# THE LIFE INSURANCE CORPORATION OF INDIA ,_ v. D. J. BAHADUR & ORS

- **Citation:** [1981] 1 S.C.R. 1083
- **Court:** Supreme Court of India
- **Decided:** 1980-11-10
- **Case number:** Writ Petition No. 1186/78. WITH Transfer Case No. 1 of 1979
- **Bench:** V. R. Krishna Iyer, R. S. Pathak, A. D. KOSl!AL
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-life-insurance-corporation-of-india-v-d-j-bahadur-ors-8232
- **Pages:** 101

## Headnote

Life Insurance Corporation Act (Act 31), 1956, sections 11, 23 and 49,
scope of-Whether a general law or a special law-Industrial Disputes Act
(Act 14) 1947, sections 9A, 19(2), (6), 18, 23, 29-0bject of the Act, award
and settlement, distinction from the point of view of legal force-Whether a
special legislation
vis-a-vis Life
Insurance
Corporation
Act-Annual caslr
bonus payable to Class-Ill and Class-IV employees of the Corporation under
·the settlement of 1974, e/Jecl o>f-Ejject of notice of termination of the settlements by the Corporation
under
sections 9A
and 19(2) of the Industrial
Disputes Act and section 49 of the Life .Insurance Corporation Act-Constitution of India, 1950, Articles 12, 38, 39 and 43 and Regulation 58 of the Life
Insurance Corporation of India (Staff) Regulations, 1960.
The Life Insurance Corporation came into existence on the 1st of
September, 1956, as a statutory authority established under the Life Insurance
Corporation Act (Act 3 l), 1956.
As
from the
said date all institutions
carrying on Life Insurance business in India were nationalised to
th~ extent
of such busine:ss and their corresponding assets and liabilities were transferred
to the Corporation. Section 11 of the Act provided for the transfer of service
of those employees of such institutions who were connected with Life Insurance
business immediately before the, said date to the Corporation and for some
other matters.
Section 23 of the Life Insurance Corporation Act gave to the
Corporation the power to employ such number of persons as it thought fit
for the purpose of enabling it to discharge its functions under the Act and
declared that every person so empioyed or whose services stood transferred
to the Corporation under section 11 would be liable to serve anywhere in
India. Section 49 conferred on the Corporation the power to make regulation~
for the purpose of giving effect to the prnvisions of the Act with the previousapproval of the Central Government. Sub-section (2) of that section enumerated
various matters in relation to which such power was particularly conferred.
·On 1st of June, 1957 the Central Government promulgated the Life Insurance
Corporation (Alteration of Remuneration and other Terms ar.d Conditions
of Service of Employees) Order, 1957 altering the remuneration and other
terms and conditions of service of those employees of the Corporation whose
service had been transferred to it under sub-section (1) of section 11. Clause
9 of the 1957 Order declared that no bonus would be paid but directed that
the Corporation would set aside an amount every year for expenditure on
schemes of general benefit to the employees such as free insurance scheme,
medical benefit scheme and
other
am~nities to
them. On the 26th June,
1959, the Central Government amended clause 9 of the 1957 Order 'SO as to
provide that non-profit sharing bonus would be paid to those employees of
the Corporation whose salary did not exceed Rs. 500 per month.
On 2nd
of July, 1959 · there
was a
settlement
between the
Corporation and
its
employees providing for
paym~nt to them of cash ·bonus at the rate of It
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months' basic salary for the period from the 1st September, _1956 to the
31st December, 1961.
In the year 1960 the Life Insurance Corporation of
lndta (Staff) Regulations, 1960 were framed and Regulation 58 dealt \Vttb
the payment of grant of no:1-profit sharing bonus to its employees. On 14th
April. 1962 and 3rd August, 1963 orders were again issued, the effect of which
WJ.5 to remove the Emit of Rs. 5'00 on the basic salary as a cor;dition of
~Jiaihi1ity for payment of Lonu1.
lhe seaiemeoi dated 2r:d July, 1959 was
D
foMow(d bv three o~hers \vhich were arrived at on the 29th January, 1963.
the 20th June, 1970 and the 26th June, 1972, respectively aroJ each one of
VJtii£h · provided for payment of bonus at a particular rate.
Disputes between the Corporation and its workmen in regard to the
latter's c

## Text

_Characters 0–39,796 of 276,131. This is a partial read: ask again with offset=39796 for what follows._

THE LIFE INSURANCE CORPORATION OF INDIA
...,_
v.
D. J. BAHADUR & ORS.
November 10, 1980.
[V. R. KRISHNA IYER, R. S. PATHAK & A. D. KOSl!AL, JJ.]
Life Insurance Corporation Act (Act 31), 1956, sections 11, 23 and 49,
scope of-Whether a general law or a special law-Industrial Disputes Act
(Act 14) 1947, sections 9A, 19(2), (6), 18, 23, 29-0bject of the Act, award
and settlement, distinction from the point of view of legal force-Whether a
special legislation
vis-a-vis Life
Insurance
Corporation
Act-Annual caslr
bonus payable to Class-Ill and Class-IV employees of the Corporation under
·the settlement of 1974, e/Jecl o>f-Ejject of notice of termination of the settlements by the Corporation
under
sections 9A
and 19(2) of the Industrial
Disputes Act and section 49 of the Life .Insurance Corporation Act-Constitution of India, 1950, Articles 12, 38, 39 and 43 and Regulation 58 of the Life
Insurance Corporation of India (Staff) Regulations, 1960.
The Life Insurance Corporation came into existence on the 1st of
September, 1956, as a statutory authority established under the Life Insurance
Corporation Act (Act 3 l), 1956.
As
from the
said date all institutions
carrying on Life Insurance business in India were nationalised to
th~ extent
of such busine:ss and their corresponding assets and liabilities were transferred
to the Corporation. Section 11 of the Act provided for the transfer of service
of those employees of such institutions who were connected with Life Insurance
business immediately before the, said date to the Corporation and for some
other matters.
Section 23 of the Life Insurance Corporation Act gave to the
Corporation the power to employ such number of persons as it thought fit
for the purpose of enabling it to discharge its functions under the Act and
declared that every person so empioyed or whose services stood transferred
to the Corporation under section 11 would be liable to serve anywhere in
India. Section 49 conferred on the Corporation the power to make regulation~
for the purpose of giving effect to the prnvisions of the Act with the previousapproval of the Central Government. Sub-section (2) of that section enumerated
various matters in relation to which such power was particularly conferred.
·On 1st of June, 1957 the Central Government promulgated the Life Insurance
Corporation (Alteration of Remuneration and other Terms ar.d Conditions
of Service of Employees) Order, 1957 altering the remuneration and other
terms and conditions of service of those employees of the Corporation whose
service had been transferred to it under sub-section (1) of section 11. Clause
9 of the 1957 Order declared that no bonus would be paid but directed that
the Corporation would set aside an amount every year for expenditure on
schemes of general benefit to the employees such as free insurance scheme,
medical benefit scheme and
other
am~nities to
them. On the 26th June,
1959, the Central Government amended clause 9 of the 1957 Order 'SO as to
provide that non-profit sharing bonus would be paid to those employees of
the Corporation whose salary did not exceed Rs. 500 per month.
On 2nd
of July, 1959 · there
was a
settlement
between the
Corporation and
its
employees providing for
paym~nt to them of cash ·bonus at the rate of It
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months' basic salary for the period from the 1st September, _1956 to the
31st December, 1961.
In the year 1960 the Life Insurance Corporation of
lndta (Staff) Regulations, 1960 were framed and Regulation 58 dealt \Vttb
the payment of grant of no:1-profit sharing bonus to its employees. On 14th
April. 1962 and 3rd August, 1963 orders were again issued, the effect of which
WJ.5 to remove the Emit of Rs. 5'00 on the basic salary as a cor;dition of
~Jiaihi1ity for payment of Lonu1.
lhe seaiemeoi dated 2r:d July, 1959 was
D
foMow(d bv three o~hers \vhich were arrived at on the 29th January, 1963.
the 20th June, 1970 and the 26th June, 1972, respectively aroJ each one of
VJtii£h · provided for payment of bonus at a particular rate.
Disputes between the Corporation and its workmen in regard to the
latter's conditions of service were received by two settlements dated the 24th
)antJdl)'• 1974 and the 6th February, 1974, arrived at in pursuance of the
C
provisions of section 18 read with section 2(p) of the Industrial Disputes Act.
-The Corporation was a party to both the settlements which were identical in
terms._ llowever, while four -of thC five Unions of workmen subscribed to the
first settlement, the fifth Union was a signatory to the .second.
The settlements
provided for revised scales of pay, the method of their fixation and dearness
and other allowances ag_ well as bonus.
The settlements were approved by
the Board of the Corporation and also by the Central Government.
The
D
employees of the Corpor:ition having opted for the n;'!'W scales cf pay, bonus
·\Va~ paid in accordance therewith for the years 1973-74 and
1~7&-75 in
April 1974 and in April 1975 resP.ectively.
One of the Payment of Bo~us
(Am~ndment) Act, 1976 cof'/'l~ng frito force with retrospective effect from 25th
Septemb:r, 1975 curtailing the rights of employees of industrial undertakings
·to bonus, though it w';s
in::!ppEcable to the
Corporation by virtlle of the
provisio:is of section 32 of the Payment of Bonus Act, the payme.nt of bonus
E
for the y:ar 1975-76 to the employees of the Corporation was stopped under
ir:struc!iGQ5 from the Central Government, whose action in that behalf was
·challenged by the employezs through a petition under Article 226 of
the
Constitution of India in· th~ High Court of Calcutta.
The single Judge of
the Higli Court issued a writ of rn1ndamus directing the- Corporation to .act
·in accordance \Vith the terms of the settlement dated the 24th cf January, 1974.
The Corporation preferred a Letters Patent appeal against lhe decision of
F
·the learned singJe. Judge _and that appeal was pending dispo<ial when t!::te
,
Central Government promulgated the Life Insurance Corporation (Modification
··of.Settlement) Act, 1976 on 2')th ~fay, 1976.
The said ~ct \Yas challeni::.ed
ty the werkm\!n in the Supreme Court which by a
judgment dated 21st
February, 1980 (Madan Mohan Pathak v. Union of Ind/a, [1978] 3 SCR J34)
declarect it to be void as offe:lding Article 31(2) of the Conititution of Indja
·and directed the Corporation to forbear from implementing the 1976 .\ct and
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to pay to its Class-III and Class-IV employees bonus for the y~ars Jst_ Apdl
1975 to 31st March 1976 and 1st April 1976 to 31st !\larch 1977 in accord1.nce
\vith the terms of sub-clause (ii) of clause 8 of e~ch settlement.
On 3rd March, 1978 the Corporation issued to its workmen a notice
under sub-section ·(2) rJJf- Sl!'Ctidn 19 of the Industrial Disputes Act declaring
its intention to terminate the settlements on the expiry of a periOd (;( two
H
·months -from the date of the notice was_ served.
The notice, however
; mentioned in express terms that according to the Corporation co such notice
·v..'as really necessary for termination of the settlements.
On the san1e date.
··aaOther· "notice was issued by the Corporation under section 9A of the Indus!rial
)
./
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LIFE INSURANCE CORPOllATION V. D. J. BAHADUR
108 5
Disputes Act statini: that it intended to effect a chan2e in accordance with
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the contents of the annexure to the notice, as from the !st June, 1978, in the
conditions of &ervice ot its workmen.
On 26th May, I 9n, the Central
-Government issued a notification under section 49 of the Life Insurance
Corporation Act substituting a new regulation for the then existing regulation
bearinll serial number 58.
The new regulation was to come into force from
the !st of June, 1978.
Simultaneously, an amendment on the same lines was
made in the 1957 Order by the substitution of a new clause for the then
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existing clause 9 in pursuance of the provisions of sub-section (2) of section
11 of the L. I. C. Act.
These two notices dated 3rd March, 1978 by the Corporation under
-sections 19(2) and 9A of the Industrial Disputes Act respectively and the action
·taken by the Central Government on the 26th May, 1978 by making
new
provisions in regard to the payment of bonus to the Corporation's employees
were challen2ed successfully by the workmen in a petition to the Allahabad
'High Court under Article 226 of the Constitution of India and hence the
3ppeal by the Corporation.
Allowing the appeal by majority, the Court
HELD:
Per Iyer, J.-A. The Industrial Disputes Act is a benign measure which
·seeks to pre-empt industrial tensions, provide the mechanics ,,f dispute resolutions and set up the necessary infra-structure so that the energies of partners in
·production may not b! dissipated in counter-productive battles and assurance of
industrial justice may create a climate of goodwill. Its object is "the investigation and settlement of industrial disputes". Parliament has picked out the ~pecific
·subject of industrial disputes for particularised treatment, whether !he industry
be in the private or public sector or otherwise. The meat of the st,,tute is
industrial dispute, not conditions of employment or contract of service as such.
l1106E, 1110D, 1111B-C]
Bangalore Water Supply and Sewemge Board v. Rajappa, [1978] 2 SCC
213, applied.
B, (1) The Industrial Disputes Act substantially equate~ an award with a
-settlement, from the point of view of their legal force.
No distinction in
regard to the nature and period of their effect can be discerned, especially
when one reads section 19(2) and (6).
Further, it is clear from section 18
that a settlement, like an Award, is also binding. Thus both settlements and
Awards stand on the same footing.
[1 I09F, G, 1109 E]
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(2) There are three stages or phases with different legal effects in the
G
life of an Award or Settlement.
There is a specific period contractnally or
statutorily fixed
as the period of operation.
Thereafter, the Award or
Settlement doe• not become non est, but continues to be binding.
This is
the second chapter o~ legal efficacy but qualitatively different.
Then comes
the last phase.
If notice of intention to terminate is given -.mder secticm
19(2) or 19(6), then the third stage opens. where the Award or the Settlement
does ~urvive ~nd is in force between the parties as a contract which has
H
'superseded the earlier contract and subsists until a new Award or negotiated
settlemo.nt takes its place.
Like nature, Law abhors a vacuum and even on
the notice of termination under section 19(2) or (6), the 'equence and
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[1981] 1 S.C.R. ·
consequence cannot be just void but a coi;itinuance of the earlier terms, bu't
with liberty to both sides to raise disputes, negotiate settlements or· seek a
reference and Award. Until
such a new contract or Award replaces the
previous one, the former
settlement or Award wiIJ
regulate the relation
between the parties.
Industrial law frowns upon a lawless void and under
general law the contract of service created by an Award or Settlement Jive$
so long as a new lawful contract is brought into being. [1114 A-F]
(3) The precedents on the point, the principles of Industrial Law. th"'
constitutional empathy of Part IV and the sound rules of statutory cons1ruction·
converge to the same point that when a notice intimating termination of aru
Award or Settl::ment is issued the legal import i;i merely that the stag~ is.:
set for fresh negotiations or industrial adjudication and until either effort.
ripens into a fresh set of conditions of_ service the
prt!vious Award or
Settlement does regulate the relations between the employer and the employees ..
(1124 F-G]
Judhisthir Chandra v. Mukherjee,
AIR
1950
Cal.
577;
Mllngaldas
llarandas v. Payment of Wages Authority etc., (1957) II LU 256 (Bombay
D. B.);
JVorkmen of New Elph1~nstone Theatre v. New Elphinstone Theatre,.
(1961) I LU 105 (119) (Madras); Yamuna Mills Co. Ltd. v. Majdoor Mahajan
Manda/, Baroda & Ors .. (1957) I LLJ 620 (Born.); Sathya Studios v. Labour
Court,/(1978) I LU 227 (Madras); Maruti Mahipati Mullick & Anr. v. M/s •
Polson Ltd. & Anr., (1970) Lab. & I. C. 308 (Born.), approved.
South Indian Bank Ltd. v.' A. R. Chako, (1964] 4 SCR 62,5; Management"
of Indian Oil Corporation Ltd. v. Its Wqrkmen, 1 SCR 110; Md. Qasim Larry,
Factory Manages, Sasamusa Sugar Works v. Md. Samsuddin & Anr., [1964] T
SCR,419; followed.
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(4) The Settlement under tho I. D. Act does not suffer death merely
F
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because of the notice issued under section 19(2).
All that is done is a notice
"intimating its intention to terminate the Award".
The Award even if it
ceases to be cperative qua a\vard, continues q:1a contract. Therefore, if the
Industrial Disputes Act regulates the jural relations between the L. I. C. acd
its employees-an .. if'-then the rights under the settlements of 1.974 remain
until replaced by a later Award or Settlement. [1124 G-H. 1125 A-B]
C. (1) In determining whether a statute is a special or a general one-, the
focus must be on the principal subject matter plus the particular perspective~
For certain purposes, the Act may be general and for certain other purpose!
ii may be special. (1127 B-C]
(2) The Life Insurance Corporation Act is riot a Jaw for employment or
disputes arising therefrom, but a nationalisation measure which incidentaJly,.
like in any general take-over legislation,,, provides for recruitment, tr:insfer3,.
promotions and the like.
It is special vi.{-a-vis nationalisation of life insurance,
but general regarding Contracts of employment or acquiring office buildin£:!1.
Emergency measures are special, for sure, Reg4lar na.tionatisation statut.."1> are
general even if they incidentally refer to conditions of service. 1111 t H, 1112
A·B]
(3) So far as nationalisation of insurance business is concerned, the Life
Insurance Corporation is a special legislation, but equaily indubitably, is the'
inference, from a bare perusal
of the subject,
scheme and sections an!i
H
understanding of the anatomy of the Act, that it has nothing to do with thoparticular problem of disputes
between
employer and
employees, and of
investigation and adjudication of_ labour dispute. [1126 G~H, 1127 A]
• 4.
+
•
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LIFE INSURANCE CORPORATION v. D. J. BAHADUR
I 08.7
On the other hand, the Industrial Disputes Act is a special statute devoted
A.
wholly to investigation and settlement of industrial disputes which provides
definitionally for the nature of industrial disputes coming within its ambit.
It creates an infra-structure for investigation into, solution of and adjudication
.+ upon industrial disputes.
It also
provides
machinery for enforcement
of
Awards and Settlements. From alpha to omega the I. D. Act has one special
mission-the resolution of industrial
disputes
through specialised agencies
according to specialised procedures and with special reference to the weaker
B·
categories of employees coming within the definition of workmen.
Therefore,
with reference to industrial disputes between
employers and v orkmen, the
I. D. Act is a special statute, and the L. I. C. Act does not speak at all with
specific reference to workmen.
On the other band, its powers relate to the
1,,...__general aspects of nationalisation, of management when private businesses are
nationalised and a plurality of problems which, incidentally, involve transfer
of service of existing employees of insurers. The workmen qua workmen and
c·
industrial disputes between workmen and the employer as such, are beyond
.-
the orbit of and have no specific or special place in the scheme of the L.I.C.
Act. [1127 C-F]
(4) Thus, vis-a-vis 'industrial disputes' at the termination of the Settlement
as between the workmen and the Corporation,
the I. D. Act is a special
legislation and the L. I. C. Act a general legislation.
Like.wise, when
D·
compensation on nationalisaiion is the question, the L. I. C. Act is the special
statute.
An application of the generalia maxim makes it clear that the I. D.
Act being special law, prevails over L. I. C. Act which is a general law.
[1127 H, 1128 A-BJ
U. P. State Electricity Board v. H. S. Jain, [1979] l SCR 355, I. K. Cotton
Spinning and Weaving Mills Co. Ltd. v. State of Uttar Pradesh, AIR 1'161
SC 1170 at 1174, followed.
(5) Section II of the Life Insuranee Corporation Act, 1956 does not repel
_, the Industrial Disputes Act, 1947.
The provisions of the L. l. C. Act which
contained provisions regarding conditions of service of employees would not
become redundant, if the I. D. Act was held to prevail.
For one thing, the
provisions of .sections 11 and 49. are the usual general provisions giving
a
statutory corporation power to recruit and prescribe conditions of service of
its total staff-not anything special regarding 'workmen'.
Secondly, no case
of redundant words arose because the Corporation, like a University, employed
not only workmen but others also and to regulate their conditions of service
power was needed. Again, institutions where no dispute arose. power in the
employer to fix the terms of employment had to be vested.
[1129 F·H, 1130
A-BJ
Bangalore Water Supply and Sewarage Board v. Rajappa, [1978] 2 SCC
813; D. N. Banerji v. P. R. Mukhe,rjee & Ors. [1953] SCR 302, followed.
--4
(6) Whatever be the powers of regulation of conditions of service, including
payment or non-payment of bonus e,njoyed by the employees of the Corporation
under the L. I. C. Act subject to the directives of the Central Government,
they stem from a general Act and cannot supplant, subvert or substitute the
special legislation which specifically deals
with industrial disputes between
workmen and their employees. [1131 F-Hl
rThe Court directed the Corporation to fulfil its obligations in terms of
the 1974 settlements and start negotiations like a model employer, for a fair
settlement of the conditions of ·ser~~e between itself and its employees having
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realistic and ,equitable regard to the pre,vailing conditions of life, principles of
industrial justice and the directives underlying Part IV of the Constitution.]
Per Pathak J. (Concurring with Iyer, J.) (I) Both the limbs of sub-section +
(2) of section 11 of the L. I. C. Act,
1956 are
intended to constitute a
composite process of rationalising the scales of remuneration and othe.r terms
and conditions of service of transferred employees with a view not only to
effecting a standardisation between the
transferred employees but also to
revising their scales of remuneration, and terms and conditions of service to
a pattern, which will enable the newly established Corporation to become a
viable and commercially successful enterprise.
For that reason, it is open
to the Central Government under the sub-section to
ignore the
guarantee
contained in sub-·section (1) of section 11 in favour of the employees or ~1
anything contained in the Industrial Disputes Act, 1947 or any other law tur
the time being in force or any award, sr.ttlement or agreement for the lime
being in force. [1135 D-G]
The second limb of sub-section (2) of section 11 is not related to employees
generally, that is to say, both transferred and newly recruited employees, of
the Corporation. It is confined to transferred employees;
There is no danger
of an order made by the Central Government under the second limb of subsection (2) in respect of transferred 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 nf
transfer and integration, the transferred
employees
constitute a reasonably
defined class in themselves and form no common basis with newly recruited
employees. [1136 C-E]
The power under the second limb of sub-section (2) of section 11 can
be exercised more than once.
To effectuate the transfer appropriately and
completely it may be, necessary to pass through different stages, and at ench
stage to make a definite order.
So' Jong as the complex of orders so made
is necessarily linked
with the
process of
transfer and
integration, it is
immaterial that a succession of orders is made. The deletion of the words
"from time to time" found in the Bill, is of no consequence. [1136 E-G]
(2) The notification dated 26th May,
1980 purporting
to amend the
Standardisation Order is invalid.
It has no effect on the right to bonus by
the workmen. The notification was intended to apply to transferred employees
only.
It declares explicitly that the Central Government is satisfied that a
revision of the terms and conditiorni of service of the transferred employees
is considered necessary.
This is made
explicit
by the circumstance that
identical provisions have been
made by the
Corporation, with the prior
approval of the Central Government, in the new Regulation 58 of a notification
issued under both clauses (b) and (bb). [1137 A-C]
(3) A settlement under the Industrial Disputes Act, in essence, is a contract
between the employer and the workmen prescribing new terms and conditions.
H
As soon as the settlement is concluded and becomes operative, the contract
embodied in it takes effect and the existing terms
and conditions of the
workmen are modified accordingly.
Unless there is somethin2 to the contrary"
in a particular term or condition of the Settlement the
embodied contract
LIFE INSURANCE CORPORATION V. D. J. BAHADUR
1089'
endures indefinitely, continuing to govern the relation between the parties in
A.
future, subject of course to subsequent alteration through a fresh settlement,
award or valid legislation.
Settlement is not only a contract but something
more. Conceptually, it is a "settlement". It concludes or "settles" a dispute.
~ In order the new contract be afforded a chance of being effectively worked
out a mandate obliging the parties to unreservedly comply with it for a period
of time is desirable.
It was made "binding" by the statute for such period.
On the expiry of such period, the baln lifts, and the
parti~s are at liberty
B;
tu seek an alteration of the contract. (1138 E-H-1139 A-C]
The law laid down in South Indian Bank Ltd. v. A. R. Chacko (1964]
5 SCR 825 and Md. Quasim Larry, Factory Manager, Sasamusa Sugar Works
v. Md. Shamsuddin & Anr., [1964] 7 SCR 419 in respect of an Award applies
I,.~ equally in relation to a settlement. [l 140B]
(4) The Industrial Disputes Act is a ·special law and must prevail over
the Corporation Act, a general law, for the purpose of protecting the sanctity
t
of transactions concluded
under the
former
enactment.
Regulation 58, a
product of the Corporation Act, cannot supersede the contract respecting bonus
betwe1en the parties resulting from the settlement of 1974.
(1142 B-D]
Plainly, if a settlement- resolves an industrial dispute under the Industrial
c
Disputes Act, it pertains to the central purpose of that Act.
This constitutes
]).
a special law in respect of a settlement reached under the auspices between
an employer and
his
"workmen" employees.
The consequences of
such
,ettlement are the product of the special law. [1141 E-F]
The Corporation Act was enacted primarily for effecting the nationalisation
of Life Insurance business by transferring all such business to a Corporation
established for that purpose.
Clearly, the object behind section II (1), section
E
Z3 and clauses (b) and (bb) of section 49(2) of the L. I. C. Act is to provide
staff and Jabour for the purpose of the proper management of the nationalised
i
life Insurance business.
The Corporation Act ·does not possess the features
found in the Industrial Disputes Act.
No special provision exists in regard to
industrial disputes and their resolution and the, consequences of that resolution.
The special jurisdiction created for the purpose under the Industrial Dispute>;_
)--··
Act is not the subject matter of the Corporation Act at all. No corresponding
F
provision in the Corporation Act, a
subsequent
enactment, deals with the
.subject matter enacted in the Industrial Disputes Act.
(1140 F, 1141 A, F-G]
Yet Parliament intended to provide
for the. Corporation's "workmen"
employees the same opportWlities as are available under the Industrial Disputes
Act to the, workmen of other employers, as demonstrated by section 2(a)(I)
of the
Corporation
Act.
The expression
"appropriate Government" is
G.
specifically defined by it in relation to an industrial dispute .ooncerning t~e Life
Insurance Corporation.
Both the Central Government and the Corporation
~-
understood the Industrial Disputes Act in that light, for, Regulation 51(2)
of the (Staff) Regulations made bv the Corporation under clauses (b) and (bb)
of section 49(2) of the Corporation Act, with the previous approval of the
Central Government, speaks of giving effect to a revision of scales of pay,
dearness
allowance, or
other
allowances "in pursuance of any
award,
H.
agreement or settlement." [1141 G-H, 1142A-C]
Life Insurance Corporation of India v. Sunil Kumar Mukherjee, [1964] 5
SCR 528; Sukhder Singh v. Bhagat Ram, [1975] 3 SCR 619, referred to.
1090
SUPREME COURT REPORTS
[1981] 1 S.C.R.
A
U. P. State Electricity Board & Ors. v. Bari Shanker lain &: Ors., [1979]
B
·C
D
E
F
H
SCR 355; J. K. Cotton Spinning and Weaving MJls Co. Ltd., v. State of
Uttar Pradesh, AIR 1961 SC 1170, followed.
Mary Sawards v. The Owner of the "Vera Cruz", (1884]
IO A.
C 59
_,._
(ii) 68, quoted with approval.
(5) In construing the scope of the Corporatio~'s powers under section 11
(I) of the Corporation Act, appropriate importanee should be attached to the
qualifying word "duly".
When the Corporation seeks to alter the term; ar.d
conditions of transferred employees, it must do so in accordance with
l~w,
and that requires it to pay proper regard to ihe sac:ctity of rights-acquired
by the "workmen" employees under settlements or awards under the I'ldustrial
Disputes Act. [1142H, 1143 A-BJ
_{
The provision in section 11(2) has been made for the purpose o(-~
protecting the interests of the Corporation and its policy holders.
The policy
holders constitute an important and significant sector of public illte1est. Indeed,
the avowed object of the entire Corporation Act is to provide absolute security i
to the policy holders in the matter of their life insurance protection. That is
assured by a wise management of the Corporation's business, and by ensuring
that when settlements are negotiated between the Corporation and its workmen
or when industrial adjudication is initiated in Labour
Court and industrial
tribunals, the protection of the policy holders will find appropriately significant
emphasis in the deliberations. (1143 D-E]
(6) In the view that the notification dated 26th May, 1978 purporting to
amend the Standardisation Order by substituting clause (a) is invaJid and
the newly enacted Regulation 58 does not effect the contract in respect of
bonus embodied
in the
Settlements of 1974
between the Life Insurance
Corporation and its "workmen" employees, effect must be given to that contract.
If the terms and conditions of service created by the contract need to be
reconsidered, recourse must be had to the modes ·recognised by law-negotiated
settlement, industrial adjudication or appropriate legislation.
(1143 F-G]
Per Koshal, J. (Contra) (I) The
Industrial Disputes ·Act deals with
the adjudication or
settlement of disputes
between
an employer and his
workmen and would,
therefore., be a special law
vis-a-vis another statute
which covers a larger field and may thus be considered "general" as compared
to it.
It cannot, however, be regarded as a special
law in· relation. to all
other laws irrespective of the subject matter dealt with by them.
In fact a
law may be spe:cial when considered in relation to another piece of legislation
but only a general one vis-a-vis ·still another.
"Special" and "general" are
relative terms and it is the content of one statute as compared to the other
. that will determine which of the two is to be regarded as special in relation
to the other.
Viewed in this light the
proposition, namely, "the Industrial
Disputes Act is a special law because it deals with adjudication and settlement
of matters in dispute between an employer and his workmen while the Life
Insurance Corporation
Act is a general law" cannot stand scrntiny.
The
Industrial Disputes Act would no doubt be a special Act in relation to a law
which makes provisions for matters wider than but inclusive of those· covered
by it, such as the Indian Contract Act as that is a law relating to contracts
generally (including those between an industrial employer and his workmen}
but it would lose that categorisation. and must be regarded as a general law
when its rival is shown to operate in a field narrower than its own and such
a rival is that part of the Life Insurance Oorporation Act whi~h deals with
LIFE INSURANCE CORPORATION V. D. J. BAHADUR
1091
'Ci>nditions of service of the employees of the Life Insurance Corporation-a
A
single industrial un<lertak::,g of a special type) as oppo,ed to all others of
its kind which fall within the ambit of the Indust!ial D'sputes Act.
Where
the competition is
between these two Acts,
therefore. the Life Insurance
Corporation Act must be regarded as a special law and (in ~ompari,on thereto)
the Industrial Disputes Act as a general law. [1153 E-F, H, 1154 A-Cl
(IA) Section 11 and clauses (b) and Clib} of sub-section 2 of section 49 of
the Life Insurance, Corporation Act were intended to be and do constitute
an exhaustive and cvcrriding law governing the condition of service of all
employees
of the Corporation
ir,cJuding
transferred
employees.
The
proposition, namely, that the Industrial Disputes Act
being a special law.
would override a general law like the
Life lnsnrance
Corporation Act, is
incorrect.
Even if the Industrial Disputes Act is regarded as a special law
in comparison to, the Lifu Insurance Corporation Act, the result would he
the same. [1162 E-F, 1153 E]
(I B} The general rule to be followed in the case of a conflict between two
statutes is that the later abrogates the earlier one (Leges posteriores priores
contrarias abrogant).
To this general rule there is a well known exception,
namely, generalia specialibus non derogant (general things do not derogate
from special things).
In other words, a prior special law would yield to a
later general law, if either of the following two conditions is satisfied: (i) The
two are inconsistent with each other.
(ii) There is some express reference in
the later to the earlier enactment. If either of these conditions is fulfilled the
later law, even though general, will prevail. Further four tests deductible from
the several texts on interpretation of statutes are : (i) The legislature has the
undoubted right to alter a law already promulgated by it through subsequent
legislation.
(ii) A special law may be altered, abrogated or repealed by a
later general law through an express provision.
(iii) A later general law will
override a prior special law if the two are so repugnant to each other that
they cannot co-exist even though no express provision in that behalf is found
in the general law. (iv) It is only in the absence of a provision to the
contrary and of a clear inconsistency that a special law will remain wholly
unaffected by a later general law. [1154 E, G-H, 1156 C-D]
(2) The proposition that the Industrial Dispute Act
being a special Jaw
would override a general law like the Life Insurance Corporation Act is equally
insupportable even if the Industrial Disputes Act is regarded as a special law
in connection with the Life Insurance Corporation Act.
The word "duly",
in section 11(1) of the Life Insurance Corporation Act means properly, regularly
or in due manner.
In the contexf in which it is used it may legitimately be
given a more restricted meaning, namely, in accordance with bw. If reference
to the provisions of the Industrial Disputes Act alone was contemplated and
the alterations envisaged
were merely
such as
could be
achieved
by a
settlement or award resulting from a compliance thereof, not only would the
expression "by the Corporation" become redundant (which would not be a
situation conforming to the well-known principle of interpretation of statutes
that a construction which leaves without effect any part of the language of a
statute will normally be rejected) but the express provisions of clause !bb)
of sub-section (2) of section 49 of the Li~e Insuranee Corporation Act, which
invest the Corporation with power to make regulations (albeit with the approval
of the Central Govemment) laying down the terms and conditions of service
-Of the transferred employees would also be rendered otiose.
::ro th~ extent,
B
c
D
E
F
G
H
1092
SUPREME COURT REPORTS
[1981] 1 S.C.R.
A
B
c
D
E
therefore, that section 11(1) read with that clause confers on the Corporatio~
the power to alter the terms and conditions in question-a power not enjoye4
by it under the provisions of the Tndustrial Disputes Act-it is inconsistent
with the Industrial Disputes Act and being a later law, would override that
Act despite the absence of the non-obstante clause, the inconsistency having
arisen from express language and not from mere implication. In other words,
sub-section (2) of section 11 not only gives to the Central Government the
power to alter the terms and colnditions of service of the employee,s of the
Corporation in
certain
situations, and to alter them even to the
detriment
of such employees to snch extent and in ·such manner as it thinks fit, but
also states
in
>.o
many
words that
such
power
shall be exercisable
"notwithstanding anything contained in sub-section (l)
or the
Industrial
Disputes Act 1947 or in any other law for the time being in force, or in any
Award, settlement or agreement for the time being in force."'
The mandate
of the Legislature has been expr~scd in clear and unambiguous terms in this
non-obstante clause and is to the effect that the power of the Central Government
to alter conditions of service of the employees of the Corporation shall be
wholly unfettered and that any provisions to the contrary contained in the
Industrial Di·sputes Act or for that matter, in any other
law for the time
being in force, or in any award, settlement, or agreement for the lime being
in force,
would not stand in the way of the exercise of that power even if
such exercise is to the detriment of the employees of the Corporation.
The
conferment
of the power is
thus in express supersession of the
Industrial
Disputes Act and of any settlement made thereunder.
The provisions of
that Act and the two settlements of 1974 must, therefore, yield to the dictates
of section 11(2) and to the exercise of the power conferred thereby on the
Central Government.
Further, in the, face of an expre•s provision, namely,
sub-section (4) of section 11 it is r.ot open to the employees to contend that
the law laid down in the Il)dustrial Disputes Act and not sub-section (2) of
section 11 would govern them. [1154C, 1157 C-H, 1159 A-E, F-G]
(3) The rule making power conferred on the Corporation by section 49
ot the Life lnsuranee Corporation
Act is
exercisable
notwithstanding the
provisions of the Industrial Disputes: Act.
This power is expressly conferred
on the Corporation i'n addition to that with which it is invested under clause.
(bb) of the same sub-section (2) 0£ section 49. If clauses (b) and (bb} of that
F
sub-section were not meant to override the provisions of the Industrial Disputes
Act on· the same subject they would be completely meaningless, and that is a
situation
running
directly
counter to
one of the accepted
principles of
interpretation of statutes.
Besides, these two clause• are not to be read in
isolation from section 11. The subject matter of the clauses and the sectio!1
is overlapping and together they form an integrated. whole.
The clauses must.
therefore, be read in the light of section 11.
When the two clauses say that th"
G
Corporation shall have the power to frame regulations. in regard to the terms
and conditions of its employees including transferred employees subject, of
course, to previous approval of the Central Government, the power may well
be exercised in conformity with the provisions of section 11.
And if it SI!>
exercised the
resultant regulations cannot be said to go
beyond the limits
specified in the statute. [1159 G-H, 1160 A-DJ
H
Life Insurance Corporation of lndia v. Sunil Kumar
Mukherjee & Ors.
[1964] 5 SCR 528, followed.
Hukam Chand etc. v. Union of India and others, AIR
1972 SC 2427;
B. E. Vadera ,v. Union of India & Ors. [1968] 3 SCR 575, held inapplicable.
+
LIFE INSURANCE CORPORATION v. D. J', BAHADUR
1093
U. P. State Electricity Board and Ors. v,
Hari Shanker lain and Ors.,
[1975] I SCR 355; Bangalore Water Supply &
Sewerage Board etc. v. R.
Rajappa & Ors. [1978] 3 SCR 207, explained and distinguished.
(4) Section 23
of the L. I. C. Act,
which envisages
employment of
persons by the
Corporation no
doubt implies settlement cf ccmditrnns of
service and that does not mean that once a settlement is arrived at, the same
is not liable to be altered except by another settlement reached under section
18 of the I. D. Act.
The provisions of sub-sections (1), (2) and (4) of section
1 I of the L. I. C. Act and clauses (b)1 and (bb) of ·sub-section (2) of section 49
thereof have overriding effect and the terms and conditions of service of the
employees of the Corporation forming part of a settlement under the I. D.
Act cannot last after they have be.en altered in exercise of the powers conferred
on the Corporation or the Central Government by these povisions, as
was
done when the new Regulation 58
was framed under
'Section 49 by the
Corporation and the, new clause 9 was inserted in the
1957 order by the
Central Government. Nor can any action taken under section 19(2) and 9A
of the I. D. Act have any relevance to the exercise of these powers so long
as such exercise conform to the provisions of the L. I. C. Act. [1162 G-H,
1163 A-BJ
(5) The reliance of the High Court on Madan Mohan Pathak v. Union of
India, [1978] 3 SCR 334, for support to
the
proposition
that
"the new
Regulation 58 framed under section 49 of the L. I. C. Act and the notification
issued under sub-section (2) of section 11 thereof substituting a new clause 9
in the 1957 Order are wholly ineffective against the operation of the 1974
settlements which were arrived at in pursuance of the provisions cf the I. D.
Act and which therefore continue to govern the parties thereto",
i~ wholly
misplaced because:
(a) The judgment limited itself to the duration of the settlements as
appearing in clause 12 thereof and therefore does not cover any period subsequent to 21st March, 1977.
(b) No finding at all was given nor was any observation made to the
effect that section~ II and 49 of the L. I. C, Act or the, action taken thereunder
(the promulgation of new Regulation 58 and the new clause 9 of the 1957
Order) was ineffective against the operation of the provi'sions of the I. D.
Act or of the 1974 settlements.
On the other hand the judgment very
specifically proceeded on the ground that the two settlements had to and did
conform to
the
provisions of Regulation
58
inasmuch as
the
Central
Government had accorded its approval to them,
(c) Although it was held
clearly, rather quite correctly that sub-clause (ii) of clause
8 of the 1974
settlements stood independently
of
sub-clause (J)
thereof,
the judgment
contains no finding whatsoe.ver to the effect that the conditions of service
'laid down in those settlement could be varied only by a fresh settl.ement or
award made under the provisions of the I. D.