp- c loyees or employees appointed after 1st September, 1956 were entitled to continue in service till 60 years of age, but the employees belonging to Class I and Class II, who were appointed to the service of the Corporation on or after 1st September, 1956 had to retire on the y completion of 58 years of age subject to the usual clause relating to premature retirement. Sub-regulation (2) of regulation 19 which D affected the employees belonging to Class I and Class II appointed to the service of the Corporation on or after 1st September, 19.56 was substituted by a new sub-regulation which was notified on September y 3, 1966. This new sub-regulation (2) of regulation 19 read as follows:

"(2). An employee belonging to the Class I or Class II E appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age, but the appointing authority may at its discretion,

F extend his service for one year at a time upto 60 years of age. The appointing authority may, however, direct an employee to retire on completion of 55 years of age or at any time thereafter if his efficiency is found to have been impaired." 1 The modification made by the new sub-regulation (2) of regula- tion 19 empowered the appointing authority to extend at its discretion the service of any employee of the Corporation belonging to the Class G I or Class II categories appointed to the service of the Corporation on or after 1st September, 1956 for one year at a time upto 60 years of age. Since the Corporation found that the discretion conferred on the -+ appointing authority to extend the services of Class I or Class II offi- cers beyond 58 years of age at its discretion was not being exercised satisfactory but very often abused, sub-regulation (2) was again amended on 21. 1.1977 withdrawing the power to extend the service of

L.1.C. v. S.S. SRIVASTAVA (VENKATARAMIAH, J.) 201

employees belonging to Class I and Class II appointed to the service of the Corporation on or after 1st September, 1956 beyond 58 years of age. It also provided that in the interest of the Corporation, the Corporation could retire an employee after completion of 50 years of age. The relevant part of regulation 19 amended on 21.1.1977 reades thus: B "19(1). An employee belonging to Class III or Class IV and a transferred employee belonging to Class I or Class II shall retire on completion of age 60; but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of SS years of age or at any time thereafter, on giving him three months' notice or salary in lieu thereof.

(2). An employee belonging to Class I or Class II appoin- ted to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age, but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 50 years of age or at any time thereafter on giving him three months' notice or salary in lieu thereof." E The 1st Respondent S.S. Srivastava entered the service of the Corporation as a Class III employee on 22.3.1957 on which date he was appointed as an Assistant in the Corporation. From the said Class III post he was promoted to the Class I post (since there was no necessity to pass through a Class II post before entering a Class I post) on 8.10.1963 and was appointed as Assistant Branch Manager F (Admn.). From the post of Assistant Administrative Officer he was promoted to the post of Administrative Officer in June, 1971 and.was further promoted as Assistant Divisional Manager on 18. 7 .1978. Since he was born in the month of June, 1926, notice was issued in February, 1984 to Respondent No. 1 of his retirement which was due on 30th + June, 1984 on his completing the age of 58 years. Before the date of G his retirement, he instituted a writ petition out of which these appeals arise in Civil Miscellaneous Writ No. 6849 of 1984 on the file of the High Court of Allahabad questioning the validity of regulation 19(2) of the (Staff) Regulations, 1960 as it stood then and praying for the issue of a writ in the nature of mandamus to the Corporation not to retire him before he completed the age of 60 years. The High Court H

co2 SUPREME COURT REPORTS [1987] 3 S.C.R. j A issued an interim order of stay of his retirement on May 22, 1984. Hence, he was not retired on the 30th June, 1984 as originally notified and allowed to continue in service. The Writ Petition was allowed striking down regulation 19(2) as being violative of Articles 14 and 16 of the Constitution of lpdia and the Corporation was directed not to retire the 1st Respondent before he attained the ·age of 60 years. By B virtue of the judgment of the High Court, the 1st Respondent con- -1- tinued in the service of the Corpora~ion till he completed 60 years of age. He was retired from service on 30th of June, 1986 during the ~· pendency of these appeals.

In the Writ Petition filed by the 1st Respondent it was contended that there was no justification to prescribe two different ages of retire- ment one for the transferred employees belonging to Class I and Class II categories and the other for the employees who joined the service of '1 the Corporation after lst September, 1956 and who also belonged to Class I and Class II categories. It was also contended that whatever may be the position in respect of persons who were appointed directly to any post belonging to Class I or Class II category after 1st September, 1956, as regards those who joined the service of the '! Corporation on being appointed to a Class III pdst after 1st September, 1956 there could not be any reduction of the age of retire-

1 ment from 60 years to 58 years on their being promoted to a Class I post or Class II post. In other words the contention of the lst Respon- E dent before the High Court was that since lie had the right to continue in service if he had remained in Class III only till he attained the age of 60 years as a Class III employee by virtue of the settlement and the amendment of the regulation 19 in the year 1965, the age of retirement in his case could not be reduced to 58 years only because he had been promoted to a Class I post. The Writ Petition wail contested by the F Corporation and the Union of India. It was urged on behalf of the Corporation and the Union of India that the transferred employees and the employees who joined the service after 1st September, 1956 belonged to two distinct and separate classes which had been treated differently throughout for valid reasons. It was pleaded by them that on the establishment of the Corporation under the Act it became necessary to continue the services of the employees of the erstwhile--\- insurers whose life insurance business was taken over by the Corpora- tion to run the business ofthe Corporation because the Corporation had no employees of its own in the month of September, 1956 when it was established. Since as regards the age of retirement there was no uniformity in the establishments in which the transferred employees were working prior to the nationalisation of the life insurance business

L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.) 203

and as in some cases the age of retirement had been fixed at 55 years, in some other cases it was 58 years, in few other cases at 60 years and in many cases there was no age of retirement and the employees could ' continue as long as they were found to be physically and mentally fit, it became necessary to fix the age of retirement of the transferred emp- loyees on a fair, equitable and just basis. The Central Government and the Corporation felt that 60 years of age could be a proper age of retirement in the circumstances in respect of the transferred employees and that was the reason why by regulation 19 and the standardisation order issued earlier in the case of certain classes of transferred employees under section 11(2) of the Act the retirement age was fixed at 60 years and this was done with a view to retaining the services of the experienced employees of the erstwhile insurers. It was pleaded on behalf of the Corporation and the Union of India that in the circumstances the classification of the employees into two cate- gories, namely, transferred employees and others who joined the service of the Corporation on or after 1st September, 1956 for the purposes of the age of superannuation was a valid classification and Articles 14 and 16 of the Constitution of India had not been violated. D It was further pleaded that the discrimination made between the emp- loyees belonging to Class I and Class II on the one hand and the employees belonging to Class III and Class IV on the other in the matter of the age of superannuation was not invalid since they be- longed to two distinct categories of employees who were governed by different conditions of service as regards pay, perquisites, allowances, E administrative powers etc. After hearing the arguments of both the sides the learned Judges of the High Court allowed the Writ Petition. The Higb Court did not find any unconstitutionality in a rule or regula- tion providing the age of retirement at 60 years of employees who had been absorbed from the service of the erstwhile insurers and to that extent it observed that one could say that the grouping being reason- F able the Court migbt not travel into the domain of legislative policy. It, however, found that when once a transferred employee belonging to Class III and an employee appointed after 1st September, 1956 by the Corporation to a Class III post are promoted to Class I the distinction of transferred employee and direct appointee could not be maintained G as on promotion they became persons belonging to the same category + of employees enjoying the same conditions of service. Hence the age of retirement should be the same in the case of both such promotees. It accordingly held that the 1st Respondent was entitled to continue till he attained the age of 60 years as other Class I employees belonging to the category of transferred employees. Aggrieved by the judgment of H

204 SUPREME COURT REPORTS (1987) 3 S.C.R.

A the High Court the Corporation and the Union of India have filed J these appeals by special leave.

It should be stated at the outset that some of the questions raised before us are already covered by pronouncements made by this Court. The object of enacting section 11 of the Act is dealt with in.detail by B this Court in the Life Insurance Corporation of India v. D.l. Bahadur & Ors., [1981) 1 S.C.R. 1083 which unfortunately was not brought to + the notice of the High Court. Krishna Iyer, J. at pages 1098-1099 has observed in the iourse of the said decision thus: '<t

"The Corporation, to begin with, had to take over the staff of the private insurers lest they should be thrown c out of employment on nationalisation. These private com- panies had no homogenous policy regarding conditions of '!" service for their personnel, but when these heterogenous crowds under the same management (the Corporation) divergent emoluments and other terms of service could not b survive and broad uniformity became a necessity. Thus, the statutory transfer of service from former employers and standardization of scales of remuneration and other condi- tions of employment had to be and were taken care of by

1 s. 11 of the Life Insurance Corporation Act, 1956 (for short, the LIC Act). The obvious purpose of this provision E was to enable the Corporation initially to absorb the motley multitudes from many companies who carried with them varying incidents of service so as to fit them into a fair pattern, regardless of their antecedent contracts of employ- ment or industrial settlements or awards. It was cilementary that the Corporation could not perpetuate incongruous fea- F tures of service of parent insurers, and statutory power had to be vested to vary, modify or supersede these contracts, geared to fair, equitable and, as far as possible, uniform treatment of the transferred staff. Unless there be unmis- takable expression of such intention, the ID Act will con- tinue to apply to the Corporation employees. The office of G s. 11 of the LIC Act was to provide for a smooth take-over --+· and to promote some common conditions of service in a situation where a jungle of divergent contracts of employ- ment and industrial awards or settlements confronted the State. Unless such rationalisation and standardization were evolved the ensuing chaos would itself have spelt confu- H sion, conflicts and difficulties. The functional focus of s. 11

L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, 1.) 205

of the LIC Act will dispel scope for interpretative exercises A unrelated to the natural setting in which the problem occurs."

Pathak, J. (as he then was) in his judgment in the same case observed at pages I 134 to I 136 thus: B "The first question is whether the new clause (9) of the Standardisation Order succeeds in defeating the claim of the workmen. To determine that, s. 11 of the Corpora- tion AC! must be examined. Sub-s. ( 1) guarantees to the transferred employee the same tenure, at the same re- muneration and upon the same terms and conditibns on the C transfer to the Corporation as he enjoyed on the appointed day under the insurer, and he is entitled to them until they are duly altered by the Corporation or his employment in the Corporation is terminated. The sub-section envisages alteration by the Corporation. D Sub-s. (2) of s. 11, by its first limb, confers power on the Central Government to alter the scales of remunera- tion and other terms and conditions of service applicable to transferred employees. Predictably, when the transferred employees of different insurers were brought together in common employment under the Corporation they would have been enjoying different scales of remuneration and other terms and conditions of service. The power under this part of sub-s. (2) is intended for the purpose of secur- ing uniformity among them. The second limb of sub-s. (2) is the source of controversy before us. It empowers the Central Government to reduce the remuneration payable or revise the other terms and conditions of service. That power is to be exercised when the Central Government is satisfied that the interests of the Corporation and its Policy holders require such reduction of revision. The question is whether the provision is confined to transferred employees ..j.. only or extends to all employees generally. In my opinion, it is confined to transferred employees. The provision is a part of the scheme enacted in Chapter IV providing for the transfer of existing life insurance business from the insurers to the Corporation, and the attendant concomitants of that process. There is provision for the transfer of the assets and liabilities pertaining to the business, of provident funds, H

206 SUPREME COURT REPORTS [1987] 3 S.C.R.

A superannuation and other like funds, of the services of existing employees of insurers to the Corporation and also of the services of existing employees of chief agents of the insurers to the Corporation, and finally for tire payment of compensation to the insurers for the transfer of the busi- ness to the Corporation. They are all provisions relating to B the process of transfer. Sub-s. (2) of s. 11 is a part of that process, involving as it does the integration of the Corpora- tion's staff and labour force. While the first limb of the sub-section provides for securing uniformity among the • transferred employees in regard to the scales of remunera- tion and other terms and conditions of service, the second c limb provides that if after such uniformity has been secured, or even in the process of securing such uniformity, the Central Government finds that the interests of the y Corporation and its policy holders require a reduction in the remuneration payable or revision of the other terms and conditions of service applicable to those employees, it D may make an order accordingly. It is true that the words "employees or any class of them" in the second limb are ·--.( not prefaced by the qualifying word "transferred" or "such". But that was hardly necessary when regard is had

1 to the mosaic of sections in which the provision is located. Admittedly, the first limb of sub-s. (2) relates to transfer- E red employees only, and it must be held that so does the second limb. Both provisions are intended to constitute a composite process for rationalising the scales of remunera- · tion and other terms and conditions of service of transfer- red employees with a view not only to effecting a standardi- sation between the transferred employees but also to revis- F ing their scales of remuneration, and terms and conditions of service to a pattern which will enable the newly estab- lished Corporation to become a viable and commercially - successful enterprise. The standpoint of the second limb of the sub-section, as its language plainly indicates, is pro- vided by the interests of the Corporation and its policy G holders. For that reason, it is open to the Central Govern- _i- ment under sub-section to ignore the guarantee contained in sub-section (1) of s. 11 in favour of the employees, or anything contained in the Industrial Disputes Act, 1947, or any other law for the time being in force or any award, settlement or agreement for the time being in force. H Benefits conferred thereunder on the employees must yield

L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 207

to the need for ensuring that the Corporation and its policy A holders do not suffer unreasonably from the burden of such benefits. The need for such a provision arises because it is a burden by which the Corporation finds itself saddled upon the transfer a burden not of its own making. Unless the statute provided for such relief, the weight of that burden could conceivably cripple the successful working of the B Corporation from its inception as a business organisation. It is a situation to be distinguished from what happens when the Corporation, launched on its normal course, volun- tarily assumes, in the course of its working, obligation in respect of its employees or becomes subject to such obliga- tions by reason of subsequent industrial adjudication. Like c f any other employer, the Corporation is then open to the -,- normal play of industrial relations in contemporary or future time. That the two provisions of sub-s. (2) are linked with the process of transfer and integration is further indi- cated by the circumstances that the power thereunder is vested in the Central Government. The scheme of the sec- D tions in Chapter IV indicates generally that Parliament has appointed the Central Government as the effective and direct instrumentality for bringing about the transfer and integration in the different sectors of that process.

There is no danger of an order made by the Central E Government under the second limb of sub-section (2) in respect of transfe"ed employees being struck down on the ground that it violates the equality provisions of Part III of the Constitution because similar action has not been taken in respect of newly recruited employees. So long as such order is confined to what is necessitated by the process of transfer F and integration, the transfe"ed employees constitute a reasonably defined class in themselves and form no common basis with newly recruited employees." (underlining by us) emphasis supplied

Pathak, J. also observed at Page 1136 thus: G

"Another point is whether the power under the sec- ond limb of sub-s. (2) of s. 11 can be exercised more than once. Clearly, the answer must be in the affirmative. To effectuate the transfer appropriately and completely it may be necessary to pass through different stages, and at each H

208 SUPREME COURT REPORTS [1987] 3 S.C.R.

j A stage to make a definite order. So long as the complex of orders so made is necessarily linked with the process of trans- fer and integration, it is immaterial that a succession of or- ders is made. I am not impressed by the circumstances that the original Bill moved in Parliament for amending sub-s. (2) of s. 11 contained the words "from time to time" and B that these words were subsequently deleted when enact- \- ment took place. The intent of the legislative provision must be discovered primarily from the legislation itself."

We have given extracts from the above decisions which are fairly • long since they relate to the identical provisions of law and also cover a large part of the arguments urged before us. c Having regard to the different conditions of service that were prevailing in the various establishments whose business was taken over by the Corporation it can hardly be disputed that the fixation of age of superannuation is one of the essential parts of the process of transfer and integration to which sub-section (2) of section 11 of the Act is ,. applicable. The fixation of 60 years as the age of superannuation in the -{ case of transferred employees cannot be considered to be unreason- able in view of the history of this case. The observation made by Pathak, J. in the course of his judgment that "there is no danger of an order made by the Central Government under the second limb of sub-section (2) in respect of transferred employees being struck down on the ground that it violates the equality provisions of Part III of the

F Constitution because similar action has not been taken in respect of newly recruited employees" is significant. A discrimination made by a State between the employees who are directly recruited to the service of the State and the employees whose services are taken over by the State on the taking over of the institutions where they were working has been held to be not unconstitutional by this Court in Ram Lal 1 Wadhwa & Anr. v. The State of Haryana & Ors., [1973] 1 S.C.R. 608. The facts of that case were these. There were some schools run by municipal boards and district boards in the then State of Punjab which were taken over by the Punjab Government with effect from October G 1, 1957. The teachers then employed in those schools, thus became --+ State employees. Those teachers called 'provincialised' teachers were to be given the same grades of pay and other allowances as were given to their counterparts in Government employment. The teachers in Government employment were governed by the Pun jab Educational Service Class III School Cadre Rules, 1955. On February 13, 1961, the H Punjab Government promulgated under the proviso to Article 309 of

L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 209

the Constitution, the Punjab Educational Service (Provincialised A Cadre) Class III Rules, giving them retrospective effect from October 1, 1957. By these Rules the provinci~lised teachers were treated as falling under a Cadre separate and distinct from teachers in the-State Cadre governed by the 1955 Rules. The 'provincialised' Cadre was to be a diminishing cadre to become extinct in course of time. There was to be no further recruitment to that cadre and all vacancies arising in B that cadre were to be replenished by direct recruitment to the State cadre. The transfer of such posts to the State cadre was to be done by splitting up such vacant posts into blocks of 7 and 6 by rotation. Consequently, the selection grade of 15% in the State cadre progres- sively increased in strength which was determined by the total cadre strength while the selection grade in the provincialised cadre progres- C sively decreased. Thus those recmited to the State cadre bad a prog- ressively larger chance of getting into the selection grade. In State of Punjab v. JoginderSingh, (1963] Supp. 2 S.C.R. 169 this Court upheld the validity of the 1961 Rules repelfing challenge under Articles 14 and 16 of the Constitution. In the view of the majority in that case the two cadres started as independent services, they were never integrated into D one service and, therefore, the dissimilarity of the treatment by the Rules was not a denial of equal opportunity. But, the Puni'!b Govern- ment never implemented the Rules at any time. On the reorganisation of the erstwhile Punjab State into Punjab and Haryana on November 1, 1966, the 'Haryana Government put the 1961 Rules into operation. The petitioners in the above case, i.e., Ram Lal Wadhwa & Anr. v. E The State of Haryana & Ors., (supra) appointed in the local bodies Schools before 'provincialisation', challenged the validity of the 1961 Rules. Their complaint was that the Rules created, without any valid justification, two cadres, the State cadre and the provincialised cadre, the former including not only the Government School teachers but also those recmited after October 1, 1957 and posted in the provin- F cialised schools; that by reason of having two cadres and providing for both a uniform 15 per cent for selection grade posts, coupled with making the provincialised cadre a diminishing one, the result had been that teachers deemed to have been appointed to the State cadre with effect from October 1, 1957 and even those recmited thereafter bad been promoted to the selection grade, while those in the provincialised G cadre, though senior in service and performed identical duties and had t identical scales of pay, remained in the ordinary grade. According to the petitioners in that case these Rules and their implementation con- travened Articles 14 and 16 of the Constitution. The petitioners in that petition contended that the earlier decision of this Court in State of Punjab v. Joginder Singh, {supra) required reconsideration. In the H

210 SUPREME COURT REPORTS [1987] 3 S.C.R.

A course of its decision this Court while rejecting the contention of the petitioners observed thus at pages 635-636:

"The principles on which discrimination and breach of Arts. 14 and 16 can be said to result have been by now so well settled that we do not think it necessary to repeat them B here once again. As already seen, ever since 1937 and even before, the two categories of teachers have always re- mained distinct, governed by different sets of rules, recruited by different authorities and having, otherwise than in the matter of pay scales and qualifications, different conditions of service. This position remained as late as February 13, 1961. On that day whereas the State cadre c teachers were governed by 1955-Rules, rules had yet to be framed for the provincialised cadre a diminishing one and bringing about ultimately through that principle one cadre only in the field in a phased manner. If through historical reasons the teachers had remained in two separate cate- D gories, the classification of the provincialised teachers into a separate cadre could not. be said to infringe Art. 14 and Art. 16. It was also not incumbent on the Government to frame the 1961-Rules uniformly applicable to both the categories of teachers, firstly, because a rule framing authority need not legislate for all the categories and can select for which category to legislate, (see Sakhawat Ali v. State of Orissa, [1955] 1 S.C.R. 1004; Madhubhai Amat- hala/ Gandhi v. The Union of India, [1961] 1 S.C.R. 191 and Vivian Joseph Ferreria v. The Municipal Corporation of Greater Bombay, (1972] 1 S.C.R. 70, and secondly, because it had already come to a decision of gradually diminishing the provincialised cadre so that ultimately only the state cadre would remain in the service. That was one way of solving the intricate difficulty of inter se seniority. There can be no doubt that if there are two categories of employees, it is within Government's power to recruit in one (and) not recruit in the other. There is no right in a G government employee to compel it to make fresh appoint- ments in the cadre to which he belongs. It cannot also be disputed that government had the power to make rules with retrospective effect, and therefore, could provide therein that appointments made between October 1, 1957 and February 13, 1961 shall be treated as appointments in the H State cadre. That had to be done for the simple reason that

L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 211

the provincialised cadre was already frozen even before A October 1, 1957 and Government had decided not to make fresh appointments in that cadre since that cadre was to be a diminishing one."

It has to be observed in the case before us also that the transfer- red employees belong to a diminishing cadre. When the Corporation B -+ was established they were about 27 ,000 in number and we are informed today that there are only about 22 % of those employees in ..,. service. Already 30 years have elapsed from the date of the establish- ment of the Corporation. All the transferred employees who have already retired have retired only after completion 60 years. The re- maining transferred employees are likely to go out of office within a c short period. Thereafter only the employees who are directly recruited by the Corporation who are about 54,000 in number would continue to y remain in its service. The observation made by this Court in Ram Lal Wadhwa & Anr. v The State of Haryana & Ors., (supra) clearly applies to the case before us also. D As this stage we should refer to another aspect of the case pre- } sented before us which relates to 16 persons who were appointed as the ! employees of the Corporation by virtue of an Order dated March 15,

1966. There was a department in existence in the year 1963 called Department of Insurance. The Government and the Corporation felt that the services 16 persons who were working in the Department of E Insurance were required by the Corporation. Accordingly, the Presi- dent of India agreed to release 16 persons from the service of the y Government of India to enable the Corporation to appoint them in its service by the Order of the Central Government dated 25th February, ---', 1964. The resignation of those 16 persons from the service of the Government of India was accepted on 15th March, 1966 and from that F date those persons became the employees of the Corporation. Out of those 16, 13 have already retired from service on attaining the age of 60 years. Only three of them are now in the service of the Corporation. One of them is no longer an employee of the Corporation since he is holding the post of the Chairman of the Corporation. The second of them is due to .retire within 2/3 months and only one of them would G t- I continue in the service of the Corporation for about a period of two years more. In the case of those 16 people the Corporation passed a separate order fixing their age of retirement as 60 years having regard to the negotiations which had taken place between the Corporation and the Government before the taking over of their services by the Corporation. They again belong to a different category altogether and H

212 SUPREME COURT REPORTS (1987] 3 S.C.R.

the fixation of the age of retirement in their case at 60 years cannot be challenged by those who were directly recruiteli by the Corporation after j September 1, 1956 as there is no similarity between them and the said 16 officers.

The next question for consideration is whether the fixation of 58 B years as the age of superannuation in the case of the employees who entered the service after 1st September, 1956 is unreasonable. While -\· dealing with this question, the Court can take judicial notice of the different ages of retirement prevailing in the several services in India. In almost all the public sector corporations, Central services and State * services 58 years age is considered to be a reasonable age at which c officers can be directed to retire from their service. So, the determina- tion of 58 years as the age of superannuation by itself cannot be con- sidered to be arbitrary. ..., We do not also find much substance in the contention of the 1st Respondent that there cannot be any discrimination as regards the age D of retirement between the employees belonging to Class I and Class II on_ the one hand and Class III and Class IV on the other. It is true that ·~ originally employees belonging to Class Ill and Class IV categories amongst the transferred employees were given the benefit of retire- ment at the age of 60 years but the employees belonging to Class III and Class IV categories recruited after 1st September, 1956 were re- E quired to retire on the completion of 58 years of age. In the Settlement which was arrived at between the management and the Class III and Class IV employees recruited after 1st September, 1956 it was agreed that there should be no discrimination as regards the age of retirement ' i between the employees belonging to Class III and Class IV categories amongst the transferred employees and the Class III and Class IV F employees recruited after 1st September, 1956. It was pursuant to the said settlement that regulation 19 was amended with effect from 19.6.1965. Having regard to the lower emoluments and other benefits which the employees belonging to Class III and Class IV are entitled to get from the Corporation and the higher emoluments and other benefits to which officers belonging to Class I and Class II are entitled G and also the nature of their work and the powers enjoyed by them we are of the view that fixation of different ages of retirement to the -.+ different classes of employees would not by itself be violative of Arti- cles 14 and 16 of the Constitution. In Tejinder Singh and Another v. Bharat Petroleum Corporation Ltd. and Anr., [1986] 4 S.C.C. 237 this Court has observed at page 239 thus: H

L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.) 213

"This Court in Workmen v. Bharat Petroleum Corpn, Ltd., A directed the retirement age of the clerical staff of the Refinery Division of respondent 1 to be fixed at 60 years. Petitioners have contended that the disparity in the age of retirement between two groups of employees gives rise to discriminatory treatment. This stand is not tenable for more than one reason. Clerical staff and officers of the management staff belong to separate classifications and no argument is necessary in support of it. Petitioners have not contended and perhaps could not legitimately contend, that the two classes of officers stand at par. In the Work-

- men case itself, this Court did not extend the benefit of superannuation at the age of 60 to all clerical staff but limited the same to that category of employees working in the Refinery Division, Bombay. Classification on the basis of reasonable differentia is a well known basis and we are of the view that the petitioners are not entitled in the facts of the case to seek support from Article 14 for their claim." D It was, however, contended on behalf of the 1st Respondent that since he had been recruited originally into the Class III post and he would have had the benefit of retirement at the age of 60 years if he had remained in that Class, the said benefit cannot be denied to him on his promotion to the Class I category. We do not find any merit in this contention too. When the 1st Respondent was promoted to the Class I E post in 1963 the age of retirement of officers in the Class I post had ·y been fixed at 58 years and was not different from the age of retirement of Class III employees. It was only in 1965 under the settlement the age of retirement of employees in Class III and Class IV who joined service after September 1, 1956 was raised to 60 years. If he felt that the conditions of service of Class I officers were likely to be prejudicial F to him he could have refused the promotion offered to him. Having accepted the promotion along with the higher benefits flowing from it he cannot contend after several years that he had been prejudicially affected by the condition relating to the age of retirement applicable to Class I officers appointed after September 1, 1956. That apart the higher emoluments and other perquisites to which Class I employees G +- may be entitled to and the better conditions of work which are enjoyed by them substantially compensate the effect of the lowering of the age of retirement from 60 years to 58 years. We do not find any substance in the argument urged on behalf of the 1st Respondent relying upon the judgment of this Court in Roshan Lal Tqndon v. Union of India, [1968] 1 S.C.R. 185 which lays down that when employees are H

214 SUPREME COURT REPORTS [1987] 3 S.C.R.

A recruited to a lower grade from two sources no favourable treatment should be extended to recruits from one source on their promotion to the higher grade. In the decision, referred to above, the facts were these. Vacancies in grade 'D' of Train Examiners were filled by (a) direct recruits, i.e., apprentice train examiners who had completed the prescribed period of training, and (b) promotees from skilled artisans. B Promotion from grade 'D' to 'C' was on the basis of seniority-cum- suitability. In October, 1965 the Railway Board issued a notification by which it was provided that eighty percent of the vacancies in grade 'C' were to be filled up from apprentice train examiners recrnited on or after April 1, 1966 and the remaining twenty per cent by train

e examiners from grade 'D'. The notification further provided that ap- prentice train examiners who had already been absorbed in grade 'D' before April, 1966 should en bloc be accommodated in grade 'C' in the - eighty per cent of the vacancies without undergoing any selection and with regard to twenty per cent of the vacancies, reserved for the other class promotion was to be on selection basis and not on the basis of seniority-cum-suitability. The petitioner in the said case who entered D Railway service in 1954 as a skilled artisan and was selected and con- firmed in grade 'D' challenged that part of the notification which gave favourable treatment to apprentice train examiners who had already been absorbed in grade 'D' as arbitrary and discriminatory and viola- tive of Article 14 and 16 of the Consitution. This Court held that when once the direct recrnits and promotees were absorbed in one cadre they formed one class and they could not be distinguished again for the purpose of further promotion to the higher grade 'C'. The Court further observed that before the impugned notification was issued -'{ there was only one rnle of promotion applicable to both ·direct recruits and promotees but by the impugned notification discriminatory treat- ment was made in favour of the apprentice train examiners who had already been absorbed in grade 'D'. The Court, therefore, held that the notification was discriminatory. This decision has no relevance to the present case although the High Court has relied on it in deciding this case. We have already shown that the Act itself made a distinction between the transferred employees and the employees recruited to the service of the Corporation after !st September, 1956 by making amendments in section 11 and in clauses (b) and (bb) of sub-section (2) of section 49 of the Act. In the (Staff) Regulations, 1956 and the (Staff) Regulations, 1960 there was again a distinction made between the transferred employees and employees recruited after !st Septem- ber, 1956. We find that the distinction between the two classes is recognised by Parliament even as late as 1981 when it amended section H 49 of the Act by deleting clause (bb) of sub-section (2) thereof and by

L.I.C. v. ~.S. SRIVASTAVA (VENKATARAMIAH, J.) 215

amending section 48 of the Act by introducing clause (cc) in sub- A section (2) and the new sub-section (2A) in it. After the amendment, the relevant part of section 48 reads thus:

"48. (2) ........................................... . (cc). The terms and conditions of service of the employees and agents of the Corporation, including those who became B employees and agents of the Corporation on the appointed day under this Act, ................................... .

(2A). The regulations and other provisions as in force immediately before the commencement of the Life Insurance Corporation (Amendment) Act, 1981, with c respect to the terms and conditions of service of employees and agents of the Corporation including those who became employees and agents of the Cbrporation on the appointed day under this Act, shall be deemed to be rules made under clause (cc) of sub-section (2) and shall, subject to the other provisions of this section, have effect accordingly." D (underlining by us) emphasis supplied

Clause (cc) of section 48(2) of the Act, however, has been given retrospective effect from 20th June, 1979. Sub-section (2A) of section 48 has given statutory recognition to the (Staff) Regulations of 1960 and in particular to Regulation 19(2) as amended in 1977 which is impugned in these proceedings. It is thus seen that at no point of time )- the transferred employees were integrated into one cadre along with the employees appointed after September !, 1956 as such and the transferred employees have retained their birth-marks throughout. The fact that the pay, allowances and other conditions of service have been made the same in respect of both the transferred employees and the employees of the Corporation recruited after !st September, 1956 has not brought about the integration of the two classes of employees into one single cadre. Even the High Court in the instant case accepts that it was just and proper to extend the benefit of the higher age of retirement to the transferred employees but it has held that when once ~ a transferred employee is promoted he would lose thnight to a special G · · . , treatment as regards the age of superannuation. The relevant portion '' of the judgment of the High Court reads thus:

"A reasonable classification which prevents a Court from dissecting it is one which includes all persons who are similarly situated with respect to the purpose of law or H

216 SUPREME COURT REPORTS [1987] 3 S.C.R.

A objective which the rule or section seeks to achieve. The apparent or inherent intention sought to be achieved by the regulation 19 framed by Corporation was to continue upto age of sixty years the employees of insurers as the age of superannuation in some of the companies was sixty and to derive benefit from expertise and experience of employees B who had worked with insurers. May be laudable, reasonable and proper. But is it like that? Obviously not. An employee in Class III of insurer could be continued upto sixty. But what happens when he climbs the ladder of promotion and reaches Class I. Does he still carry the stamp of experience and expertise of having worked with insurer? Once a trans- c ferred employee of Class III and a direct appointee in (that) class are promoted to Class I obviously on merit, efficiency and seniority then how can the distinction of 'transferred' and 'direct' be maintained. So long employees are in Class III they can be said to constitute two different classes of transferred and direct appointees but once they D are promoted they become similarly situated and the dis- tinction stands obliterated. They on promotion form one integrated cadre of Class I officers. To segregate them here for purposes of retirement is invidious when their pay, responsibility and benefits are same." E While we agree with the first part of the observations made in the above· extract from the judgment of the High Court, namely, that it was not discriminatory to extend the benefit of the age of 60 years to· '{ the transferred employees, we do not agree with the latter part of the observations made therein which suggests that on promotion from F Class III to Class I the transferred employees and the directly recruited employees would lose their birth-marks. Pathak, J., as he then was, has observed in D.J. Bahadur's case (supra) that it is open to the Government to make an order under section 11(2) of the Act from time to time in respect of the transferred employees and that power is not exhausted when it is exercised once. It suggests that the transfer- red employees are always amenable for separate treatment and they G do not lose their identity. It appears to be the intention of Parliament that even as late as in 1981 that the two categories of employees, namely, the transferred employees and employees recruited after 1st September, 1956 in the Corporation should be kept separate. Jn these circumstances the High Court was in error in relying upon the judg- H ment of this Court in Roshan Lal Tandon's case (supra).

L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 217

In O.P. No. 5295 of 1985 and connected cases on the file of the A High Court of Kerala which was decided on 4.2.1987 the claim of the employees of the Corporation belonging to class I but appointed after 1st September, 1956 to continue in service till they attained the age of 60 years arose for consideration. The High Court has negatived it. In the course of its judgment it has referred to the judgment under appeal in this case but has only distinguished it. The High Court of Kerala was right in not following the decision of the High Court of Allahabad which is now under appeal. It, however, distinguished it on the ground ~ that the employees in question had not been promoted from Class III to Class I as it was the case here but the petitioners refore it had continued in Class I or Class II right from the commencement. We, however, approve of the reasons given by the High Court of Kerala in holding that the employees of the Corporation belonging to Class I and ')-·· Class II who had entered service of the Corporation after 1st September, 1956 were not entitled to continue in service beyond the age of 58 years. In our view the fact that an employee had entered the service of the Corporation after September 1, 1956 in a Class III post and is later on promoted to ~ Class I post does not make any difference in so far as the question which arises for decision before us. The High

r Court of Delhi has rejected two petitions in which the very question raised in this case arose for consideration, namely, N.L. Aneja v. Union of India and Others, (Civil Writ No. 1911 of 1986) and H.S. Kochar v. L.l.C. of India & Ors., (C.W. No. 1660 of 1986) at the stage of admission itself giving reasons, though short, for its orders. The two decisions, referred to above, have been rendered by two different E

y Division Benches.

We may also refer to one decision of the Madras High Court and ~ another decision of the Calcutta High Court which arose under the provisions of the Banking Companies (Acquisition and Transfer of F Undertakings) Act, 1970 (Act 5 to 1970) where again the claim of employees of the banks in question who joined their service after nationalisation to the benefit of the conditions prescribed in the case of employees of the former banking companies whose services were taken over on nationalisation as regards the age of retirement arose for L consideration. The scheme of section 12(2) of the Banking Companies G I (Acquisition and Transfer of Undertakings) Act, 1970 and the scheme of section 11(1) of the Act, which is under consideration before us, were the same. In Govindarajulu v. The Management of Union Bank of India & Ors., (Writ Petition No. 5486 of 1980) the High Court of Madras rejected the said claim by its judgment dated 21.11.1986. In Dr. Nikhil Bhushan Chandra v. Union of India & Ors., (Civil Order H

218 SUPREME COURT REPORTS [1987] 3 S.C.R.