# AMAR KRISHNA GROSE v. LIFE INSURANCE CORPORATION OF INDIA & ANR

- **Citation:** [1973] 2 S.C.R. 998
- **Court:** Supreme Court of India
- **Decided:** 1973
- **Case number:** Civil Appeal No. 1331 of 1967
- **Bench:** J. M. Shelat, Y. v. CHANDRACHUD
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/amar-krishna-grose-v-life-insurance-corporation-of-india-anr-5938
- **Pages:** 8

## Headnote

Life Insurance (Emergency Provisions) Ordinance, 1 of 1956-C/. 3(2)
'Jeemed' termination of service-Ute frisurance Corporation Act, 31 of
1956, Sec. 11(1) &: 11(3).
Life Insurance Corporation Rules, 1956 Rule 12-A-Exc/usiv. ;uris1 diction of the Life lnsurilnce Tribunal-Whether word "liablUty of th•
controll. d business of insurer" cover questions of arrears of pay and
deemed :ermirtation of erstwhile employees.
,l\.ppellant, an employee rlf an erstwhile Life Insurance Company filed
a suit against the L.I.C. in the Calcutta High Court inter alia, claiming
that the purported termination of his service was void and for 11 declara·
tion that he continued to be in service of the Corporation after the vesting
of the business in the Life Insurance Corporation.
He further claimed
Ute atrcars of rent and other dues accrued before the vesting and salary
for the subsequent period. The Calcutta High Court split the two set of
reliefs and held that under Rule 12-A-the Life Insurance Tribunal had
the exclusive jurisdiction to decide whether the Cory<?ration was liable as
a successor to the said companies for the earlier ltabilities er not.
The
High Court 'further held that the question as to whether the employment
of the appellant stood terminated by virtue of sec. 3 (2) of the Ordinance
was also within the exclusive jurisdiction of the Tribunal. Since the relief
for declaration of the continuation of service ·. and subsequent salary
depended upon the question of termination of service under sec. 3(2)
of the Ordinance, the High Cotirt ordered that that part of the claim may
sta.nd over and considered after the TribunaI's decision on the first set o(
issues.
The court gave liberty to the Corporation to agitate (at such an
adjourned hearing) that the Central Government has the exclusive jurisdiction under sec. 11 (1) & 11 ( 3) of Act to adjudicate the question of
continuation rlf employment.
On appeal the Court,
HEID : ( 1) The expressiou "controlled business of the insurer" in
Rule 12A means the life insurance busineis carried on by an insurer
before its management became vested in a custodian under the ordinance
and then in the Corporation. The appellant was not right in .contending
that the past liabilities do not relate to "controlled business". Therefore the
Tribunal was. the proper authority to decide question of arrears of pay
and other dues. [1003 BJ
(2) Rule 12-A confers on the Tribunal the jurisdiction to try "any
question ••. of any nature whatsoever in relation to .... liabilities pertaining to controlled business." The question, whether the services of the
appellant stood terminated by cl. 3 ( 2) of the Ordinance is related to the
'liability' of the "controlled business" and is covered by the wide wording
of Rule 12-A. The Tribunal alone had the jurisdiction to decide the
said question. [1005 DJ
(3) The High Court was right in splitting the appellants' claim into
two, one triable by the Tribunal and the other not, and retainina with it
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A. K. GHOSE v. L.I.C. (Shelat, J.)
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that part of the suit which. did not fall within the scope of R. 12-A with
lib•'~"· 1" ,-"~ parties to nuse later on the questlon whether that part was
tri•u•c oy the court or by the Central Government under S. 11 (3) of tlle
Act. [1005 GJ
B
Appeal dismissed.

## Text

998
AMAR KRISHNA GROSE
v.
LIFE INSURANCE CORPORATION OF INDIA & ANR.
November 14; 1972
[J. M. SHELAT AND Y. v. CHANDRACHUD. JJ.]
Life Insurance (Emergency Provisions) Ordinance, 1 of 1956-C/. 3(2)
'Jeemed' termination of service-Ute frisurance Corporation Act, 31 of
1956, Sec. 11(1) &: 11(3).
Life Insurance Corporation Rules, 1956 Rule 12-A-Exc/usiv. ;uris1 diction of the Life lnsurilnce Tribunal-Whether word "liablUty of th•
controll. d business of insurer" cover questions of arrears of pay and
deemed :ermirtation of erstwhile employees.
,l\.ppellant, an employee rlf an erstwhile Life Insurance Company filed
a suit against the L.I.C. in the Calcutta High Court inter alia, claiming
that the purported termination of his service was void and for 11 declara·
tion that he continued to be in service of the Corporation after the vesting
of the business in the Life Insurance Corporation.
He further claimed
Ute atrcars of rent and other dues accrued before the vesting and salary
for the subsequent period. The Calcutta High Court split the two set of
reliefs and held that under Rule 12-A-the Life Insurance Tribunal had
the exclusive jurisdiction to decide whether the Cory<?ration was liable as
a successor to the said companies for the earlier ltabilities er not.
The
High Court 'further held that the question as to whether the employment
of the appellant stood terminated by virtue of sec. 3 (2) of the Ordinance
was also within the exclusive jurisdiction of the Tribunal. Since the relief
for declaration of the continuation of service ·. and subsequent salary
depended upon the question of termination of service under sec. 3(2)
of the Ordinance, the High Cotirt ordered that that part of the claim may
sta.nd over and considered after the TribunaI's decision on the first set o(
issues.
The court gave liberty to the Corporation to agitate (at such an
adjourned hearing) that the Central Government has the exclusive jurisdiction under sec. 11 (1) & 11 ( 3) of Act to adjudicate the question of
continuation rlf employment.
On appeal the Court,
HEID : ( 1) The expressiou "controlled business of the insurer" in
Rule 12A means the life insurance busineis carried on by an insurer
before its management became vested in a custodian under the ordinance
and then in the Corporation. The appellant was not right in .contending
that the past liabilities do not relate to "controlled business". Therefore the
Tribunal was. the proper authority to decide question of arrears of pay
and other dues. [1003 BJ
(2) Rule 12-A confers on the Tribunal the jurisdiction to try "any
question ••. of any nature whatsoever in relation to .... liabilities pertaining to controlled business." The question, whether the services of the
appellant stood terminated by cl. 3 ( 2) of the Ordinance is related to the
'liability' of the "controlled business" and is covered by the wide wording
of Rule 12-A. The Tribunal alone had the jurisdiction to decide the
said question. [1005 DJ
(3) The High Court was right in splitting the appellants' claim into
two, one triable by the Tribunal and the other not, and retainina with it
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that part of the suit which. did not fall within the scope of R. 12-A with
lib•'~"· 1" ,-"~ parties to nuse later on the questlon whether that part was
tri•u•c oy the court or by the Central Government under S. 11 (3) of tlle
Act. [1005 GJ
B
Appeal dismissed.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1331 of
1967.
Appeal by certificate from the judgment and
order dated
February 28, 1966 of the Calcutta High Court in Appeal from
Order No. 88 of 1965.
M. C. Setalvad and Ram Prosanna Bagchi and Sukumar
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Ghose for the appellant.
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F. S. Narima11, Additional Solicitor General of India, K. L .
. Hathi and P. C. Kapur for the respondent No. 1.
The Judgment of the Court was delivered by
SHELAT, J,
This appeal, founded on the certificate granted
by the High Court of Calcutta, raises questions of interpretation
of sec. 3(2) of the Life Insurance (Emergency Provisions) Ordi·
nance, 1 of 1956, sec. 11 of the Life Insurance Corporation Act,
31 of 1956 and R. 12A of the Life Insurance Corporation Rules,
1956 made under s. 48 of the said Act.
These questions arise in the following circumstances :
Prior to January 1, 1956 the appellant was employed as the
Pdncipal Officer of .the Bengal Insurance and Seal Proper!J Co.
Ltd., respondent 2 in this appeal. It was not disputed ID the
High Court that by Principal Officer the appellant meant that he
was the Managing Director. His salary as such officer was Rs.
2630 per mensum which on and from January 1, 1956 was raised to Rs. 3000 per mensum. On January 19, 1956, respondent
2 issued in favour of the appellant four cheques for Rs. 5436-6-0
in all representing his salary for November and December 1955
and for certain other dues.
On that very day; i.e., January 19,
1956, the Life Insurance (Emergency Provisions)
Ordinance,
1956 came into force, u11der which January 19, 1956 was the
appointed day.
The. management of the life insurance business
carried on by all concerns including that of respondent 2 was
taken over and became vested in custodians appointed under the
Ordinance. Cl. 3 (2) of the Ordinance provided that "any contract, whether express or implied, providing for the management
of the controlled business of an insurer made before the appointed
day between the insurer and any person in ch.arge of the manage-
. ment of such business immediately before the appointed day shall
be deemed to have terminated on the appointea day". The Ordi-
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[1973] 2 S.C.R,
nance was substituted by the Life Insurance (Emergen~y Provisions) Act, 9 of 1956 which came into force as from March 21,
1956. The said cheques, when presented for payment, were not
honoured by the Bank on the ground that they were not signed
by the custodian.
On June 18, 1956, Parliament passed The ·Life Ir..surance
Corporation Act, 31 of 1956, which came into force as froni Ju1y
I, 1956.
A Notification, dated August 30, 1956, issued thereunder fixed September 1, J 956 as the appointed day, that is ihc
date when the Corporation was established under sec. 3 of the
Act. Sec. 7 of the Act reads as follows :
"7 ( 1) On the appointed day there shall be transferred to and vested in the Corporation all the assets
and liabilities appertaining to the controlled business of
all insurers.
( 2) The assets appertaining to the controlled business of an insurer shall be deemed to include all rights
and powers, and all property, whether movable or immovable, appertaining to his controlled business, including in particular, cash balances, reserve funds, investments, deposits and ah other interests and rights in or
arising out of such property as may be in the possession of the insurer ...... and liabilities shaJI be deemed
to include all debts, liabilities ancl. obligations of whatever kind then existing and appertaining to the cootrolled business of the insurer."
Sec 11 ( 1) of the Act provides that 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
wholly or mainly in connection with his controlled business immediately before the appointed day (i.e. September l, 1956)
shall on and from the appointed day become an employee of the
Corporation and shall hold his office therein on the same terms
and conditions as he was having on the appointed day, unless and
until his ~mployment in the Corporation is tenninated by the
Corporation. Sub-sec. (3) of s. 11 provides that if any question
arises as to whether (a) any person was a whole-time employee
of an insurer, or (b) as to whether any employee was employed
wholly or mainly in connection with the controlled business of an
insurer immediately before the apPointed day (i.e. Seotember 1.
1956) that question shall be referred to the Central_Govemment,
whose decision shall be final. Under s. 17, the Central Government ·has been emoowered to constitute one or more tribunals.
Sec. 48 empowers the Cent~al Government !o mak~ ru,lei:, ~nd in
particular among other sub1ects on the supiect of 1unsd1ct10n of
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the tribunals constituted under s. 17.
Rule 12A of the Life
Insurance Corporation· Rules, 1956 made under s. 48 reads as
under:
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"l 2A. Jurisdiction of Tribunal.
The Tribunal may exercise jurisdiction in the whole
of India and shall have power to decide or determine
all or any of the following matters, namely,
(1 ) any question whether of title or of liability, or
of any nature whatsoever in relation
to
the
assets and liabilities pertaining to the controlled
business of the insurer transferred to and vested
in the Corporation."
It seems clear from s. 11(3) of the Act and the said rule 12A
( 1) that on a question whether a person was a whole-time employee of an insurer or whether any employee was
employed
wholly or mainly in connection with the controlled business of
such insurer ~mmediately before the appointed day, i.e., September 1, 1956, it is the Central Government which is the deciding
authority and whose decision is final, and (2) that where a question, whether of title or of _liability or of any nature whatsoever
in relation to the assets and 'liabilities pertaining to the controlled
business of the insurer transferred to and vested in the Corporation, arises, it is the tribunal which is the authority invested with
the jurisdiction to determine such a question.
On January 20, 1959, the appellant filed a suit in the High
Court claiming the following reliefs :
(a) a decree for Rs. 5436-6-0 as salary for November
and December 1955;
(b) declaration that the purported tennination of his
contract of service as the principal officer of respondent 2 and/ or as an employee of the Corporation
was void;
( c) declaration that he was and continued to be the employee of the Corporation and for reinstatement;
(d) a decree for Rs. 1,01,250 being his salary from
January 1956 to December 1958 at the rate of Rs.
2812-8-0 per mensem;
( e) in the alternative, for a decree for the said amount
of Rs. 1,01,250 against respondent 2; and
( f) for interest and costs.
The case of the Corporation was (I ) that by rearon of cl.
3(2) of Ordinance 1 of 1956 the employment of the appellant
1002
SUPREME COURT RBPOll.TS
[1973) 2 S,C,R,
with the respondent 2 stood terminated on January 19, 1956, and
( 2) that as a consequence of such termination, .the appellant was
not in the empl,oyment of respondent 2 wholly or mainly in connection with his controlled business immediately before the
appointed day under the Act, i.e., September 1, 1956, and the~
fore, was not entitled to the benefit of s. 11 ( 1) thereof and could
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not, therefore, claim to have become an employee of the Corpora-
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tion. Therefore, there was no question of his employment having
to be or having been terminated by the Corporation at all, much
less wrongfully. Its case further was that so far as the first relief
was concerned, siince the claim for Rs. 5436-6-0 raised the qua;-
tion of liability pertaining to the controlled business of respondClllt
2, the jurisdiction was exclusively with the tribunal as under s.
41 of the Act no civil court has the jurisdiction to entertain and
adjudicate upon a matter which the tribunal has been empowered
to determine.
That being so, it was the tribunal which had to
decide whether (a) the appellant's employment stood terminated
on Ja1Juary 19, 1956 by virtue of cl. 3(2) of Ordinance 1of1956,
and (b) wheth"r as a result of the vesting of the management of
controlled business in the Custodian or the vesting of that busiMI'
in the Corporation, the Corporation was liable tel jlay the arrears
of liis salary for November and December 1956 and certain other
dues.
So far as the claim for Rs. 1,01,250, on the footing that
there was no such termination of the appellant's service and consequently his having become and having continu:ld to be the
Corporation's employee under s. 11 ( 1) of the Act, is concerned,
the Corporation's case was that that part of his case had to be
determined by the Central Government as under s. 11 ( 3) it ii
that Government which has to decide whether the appellant was
a whole-time employee of respondent 2 wholly or mainly in connection with that company's controlled business immediately before the appointed day, viz., September 1, 1956. That question
depended upon the question whether his employment with respondent 2 stood terminated on January 19, 1956 under cl. 3(2)
of the said Ordinance, for, if it did, no further question of his
becoming or his having continued as the Corporation's employee
under s. 11 ( 1) of the Act could possibly arise.
A learned single Judge of the High Court, before whom the
suit came up for hearing, held that the High Court had no jurisdiction to entertain or adjudicate the appellant's claim against the
Corporation and dismissed the appellant's suit.
In a Letters
Patent appeal against that judgment and docree, a Division Be~ch
of the High Court sustainild the trial Court's finding that the High
Court had no jurisdiction in the matter of the atinellant's claim
for Rs. 5436-6-0 and that it was the tribunal which ha~ that
jurisdiction. But it did not uphold the tri~I C?urt's findmg as
regards the relief for the salary and declaration m respect of the
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period from September 1, 1956 to December 1958. Tne Division
Bench held that "this part of the case, so far as the Life Insurance
Corporation is concerned, will stand adjourned until the determination of the proceedings before the Trib11J1al mentioned above.
This will be without prejudice to the rights of the defendants to
raise the question of competency of the Court to decide an)' q__uestion which comes within the scope of sec. 11 ( 3) of the said Act.
So far as defendant No. 2 is concerned,. it has been held that the
Court has jurisdiction and we arc not disturbing that part of the
decree". What the Division Bench in effect decided was thit it
was the tribunal and not the High Court which had the jurisdiction to decide :he question as to the Corporation's liability to pay
the said arrears of salary for Novcmbier and December 19SS as
that liability pertained to the controlled business of respondent 2.
That question would involve the issue as to whether or not the
appellant's CO!jtract Of service With respondent 2 stood terminated
by virtue of cl. 3 ( 2 ) of the Ordinance. As regards his claim for
salary for the period from September l, 1956 to December 1958,
the Division Bench left the question open until the tribunal W,.
cided the first part of the claim including the question arising
Wider cl. 3(2) of the Ordinance. But it left the question, viz.,
whether the appellant becallle and continued to be the empll>yee
of the Corporation under s. 11 (1 ) of the Act, open and retairieP
that part of the appellant's suit with the High Court with liberty
to the respondents to raise the question of the High Court's juria·
diction in that regard. That question would be whether under s.
11 (3) of the Act it is for the Central Government to determine
whether the appellant was the wholi:-time employee of respondent
2 immediately before the appointed day under the Act, viz.,
September 1, 1956.
Mr. Setalvad doubted the correctness of such an interpretation
of R. 12A of the Corporation Rules and argued that the Rule
conferred jurisdiction on the tribunal on questions as to the Corporation's liability in relation to "the assets and liabilities pertaining to the controlled business of the insurer transferred to and
vested in the Corporation". The business transferred to and
vested in the Corporation could no longer be the controlled business of the insurer and ceased to be so once it became transferred to and vested in the Corporation under the Act. Therefore,
he argued, the Tribunal could have no jurisdiction in respect of
a liability to which the Corporation succeeded as a result of ~e
assets and liabilities of the insurer having been transferred to and
vested in the Corporation. He contended that that bdng the position, it was not the tribunal but the civil court which had to decide
the question whether the Corporation was liable to pay the arrears
of salary for November and December 1956, a liability, which
the Custodian and later on the Corporation were liable to satisfy,
1004
SUPREME COURT REPORTS
[1973] 2 S.C.R;
the former as .a result of the management having vested in him
under the Ordmance, and the latter as a re,sult of its having succeeded 10 the assets and liabilities of the insurer.
He also contend.ed th~t the question as to whether the appellant's contract of
seMce with respondent 2 stood terminated on January 19, 1956
under cl. 3 ( 2) of the Ordinance would also not fall under R.
12A.
The Add!. Solicitor-General, on the other hand, disputed
such a construction of R. l 2A and contended that the tribu.nal
had under that Rule .the eXclusive jurisdiction to determine both
the questions, and the High Court could not by reason of s. 41
of the Act entertain or adjudge either of the two questions.
The reliefs prayed for by the appellant in his plaint pertained
to two periods; ( 1) Rs. 5436-6-0 being the arrears of salary and
other dues for the months of .November and December 1955, RD.cl
(2) Rs. one lac and odd being the salary from January I, 19~6
to December 1958. Under R. 12A, a question either of liability
or of any nature whatsoever in relation to the assets or liabilities
pertaining to the controlled business of the insurer transferred
to aild vested in the Corporation falls within .the jurisdiction of
the tribunal and cannot be entertained and adjudicated by a civil
court under s. 41 of the Act. In respect of the claim for arrears
of salary for November and December 1956, the question really
would be one of liability in regard to or pertaining to the cootrolled business of the insurer which became transferred to and vested.
in the Corporation. That question, therefore, fell fairly
and
squarely within the jurisdiction of the tribunal. The exl'ression
"controlled business of the insurer" in R. 12A means the life insurance business carrieji on by an insurer before its management
became vested in a custodian under the Ordinance and whose
assets and liabilities became transferred to and vested in
the
Corporation under tqe Act. R. l 2A clearly deals with questions
arising out of. and pertaining to such controlled business. Under
R. 12A, jurisdiction to try questions in respect of the liability
pertaining to such business has been vested fo the tribunal. The
question of the liability of the Corporation in regard to the arrears
of salary for November and December 1955 clearly related to the
controlled business then carried on by respondent 2 ... The Corporation was sought to'be made liable to pay those arrears on the
ground that that liabililY. was transferred to and vested in the
C.orporation.
Clearly R. 12A applied to such a question and
the jurisdiction to try such a. qu_estion was in the tribu?al ~nd not
the High Court.
Any qu¢stion, therefore, as to the habiltty pertaining to the business which was the controlled business as defined by the Act would have to be tried by the tribunal.
As regards the second c\aim of the appellant, that claim involved the question as to Whether his contract of service with
respondent 2 stood tenninatcd on January 19, 1956 by virtue
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of cl. 3 (2) of the Ordinance. If it did, he would not be a person
who was employed by the insurer wholly or mainly in connection
with his controlled business immediately before the appointed day
(which is September 1, 1956 under the Act) as require(! by s.
11 ( 1) of the Act, and therefore, he could not claim to be one
who became and continued to be an employee of the Corporation
<IS envi>aged by that sub-section. Under sub-sec. ( 3) of sec. 11,
the question whether an employee was employed wholly or mainly
·in connection with the controlled business of an insurer inunediati:ly before the appointed day under the Act (i.e., September
J, 1956) is determinable by the Central Government and not by
<I civil court.
That question, however, would depend upon the
4uestion whether the appellant's con_tract of service stood terminated by reason of cl. 3(2) of the Ordinance on September 1,.
1956. Has the tribunaj the exclusive jurisdiction to decide that
4iwstion ? .The High Court thought so, and in our view rightly
because R. 12A confers on the tribunal the jurisdiction tOI try
"any question---0f any nature whatsoever in relation to-liabilities pertaining to the controlled business of the insurer transferred
to and vested in the Corporation". These are very wide words
which would include the question whether the appellant as the
principal officer ·of respondent 2 continued 10 be such officer after
January 19, 1956 in relation to the controlled business which on
and after January 19, 1956 was to be managed in terms of the
Ordinance by a custodian appointed thereunder and whose assets
and liabilities on the passing of the Act were transferred to and
vested in the Corporation. The question whether his contract of
employment as the principal officer of the business, defined as the
controlled business both under the Ordinance and the Act, continued or not after January 19, 1956 would be a question in relation to the liability pertaining to such controlled business and
w~s therefore within the scope of R. 12A. But the question as to
whether he became an employee of the Corporation under s.
11 (I) on and from January l, 1956, though dependent on the
answer as to whether his contract stood terminate<! under cl. 3(2)
of the Ordinance, would not fall within R. 12A and was not
therefore triable by the tribunal. The High Court, therefore, was
right in splitting the appellant's claim into two, one triable by the
tribunal and the other not, and retaining with it that part of the
suit which did not fall within the scope of R. 12A with liberty to
the parties to raise later on the question whether that part was
triable by the Court or by the Central Government under s. 11 ( 3)
of the Act.
The appeal thus fails and is dismissed with costs.
S.B.W.
Appeal dismissed.