Full Judgment Text
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PETITIONER:
AMAR KRISHNA GHOSE
Vs.
RESPONDENT:
LIFE INSURANCE CORPORATION OF INDIA & ANR.
DATE OF JUDGMENT14/11/1972
BENCH:
SHELAT, J.M.
BENCH:
SHELAT, J.M.
CHANDRACHUD, Y.V.
CITATION:
1973 AIR 250 1973 SCR (2) 998
1973 SCC (2) 352
ACT:
Life Insurance (Emergency Provisions) Ordinance, 1 of 1956-
Cl. 3(2) ’deemed’ termination of service-Life Insurance
Corporation Act, 31 of 1956, Sec. 11(1) & 11(3).
Life Insurance Corporation Rules, 1956 Rule 12-A--Exclusive
jurisdiction of the Life Insurance Tribunal-Whether word
"liability of the controlled business of insurer" cover
questions of arrears of pay and deemed termination of
erstwhile employees.
HEADNOTE:
Appellant, an employee of an erstwhile Life Insurance
Company filed a suit against the L.I.C. in the Calcutta High
Court inter alia, claiming that the purported termination of
his service was void and for a declamation that he continued
to be in service of the Corporation after the vesting of the
business in the life Insurance Corporation. He further
claimed the arrears of rent and other dues accrued before
the vesting and salary for the subsequent period. The
Calcutta High Court split the two set of reliefs and held
that under Rule 12-A-the Life Insurance Tribunal had the
exclusive jurisdiction to decide whether the Corporation was
liable as a successor to the said companies for the earlier
liabilities or not. The High Court ’further held that the
question as to whether the employment of the appellant stood
terminated by virtue of sec. 3(2) of the Ordinance was also
within the exclusive jurisdiction of the Tribunal. Since
the relief for declaration of the continuation of service
and subsequent salary depended upon the question of
termination of service under sec. 3(2) of the Ordinance, the
High Court ordered that part of the claim may stand over and
considered after the Tribunal’s decision on the first set of
issues. The court gave liberty to the Corporation to
agitate (at such an adjourned hearing) that the Central
Government has the exclusive jurisdiction under sec. 11(1) &
11(3) of Act to adjudicate the question of continuation of
employment.
On appeal the Court,
HELD: (1) The expression "controlled business of the
insurer" in, Rule 12A means the life insurance business
carried on by an insurer before its management became vested
in a custodian under the ordinance and then in the
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Corporation., The appellant was not right in contending that
the past liabilities do not relate to "controlled business".
Therefore the Tribunal was the proper authority to decide
question of arrears of pay and other dues. [1003 E]
(2) Rule 12-A confers on the Tribunal the jurisdiction to
try "any question of any nature whatsoever in relation
to .... liabilities pertaining to controlled business." ’Me
question, whether the services of the appellant stood
terminated by cl. 3(2) of the Ordinance is related to the
liability’ of the "controlled business" and is covered by
the wide wording of Rule 12-A. The Tribunal alone had the
jurisdiction to decide the said question. [1005 D]
(3) The High Court was right in splitting the appellants’
claim into two, one triable by the Tribunal and the other
not, and retaining with it
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that part of the suit which did not fall within the scope of
R. 12-A with liberty to the parties to raise later on the
question whether that part was triable by the court or by
the Central Government under S. 11 (3) of the Act. [1O05 G]
Appeal dismissed.
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1331 of
1967.
Appeal by certificate from the judgment and order dated
February 28, 1966 of the Calcutta High Court in Appeal from
Order No. 88 of 1965.
M. C. Setalvad and Ram Prosanna Bagchi and Sukumar Ghose
for the appellant.
F. S. Nariman, Additional Solicitor General of India, K.
L. Hathi and P. C. Kapur for the respondent No. 1.
The Judgment of the Court was delivered by
SHELAT, J. This appeal, founded on the certificate granted
by the High Court of Calcutta, raises questions of
interpretation of sec. 3(2) of the Life Insurance (Emergency
Provisions) Ordinance, 1 of 1956, sec. 11 of the Life
Insurance Corporation Act, 31 of 1956 and R. 12A of the Life
Insurance Corporation Rules, 1956 made under s. 48 of the
said Act.
These questions arise in the following circumstances
Prior to January 1, 1956 the appellant was employed as the
Principal Officer of the Bengal Insurance and Seal Property
Co. Ltd., respondent 2 in this appeal. It was not disputed
in the High Court that by Principal Officer the
appellant meant that he was the Managing Director. His
salary as such officer was Rs. 2630 per mensum which on
and from January 1, 1956 was raised to Rs. 3000 per mensum.
On January 19, 1956, respondent2 issued in favour of the
appellant four cheques for Rs. 5436-6-0 in all
representing his salary for November and December 1955 and
for certain other dues. On that very day, i.e., January 19,
1956, the Life Insurance (Emergency Provisions) Ordinance,
1956 came into force, under which January 19, 1956 was the
appointed day. The management of the life insurance business
carried on by all concerns including that of respondent 2
was taken over and became vested in custodians appointed
under the Ordinance. Cl. 3(2) of the Ordinance provided
that "any contract, whether express or implied, providing
for the management clof the controlled business of an
insurer made before the appointed day between the insurer
and any person in charge of the management of such business
immediately before the appointed day shall be deemed to
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have terminated on the appointed day". The Ordi-
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nance was substituted by the Life Insurance (Emergency
Provisions) Act, 9 of 1956 which came into force as from
March 21, 1956. The said cheques, when presented for
payment, were not honoured by the Bank on the ground that
they were not signed by the custodian.
On June 18, 1956, Parliament passed The Life Insurance
Corporation Act, 31 of 1956, which came into force as from
July 1, 1956. A Notification, dated August 30, 1956, issued
thereunder fixed September 1, 1956 as the appointed day,
that is the date when the Corporation was established under
sec. 3 of the Act. Sec. 7 of the Act reads as follows :
"7(1) On the appointed day there shall be
transferred to and vested in the Corporation
all the assets and liabilities appertaining to
the controlled business of all insurers.
(2)The assets appertaining to the
controlled business of an insurer shall be
deemed to include all rights and powers, and
all property, whether movable or immovable,
appertaining to his controlled business,
including in particular, cash balances,
reserve funds investments, deposits and all
other interests and rights in of arising out
of such property as may be in the possession
of the insurer...... and liabilities shall be
deemed to include all debts, liabilities and
obligations of whatever kind then existing and
appertaining to the controlled business of the
insurer."
Sec 11(1) of the Act provides that every whole-time employee
of an insurer whose controlled business has been transferred
to and vested in the Corporation and who was employed by the
insurer wholly or mainly in connection with his controlled
business immediately before the appointed day (i.e.
September 1, 1956) shall on and from the appointed day
become an employee of the Corporation and shall hold his
office therein on the same terms and conditions as he was
having on the appointed day, unless and until his employment
in the Corporation is terminated by the Corporation. Sub-
sec. (3) of s. II provides that if any question arises as to
whether (a) any person was a whole-time employee of an
insurer, or (b) as to whether any employee was employed
wholly or mainly in connection with the controlled business
of an insurer immediately before the appointed day (i.e.
September 1, 1956) that question shall be referred to the
Central Government, whose decision shall be final. Under s.
17, the Central Government has been empowered to constitute
one or more tribunals. Sec. 48 empowers the Central
Government to make rules, and in particular among other
subjects on the subject of jurisdiction of
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the tribunals constituted under s. 17. Rule 12A of the Life
Insurance Corporation Rules, 1956 made under s. 48 reads as
under :
"12A. Jurisdiction of Tribunal.
The Tribunal may exercise jurisdiction in the
whole of India and shall have power to decide
or determine all or any of the following
matters, namely,
(1) any question whether of title or of
liability, or of any nature whatsoever in
relation to the assets and liabilities
pertaining to the controlled business of the
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insurer transferred to and vested in the
Corporation."
It seems clear from s. 11(3) of the Act and the said rule
12A (1) that on a question whether a person was a whole-time
employee of an insurer or whether any employee was employed
wholly or mainly in connection with the controlled business
of such insurer immediately before the appointed day, i.e.,
September 1, 1956, it is the Central Government which is the
deciding authority and whose decision is final, and (2) that
where a question, whether of title or of liability or of any
nature whatsoever in relation to the assets and liabilities
pertaining to the controlled business of the insurer
transferred to and vested in the Corporation, arises, it is
the tribunal which is the authority invested with the
jurisdiction to determine such a question.
On January 20, 1959, the appellant filed a suit in the High
Court claiming the following reliefs :
(a) a decree for Rs. 5436-6-0 as salary for
November and December 1955;
(b) declaration that the purported
termination of his contract of service as the
principal officer of respondent 2 and/or as an
employee of the Corporation was void;
(c) declaration that he was and continued to
be the employee of the Corporation and for
reinstatement;
(d) a decree for Rs. 1,01,250 being his
salary from January 1956 to December 1958 at
the rate of Rs. 2812-8-0 per mensem;
(e) in the alternative, for a decree for the
said amount of Rs. 1,01,250 against respondent
2; and
(f ) for interest and costs.
The case of the Corporation was (1) that by reason of cl.
3(2) of Ordinance 1 of 1956 the employment of the appellant
1002
with the respondent 2 stood terminated on January 19, 1956,
and (2) that as a consequence of such termination, the
appellant was not in the employment of respondent 2 wholly
or mainly in connection with his controlled business
immediately before the appointed day under the Act, i.e.,
September 1, 1956, and therefore, was not entitled to the
benefit of s. 11( 1) thereof and could not, therefore, claim
to have become an employee of the Corporation. Therefore,
there was no question of his employment having to be or
having been terminated by the Corporation at all, much less
wrongfully. Its case further was that so far as the first
relief was concerned since the claim for Rs. 5436-6-0 raised
the question of pertaining to the controlled business of
respondent 2, the jurisdiction was exclusively with the
tribunal as under s. 41 of the Act no civil court has the
jurisdiction to entertain and adjudicate upon a matter which
the tribunal has been empowered to determine. That being
so, it was the tribunal which had to decide whether (a) the
appellant’s employment stood terminated on January 19, 1956
by virtue of cl. 3 (2) of Ordinance 1 of 1956, and (b)
whether as a result of the vesting of the management of
controlled business in the Custodian or the vesting of that
business in the Corporation, the Corporation was liable to
Day the arrears of his salary for November and December 1956
and certain other dues. So far as the claim for Rs.
1,01,250, on the footing that there was no such termination
of the appellant’s service and consequently his having
become and having continued to be the Corporation’s employee
under s. 11(1) of the Act, is concerned, the Corporation’s
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case was that part of his case had to be determined by the
Central Government as under s. 11(3) it is that Government
which has to decide whether the appellant was a whole-time
employee of respondent 2 wholly or mainly in connection with
that company’s controlled business immediately before the
appointed day, viz., September 1, 1956. That question
depended upon the question whether his employment with res-
pondent 2 stood terminated on January 19, 1956 under cl.
3(2) of the said Ordinance, for, if it did, no further
question of his becoming or his having continued as the
Corporation’s employee under s. 11(1) of the Act could
possibly arise.
A learned single Judge of the High Court, before whom the
suit came up for hearing, held that the High Court had no
jurisdiction to entertain or adjudicate the appellant’s
claim against the Corporation and dismissed the appellant’s
suit. In a Letters Patent appeal against that judgment and
decree, a Division Bench of the High Court sustained the
trial Court’s finding that the High Court had no
jurisdiction in the matter of the appellant’s claim for Rs.
5436-6-0 and that it was the tribunal which had that
jurisdiction. But it did not uphold the trial Court’s
finding as regards the relief for the salary and declaration
in respect of the
1003
period from September 1, 1956 to December 1958. The
Division Bench held that "this part of the case, so far as
the Life Insurance Corporation is concerned, will stand
adjourned until the determination of the proceedings before
the Tribunal mentioned above. This will be without
prejudice to the rights of the defendants to raise the
question of competency of the Court to decide any question
which comer, within the scope of sec. 11 (3) of the said
Act. So far as defendant No. 2 is concerned it has been
held that the Court has jurisdiction and we are not
disturbing that part of the decree". What the Division
Bench in effect decided was that it was the tribunal and not
the High Court which had the jurisdiction to decide the
question as to the Corporations liability to pay the said
arrears of salary for November and December 1955 as that
liability pertained to the controlled business of respondent
2. That question would involve the issue as to whether or
not the appellant’s contract of service with respondent 2
stood terminated by virtue of cf. 3(2) of the Ordinance. As
regards his claim for salary for the period from September 1
1956 to December 1958, the Division Bench left the question
open until the tribunal decide the first part of the claim
including the question arising under cl. 3(2) of the
Ordinance. But it left the question, viz., whether the
appellant be-came and continued to be the employee of the
Corporation under s. 1 1 ( 1 ) of the Act, open and retained
that part of the appellant’s suit with the High Court with
liberty to the respondents to raise the question of the High
Court’s jurisdiction in that regard. That question would be
whether under s. 11(3) of the Act it is for the Central
Government to determine whether the appellant was the whole-
time employee of respondent 2 immediately before the
appointed day under the Act, viz., September 1, 1956.
Mr. Setalvad doubted the correctness of such an
interpretation of R. 12A of the Corporation Rules and argued
that the Rule conferred jurisdiction on the tribunal on
questions as to the Corporation’s liability in relation to
"the assets and liabilities pertaining to the controlled
business of the insurer transferred to and vested in the
Corporation". The business transferred to and vested in the
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Corporation could no longer be the controlled business of
the insurer and ceased to be so once it became transferred
to and vested in the Corporation under the Act. Therefore,
he argued, the Tribunal could have no jurisdiction in
respect of a liability to which the Corporation succeeded as
a result of the assets and liabilities of the insurer having
been transferred to and vested in the Corporation. He
contended that being the position, it was not the tribunal
but the civil court which had to decide the question whether
the Corporation was liable to pay the arrears of salary for
November and December 1956. a liability, which the Custodian
and later on the Corporation were liable to satisfy,
1004
the former as a result of the management having vested in
him under the Ordinance,, and the latter as a result of its
having succeeded to the assets and liabilities of the
insurer. He also contended that the question as to whether
the appellant’s contract of service with respondent 2 stood
terminated on January 19, 1956 under cl. 3(2) of the
Ordinance would also not fall under R. 12A. The Addl.
Solicitor-General, on the other hand, disputed such a
construction of R. 12A and contended that the tribunal had
under that Rule the exclusive jurisdiction to determine both
the questions, and -the High Court could not. by reason of
S. 41 of the Act entertain or adjudge either of the two
questions.
The reliefs prayed for by the appellant in his plaint
pertained to two periods; (1) Rs. 5436-6-0 being the arrears
of salary and other dues for the months of November and
December 1955, and (2) Rs. one lac and odd being the salary
from January 1, 1956 to December 1958. Under R. 12A, a
question either of liability or of any nature whatsoever in
relation to the assets or liabilities pertaining to the
controlled business of the insurer transferred to and vested
in the Corporation falls within the jurisdiction of the
tribunal and cannot be entertained and adjudicated by a
civil court under S. 41 of the Act. In respect of the claim
for arrears of salary for November and December 1956, the
question really would be one of liability in regard to or
pertaining to the controlled business of the insurer which
became transferred to and vested in the Corporation. That
question, therefore, fell fairly and squarely within the
jurisdiction of the tribunal. The expression "controlled
business of the insurer" in R. 12A means the life insurance
business carried on by an insurer before its management
became vested in a custodian under the Ordinance and whose
assets and liabilities became transferred to and vested in
the Corporation under the Act. R.12A clearly deals with
questions arising out of and pertaining to such controlled
business. Under R. 12A, jurisdiction to try questions in
respect of the liability pertaining to such business has
been vested in the tribunal. The question of the liability
of the Corporation in regard to the arrears of salary for
November and December 1955 clearly related to the controlled
business then carried on by respondent 2. The Corporation
was sought to be made liable to pay those arrears on the
ground that liability was transferred to and vested in the
Corporation. Clearly R. 12A applied to such a question and
the jurisdiction to try such a question was in the tribunal
and not the High Court. Any question, therefore, as to the
liability pertaining to the business which was the
controlled business as defined by the Act would have to be
tried by the tribunal.
As regards the second claim of the appellant, that claim in-
volved the question as to whether his contract of service
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with respondent 2 stood terminated on January 19, 1956 by
viz
1005
of cl. 3 (2) of the Ordinance.’ If it did, he would not be a
person who was employed by the insurer wholly or mainly in
connection. with his controlled business immediately before
the appointed day (which is September 1, 1956 under the Act)
as required by s. 11(1) of the Act, and therefore, he could
not claim to be one became and continued to be ;in employee
of the Corporation as envisaged by that sub-section. Under
sub-sec. (3) of sec. 11, the question whether an employee
was employed wholly or mainly in connection with the
controlled business.of an insurer immediately before the
appointed day under the Act (i.e., September 1, 1956) is
determinable by the Central Government and not by a civil
court. That question, however, would depend upon the
question whether the appellant’s contract of service stood
terminated by reason of cl. 3 (2) of the Ordinance on
September 1, 1956. Has the tribunal the exclusive
jurisdiction to decide that question ? The High Court
thought so, and in our view rightly because R. 12A confers
on the tribunal the jurisdiction to try, any question-of any
nature whatsoever in relation to-liabilities pertaining to
the controlled business of the insurer transferred to and
vested- in the Corporation". These are very wide words
which would include the question whether the appellant as
the principal officer of respondent 2 continued. lo be such
officer after January 19, 1956 in relation to the controlled
business which on and after January 19, 1956 was to be
managed in terms of the Ordinance by a custodian appointed
thereunder and whose assets and liabilities on the passing
of the Act were transferred to and vested in the
Corporation. The question whether his contract of
employment as the principal officer of the business, defined
as the controlled business both under the Ordinance and the
Act, continued or not after January 19, 1956 would be a
question in relation to the liability pertaining to such
controlled business and was therefore within the scope of R.
12A. But the question as to whether he became an employee
of the Corporation under s. 11(1) on and from January 1,
1956, though dependent on the answer as to whether his
contract stood terminated under cl. 3 (2) of the Ordinance,
would not fall within R. 12A and was not therefore triable
by the tribunal. The High Court, therefore, was right in
splitting the appellants claim into two, one triable by the
tribunal and the other not, and retaining with it that part
of the suit which did not fall within the, scope of R. 12A
with liberty to the parties to raise later on the Question
whether that Part was triable by the Court or by the Central
Government under s. II ( 3 of the Act.
The appeal thus fails and is dismissed with costs.
S.B.W. Appeal dismissed-
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