Ranbir Singh vs Sk Roy, Chairman, Life Insurance Corp. of India & Anr.

HELD: 1. None of the Counsel appearing on behalf of the workers in the present batch of cases disputed the factual position, asserted on behalf of LIC, that the judgment of the two-judge Bench in TN Terminated Employees Association affirming the validity of the Srivastav Award contains no reference whatsoever to the final order dated 7 February 1996 in the batch of civil appeals arising from the Tulpule and Jamdar Awards in LIC v. Their Workmen. The interim order dated 1 March 1989 in LIC v. Their Workmen, which forms the basis of the judgment in TN Terminated Employees Association, was passed in the backdrop of a compromise which was arrived between LIC and eight out of the nine Unions and Associations representing the workers. Since the appeals were pending at that stage, the Court granted liberty to the parties to the compromise to implement its terms as an interim measure, without prejudice to the contentions of the ninth Union which had not entered into the compromise. But noticeably, there is a clear omission on the part of the Court in TN Terminated Employees Association to refer to the admitted position that subsequently on 7 February 1996, this Court in LIC v. Their Workmen accepted the submission of LIC that since eight out of the nine unions (representing nearly 99 per cent of the workers in Class III and Class IV posts) had accepted the compromise, there was no justification for the ninth Union to object. The Court held that it would be in the interest of industrial peace that the ninth Union should also fall in line and act on the terms of the compromise. The civil appeals in LIC v. Their Workmen were disposed of in terms of the above order dated 7 February 1996. The terms of compromise clearly envisaged that the management and the workers had agreed that the awards of the NIT dated 17 April 1986 (Tulpule Award) and 26 August 1988 (Jamdar Award) “be substituted by the terms and conditions of compromise in relation to the question of regular employment of the workmen concerned in the said references”. Once the awards were substituted by the terms of compromise, it would be an impermissible interpretation of law to hold that the awards continued to be operative and binding, notwithstanding the final order of this Court dated 7 February 1996 in LIC v. Their Workmen. The final order dated 7 February 1996 has not been adverted to by the two-judge Bench in TN Terminated Employees Association. The factual finding is based only on the interim order dated 1 March 1989. The final order dated 7 February 1996 in LIC v. Their Workmen had a crucial bearing on the special leave petitions arising from the judgment of the Delhi High Court setting aside the Srivastav Award. [Para 53][1044-E-H; 1045-A-E]

2. The two-judge Bench in TN Terminated Employees Association opined that the scheme which was framed in E Prabavathy was the outcome of an order which was passed in writ petitions filed by the workers and not in the course of the adjudication of an industrial dispute. On this ground, the Court held that the decision in E Prabavathy would not come in the way of an adjudication by the CGIT or NIT while deciding a reference under Section 10 of the ID Act. The decision in E Prabavathy was rendered on 23 October 1992 in a batch of civil appeals which was being considered by a three-judge Bench. During the pendency of the civil appeals, the Court called upon LIC to formulate a scheme for the regularisation of workers who had been granted ad hoc employment for at least 85 days from time to time. The three-judge Bench held, after assessing the terms of the scheme proposed by LIC, that it was reasonable and commended itself for acceptance. The scheme proposed by LIC was approved by this Court with a specific observation that the clauses of the scheme extracted in the order would form a part of the order of this Court. The decision of three Judges in E Prabavathy was thereafter interpreted by a two-judge Bench in its order dated 22 November 2001 in G Sudhakar. Noticing that the scheme which has been accepted in E Prabavathy governed workers of the Tamil Nadu Division of LIC, the Court held that the scheme would be equally applicable to the workers of all divisions of LIC in the country. The Court therefore held that it was not necessary to evolve a fresh scheme for a different group of workers, in that case under the directions of the Andhra Pradesh High Court. As a matter of fact, it is also material to note that in paragraph 75 of the Srivastav Award itself there was a specific finding that though the E Prabavathy group of workers had been impleaded in the reference and had filed a statement of the claim, having regard to the fact that the order of this Court dated 23 October 1992 was between the same parties, the workers had no valid ground to challenge the legality of this Court’s order before the tribunal. Despite the clear observations in the Srivastav Award, the judgment of the two-judge Bench in TN Terminated Employees Association has come to the conclusion that the order of the three-judge Bench in E Prabavathy would not preclude an industrial adjudication by the tribunal. The twojudge Bench which delivered the judgment in TN Terminated Employees Association was bound by the order in E Prabavathy , which was of a larger Bench of three judges, and the interpretation which was placed on it by another two-judge Bench in G Sudhakar. If the two-judge Bench differed, it had to refer the matter to a larger Bench but it was not at liberty to take a final view at variance with binding decisions of a larger Bench and of a co-ordinate Bench. [Para 54][1045-E-H; 1046-A-F]

3. There cannot be any dispute over the principle that the judgment in TN Terminated Employees Association, followed by the order in review dated 9 August 2016, are between the present parties and finality has attached to them. LIC is, however, before this Court urging that as a statutory entity with a nationwide presence, it is faced with a situation involving conflicting directions of this Court. LIC has submitted that while on the one hand, the Tulpule and Jamdar Awards were substituted by the terms of compromise on 7 February 1996 in LIC v. Their Workmen, this was preceded by the order dated 23 October 1992 of a threejudge Bench in E Prabavathy which accepted the scheme of absorption proposed by LIC and followed by the order dated 22 November 2001 of a two-judge Bench in G Sudhakar which interpreted the decision in E Prabavathy as being applicable to all divisions of LIC. The impact of the judgment in TN Terminated Employees Association is to substitute and supplant the schemes which were evolved before this Court for providing absorption on specified terms. The essence of the schemes which were accepted by this Court was that those temporary, badli and parttime workers who fulfilled the requirement of the threshold period of service would be eligible to be considered for the grant of the permanency, subject to certain conditions. The orders passed by this Court envisage that these workers would be considered for the grant of permanency in the course of a recruitment process. The impact of the judgment of the two-judge Bench in TN Terminated Employees Association is that while on the one hand the Court’s orders dated 23 October 1992, 7 February 1996 and

22 November 2001 continued to hold the field, on the other hand the restoration of the Srivastav Award brings in place a regime in conflict with what has been accepted by this Court in these orders. Faced with this predicament, it is necessary for this Court to step in and to correct a manifest miscarriage of justice caused by the decision in TN Terminated Employees Association which has been urged to be per incuriam. The consequence of not doing so is serious. [Para 56][1047-B-G]

4. The Court is now confronted with claims on behalf of the workers that the principle which has been enunciated in the Srivastav Award and which has been restored by the two-judge Bench in TN Terminated Employees Association must apply to all workers subsequently engaged by applying Section 18(3)(d) read with Section 17A of the ID Act. Hence, a balance will now have to be drawn by this Court, in the exercise of its jurisdiction under Article 142 of the Constitution, which while on the one hand factors in the finality which has attached to the judgment in TN Terminated Employees Association but on the other hand also factors in the essential concerns which have been expressed before this Court by LIC. LIC had been restrained, due to the interim orders which were passed in the course of the various proceedings, from taking recourse to recruitment through the open market. LIC having been restrained by judicial orders from pursuing an open recruitment process, the situation which has now arisen is that unless a balance were to be drawn, absorption of part-time and badli workers would become a substitute for a recruitment process based on sanctioned posts, consistent with the principles of reservation and pursued on the basis of a structured recruitment which gives equal opportunities to all applicants. Such a consequence is a serious detriment to constitutional parameters and to the duty of LIC as a public employer to follow a process which is fair and in consonance with Articles 14 and 16 of the Constitution. An open and competitive process for recruitment will enable LIC to recruit the best among the available talent. Substituting this by a back-door entry will be detrimental to the interests of the corporation which is governed by statute. [Para 57][1047-H; 1048-A-C, E-G]

5. The Dogra Report eventually concludes that the group of workers, who are governed by the order of this Court in E Prabavathy, would also be eligible for absorption. By considering the workers who are governed by the order in E Prabavathy to be eligible for absorption, the Dogra Report has fallen into a clear error. The report has considered those workers who were clearly outside the ambit of its remit since they were governed by a specific order of this Court. That apart, it is evident that the Dogra Report has proceeded on a generalised assumption that a majority of workers had produced documents are eligible for absorption (having drawn a negative inference from LIC’s non-production of documents). In this backdrop, it would be necessary to bring about a proper verification before the claims of the workers can be truly considered. The deficiency of the Dogra Report in carrying out a proper verification stands clearly established. [Para 60][1051-D-G]

6. Section 48 of the LIC Act confers a rule making power on the Central Government. Clause (cc) of sub-Section (2) of Section 48 was introduced by Act 1 of 1981 with effect from 31 January 1981. Simultaneously by the Amending Act, sub-Sections (2A), (2B) and (2C) were introduced into Section 48. By virtue of sub-Section (2A), the regulations governing the terms and conditions of service of the employees and agents of LIC which were in force immediately before Amending Act 1 of 1981, are deemed to be rules made under clause (cc) of sub-Section (2) and have effect subject to the other provisions of the Section. By a deeming fiction of law, the regulations which were in existence on the date of the Amending Act in relation to the terms and conditions of service are given the status of rules framed under clause (cc) of sub-Section (2) of Section 48. The effect of subSection (2C) is that the provision of clause (cc) of sub-Section (2) and any rules made under it with retrospective effect, shall also be deemed to have had effect from that date notwithstanding any judgment, decree or order of any Court, tribunal or other authority and notwithstanding anything contained in the ID Act, or in any other law or any agreement, settlement, award or other instrument for the time being in force. The rules which are framed under Section 48(2)(cc) operate with a non-obstante clause which prevails, inter alia, notwithstanding anything contained in the ID Act. The vires of the Amending Act was upheld in a judgment of a three-judge Bench of this Court in A V Nachane. Earlier the employees were governed by the regulations framed by LIC under Section 49 as well as by the provisions of the ID Act. Hence, it was open to the workers to enforce their rights and remedies in terms of the regulations framed under the LIC Act or in accordance with the provisions of ID Act. However, after the amendments which were introduced by Parliament in Section 48, the employees of LIC would not be entitled to the protection of the ID Act to which they were entitled before the enforcement of the amendment. [Para 61, 62, 63 and 67][1051-G-H; 1052-B,GH; 1053-A-C; 1056-G-H; 1057-A-B]

7. It becomes necessary at this stage to advert to the provisions of Regulation 8 of the Life Insurance Corporation of India (Staff Regulations), 1960. Regulation 8(1) deals with temporary staff and is prefaced with a non-obstante provision. Clause (1) of Regulation 8 is an enabling provision empowering LIC to employ staff in Classes III and IV on a temporary basis, subject to such general or specific directions which may be issued by the Chairperson from time to time. Clause (2) of Regulation 8 stipulates that no person who is appointed under Regulation 8(1) is, only by reason of such appointment, to be entitled to absorption in the service of LIC or to claim preference for recruitment to any post. The expression “shall only by reason of such appointment be entitled to absorption” in this sub-clause (2) is crucial. What the expression postulates is that a person who is appointed on a temporary basis can nether claim an entitlement to absorption or a preference in recruitment merely by having been appointed on a temporary basis. In other words, Regulation 8(2) does not postulate an absolute bar to a claim for absorption but it stipulates that absorption cannot be claimed merely on the ground that a person was engaged on a temporary basis. Regulation 8(2), for instance, will not preclude a claim for absorption being made in terms of a scheme which is propounded by LIC, so long as the scheme contains provisions which facilitate absorption on stipulated terms and conditions. But the mere fact that a person is appointed in a temporary capacity by LIC, does not entitle such a person ipso jure to seek absorption merely by virtue of or only by reason of such an appointment. [Para 70][1058-B-F]

8. The impact of the provisions of clause (cc) of sub-Section (2), sub-Section (2A) and sub-Section (2C) of Section 48 on the clams of the workers appointed after 4 March 1991 must now be considered. The workers who have worked as temporary, badli or part-time workers after 4 March 1991, seek to assert their claims on the basis of Section 18(3)(d) of the ID Act. Section 18 specifies the person on whom settlements and awards are binding. Section 18(3)(a) stipulates that a settlement or award would bind all the parties to the industrial dispute. Further, clause (d) specifies that where a party to the dispute is composed of workers, the settlement and award binds not only persons who are employed in the establishment to which the dispute relates on the date of the dispute but all persons who subsequently become employees in that establishment or a part of it. Section 18(3)(d), in other words, extends the applicability of a settlement or award beyond the workers who were engaged on the date of the dispute to all persons who subsequently become employees in the establishment. Regulation 8 of the Staff Regulation expressly permits the engagement of temporary workers and clause (2) contains a provision to the effect that a person who engaged under its clause (1) shall not, only by reason of such appointment, be entitled to absorption or to claim a preference for recruitment on any post. The effect of sub-Section (2A) of Section 48 is that Regulation 8 is deemed to be a rule which is framed under clause

(cc) of sub- Section (2) of Section 48. Moreover, the provisions of Section 48(2C) postulate that a rule which is made under the clause shall have effect notwithstanding anything contained in the ID Act. Hence, the workers who have been recruited post 4 March 1991 cannot make a claim for absorption ipso jure under Section 18(3)(d) of the ID Act, as a result of the overriding provision which is contained in sub-Section (2C) of Section 48. [Para 71][1051-F-H; 1059-A-D]

9. In structuring the relief in present proceedings, it is essential to recapitulate the key legal findings that will govern the determination of rights and equities, which are as under:

(i) On 7 February 1996, a two-judge Bench of this Court in LIC v. Their Workmen had accepted the terms of compromise which was arrived at on 1 March 1989 between the management of LIC and eight Unions, and imposed them upon the ninth Union as well. In addition, the two-judge Bench of this Court had issued certain directions;

(ii) On 23 October 1992, a three-judge Bench of this Court, while disposing of the civil appeals in E Prabavathy, specifically accepted the scheme formulated by LIC for regularising the workers who were engaged on a temporary basis. The scheme was also specifically incorporated as a part of the order. The threejudge Bench in E Prabavathy held that the scheme proposed by LIC is reasonable and that: (a) the regularisation will be by selection for appointment; and (b) the above clauses of the scheme would constitute a part of the order of this Court;

(iii) On 22 November 2001, a two-judge Bench of this Court in G Sudhakar directed that though the order dated 23 October 1992 in E Prabavathy applied to the workers of the Tamil Nadu division, the scheme would equally be applicable to the workers of all divisions of LIC in the country;

(iv) The judgment of the two-judge Bench of this Court dated 8 March 2015 in TN Terminated Employees Association failed to notice that as a result of the final order dated 7 February 1996 in LIC v. Their Workmen, the Tulpule and Jamdar Awards had been substituted by the terms of compromise. The two-judge Bench of this Court overlooked the final order dated 7 February 1996 in LIC v. Their Workmen and while adverting only to the interim order dated 1 March 1989, it arrived at a palpably erroneous conclusion that the Jamdar and Tulpule Awards were still operative and binding; and

(v) Though the petition seeking review of TN Terminated Employees Association and the curative petition stand dismissed, LIC is confronted with a situation in which it is equally bound by the earlier decision of the three-judge Bench dated 23 October 1992 in E Prabavathy, the judgment of the two-judge Bench dated

7 February 1996 in LIC v. Their Workmen dealing with the appeals arising out of the Tulpule and Jamdar Awards and the judgment of the two-judge Bench dated 22 November 2001 in G Sudhakar. [Para 73][1059-F-G; 1060-B-C, H; 1061-A-F]

10.1. There is a palpable conflict between the two judge Bench decision in TN Terminated Employees Association dated

18 March 2015 on the one hand and the earlier binding decision of a larger Bench in E Prabavathy on 23 October 1992 and of subsequent Benches. This conflict must be harmonised by taking recourse to the jurisdiction of this Court under Article 142 of the Constitution. In arriving at a conclusion, this Court finds that:

(i) The remit of the CGIT which resulted in the Dogra Report was confined to the process of verification, as distinct from an adjudication of rights and liabilities;

(ii) The Dogra Report is flawed because: (a) The report failed to carry out an accurate verification of only those Class III workers who had put in at least 85 days of work in a period of two years and Class IV workers who had put in 70 days of work in a period of three years; (b) The lists which are appended to the report contain patent inconsistencies and errors as a consequence of a failure to carry out an adequate verification; and (c) The report accepted the claims for absorption of those workers who were specifically governed by the decision of this Court in E Prabavathy, in spite of an express stipulation to the contrary in the order of this Court dated 23 October 1992 in E Prabavathy as well as in paragraph 75 of the Srivastav Award;

(iii) A public employer such as LIC cannot be directed to carry out a mass absorption of over 11,000 workers on such flawed premises without following a recruitment process which is consistent with the principles of equality of opportunity governed by Articles 14 and 16 of the Constitution. Such an absorption would provide the very back-door entry, which negates the principle of equal opportunity and fairness in public employment. [Para 74][1061-G-H; 1062-A-F]

10.2. The dispute is now of an antiquity tracing back to nearly four decades. The claims of those workers who are duly found upon verification to meet the threshold conditions of eligibility should be resolved by the award of monetary compensation in lieu of absorption, and in full and final settlement of all claims and demands. Directions accordingly issued. [Para 75][1062-F-H]

Tamil Nadu Terminated Full Time Temporary LIC Employees Association v. Life Insurance Corporation of India (2015) 9 SCC 62 : [2015] 5 SCR 806 – held per incuriam.

Life Insurance Corporation of India v. Raghavendra Seshagirirao Kulkarni, (1997) 8 SCC 461 : [1997]

4 Suppl. SCR 207; LIC of India v. G Sudhakar [Decision of Supreme Court in Civil Appeal No 2104 of 2000]; A V Nachane v. Union of India (1982) 1 SCC 205 : [1982]

2 SCR 246; M. Venugopal v. Divisional Manager, LIC, Machilipatnam, (1994) 2 SCC 323 : [1994] 1 SCR 433 and E Prabavathy v. Life Insurance Corporation of India [Decision of Supreme Court in SLP (Civil) No 10393 of 1992] – referred to.