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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 32 PETITIONER: LIFE INSURANCE CORPORATION OF INDIA &ANOTHER ETC. Vs. RESPONDENT: S.S. SRIVASTAVA & OTHERS DATE OF JUDGMENT05/05/1987 BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) SINGH, K.N. (J) CITATION: 1987 AIR 1527 1987 SCR (3) 180 1988 SCC Supl. 1 JT 1987 (2) 529 1987 SCALE (1)975 CITATOR INFO : F 1987 SC1706 (16) ACT: Life Insurance Corporation of India (Staff) Regulations 1960-Retirement of Class I and Class II Employees appointed on or after September 1, 1956 at 58 years--Whether valid and legal. Life Insurance Corporation Act, 1956---Section 11(2)--Fixation of 60 years as age of superannuation for transferred employees-Whether unreasonable. Constitution of India, 1950--Articles 14 and 16--Differ- ent ages of retirement for Class I and II Officers--Classi- fication of employees into two categories for fixing of age of superannuation depending on dates of entry into service--Whether valid and legal. HEADNOTE: The Life Insurance Corporation was established on Sep- tember 1, 1956 under the Life Insurance Act of 1956 (Act 31 of 1956) by amalgamating about 200 insurers carrying on life insurance business in the country. It had no employees of its own to carry on the vast business which had been taken over and the nature of the work was such that the Corpora- tion required the services of employees with experience and expertise in running life insurance business. In order to meet the above need, Section 11 of the Act came to be enact- ed. Sub-section (1) provided that with effect from September 1, 1956, every whole time employee of the erstwhile insurers would become an employee of the Corporation and hold office therein by the same tenure, at the same remuneration, and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held on September 1, 1956, had the Act not been passed. The conditions of service of the employees whose serv- ices were transferred to the Corporation under Section 11(1) were not uniform. The conditions governing the retirement of those employees were also diverse and different. In some cases the age of retirement had been fixed at 55 years, in some at 58 years and in some others at 60 years. In many cases, the insurers had permitted their employees to contin- http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 32 ue in 181 their services even beyond 60 years depending upon their efficiency and physical capacity. For the purposes of rationalising the pay scales of the transferred employees, under sub-section (2) of Section 11 the Central Government was empowered to alter the terms of service of the employees as to their remuneration in such manner as it thought fit. The sub-section was amended by Acts 17 and 36 01’ 1957. Clause (bb) of sub-section (2) 01’ Section 49 conferred power on the Corporation to make regulations with the previ- ous approval of the Central Government as regards ’the terms and conditions of service of persons who had become employ- ees of the Corporation under subsection (1) 01’ Section 11’. Under clauses (b) and (bb) of Section 49(2) 01’ the Act, Regulations were framed prescribing the ages of retirement of the employees of the Corporation belonging to different categories with the previous approval of the Central Govern- ment and were incorporated in the Life Insurance Corporation of India (Staff) Regulations, 1960 made by the Corporation which came into effect on July, 1960. Under Regulation 19(1), all transferred employees were entitled to remain in service till they completed 60 years of age but the appointing authority was empowered to retire any such transferred employee on completion of 55 years of age or at any time thereafter, if his efficiency was found to have been impaired. Under Regulation 19(2) employees appointed to the service of the Corporation on or after September, 1956, were required to retire on completion of 58 years of age but the appointing authority was empowered to retire any such employee on completion of 55 years of age or thereafter if his efficiency was found to have been im- paired. In the case of the transferred employees this regulation was made in conformity with the ’standardisation order’ passed in respect of Class III and Class IV transferred employees. in whose case the age of retirement was fixed at 60 years.. The result was that the regulation made a clear and distinct classification 01’ all the employees of the Corporation belonging to all classes into two groups---transferred employees and the employees appointed after September 1, 1956 for purposes of the age of retire- ment having regard to the historical reasons. 182 Consequent upon the settlement arrived at, upon an industrial dispute which arose between Class III and Class IV employees who were appointed subsequent to September 1, 1956 in the Corporation. Regulation 19 of the Life Insurance Corporation of India (Staff) Regulations 1960 which came into force w.e.f. July 1, 1960 was amended and the employees of the Corporation were divided both longitudinally and latitudinally insofar as the age of retirement was con- cerned. Longitudinally, all the transferred employees be- longing to Class I and II became entitled to continue in service till they attained the age of 60 years, the Corpora- tion being empowered to retire any of them prematurely on completion of 55 years of age if his efficiency was found to have been impaired, and all the Class I and Class II offi- cers appointed to the service of the Corporation on or after September 1, 1956 had to retire on completion of 58 years of age subject again to the power of the Corporation to retire any such employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been impaired. Latitudinally, the employees were divided into two http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 32 groups and all the employees belonging to Class III and Class IV, irrespective of the tact whether they were trans- ferred employees or employees appointed after September 1, 1956 were entitled to continue in service till 60 years of age, but the employees belonging to Class I and Class II who were appointed to the service of the Corporation on or after September 1, 1956 had to retire on the completion of 58 years of age subject to the usual clause relating to prema- ture retirement. Sub-regulation (2) of Regulation 19 was modified empow- ering the appointing authority to extend at its discretion of service of any employee of the Corporation belonging to Class I or Class II categories appointed to service on or after September 1, 1956 for one year at a time upto 60 years of age. The power to extend the service of employees belong- ing to Class I and Class II appointed on or after September 1, 1956 beyond 58 years or’ age was withdrawn from January 21, 1977 and the Corporation was permitted to retire an employee on completion of 50 years of age. The first respondent joined the Corporation as a Class III employee on March 22, 1957. Subsequently, he was promot- ed to a Class I post and ultimately as Assistant Divisional Manager. Since he was born in the month of June, 1926, notice was issued to him in February, 1984 of his retirement which was due on June 30, 1984 on his completing the age of 58 years. Before the date of his retirement, he instituted a writ petition in the High Court questioning the validity of Regulation 19(2) of the (Staff) Regulations, 1960, as it stood then and prayed for the issue 183 of writ of mandamus directing the Corporation not to retire him before he attained the age of 60 years. It was contended by the first respondent before the High Court that there was no justification to prescribe two different ages of retirement one for the transferred employ- ees belonging to Class I and Class II categories and the other for the employees who joined the service of the Corpo- ration alter September 1, 1956 and who also belonged to Class I and Class II categories, and that in regard to those who joined the service after being appointed to Class III post after September 1, 1956, there could not be any reduc- tion of age of retirement from 60 to 58 years on their being promoted to a Class I or Class II post. Since he had the right to continue in service if he had remained in Class III only till he attained the age of 60 years as a Class III employee, age of retirement could not be reduced to 58 years only because he had been promoted to a Class I post. It was urged on behalf of the Corporation and the Union of India that the transferred employees and the employees who joined the service after September 1, 1956 belonged to two distinct and separate classes which had been treated differently throughout for valid reasons. Since there was no uniformity in the establishments in which the transferred employees were working prior to nationalisation of the life insurance business, it became necessary to fix the age of retirement of the transferred employees on a lair, equitable and just basis. In the circumstances, the classification of the employees into two categories, namely, transferred employees and others who joined on or after September 1, 1956 for the purposes of age of superannuation was a valid classification and Articles 14 and 16 of the Constitution had not been violated. It was further submitted that the discrimination made between the employees belonging to Class I and Class II on the one hand and the employees belonging to Class III and Class IV on the other in the matter of the http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 32 age of superannuation was not invalid since they belonged to two different categories of employees who were governed by different conditions of service as regards pay, perquisites, allowances, administrative powers etc. The High Court did not find any unconstitutionality in a rule or regulation providing the age of retirement at 60 years of employees who had been absorbed from the service of the erstwhile insurers and to that extent it held that the grouping being reasonable the Court might not travel into the domain of legislative policy. It, however, found that when once a transferred employee belonging to Class III and an emp- 184 loyee appointed after 1st September, 1956 by the Corporation to a Class III post is promoted to Class I, the distinction of the transferred employee and direct appointee could not be maintained, as on promotion they became persons belonging to the same category of employees enjoying the same condi- tions of service. Hence the age of retirement should be the same in the case of both such promotees. It accordingly held that the first respondent was entitled to continue till he attained the age of 60 years as other Class I employees belonging to the category of transferred employees. The Writ Petition was allowed and Regulation 19(2) was struck down as being violative of Articles 14 and 16 of the Constitution of India and the Corporation was directed not to retire the first respondent before he attained the age of 60 years. Allowing the appeals, by special leave, of the Life Insurance Corporation of India and the Union of India, this Court, HELD: 1.1 The decision taken by the Corporation and the Central Government as regards the ages of retirement of the different classes of the employees of the Corporation is a bona fide one and cannot be characterised as unreasonable and it is not, therefore, liable to be upset by a decision of the Court. [222G] 1.2 In the instant case, the High Court erred in strik- ing down Regulation 19(2) of the L.I.C. (Staff) Regulations 1960 as amended in the year 1977 and in directing the Corpo- ration to continue the first respondent in its service till he completed the age of 60 years. [223A] 2.1 Classification of employees into two categories for purposes of fixing the age of superannuation depending upon the date of entry into service is not something which is unusual, and such classification becomes necessary on ac- count of historical facts and the need for treating the employees in a fair and just way. [220G] 2.2 Merely because the pay, allowances and other perqui- sites drawn by the transferred employees and by the employ- ees appointed after September 1, 1956 by the Corporation are the same, it cannot be said that the transferred employees and the other employees had been integrated so as to form one cadre. So far as the age of retirement is concerned, they are being treated differently right from the date on which the Corporation was established. [221G] 2.3 In the instant case, since the classification of the employees for the purpose of age of retirement into two categories is reasonable 185 and not arbitrary and there is a reasonable nexus between the classification and the object to be attained thereby, it is not possible to ho1d that Regulation 19(2) is violative of Articles 14 and 16 of the Constitution. [222C] 3. The Act itself made a distinction between the trans- ferred employees and the employees recruited to the service http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 32 of the Corporation after September 1, 1956 by making amend- ments in Section 11 and in clauses (b) and (bb) of sub- section (2) of Section 49 of the Act. In the (Staff) Regula- tions, 1956 and the (Staff) Regulations, 1960 there was again a distinction made between the transferred employees and the employees recruited alter September 1, 1956. The distinction between the two classes Is recognised by Parlia- ment even as late as 1981 which it amended Section 49 of the Act by deleting clause (bb) of sub-section (2) thereof and by amending Section 48. of the Act by introducing clause (cc) in sub-section (2) and the new sub-section (2A) in it. At no point of time the transferred employees were integrat- ed into one cadre alongwith employees appointed after Sep- tember 1, 1956 as such and the transferred employees have retained their birth-marks throughout. The tact that the pay, allowances and other conditions or services have been made the same in respect of both the transferred employees and the employees of the Corporation recruited after Septem- ber 1, 1956 has not brought about the integration of the two Classes of employees into one single cadre. [214GH; 215A: E-F] 4.1 The determination of 58 years as age of superannua- tion, in the case of the employees, who entered service after September 1, 1956 by itself cannot be considered to be arbitrary since in almost all the public sector corpora- tions, Central services and the State services, 58 years age is considered to be a reasonable age at which officers can be directed to retire from their service. [212C] 4.2 Regarding the dIscrimination in the age or’ retire- ment between employees belonging to Class I and Class II on the one hand and Class III and Class IV on the other, it is true that originally employees belonging to Class III and Class IV categories amongst the transferred employees were given the benefit of retirement at the age of 60 years, but the employees belonging to Class III and Class IV categories after 1st September, 1956 were required to retire on the completion of 58 years of age. Pursuant to the settlement arrived at between the Management and the Class III and IV employees recruited after September 1, 1956. this discrimi- nation was removed and Regulation 19 was amended w.e.f. June 19, 1965. [212D-F] 186 4.3 Having regard to the lower emoluments and other benefits which the employees belonging to Class III and Class IV are entitled to get from the Corporation and the higher emoluments and other benefits to which officers belonging to Class I and Class II are entitled to and also the nature of their work and the powers enjoyed by them, fixation of different ages of retirement to the different classes of employees could not by itself be violative of Articles 14 and 16 of the Constitution. [212F-G] 5. Having regard to different conditions of service that were prevailing in the various establishments whose business was taken over by the Corporation, fixation of age of super- annuation is one of the essential parts or’ the process of transfer and integration to which sub-section (2) of Section 11 of the Act is applicable. The fixation of 60 years as the age of superannuation in the case of transferred employees cannot be considered to be unreasonable in view of the history of this case. [208C-D] 6. The transferred employees who are treated favourably belong to a vanishing group and, perhaps, within a period of two years none of them would be in the service of the Corpo- ration. Thereafter, only one class of employees would be in the service of the Corporation, namely, those appointed http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 32 subsequent to September 1, 1956 by the Corporation in re- spect of whom the Corporation has fixed the age of retire- ment as 58 years which corresponds to the age or’ retirement in almost all the public sector establishments, the Central Government services and the State Government services. [221C-E] 7. The High Court was right in holding that it was not discriminatory to extend the benefit of the age of 60 years to the transferred employees. However, it was not correct in holding that on promotion from Class III to Class I, the transferred employees and the directly recruited employees would lose their birth-marks. The intention of Parliament was that even as late as in 1981 the two groups of employ- ees, namely, the transferred employees and employees re- cruited after September 1, 1956 in the Corporation should be kept separate. In these circumstances, the High Court was in the error in holding that when employees are recruited to a lower grade from two sources, no favourable treatment should be extended to recruits from one source on their promotion to the higher grade. The fact that an employee had entered the service of the Corporation after September 1, 1956 in a Class III post and is later on promoted to a Class I post does not make any difference. [216E-H; 217D] 187 8. In the instant case, when the first respondent was promoted to the Class I post in 1963 the age of retirement of officers in the Class I post had been fixed at 58 years and was not different from the age of retirement of Class III employees. It was only in 1965 under the settlement, the age of retirement of employees in Class III and Class IV who joined service after September 1, 1956 was raised to 60 years. If he felt that the conditions of service ill’ Class I officers were likely to be prejudicial to him, he could have refused the promotion offered to him. Having accepted the promotion alongwith the higher benefits flowing from it he cannot contend after several years that he had been prejudicially affected by the condition relating to the age of retirement applicable to Class I officers appointed after September 1, 1956. That apart, the higher emoluments and other perquisites to which Class I employees may be entitled to and the better conditions of work which are enjoyed by them substantially compensate the effect of the lowering of the age of retirement from 60 years to 58 years. [213E-G] Christopher Pimenta and Others v. Life Insurance Corpo- ration of India, A.I.R. 1958 Bombay 451; Life Insurance Corporation of India v. D.J. Bahadur & Ors., [1981] 1 S.C.R. 1083; Ram Lal Wadhwa & Anr. v. The State of Haryana & 0rs.,[1973] 1 S.C.R. 608; State of Punjab v. Joginder Singh, [1963] Supp. 2 S.C.R. 169; Tejinder Singh and Another v. Bharat Petroleum Corporation Ltd. and Anr., [1986] 4 S.C.C. 237; Roshan Lal Tandon v. Union of India, [1968] 1 S.C.11. 185; Miss Lena Khan v. Union of India and Ors., Jt. [1987] 2 S.C. 19; Railway Board v. A. Pitchumani, [1972] 2 S.C.R. 187; Manindra Chandra Sen v. Union of India & Ors., A.I.R. 1973 CAL. 385; M/s British Paints (India) Ltd. v. The Work- men, [1966] 2 S.C.R. 523; Mohammad Shujat Ali & Ors. etc. v. Union of India & Ors. etc. [1975] 1 S.C.R. 449; Workmen of the Bharat Petroleum Corporation Ltd. (Refining Division) Bombay v. Bharat Petroleum Corporation Ltd. and Another, [1984] 1 S.C.R. 251; Tamil Nadu Education Department Minis- terial & General Subordinate Service Association v. State of Tamil Nadu & Anr., [1980] 1 S.C.R. 1026, referred to. http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 32 JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10761077 of 1987. From the Judgment and Order dated 17.8.1985 of the Allahabad High Court in C.M. Writ No. 6849 of 1984. K. Parasaran, B. Datta, P.P. Rao, K.L. Hathi, Anil Nauriya, S.R. Aggarwal, Y. Ramachandran, U.J. Rana, R.P. Srivastava, Hem- 188 ant Sharma, P. Parmeshwaran, Ms. Sushma Suri and C.V. Subba Rao for the Appellants. M.K. Ramamurthy, C.S. Vaidyanathan, S. Ravindra Bhatt, Mohan, S.R. Setia and Probir Choudhary for the Respondents. The Judgment of the Court was delivered by VENKATARAMIAH J. The question involved in these appeals by special leave which are filed against the judgment dated August 17, 1985 of the High Court of Allahabad in Civil Miscellaneous Writ No. 6849 of 1984 relates to the constitu- tional validity of regulation 19(2) of the Life Insurance Corporation of India (Staff) Regulations, 1960 (hereinafter referred to as ’the (Staff) Regulations, 1960’), as amended on 21.1. 1977 by the Life Insurance Corporation of India (hereinafter referred to as ’the Corporation’) which pro- vides that an employee belonging to Class I or Class II appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 50 years of age and at any time thereafter on giving him three months’ notice or salary in lieu thereof. Prior to January,. 1955 there were more than 200 insur- ers carrying on life insurance business in India. As it came to the notice of the Government that the Indian life insur- ers, with a few exceptions, were virtually controlled by few individuals who were utilising the funds of those companies to the detriment of the industry and the policyholders, the Government decided to nationalise the life insurance busi- ness. Pursuant to the said decision, the President of India promulgated the Life Insurance (Emergency Provisions) Ordi- nance, 1956 on January 19, 1956 providing for the vesting of the management of the life insurance business (which was called the controlled business under the Ordinance) which was being carried on by any insurer in India on that day in the Central Government and providing for its management. On the passing of the said Ordinance the management of the controlled business of all the insurers in India thus vested in the Central Government and pending the appointment of the custodians for the controlled business of any insurer the person in charge of the management of such business immedi- ately before the passing of the Ordinance was required to be in charge of the management of the business for and on behalf of the Central Government. The Ordinance contained detailed provisions for the carrying on of the life insur- ance business by 189 the Government for the time being.The Ordinance was replaced by the Life Insurance (Emergency Provisions) Act, 1956 which was published on 21st of March, 1956. The said Act was followed by the Life Insurance Corporation Act, 1956 (Act 31 of 1956) (hereinafter referred to as ’the Act’) which was published in the Gazette on 18th June, 1956. The Act, howev- er, came into force on 1st July, 1956. The Act provided for the establishment and incorporation of the Corporation. The Corporation was accordingly established on 1st September, http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 32 1956. Under the Act the expression ’appointed day’ is de- fined as the date on which the Corporation is established. The appointed day for the purposes of the Act is, therefore, September 1. 1956. By virtue of section 7 of the Act on the appointed day all the assets and liabilities appertaining to the controlled business of all insurers, the management of which it had been taken over earlier by the Central Govern- ment, stood transferred to and vested in the Corporation. When the Corporation thus came into existence it had no employees of its own to carry on the vast business of the large number of insurers which had been taken over by it. It, therefore, became necessary to transfer the services of the existing employees of the insurers to the Corporation because without the services of those employees it was almost impossible for the Corporation to run the life insur- ance business in India which involved management of the various offices situated in different parts of India, serv- icing of lakhs of insurance policies, the administration of the assets taken over from the insurers and several other activities connected with the life insurance business. The nature of the work of the Corporation was such that it required the services of the employees with sufficient experience and expertise in running the life insurance business. In order to meet the above need section 11 of the Act came to be enacted. Section 11 of the Act originally stood as follows: "11. Transfer of service of existing employees of insurers to the Corporation-- (1) 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 shall, on and from the appointed day, become an employee of the Corporation, and shall hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privi- leges as to pen- 190 sion and gratuity and other matters as he would have held the same on the appointed day if this Act had not been passed, and shall continue to do so unless and until his employ- ment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation: Provided that nothing contained in this sub-section shall apply to any such employee who has, by notice in writing given to the Central Government prior to the ap- pointed day, intimated his intention of not becoming an employee of the Corporation. (2) Notwithstanding anything con- tained in sub-section (1) or in any contract of service, the Central Government may, for the purposes of rationalising the pay scales of employees of insurers whose controlled business has been transferred to and vested in it or for the purpose of reducing the remuner- ation payable to employees in cases where in the interest of the Corporation and its policyhold ers a reduction is called for, alter the terms of service of the employees as to their remuneration in such manner as it http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 32 thinks fit; and if the alteration is not acceptable to any employee the Corporation may terminate his employment on giving him compensation equivalent to three months’ remuner- ation unless the contract of service with such employee provides for a shorter notice of termination. Explanation: The compensation payable to an employ- ee under this sub-section shall be in addition to and shall not affect any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service. (3) If any question arises as to whether any person was a whole-time employee of an insurer or as to whether any employee was employed wholly or mainly in connection with the controlled business of an insurer immediately before the appointed day the question shall be referred to the Central Government whose decision shall be final. (4) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any other 191 law for the time being in force, the transfer of the serv- ices of any employee of an insurer to the Corporation shall not entitle any such employee to any compensation under that Act or other law, and no such claim shall be entertained by any Court, tribunal or other authority." Sub-section (1) of section 11 of the Act provided that every whole-time employee of an insurer whose controlled business had been transferred to and vested in the Corpora- tion and who was employed by the insurer wholly or mainly in connection with the controlled business immediately before the appointed day, i.e., September 1, 1956, would on and from the appointed day become an employee of the Corpora- tion, and would hold his office therein by the same tenure, at the same remuneration and upon the same terms and condi- tions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same on the appointed day if the Act had not been passed, and would continue to do so unless and until his employment in the Corporation was terminated and until his remunera- tion, terms and conditions were duly altered by the Corpora- tion. The proviso to that sub-section provided that nothing contained in sub-section (1) of section 11 of the Act would apply to any such employee who had by notice in writing given to the Central Government prior to September 1, 1956 intimated his intention of not becoming an employee of the Corporation. The whole-time employees of the erstwhile insurers whose services were thus transferred to the Corpo- ration are hereinafter referred to as ’the transferred employees’ of the Corporation. As mentioned earlier, there were more than 200 insurers whose controlled business had been taken over by the Corporation and we are informed that there were about 27,000 whole-time employees working in them. The conditions of service of these transferred employ- ees of the Corporation whose services were transferred to the Corporation under section 11(1) of the Act were not uniform. It was naturally difficult to continue after the establishment of the Corporation in the cases of all the transferred employees, the conditions of service enjoyed by them when they were in the employment of the former insur- ers. The conditions governing the retirement of those offi- cials with which we are concerned in these appeals were also diverse and different. In some cases the age of retirement had been fixed at 55 years, in some at 58 years and in some others at 60 years. In many cases the insurers had permitted their employees to continue in their service even beyond 60 years depending upon their efficiency and physical capacity. http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 32 The conditions of service of employees and in particular the terms of remuneration prevalent in some of the former 192 insurance organisations were also disadvantageous to the policyholders. It, therefore became necessary to bring about uniformity in the conditions of service of the transferred employees. Parliament therefore, enacted sub-section (2) of section 11 of the Act which provided that notwithstanding anything contained in sub-section (1) of section 11 or in any contract of service, the Central Government might for the purposes of rationalising the pay scales of employees of insurers whose controlled business had been transferred to and vested in it or for the purposes of reducing the remu- neration payable to those employees in cases where in the interest of the Corporation and its policyholders a reduc- tion was called for, alter the terms of service of the employees as to their remuneration in such manner as it thought fit and if the alteration was not acceptable to any employee the Corporation might terminate his employment on giving him compensation equivalent to three months’ remuner- ation unless the contract of service with such employee provided for a shorter notice of termination. Doubts arose as regards the meaning of sub-section (2) of section of the Act. In Christopher Pimenta and Others v. Life Insurance Corporation of India, A.I.R. 1958 Bombay 451 the High Court of Bombay opined that under section 11(2) of the Act the Central Government could alter the terms and conditions of service of the employees only as to the remuneration and that the said sub-section had no reference to the other terms and conditions of the service. The above decision of the Bombay High Court was delivered on 16.4.1957. It is stated that there were cases pending in other courts also questioning the scope and ambit of sub-section (2) of sec- tion 11 of the Act as it stood originally. Hence in order to remove all doubts the President of India promulgated an ordinance (which was replaced by Act 17/1957) substituting a new sub-section in the place of the original sub-section (2) of section II of the Act making it more comprehensive and thus enabling the Central Government to alter suitably all conditions of service of the transferred employees. The new sub-section (2) of section 11 of the Act was further modi- fied by Act 36 of 1957. Thereafter sub-section (2) of sec- tion 11 of the Act read as follows: "(2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of remuner- ation and the other terms and conditions of service applica- ble to employees of insurers whose controlled business has been transferred to, and vested in the Corporation, it is necessary so to do, or that, in the interest of the Corpora- tion and its policy-holders, a reduction in the remuneration payable, or a revision of the other terms and 193 conditions of service applicable, to employees or any class of them is called for, the Central Government may, notwith- standing anything contained in sub-section (1), or in the Industrial Disputes Act, 1947, or in any other law for the time being in force, or in any award, settlement or agree- ment for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of service to such extent and in such manner as it thinks fit, and if the alteration. is not acceptable to any employee, the Corporation may terminate his employ- ment by giving him compensation equivalent to three months’ remuneration unless the contract of service with such em- ployee provides for a shorter notice of termination. http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 32 Explanation--The compensation payable to an employee under this sub-section shall be in addition to, and shall not affect, any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service." Section 49(1) of the Act conferred powers on the Corpo- ration to make with the previous approval of the Central Government regulations not inconsistent with the Act and the rules made thereunder. It provided for making regulations to provide for all matters for which provision was expedient for the purposes of giving effect to the provisions of the Act. Clause (b) of sub-section (2) of section 49 of the Act in particular conferred power on the Corporation to make regulations as regards the method of recruitment of employ- ees and agents of the Corporation and the terms and condi- tions of such employees or agents. It was felt that clause (b) of section 49(2) of the Act was not in terms applicable to the transferred employees who became the employees of the Corporation under sub-section (1) of section 11 of the Act but only referred to the employees and agents of the Corpo- ration who were employed after the Corporation was estab- lished, that is, after 1st September 1956. To remove the above doubt by Act 17 of 1957 section 49 of the Act was amended by introducing clause (bb) in sub-section (2) of section 49 of the Act which expressly conferred power on the Corporation to make regulations with the previous approval of the Central Government as regards ’the terms and condi- tions of service of persons who have become employees of the Corporation under sub-section (1) of section 11’. The above clause was introduced into the Act with retrospective effect along with the new sub- 194 section (2) of section 11 of the Act. It is this to be seen that the conditions of service of the transferred employees were to be regulated by the provisions of the Act, by an order made by the Central Government under section 11(2) of the Act and the regulations made under clause (bb) of sec- tion 49(2) of the Act. Even before clause (bb) was actually introduced into the Act with retrospective effect by Act 17 of 1957 the Corporation had promulgated the Life Insurance Corporation of India (Staff) Regulations, 1956 (hereinafter referred to as ’the (Staff) Regulations, 1956’). Under regulation 21 of the (Staff) Regulations, 1956 provision was made regarding superannuation and retirement of the employ- ees of the Corporation. Regulation 21 reads as follows: "21. An employee shall retire at fifty-five years of age provided that the appointing authority may at its discretion extend the service every year upto 60 years of age. Provided, however, that in respect of some of the employees of insurers who are allowed to continue in service beyond age 60 because of the terms and conditions of employ- ment having not ’been favourable in the past, the Executive Committee may at its discretion extend their service every year upto age 65. Provided further that during the three years, beginning from 1st September, 1956, the Executive Committee may, at its discretion, extend the service of a class I employee, who has completed sixty years of age for such period as may be specified but not exceeding one year at a time if such extension is considered necessary in the inter- est of the Corporation. Explanation--Notwithstanding anything contained in this Regulation, where an employee has privilege leave earned but not availed of as on the date of retirement as prescribed in the above Regulation he may be permitted to http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 32 avail of the leave and in that case the employee will be deemed to retire from service at the expiry of the leave." The above regulation fixed the age of retirement of an employee at 55 years while empowering the authority to extend the service of an employee, at its discretion, every year upto 60 years of age. The first proviso to regulation 21 of the (Staff) Regulations, 1956, however, 195 authorised the Corporation to allow some of the employees of insurers who were allowed to continue in service beyond the age of 60 years for the reasons mentioned therein. The above regulation thus made a distinction between an employee who entered the service of the Corporation after it was estab- lished, i.e., after 1st September, 1956 and the transferred employees insofar as the age of retirement was concerned. Pursuant to the power conferred on it under sub-section (2) of section 11 of the Act the Central Government issued an order on 1.6.1957 called the Life Insurance Corporation of India (Alteration of Remuneration and other Terms & Conditions of Service of Employees) Order, 1957 which came into force retrospectively from 1st September, 1956. This order is called the ’standardisation order’. This Order applied to all transferred employees who had become employ- ees of the Corporation under section 11(1) of the Act and who were in supervisory, clerical and subordinate grades (now classified as Class III and Class IV employees) of the erstwhile insurers on 31st August, 1956. Clause 13 of the above Order, which related to the age of superannuation read as follows: "13. Retirement: The normal age of retirement shall be 60. But the Corporation may require any employee who has attained the age of 55 to retire if his efficiency is found to have been impaired." Clause 13 of the above Order, therefore, modified regu- lation 21 of the (Staff) Regulations, 1956 to the extent indicated therein with effect from the commencement of the Corporation. After the promulgation of the Order the trans- ferred employees to whom it applied were entitled to contin- ue in the service of the Corporation till they attained the age of 60 years subject to the Corporation exercising its powers to retire a transferred employee on his attaining the age of 55 years if his efficiency was found to have been impaired. In the case of the other employees who joined service subsequent to 1st September, 1956 regulation 21 of the (Staff) Regulations, 1956, which prescribed the age of retirement at 55 years subject to the appointing authority at its discretion extend the age of retirement to 60 years as provided therein, continued to apply. This Order applied to the members of the staff of the Corporation belonging to Class III and Class IV categories. As regards the trans- ferred officers belonging to the Class II category, 196 namely, the Field Officers, a standardisation order was made under sub-section (2) of section 11 of the Act on 30th December, 1957. Clause 6 of that order originally read as follows: "6. Leave and retirement--In the matter of leave and retire- ment, Field Officers shall be governed by the same regula- tions as are applicable to Class I officers of the Corpora- tion." The above clause 6 was substituted by a new clause on 25.11.1962 which read as follows: "6. Leave and retirement--In the matter of leave and retire- ment, Development Officers shall be governed by the Life http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 32 Insurance Corporation of India (Staff) Regulations, 1960, as amended from time to time." It may be noted that the Field Officers referred to in the former clause 6 had been redesignated as the Development Officers before it was substituted by the later clause 6 of the standardisation order. Insofar as the transferred offi- cers belonging to Class I were concerned, the question of determination of their age of superannuation was taken up for consideration by the Services and Budget Committee of the Corporation on 20th November, 1959. Para 9 of the office note circulated amongst the members of that committee gave a true picture of the conditions prevailing then. It read thus: "9. As regards retirement, the Government has mentioned that the Department of Expenditure has objected to raising the date of superannuation to 58 years of age on the ground that other statutory Corporations are also demanding the same benefit on the analogy of the Life Insurance Corporation’s proposal. Standardisation Order provides that an employee shall retire at 60 years of age, but the competent authority may require an employee to retire at any time after 55 years of age if his efficiency is found to have been impaired. In the amended Regulations approved by the Board, this provi- sion of the Standardisation Order was incorporated as far as employees in Classes III & IV are concerned but in the case of transferred officers and Field Officers, the retirement age was fixed at 55 extensible to 58 with a further proviso that in special circumstances only the competent authority may extend the services 197 beyond age 58 and upto 60 years of age. The Board has also decided that administratively we shall grant exten- sion upto 60 liberally till the end of 1963. Most of the insurers permitted their officers to continue in service upto 60 years of age and even beyond, depending upon their efficiency. There is no reason why there should be distinc- tion between officers and staff in this matter as both of them had similar privileges with regard to retirement in the past. There is thus a strong case for extending the provi- sions of the Standardisation Order regarding retirement to the transferred officers also. As regards new recruits, it was thought that there was no justification to bring down the retirement age from 60 to 55 all of a sudden nor was it considered necessary to maintain any distinction between officers and staff. All the employees have often represented that the age of retirement should be raised to 60. A compro- mise was, therefore, struck by fixing the age at 58. In the light of the above it is suggested that the provisions of the Standardisation Order may be extended to transferred officers and the retirement age may be retained at 58 for persons recruited on or after 1st January 1959. It may be added that this would mean a modification of the earlier decision of the Board in this matter." After the matter was duly considered by the Services and the Budget Committee and by the Corporation, regulations were framed under clauses (b) and (bb) of section 49(2) of the Act prescribing the ages of retirement of the employees of the Corporation belonging to different categories with the previous approval of the Central Government and were incorporated in the (Staff) Regulations, 1960 made by the Corporation which came into effect on July 1, 1960. Regula- tion 19 of the (Staff) Regulations, 1960 dealt with the subject of superannuation and retirement of the employees of the Corporation. It reads thus: "Superannution and Retirement: http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 32 19(1). A transferred employee shall retire on completion of age 60; but the appointing authority may direct such employ- ee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been im- paired. (2) An employee appointed to the service of the 198 Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age; but the appointing authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been impaired. ........................................ It is seen from the above regulation that the cases of all transferred employees were dealt with by sub-regulation (1) of regulation 19 and the cases of employees appointed to the service of the Corporation that year after 1st Septem- ber, 1956 were dealt with by sub-regulation (2) of regula- tion 19. All the transferred employees were entitled to remain in service till they completed 60 years of age but the appointing authority was empowered to retire any such transferred employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been impaired. All employees appointed to the service of the Corporation on or after 1st September, 1956 were required to retire on completion of 58 years of age but the appointing authority was empowered to retire any such employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been impaired. This regula- tion was made in supersession of all other earlier regula- tions. In the case of the transferred employees the regula- tion was in conformity with the standardisation order passed in respect of Class III and Class IV transferred employees in whose case the age of retirement was fixed at 60 years. The result was that the regulation made a clear and distinct classification of all the employees of the Corporation belonging to all classes into two groups--transferred em- ployees and the employees appointed after 1st September, 1956, for purposes of the age of retirement having regard to the historical reasons. It would appear that an industrial dispute arose between the Class III and Class IV employees who entered the service of the Corporation on or after 1st September, 1956 and the Corporation and one of the points of dispute related to the age of retirement. These employees demanded that their age of retirement should also be fixed at 60 years as in the case of Class III and Class IV employ- ees belonging to the category of transferred employees. The dispute ultimately ended in a settlement which was incorpo- rated in the Memorandum of Settlement arrived at under section 2(p) and section 18(1) of the Industrial Disputes Act, 1947 and rule 58 of the Industrial (Central) Disputes Rules, 1957 dated 29th January, 1965. The relevant part of the settlement arrived at between the parties to the said industrial dispute as regards the age of retirement of class III and class IV emp- 199 loyees who entered the service of the Corporation on or after 1st September, 1956 read as follows: "1. Retirement age for new employees: There will be no distinction between Class 111 and Class IV ’transferred employees’ and Class III and Class IV employees who entered the service of the Corporation on or after 1.9.1956 in regard to retirement age which shall be 60" After the above settlement was arrived at regulation 19 http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 32 of the (Staff) Regulations, 1960, which had been brought into force with effect from July 1, 1960, was suitably amended to bring it in conformity with the settlement. The relevant part of the amended regulation 19 which was noti- fied on 19.6.1965 read thus: "19(1). An employee belonging to Class III or Class IV and a transferred employee belonging to Class I or Class II shall retire on completion of age 60; but the appointing authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been impaired. (2) An employee belonging to Class I or Class II appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age, but the appointing authority may direct such employee to retire on completion of 55 years of age or at any time thereafter, if his efficiency is found to have been im- paired. (2A) Notwithstanding what is stated in sub-regula- tions (1) and (2) above, an employee may be permitted to retire at any time after he has completed age 55. .........................." On account of the settlement arrived at between Class III and Class IV employees, who were appointed subsequent to 1st September, 1956 and the Corporation, which was followed up by the amendment of the (Staff) Regulations with effect from 19.6.1965, the employees of the Corporation were divid- ed both longitudinally and latitudinally insofar as the age of superannuation was concerned. The longitudinal division of the employees was as follows. All the transfer- 200 red employees belonging to Class I and Class II became entitled to continue in service till they attained the age of 60 years subject of course to the power of the Corpora- tion to retire any of them prematurely on completion of 55 years of age if his efficiency was found to have been im- paired and all the Class I and Class II officers appointed to the service of the Corporation on or after 1st September, 1956 had to retire on completion of 58 years of age subject again to the power of the Corporation to retire any such employee on completion of 55 years of age or at any time thereafter if his efficiency was found to have been im- paired. The employees of the Corporation were divided lati- tudinally into two groups. All the employees belonging to Class III and Class IV irrespective of the fact whether they were transferred employees or employees appointed after 1st September, 1956 were entitled to continue in service till 60 years of age, but the employees belonging to Class I and Class II, who were appointed to the service of the Corpora- tion on or after 1st September, 1956 had to retire on the completion of 58 years of age subject to the usual clause relating to premature retirement. Sub-regulation (2) of regulation 19 which affected the employees belonging to Class I and Class II appointed to the service of the Corpo- ration on or after 1st September, 1956 was substituted by a new sub-regulation which was notified on September 3, 1966. This new sub-regulation (2) of regulation 19 read as fol- lows: "(2). An employee belonging to the Class I or Class II ap- pointed to the service of the Corporation on or’ after 1st September, 1956 shall retire on completion of 58 years of age, but the appointing authority may at its discretion, extend his service for one year at a time upto 60 years of age. The appointing authority may, however, direct an em- ployee to retire on completion of 55 years of age or at any http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 32 time thereafter if his efficiency is found to have been impaired." The modification made by the new sub-regulation (2) of regulation 19 empowered the appointing authority to extend at its discretion the service of any employee of the Corpo- ration belonging to the Class I or Class II categories appointed to the service of the Corporation on or after 1st September, 1956 for one year at a time upto 60 years of age. Since the Corporation found that the discretion conferred on the appointing authority to extend the services of Class I or Class II officers beyond 58 years of age at its discre- tion was not being exercised satisfactory but very often abused, sub-regulation (2) was again amended on 21.1.1977 withdrawing the power to extend the service of 201 employees belonging to Class I and Class 11 appointed to the service of the Corporation on or after 1st September, 1956 beyond 58 years of age. It also provided that in the inter- est of the Corporation, the Corporation could retire an employee after completion of 50 years of age. The relevant part of regulation 19 amended on 21.1.1977 reades thus: "19(1). An employee belonging to Class III or Class IV and a transferred employee belonging to Class I or Class II shall retire on completion of age 60; but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 55 years of age or at any time thereafter, on giving him three months’ notice or salary in lieu thereof. (2). An employee belonging to Class I or Class II appointed to the service of the Corporation on or after 1st September, 1956 shall retire on completion of 58 years of age, but the competent authority may, if it is of the opinion that it is in the interest of the Corporation to do so, direct such employee to retire on completion of 50 years of age or at any time thereafter on giving him three months’ notice or salary in lieu thereof." The 1st Respondent S.S. Srivastava entered the service of the Corporation as a Class III employee on 22.3.1957 on which date he was appointed as an Assistant in the Corpora- tion. From the said Class III post he was promoted to the Class I post (since there was no necessity to pass through a Class II post before entering a Class I post) on 8.10.1963 and was appointed as Assistant Branch Manager (Admn.). From the post of Assistant Administrative Officer he was promoted to the post of Administrative Officer in June, 1971 and was further promoted as Assistant Divisional Manager on 18.7.1978. Since he was born in the month of June, 1926, notice was issued in February, 1984 to Respondent No. 1 of his retirement which was due on 30th June, 1984 on his completing the age of 58 years. Before the date of his retirement, he instituted a writ petition out of which these appeals arise in Civil Miscellaneous Writ No. 6849 of 1984 on the file of the High Court of Allahabad questioning the validity of regulation 19(2) of the (Staff) Regulations, 1960 as it stood then and praying for the issue of a writ in the nature of mandamus to the Corporation not to retire him before he completed the age of 60 years. The High Court 202 issued ’an interim order of stay of his retirement on May 22, 1984. Hence, he was not retired on the 30th June, 1984 as originally notified and allowed to continue in service. The Writ Petition was allowed striking down regulation 19(2) as being violative of Articles 14 and 16 of the Constitution of India and the Corporation was directed not to retire the 1st Respondent before he attained the-age of 60 years. By http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 32 virtue of the judgment of the High Court, the 1st Respondent continued in the service of the Corporation till he complet- ed 60 years of age. He was retired from service on 30th of June, 1986 during the pendency of these appeals. In the Writ Petition filed by the 1st Respondent it was contended that there was no justification to prescribe two different ages of retirement one for the transferred employ- ees belonging to Class I and Class II categories and the other for the employees who joined the service of the Corpo- ration after 1st September, 1956 and who also belonged to Class I and Class II categories. It was also contended that whatever may be the position in respect of persons who were appointed directly to any post belonging to Class I or Class II category after 1st September, 1956, as regards those who joined the service of the Corporation on being appointed to a Class III post after 1st September, 1956 there could not be any reduction of the age of retirement from 60 years to 58 years on their being promoted to a Class I post or Class II post. In other words the contention of the 1st Respondent before the High Court was that since he had the fight to continue in service if he had remained in Class III only till he attained the age of 60 years as a Class III employee by virtue of the settlement and the amendment of the regula- tion 19 in the year 1965, the age of retirement in his case could not be reduced to 58 years only because he had been promoted to a Class I post. The Writ Petition was contested by the Corporation and the Union of India. It was urged on behalf of the Corporation and the Union of India that the transferred employees and the employees who joined the service after 1st September, 1956 belonged to two distinct and separate classes which had been treated differently throughout for valid reasons. It was pleaded by them that on the establishment of the Corporation under the Act it became necessary to continue the services of the employees of the erstwhile insurers whose life insurance business was taken over by the Corporation to run the business of the Corpora- tion because the Corporation had no employees of its own in the month of September, 1956 when it was established. Since as regards the age of retirement there was no uniformity in the establishments in which the transferred employees were working prior to the nationalisation of the life insurance business 203 and as in some cases the age of retirement had been fixed at 55 years, in some other cases it was 58 years, in few other cases at 60 years and in many cases there was no age of retirement and the employees could continue as long as they were found to be physically and mentally fit, it became necessary to fix the age of retirement of the transferred employees on a fair, equitable and just basis. The Central Government and the Corporation felt that 60 years of age could be a proper age of retirement in the circumstances in respect of the transferred employees and that was the reason why by regulation 19 and the standardisation order issued earlier in the case of certain classes of transferred em- ployees under section 11(2) of the Act the retirement age was fixed at 60 years and this was done with a view to retaining the services of the experienced employees of the erstwhile insurers. It was pleaded on behalf of the Corpora- tion and the Union of India that in the circumstances the classification of the employees into two categories, namely, transferred employees and others who joined the service of the Corporation on or after 1st September, 1956 for the purposes of the age of superannuation was a valid classifi- cation and Articles 14 and 16 of the Constitution of India http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 32 had not been violated. It was further pleaded that the discrimination made between the employees belonging to Class I and Class II on the one hand and the employees belonging to Class III and Class IV on the other in the matter of the age of superannuation was not invalid since they belonged to two distinct categories of employees who were governed by different conditions of service as regards pay, perquisites, allowances, administrative powers etc. After heating the arguments of both the sides the learned Judges of the High Court allowed the Writ Petition. The High Court did not find any unconstitutionality in a rule or regulation providing the age of retirement at 60 years of employees who had been absorbed from the service of the erstwhile insurers and to that extent it observed that one could say that the grouping being reasonable the Court might not travel into the domain of legislative policy. It, however, found that when once a transferred employee belonging to Class III and an employee appointed after 1st September, 1956 by the Corporation to a Class III post are promoted to Class I the distinction of transferred employee and direct appointee could not be maintained as on promotion they became persons belonging to the same category of employees enjoying the same conditions of service. Hence the age of retirement should be the same in the case of both such promoters. It accordingly held that the 1st Respondent was entitled to continue till he attained the age of 60 years as other Class I employees belonging to the category of transferred employees. Aggrieved by the judgment of 204 the High Court the Corporation and the Union of India have filed these appeals by special leave. It should be stated at the outset that some of the questions raised before us are already covered by pronounce- ments made by this Court. The object of enacting section 11 of the Act is dealt with in. detail by this Court in the Life Insurance Corporation of India v. D.J. Bahadur & Ors., [1981] 1 S.C.R. 1083 which unfortunately was not brought to the notice of the High Court. Krishna Iyer, J. at pages 1098-1099 has observed in the course of the said decision thus: "The Corporation, to begin with, had to take over the staff of the private insurers lest they should be thrown out of employment on nationalisation. These private compa- nies had no homogenous policy regarding conditions of serv- ice for their personnel, but when these heterogenous crowds under the same management (the Corporation) divergent emolu- ments and other terms of service could not survive and broad uniformity became a necessity. Thus, the statutory transfer of service from former employers and standardization of scales of remuneration and other conditions of employment had to be and were taken care of by s. 11 of the Life Insur- ance Corporation Act, 1956 (for short, the LIC Act). The obvious purpose of this provision was to enable the Corpora- tion initially to absorb the motley multitudes from many companies who carried with them varying incidents of service so as to fit them into a fair pattern, regardless of their antecedent contracts of employment or industrial settlements or awards. It was elementary that the Corporation could not perpetuate incongruous features of service of parent insur- ers, and statutory power had to be vested to vary, modify or supersede these contracts, geared to fair, equitable and, as far as possible, uniform treatment of the transferred staff. Unless there be unmistakable expression of such intention, the ID Act will continue to apply to the Corporation employ- ees. The office of s. 11 of the LIC Act was to provide for a http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 32 smooth take-over and to promote some common conditions of service in a situation where a jungle of divergent contracts of employment and industrial awards or settlements confront- ed the State. Unless such rationalisation and standardiza- tion were evolved the ensuing chaos would itself have spelt confusion, conflicts and difficulties. The functional focus of s. 11 205 of the LIC Act will dispel scope for interpretative exer- cises unrelated to the natural setting in which the problem occurs." Pathak, J. (as he then was) in his judgment in the same case observed at pages 1134 to 1136 thus: "The first question is whether the new clause (9) of the Standardisation Order succeeds in defeating the claim of the workmen. To determine that, s. 11 of the Corporation Act must be examined. Sub-s. (1) guarantees to the trans- ferred employee the same tenure, at the same remuneration and upon the same terms and conditions on the transfer to the Corporation as he enjoyed on the appointed day under the insurer, and he is entitled to them until they are duly altered by the Corporation or his employment in the Corpora- tion is terminated. The sub-section envisages alteration by the Corporation. Sub-s. (2) of s. 11, by its first limb, confers power on the Central Government to alter the scales of remuneration and other terms and conditions of service applicable to transferred employees. Predictably, when the transferred employees of different insurers were brought together in common employment under the Corporation they would have been enjoying different scales of remuneration and other terms and conditions of service. The power under this part of sub-s. (2) is intended for the purpose of securing uniformity among them. The second limb of sub-s. (2) is the source of controversy before us. It empowers the Central Government to reduce the remuneration payable or revise the other terms and conditions of service. That power is to be exercised when the Central Government is satisfied that the interests of the Corporation and its Policy holders require such reduction of revision. The question is whether the provision is confined to transferred employees only or extends to all employees generally. In my opinion, it is confined to transferred employees. The provision is a part of the scheme enacted in Chapter IV providing for the trans- fer of existing life insurance business from the insurers to the Corporation, and the attendant concomitants of that process. There is provision for the transfer of the assets and liabilities pertaining to the business, of provident funds, 206 superannuation and other like funds, of the services of existing employees of insurers to the Corporation and also of the services of existing employees of chief agents of the insurers to the Corporation, and finally for the payment of compensation to the insurers for the transfer of the busi- ness to the Corporation. They are all provisions relating to the process of transfer. Sub-s. (2) of s. 11 is a part of that process, involving as it does the integration of the Corporation’s staff and labour force. While the first limb of the sub-section provides for securing uniformity among the transferred employees in regard to the scales of remu- neration and other terms and conditions of service, the second limb provides that if after such uniformity has been secured, or even in the process of securing such uniformity, the Central Government finds that the interests of the http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 32 Corporation and its policy holders require a reduction in the remuneration payable or revision of the other terms and conditions of service applicable to those employees, it may make an order accordingly. It is true that the words "em- ployees or any class of them" in the second limb are not prefaced by the qualifying word "transferred" or "such". But that was hardly necessary when regard is had to the mosaic of sections in which the provision is located. Admittedly, the first limb of sub-s. (2) relates to transferred employ- ees only, and it must be held that so does the second limb. Both provisions are intended to constitute a composite process for rationalising the scales of remuneration and other terms and conditions of service of transferred employ- ees 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 Corpo- ration to become a viable and commercially successful enter- prise. The standpoint of the second limb of the sub-section, as its language plainly indicates, is provided by the inter- ests of the Corporation and its policy holders. For that reason, it is open to the Central Government under sub- section to ignore the guarantee contained in sub-section (1) of s. 11 in favour of the employees, or anything contained in the Industrial Disputes Act, 1947, or any other law for the time being in force or any award, settlement or agree- ment for the time being in force. Benefits conferred there- under on the employees must yield 207 to the need for ensuring that the Corporation and its policy holders do not suffer unreasonably from the burden of such benefits. The need for such a provision arises because it is a burden by which the Corporation finds itself saddled upon the transfer a burden not of its own making. Unless the statute provided for such relief, the weight of that burden could conceivably cripple the successful working of the Corporation from its inception as a business organisation. It is a situation to be distinguished from what happens when the Corporation, launched on its normal course, voluntarily assumes, in the course of its working, obligation in respect of its employees or becomes subject to such obligations by reason of subsequent industrial adjudication. Like any other employer, the Corporation is then open to the normal play of industrial relations in contemporary or future time. That the two provisions of sub-s. (2) are linked with the process of transfer and integration is further indicated by the circumstances that the power thereunder is vested in the Central Government. The scheme of the sections in Chapter IV indicates generally that Parliament has appointed the Cen- tral Government as the effective and direct instrumentality for bringing about the transfer and integration in the different sectors of that process. There is no danger of an order made by the Central Government under the second limb of sub-section (2) in respect of transferred employees being struck down on the ground that it violates the equality provisions of Part 111 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 proc- ess of transfer and integration, the transferred employees constitute a reasonably defined class in themselves and form no common basis with newly recruited employees." (underlining by us) emphasis supplied Pathak, J. also observed at Page 1136 thus: "Another point is whether the power under the http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 32 second limb of sub-s. (2) of s. 11 can be exercised more than once. Clearly, the answer must be in the affirmative. To effectuate the transfer appropriately and completely it may be necessary to pass through different stages, and at each 208 stage to make a definite order. So long 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. I am not impressed by the circumstances that the original Bill moved in Parliament for amending sub-s. (2) of s. 11 contained the words "from time to time" and that these words were subsequently deleted when enact- ment took place. The intent of the legislative provision must be discovered primarily from the legislation itself." We have given extracts from the above decisions which are fairly long since they relate to the identical provi- sions of law and also cover a large part of the arguments urged before us. Having regard to the different conditions of service that were prevailing in the various establishments whose business was taken over by the Corporation it can hardly be disputed that the fixation of age of superannuation is one of the essential parts of the process of transfer and inte- gration to which sub-section (2) of section 11 of the Act is applicable. The fixation of 60 years as the age of superan- nuation in the case of transferred employees cannot be considered to be unreasonable in view of the history of this case. The observation made by Pathak, J. in the course of his judgment that "there is no danger of an order made by the Central Government under the second limb of sub-section (2) in respect of transferred employees.being struck down on the ground that it violates the equality provisions of Part III of the Constitution because similar action has not been taken in respect of newly recruited employees" is signifi- cant. A discrimination made by a State between the employees who are directly recruited to the service of the State and the employees whose services are taken over by the State on the taking over of the institutions where they were working has been held to be not unconstitutional by this Court in Ram Lal Wadhwa & Anr. v. The State of Haryana & Ors., [1973] 1 S.C.R. 608. The facts of that case were these. There were some schools run by municipal boards and district boards in the then State of Punjab which were taken over by the Punjab Government with effect from October 1, 1957. The teachers then employed in those schools, thus became State employees. Those teachers called ’provincialised’ teachers were to be given the same grades of pay and other allowances as were given to their counterparts in Government employment. The teachers in Government employment were governed by the Punjab Educational Service Class III School Cadre Rules, 1955. On February 13, 1961, the Punjab Government promulgat- ed under the proviso to Article 309 of 209 the Constitution, the Punjab Educational Service (Provincia- lised Cadre) Class III Rules, giving them retrospective effect from October 1, 1957. By these Rules the provincia- lised teachers were treated as failing under a Cadre sepa- rate and distinct from teachers in the-State Cadre governed by the 1955 Rules. The ’provincialised’ Cadre was to be a diminishing cadre to become extinct in course of time. There was to be no further recruitment to that cadre and all vacancies arising in that cadre were to be replenished by direct recruitment to the State cadre. The transfer of such posts to the State cadre was to be done by splitting up such http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 32 vacant posts into blocks of 7 and 6 by rotation. Consequent- ly, the selection grade of 15% in the State cadre progres- sively increased in strength which was determined by the total cadre strength while the selection grade in the pro- vincialised cadre progressively decreased. Thus those re- cruited to the State cadre had a progressively larger chance of getting into the selection grade. In State of Punjab v. Joginder Singh, [1963] Supp. 2 S.C.R. 169 this Court upheld the validity of the 196 1 Rules repelling challenge under Articles 14 and 16 of the Constitution. In the view of the majority in that case the two cadres started as independent services, they were never integrated into one service and, therefore, the dissimilarity of the treatment by the Rules was not a denial Of equal opportunity. But, the Punjab Government never implemented the Rules at any time. On the reorganisation of the erstwhile Punjab State into Punjab and Haryana on November 1, 1966, the Haryana Government put the 1961 Rules into operation. The petitioners in the above case, i.e., Ram Lal Wadhwa & Anr. v. The State of Haryana & Ors., (supra) appointed in the local bodies Schools before ’provincialisation’, challenged the validity of the 1961 Rules. Their complaint was that the Rules created, without any valid justification, two cadres, the State cadre and the provincialised cadre, the former including not only the Government School teachers but also those recruited after October 1, 1957 and posted in the provincialised schools; that by reason of having two cadres and providing for both a uniform 15 per cent for selection grade posts, coupled with making the provincialised cadre a diminishing one, the result had been that teachers deemed to have been appointed to the State cadre with effect from October 1, 1957 and even those recruited thereafter had been promoted to the selec- tion grade, while those in the provincialised cadre, though senior in service and performed identical duties and had identical scales of pay, remained in the ordinary grade. According to the petitioners in that case these Rules and their implementation contravened Articles 14 and 16 of the Constitution. The petitioners in that petition contended that the earlier decision of this Court in State of Punjab v. Joginder Singh, (supra) required reconsideration. In the 210 course of its decision this Court while rejecting the con- tention of the petitioners observed thus at pages 635-636: "The principles on which discrimination and breach of Arts. 14 and 16 can be said to result have been by now so well settled that we do not think it necessary to repeat them here once again. As already seen, ever since 1937 and even before, the two categories of teachers have always remained distinct, governed by different sets of rules, recruited by different authorities and having, otherwise than in the matter of pay scales and qualifications, differ- ent conditions of service. This position remained as late as February 13, 1961. On that day whereas the State cadre teachers were governed by 1955-Rules, rules had yet to be framed for the provincialised cadre a diminishing one and bringing about ultimately through that principle one cadre only in the field in a phased manner. If through historical reasons the teachers had remained in two separate catego- ries, the classification of the provincialised teachers into a separate cadre could not be said to infringe Art. 14 and Art. 16. It was also not incumbent on the Government to frame the 1961-Rules uniformly applicable to both the cate- gories of teachers, firstly, because a rule framing authori- ty need not legislate for all the categories and can select for which category to legislate, (see Sakhawat Ali v. State http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 32 of Orissa, [1955] 1 S.C.R. 1004; Madhubhai Amathalal Gandhi v. The Union of India, [1961] 1 S.C.R. 191 and Vivian Joseph Ferreria v. The Municipal Corporation of Greater Bombay, [1972] 1 S.C.R. 70, and secondly, because it had already come to a decision of gradually diminishing the provincia- lised cadre so that ultimately only the state cadre would remain in the service. That was one way of solving the intricate difficulty of inter se seniority. There can be no doubt that if there are two categories of employees, it is within Government’s power to recruit in one (and) not re- cruit in the other. There is no right in a government em- ployee to compel it to make fresh appointments in the cadre to which he belongs. It cannot also be disputed that govern- ment had the power to make rules with retrospective effect and therefore, could provide therein that appointments made between October 1, 1957 and February 13, 1961 shall be treated as appointments in the State cadre. That had to be done for the simple reason that 211 the provincialised cadre was already frozen even before October 1, 1957 and Government had decided not to make fresh appointments in that cadre since that cadre was to be a diminishing one." It has to be observed in the case before us also that the transferred employees belong to a diminishing cadre. When the Corporation was established they were about 27,000 in number and we are informed today that there are only about 22% of those employees in service. Already 30 years have elapsed from the date of the establishment of the Corporation. All the transferred employees who have already retired have retired only after completion 60 years. The remaining transferred employees are likely to go out of office within a short period. Thereafter only the employees who are directly recruited by the Corporation who are about 54,000 in number would continue to remain in its service. The observation made by this Court in Ram Lal Wadhwa & Anr. v The State of Haryana & Ors., (supra) clearly applies to the case before us also. As this stage we should refer to another aspect of the case presented before us which relates to 16 persons who were appointed as the employees of the Corporation by virtue of an Order dated March 15, 1966. There was a department in existence in the year 1963 called Department of Insurance. The Government and the Corporation felt that the services 16 persons who were working in the Department of Insurance were required by the Corporation. Accordingly, the President of India agreed to release 16 persons from the service of the Government of India to enable the Corporation to appoint them in its service by the Order of the Central Government dated 25th February, 1964. The resignation of those 16 persons from the service of the Government of India was accepted on 15th March, 1966 and from that date those per- sons became the employees of the Corporation. Out of those 16, 13 have already retired from service on attaining the age of 60 years. Only three of them are now in the service of the Corporation. One of them is no longer an employee of the Corporation since he is holding the post of the Chairman of the Corporation. The second of them is due to.retire within 2/3 months and only one of them would continue in the service of the Corporation for about a period of two years more. In the case of those 16 people the Corporation passed a separate order fixing their age of retirement as 60 years having regard to the negotiations which had taken place between the Corporation and the Government before the taking over of their services by the Corporation. They again belong http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 32 to a different category altogether and 212 the fixation of the age of retirement in their case at 60 years cannot be challenged by those who were directly re- cruited by the Corporation after September 1, 1956 as there is no similarity between them and the said 16 officers. The next question for consideration is whether the fixation of 58 years as the age of superannuation in the case of the employees who entered the service after 1st September, 1956 is unreasonable. While dealing with this question, the Court can take judicial notice of the differ- ent ages of retirement prevailing in the several services in India. In almost all the public sector corporations, Central services and State services 58 years age is considered to be a reasonable age at which officers can be directed to retire from their service. So, the determination of 58 years as the age of superannuation by itself cannot be considered to be arbitrary. We do not also find much substance in the contention of the 1st Respondent that there cannot be any discrimination as regards the age of retirement between the employees belonging to Class I and Class II on the one hand and Class III and Class IV on the other. It is true that originally employees belonging to Class III and Class IV categories amongst the transferred employees were given the benefit of retirement at the age of 60 years but the employees belong- ing to Class III and Class IV categories recruited after 1st September, 1956 were required to retire on the completion of 58 years of age. In the Settlement which was arrived at between the management and the Class III and Class IV em- ployees recruited after 1st September, 1956 it was agreed that there should be no discrimination as regards the age of retirement between the employees belonging to Class III and Class IV categories amongst the transferred employees and the Class III and Class IV employees recruited after 1st September, 1956. It was pursuant to the said settlement that regulation 19 was amended with effect from 19.6.1965. Having regard to the lower emoluments and other benefits which the employees belonging to Class III and Class IV are entitled to get from the Corporation and the higher emoluments and other benefits to which officers belonging to Class I and Class II are entitled and also the nature of their work and the powers enjoyed by them we are of the view that fixation of different ages of retirement to the different classes of employees would not by itself be violative of Articles 14 and 16 of the Constitution. In Tejinder Singh and Another v. Bharat Petroleum Corporation Ltd. and Anr., [1986] 4 S.C.C. 237 this Court has observed at page 239 thus: 213 "This Court in Workmen v. Bharat Petroleum Corpn. Ltd., directed the retirement age of the clerical staff of the Refinery Division of respondent 1 to be fixed at 60 years. Petitioners have contended that the disparity in the age of retirement between two groups of employees gives rise to discriminatory treatment. This stand is not tenable for more than one reason. Clerical staff and officers of the manage- ment staff belong to separate classifications and no argu- ment is necessary in support of it. Petitioners have not contended and perhaps could not legitimately contend, that the two classes of officers stand at par. In the Workmen case itself, this Court did not extend the benefit of super- annuation at the age of 60 to all clerical staff but limited the same to that category of employees working in the Refin- ery Division, Bombay. Classification on the basis of reason- able differentia is a well known basis and we are of the http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 25 of 32 view that the petitioners are not entitled in the facts of the case to seek support from Article 14 for their claim." It was, however, contended on behalf of the 1st Respond- ent that since he had been recruited originally into the Class III post and he would have had the benefit of retire- ment at the age of 60 years if he had remained in that Class, the said benefit cannot be denied to him on his promotion to the Class I category. We do not find any merit in this contention too. When the 1st Respondent was promoted to the Class I post in 1963 the age of retirement of offi- cers in the Class I post had been fixed at 58 years and was not different from the age of retirement of Class III em- ployees. It was only in 1965 under the settlement the age of retirement of employees in Class III and Class IV who joined service after September 1, 1956 was raised to 60 years. If he felt that the conditions of service of Class I officers were likely to be prejudicial to him he could have refused the promotion offered to him. Having accepted the promotion along with the higher benefits flowing from it he cannot contend after several years that he had been prejudicially affected by the condition relating to the age of retirement applicable to Class I officers appointed after September 1, 1956. That apart the higher emoluments and other perquisites to which Class I employees may be entitled to and the better conditions of work which are enjoyed by them substantially compensate the effect of the lowering of the age of retire- ment from 60 years to 58 years. We do not find any substance in the argument urged on behalf of the 1st Respondent rely- ing upon the judgment of this Court in Roshan Lal Tandon v. Union of India, [1968] 1 S.C.R. 185 which lays down that when employees are 214 recruited to a lower grade from two sources no favourable treatment should be extended to recruits from one source on their promotion to the higher grade. In the decision, re- ferred to above, the facts were these. Vacancies in grade ’D’ of Train Examiners were filled by (a) direct recruits, i.e., apprentice train examiners who had completed the prescribed period of training, and (b) promoters from skilled artisans Promotion from grade ’D’ to ’C’ was on the basis of seniority cum suitability. In October, 1965 the Railway Board issued a notification by which it was provided that eighty percent of the vacancies in grade ’C’ were to be filled up from apprentice train examiners recruitment. or after April 1, 1966 and the remaining twenty per cent by train examiners from grade ’D’. The notification further provided that apprentice train examiners who had already been absorbed in grade ’D’ before April, 1966 should en bloc be accommodated in grade ’C’ in the eighty per cent of the vacancies without undergoing any selection and with regard to twenty per cent of the vacancies, reserved for the other class promotion was to be on selection basis and not on the basis of seniority-cum-suitability. The petitioner in the said case who entered Railway service in 1954 as a skilled artisan and was selected and confirmed in grade ’D’ chal- lenged that part of the notification which gave favourable treatment to apprentice train examiners who had already been absorbed in grade ’D’ as arbitrary and discriminatory anti violative of Article 14 and 16 of the Constitution. This Court held that when once the direct recruits and promoters were absorbed in one cadre they formed one class and they could not be distinguished again for the purpose of further promotion to the higher grade ’C’- The Court further ob- served that before the impugned notification was issued there was only one rule of promotion applicable to both http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 26 of 32 direct recruits and promoters but by the impugned notifica- tion discriminatory treatment was made in favour of the apprentice train examiners who had already been absorbed in grade ’D’. The Court, therefore, held that the notification was discriminatory. This decision has no relevance to the present case although the High Court has relied on it - in deciding this case. We have already shown that the Act itself made a distinction between the transferred employees and the employees recruited to the service of the Corpora- tion after 1st September, 1956 by making amendments in section II and in clauses (b) and (bb) of sub-section (2) of section 49 of the Act. In the (Staff) Regulations, 1956 and the (Staff) Regulations, 1960 there was again a distinction made between the transferred employees and employees re- cruited after 1st September, 1956. We find that the distinc- tion between the two classes is recognised by Parliament even as late as 1981 when it amended section 49 of the Act by deleting clause (bb) of sub-section (2) thereof and by 215 amending section 48 of the Act by introducing clause (cc) in subsection (2) and the new sub-section (2A) in it. After the amendment, the relevant part of section 48 reads thus: "48. (2) ................................... (cc). The terms and conditions of service of the employees and agents of the Corporation, including those who became employees and agents of the Corporation on the appointed day under this Act, .................................... (2A). The regulations and other provisions as in force immediately before the commencement of the Life Insurance Corporation (Amendment) Act, 1981, with respect to the terms and conditions of service of employees and agents of the Corporation including those who became employees and agents of the Corpo- ration on the appointed day under this Act, shall be deemed to be rules made under clause (cc) of sub-section (2) and shall, subject to the other provisions of this section, have effect accordingly." (underlining by us) empha- sis supplied Clause (cc) of section 48(2) of the Act, however, has been given retrospective effect from 20th June, 1979. Sub- section (2A) of section 48 has given statutory recognition to the (Staff) Regulations of 1960 and in particular to Regulation 19(2) as amended in 1977 which is impugned in these proceedings. It is thus seen that at no point of time the transferred employees were integrated into one cadre along with the employees appointed after September 1, 1956 as such and the transferred employees have retained their birth-marks throughout. The fact that the pay, allowances and other conditions of service have been made the same in respect of both the transferred employees and the employees of the Corporation recruited after 1st September, 1956 has not brought about the integration of the two classes of employees into one single cadre. Even the High Court in the instant case accepts that it was just and proper to extend the benefit of the higher age of retirement to the trans- ferred employees but it has held that when once a trans- ferred employee is promoted he would lose the right to a special treatment as regards the age of superannuation. The relevant portion of the judgment of the High Court reads thus: http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 27 of 32 "A reasonable classification which prevents a Court from dissecting it is one which includes all persons who are similarly situated with respect to the purpose of law or 216 objective which the rule or section seeks to achieve. The apparent or inherent intention sought to be achieved by the regulation 19 framed by Corporation was to continue upto age of sixty years the employees of insurers as the age of superannuation in some of the companies was sixty and to derive benefit from expertise and experience of employees who had worked with insurers. May be laudable, reason- able and proper. But is it like that? Obvious- ly not. An employee in Class III of insurer could be continued upto sixty. But what hap- pens when he climbs the ladder of promotion and reaches Class I. Does he still carry the stamp of experience and expertise of having worked with insurer? Once a transferred em- ployee of Class III and a direct appointee in (that) class are promoted to Class I obviously on merit, efficiency and seniority then how can the distinction of ’transferred’ and ’direct’ be maintained. So long employees are in Class III they can be said to constitute two different classes of transferred and direct appointees but once they are promoted they become similarly situated and the dis- tinction stands obliterated. They on promotion form one integrated cadre of Class I officers. To segregate them here for purposes of retire- ment is invidious when their pay, responsibil- ity and benefits are same." While we agree with the first part of the observations made in the above extract from the judgment of the High Court, namely, that it was not discriminatory to extend the benefit of the age of 60 years to the transferred employees, we do not agree with the latter part of the observations made therein which suggests that on promotion from Class III to Class I the transferred employees and the directly re- cruited employees would lose their birth-marks. Pathak, J., as he then was, has observed in D.J. Bahadur’s case (supra) that it is open to the Government to make an order trader section 11(2) of the Act from time to time in respect of the transferred employees and that power is not exhausted when it is exercised once. It suggests that the transferred employees are always amenable for separate treatment and they do not lose their identity. It appears to be the inten- tion of Parliament that even as late as in 1981 that the two categories of employees, namely, the transferred employees and employees recruited after 1st September, 1956 in the Corporation should be kept separate. In these circumstances the High Court was in error in relying upon the judgment of this Court in Roshan Lal Tandon’s case (supra). 217 In O.P. No. 5295 of 1985 and connected cases on the file of the High Court of Kerala which was decided on 4.2. 1987 the claim of the employees of the Corporation belonging to class I but appointed after 1st September, 1956 to continue in service till they attained the age of 60 years arose for consideration. The High Court has negatived it. In the course of its judgment it has referred to the judgment under appeal in this case but has only distinguished it. The High http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 28 of 32 Court of Kerala was right in not following the decision of the High Court of Allahabad which is now under appeal. It, however, distinguished it on the ground that the employees in question had not been promoted from Class III to Class I as it was the case here but the petitioners before it had continued in Class I or Class 11 right from the commence- ment. We, however, approve of the reasons given by the High Court of Kerala in holding that the employees of the Corpo- ration belonging to Class I and Class II who had entered service of the Corporation after 1st September, 1956 were not entitled to continue in service beyond the age of 58 years. In our view the fact that an employee had entered the service of the Corporation after September 1, 1956 in a Class III post and is later on promoted to a Class I post does not make any difference in so far as the question which arises for decision before us. The High Court of Delhi has rejected two petitions in which the very question raised in this case arose for consideration, namely, N.L. Aneja v. Union of India and Others, (Civil Writ No. 1911 of 1986) and H.S. Kochar v. L.I.C. of lndia & Ors., (C.W. No. 1660 of 1986) at the stage of admission itself giving reasons, though short, for its orders. The two decisions, referred to above, have been rendered by two different Division Benches. We may also refer to one decision of the Madras High Court and another decision of the Calcutta High Court which arose trader the provisions of the Banking Companies (Acqui- sition and Transfer of Undertakings) Act, 1970 (Act 5 to 1970) where again the claim of employees of the banks in question who joined their service after nationalisation to the benefit of the conditions prescribed in the case of employees of the former banking companies whose services were taken over on nationalisation as regards the age of retirement arose for consideration. The scheme of section 12(2) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the scheme of section 11(1) of the Act, which is trader consideration before us, were the same. In Govindarajulu v. The Management of Union Bank of India & Ors., (Writ Petition No. 5486 of 1980) the High Court of Madras rejected the said claim by its judgment dated 21.11. 1986. In Dr. Nikhil Bhushan Chandra v. Union of India & Ors., (Civil Order 218 No. 13958 (W) of 1980) decided on December 21, 1982 the High Court of Calcutta has rejected a similar claim. We may at this stage refer to a recent decision of this Court in Miss Lena Khan v. Union of India and Ors., J.T. 1987 2 S.C. 19 decided on 30.3. 1987 in which the validity of the continua- tion of some foreign Air Hostesses beyond the prescribed age of retirement came up for consideration. The Court rejected the petition stating that the management of Air India having taken a decision "to phase out U.K. incumbents when they attain the age of 45", it was not discriminatory to Air Hostesses of Indian origin who were to retire at the age of 35 years and was not unconstitutional. The principle enunci- ated in this case can be applied to the cases of three officers who belong to the Department of Insurance who joined the service of the Corporation after resigning their posts in the Government of India in the year 1965, there being no chance of any addition to their class. Classification of employees into two categories for purposes of fixing the age of superannuation depending upon their dates of entry into service when the necessity for doing so arises on account of certain historical reasons is not unknown. This Court had to deal with a case involving a similar situation in Railway Board v. A. Pitchumani, [1972] http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 29 of 32 2 S.C.R. 187. Several railway companies which were running their own railways in different parts of India were amalaga- mated with the Indian Railway Administration in 1947. On such amalagamation servants of the railway companies, whose railways were taken over, became the employees of the Indian Railway Administration. On the absorption of the services of the servants of the previous railway companies it became necessary for the Indian Railway Administration to frame rules with regard to their conditions of service including the determination of the age of retirement of those railway employees. Accordingly, rule 2046 (F.R. 56) of the Indian Railway Fundamental Rules had to be modified. That rule was, therefore, substituted by a new rule on January 11, 1967. The new rule read as follows: "2046. (FR. 56)--(a) Except as otherwise provided in this rule, every railway servant shall retire on the day he attains the age of fifty-eight years. (b). A ministerial railway servant who entered Government service on or before the 31st March, 1938 and held on that date-- (i) a lien or a suspended lien on a permanent post, or 219 (ii) a permanent post in a provision- al substantive capacity under Clause (d) of Rule 2008 and continued to hold the same without interruption until he was confirmed in that post, shall be retained in service till the day he attains the age of sixty years. NOTE: For the purpose of this Clause, the expression "Government Service" includes service rendered in ex-company, and ex-State Railways, and in a former provincial Govern- ment." In the above new rule every railway servant, whose case did not fall under clause (b) of that rule was required to retire on the date he attained the age of 58 years. Clause (b), however, provided that every ministerial railway serv- ant who had entered the Government service on or before 31st March, 1938 and who satisfied the conditions mentioned either in sub-clause (i) or sub-clause (ii) thereof was entitled to continue in service till he attained the age of 60 years. As may be seen from that rule, the classification of the employees was made on the basis of the date of entry into the service of the Government. That clause (b) of the said rule applied also to the employees of ex-companies and ex-State railways which were taken over by the Indian Rail- way Administration is clear from the note attached to clause (b) of rule 2046 which provided that for the purpose of that clause the expression ’Government Service’ included service rendered in ex-company and ex-State railways and in a former provincial Government. On December 27, 1967 the Indian Railway Administration substituted the note attached to clause (b) of rule 2046 by the new note which read thus: "For the purpose of this clause the expression ’Government Service’ includes service rendered in a former provincial gov- ernment and in ex-company and ex State Rail- ways, if the rules of the Company or the State had a provision similar to Clause (b) above." The effect of the new note was that an employee who satis- fied the condition in sub-section (i) or sub clause (ii) of clause (b) was entitled to continue upto 60 years after http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 30 of 32 December 23, 1967 only if the rules of the company in which he was formerly working had a provision similar to clause (b) of rule 2046 which fixed the age of retirement at 60 years. 220 The Respondent in that case, that is, A. Pitchumani while he was entitled before December 23, 1967 to continue in service till he attained the age of 60 years as he had joined the service of the Madras and Southern Mahratta Railway Company on August 16, 1927, i.e., prior to March 31, 1938 and satis- fied the other conditions mentioned in clause (b) of rule 2046 could not have the benefit of that clause on and after December 23, 1967 since in the Madras and Southern Mahratta Railway Company where he was formerly working there was no rule similar to clause (b) as regards the age of retirement. He was asked to retire from service on April 14, 1968 on which date he was completing the age of 58 years. The Re- spondent, A. Pitchumani questioned before the High Court of Mysore (Karnataka) the validity of the note substituted by the Order dated December 23, 1967 which took away his right to continue in service till he attained the age of 60 years which he otherwise possessed before the introduction of the said note. The High Court of Mysore struck down a part of the new note only on the ground that it was discriminatory and directed that the Respondent, A. Pitchumani should be allowed to continue in the service till he completed the age of 60 years. On appeal, the judgment of the High Court was affirmed by this Court in Railway Board v. A. Pitchumani (supra). This Court did not find fault with the classifica- tion that had been made between the persons falling under clause (a) and persons falling under clause (b) on the basis of the date of entry into service since clauses (a) and (b) of rule 2046 had uniform application to all the employees of the Indian Railway Administration who came within the re- spective clauses. It, however, agreeing with the High Court found fault with the classification of the employees falling under clause (b) into two categories, namely, those employ- ees belonging to a company where there was a rule similar to clause (b) as regards the age of superannuation and those employees who came from companies where there was no rule similar to clause (b) as regards the age of superannuation. In Manindra Chandra Sen v. Union of India & Ors. A.I.R. 1973 CAL. 385 Sabyasachi Mukharji J., has upheld the said classi- fication of railway employees into two categories viz. those who joined on or before 31.3. 1938 and those who joined after 31.3. 1938 for purposes of fixing the age of superan- nuation on the basis of same historical facts which are set out in detail in that judgment. Such classification for purposes of fixing the age of superannuation depending upon the date of entry into services is not, therefore, something which is unusual and such classification becomes necessary on account of historical facts and the need for treating the employees in a fair and just way. 221 On behalf of the 1st Respondent reliance is placed on the decision of this Court in M/s. British Paints (India) Ltd. v. The Workmen, [1966] 2 S.C.R. 523 in support of his case that there should be no discrimination amongst the employees of an establishment with regard to the age of superannuation. That decision was rendered in an appeal against an award passed by an Industrial Tribunal. In that decision this Court has, no doubt, observed that generally speaking there should not be any difference in the age of retirement of existing workmen and others to be employed in future unless there are special circumstances justifying http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 31 of 32 such difference. By making the above observation this Court has virtually accepted the position that when there are special circumstances justifying the difference, it is open to fix different ages of retirement for the employees of an establishment in appropriate cases. We have already ex- plained earlier the reason for treating the transferred employees differently from the employees appointed after 1st September, 1956 by the Corporation. The transferred employ- ees who are treated favourably belong to a vanishing group and, perhaps, within a period of few years none of them would be in the service of the Corporation. Thereafter only one class of employees would be in the service of the Corpo- ration, namely, those appointed subsequent to 1st September, 1956 by the Corporation in respect of whom the Corporation has fixed the age of retirement as 58 years which corre- sponds to the age of retirement in almost all the public sector establishments, the Central Government services and the State Government services. The 1st Respondent cannot derive any assistance from the decision of this Court in Mohammad Shujat Ali & Ors. etc. v. Union of India & Ors. etc., [1975] 1 S.C.R. 449 in support of his case before us. In the above decision this Court was concerned with reservation of posts for graduate Supervisors in the cadre of Assistant Engineers giving them a preferen- tial treatment over non-graduate Supervisors who were also eligible to be promoted along with the graduate Supervisors to the cadre to Assistant Engineers after the graduates and non-graduates had been integrated into one cadre of Supervi- sors. Merely because the pay, allowances and other perqui- sites drawn by the transferred employees and by the employ- ees appointed after 1st September, 1956 by the Corporation are the same it cannot be said that the transferred employ- ees and the other employees had been integrated so as to form one cadre. So far as the age of retirement is concerned as it is already shown they are being treated differently right from the date on which the Corporation was estab- lished. The decision of this Court in Workmen of the Bharat Petrole- um 222 Corporation Ltd. (Refining Division) Bombay v. Bharat Petro- leum Corporation Ltd. and Another, [1984] 1 S.C.R. 251 no doubt lays down that under the modern conditions there is a general trend in favour of raising the age of retirement in the case of employees in industrial establishments. It may be so. We are not concerned in this case with the question whether the age of retirement of employees who have joined the service of the Corporation after 1st September, 1956 should be raised to 60 years. That is a matter of policy which has got to be decided by the Corporation and the Central Government. We are only concerned with the question whether the employees appointed after 1st September, 1956 have been subjected to any hostile discrimination while fixing the age of retirement contrary to Article 14 and Article 16 of the Constitution. Since the classification of the employees for the purpose of age of retirement into two categories in this case appears to us to be reasonable and not arbitrary and that there is a reasonable nexus between the classification and the object to be attained thereby, it is not possible to hold that regulation 19(2) is violative of Article 14 and 16 of the Constitution. We may at this stage refer to the following passage in Tamil Nadu Education Department Ministerial & General Subor- dinate Service Association v. State of Tamil Nadu & Anr., [1980] 1 S.C.R. 1026. http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 32 of 32 "In Service Jurisprudence integration is a complicated administrative problem where, in doing broad justice to many, some bruise to a few cannot be ruled out. Some play in the joints, even some wobbing, must be left to Government without fussy forensic monitoring, since the administration has been entrusted by the Constitution to the Executive, not to the Court. All life, including administrative life, involves experiment, trial and error, but within the leading strings of fundamental rights, and, absent unconstitutional ’exces- ses’, judicial correction is not right. Under Article 32, this Court is the constitutional sentinel not the national ombudsman. We need an ombudsman but the court cannot make-do." (page 1031) The decision taken by the Corporation and the Central Government as regards the ages of retirement of the differ- ent classes of the employees of the Corporation in the instant case is a bona fide one and cannot be characterised as unreasonable. It is not, therefore, liable to be upset by a decision of the Court. On a careful consideration of all 223 the aspects of the case we feel that the High Court erred in striking down regulation 19(2) of the (Staff) Regulations, 1960 as amended in the year 1977, and in directing the Corporation to continue the 1st Respondent in its service till he completed the age of 60 years. We, therefore, set aside the judgment of the High Court and dismiss the writ petition filed in the High Court. The appeals are according- ly allowed. There shall, however, be no order as to costs. N.P.V. Appeals allowed. 224