Gauhati High Court
Siddhartha Saha & 2 Ors vs Life Insurance Corporation Of India & 4 ... on 31 January, 2017
Author: Suman Shyam
Bench: Suman Shyam
IN THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
PRINCIPAL SEAT AT GUWAHATI
(CIVIL APPELLATE JURISDICTION)
WP(C) Nos.2169/2016 and 3314/2016
1. WP(C) No.2169/2016
Siddhartha Saha and 2 others ... ... Petitioners
-Versus-
Life Insurance Corporation of India
and 4 others. ... ... Respondents
2. WP(C) No.3314/2016 Subrata Das ... ... Petitioner
-Versus-
Life Insurance Corporation of India
and 5 others. ... ... Respondents
BEFORE
HON'BLE MR. JUSTICE SUMAN SHYAM
For the petitioner(s) : Mr. S. K. Talukdar, Advocate.
For the respondents : Mr. S. P. Choudhury, Advocate
[in WP(c) 2169/2016]
Mr. S. Nath, Advocate
[in WP(C) 3314/2016].
Date of hearing : 31.01.2017.
Date of Judgment : 31.01.2017.
WP(C) Nos.2169/2016 & 3314/2016 Page 1 of 16
JUDGMENT AND ORDER (Oral)
1. Heard Mr. S. K. Talukdar, learned counsel appearing for the writ petitioner(s) in both the writ petitions. Also heard Mr. S. P. Choudhury, learned counsel representing the respondents in WP(C) No.2169/2016 as well as Mr. S. Nath, learned counsel appearing for the respondents in WP(C) No.3314/2016. Since both the writ petitions are founded on identical question of fact and law, hence, I propose to dispose of the same by this common order.
2. The respondent no.1, Life Insurance Corporation of India (LICI), had earlier formulated a scheme in the name of "LIC of India (Financial Services Executives) Scheme, 2007 (in short, the Scheme of 2007) paving the way for engagement of Financial Services Executives (FSE) on contractual basis for a period of three years. The FSE's were supposed to do a marketing job and would therefore, be directly responsible for procuring new business, providing policy servicing and related jobs from the bank branches and other outlets assigned to them. The Scheme of 2007, as modified on 01.07.2013, laid down the eligibility criteria for appointment as an FSE besides containing other terms and conditions of engagement including "termination of contract" and "renewal of contract" .
3. In terms of the Scheme of 2007, the respondent No.5 had issued a Circular for engagement of 170 FSEs in the various offices of the WP(C) Nos.2169/2016 & 3314/2016 Page 2 of 16 respondent No.1 situated at the Eastern Zone. The said notice had inter-alia clarified that selection as Financial Services Executive (FSE) would be on contractual basis and shall not confer any right on a candidate to be appointed as a permanent employee under the Corporation.
4. The writ petitioners had applied for the post of FSE and had also taken part in a selection process held by the respondents. On being selected, the petitioners were made to undergo a training programme pursuant whereto, separate orders engaging them as FSEs on contractual basis was also issued. Accordingly, the writ petitioners had joined as FSEs and have been rendering their services to the respondent No.1 corporation. Being satisfied with their performances, the contract of the petitioners have also been extended by the respondent corporation from time to time and by the order dated 23- 04-2015, the contract had been extended for the 8th (eight) consecutive year. However, in the order dated 23.04.2015, it was mentioned that with effect from 01.04.2016 the contract will automatically cease without any further notice. The order dated 23.04.2015 was followed by a separate communication dated 29.02.2016 reminding the petitioners that their contractual extension period would be completed on 31.03.2016 and that this would be the last and final extension of contractual service of the petitioners as FSE. The said stand of the respondent No. 1 was apparently based on a WP(C) Nos.2169/2016 & 3314/2016 Page 3 of 16 policy decision not to re-renew the contract of the FSEs beyond the 8th year.
5. The orders dated 23.04.2015 as well as 29.02.2016 have been put to challenge by the three writ petitioners in WP(C) No.2169/2016 whereas the notification dated 01.01.2015 communicating the policy decision taken by the respondent No.1 to make the extension of the contractual services of the eligible FSEs for the 8th year as the last and final extension has been challenged by the lone petitioner in WP(C) No.3314/2016.
6. Mr. Talukdar, learned counsel appearing for the writ petitioners, submits that the petitioners are not disputing the fact that their appointment as FSEs was purely contractual nor are they denying the fact that as per the Scheme of 2007, the initial period of appointment was only for a period of three years subject to extension for a further period of two years only. However, since the respondents had permitted the petitioners to continue as FSEs beyond the said contractual period, hence, the terms of the contract automatically stood modified and therefore, the embargo of maximum period of five years in service, as provided by the Scheme, would no longer be applicable in the facts and circumstances of the present case.
7. Placing heavy reliance upon the decision of the Hon'ble Supreme Court in the case of Mohd. Abdul Kadir and another vs. WP(C) Nos.2169/2016 & 3314/2016 Page 4 of 16 Director General of Police, Assam and others reported in (2009) 6 SCC 611, Mr. Talukdar contends that the respondent No.1 has not yet discontinued with the scheme under which the petitioners had been appointed as FSEs and therefore, in the absence of any allegation against the petitioners as regards their performance standards, the respondents cannot arbitrarily terminate the services of the petitioners during the continuance of the scheme of 2007.
8. By referring to another decision of the Hon'ble Supreme Court in the case of Shrilekha Vidyarthi (Kumari) vs. State of U.P., reported in (1991) 1 SCC 212, Mr. Talukdar submits that even though the appointment of the petitioners is governed by the terms and conditions of the contract, law is well settled that any action of the state and its instrumentalities, which is found to be unjust, unfair or un- reasonable even in contractual appointments, would be open to judicial review. According to Mr. Talukdar, by refusing to re-new the contracts of the petitioners beyond the 8th year despite continuance of the scheme, the respondents have acted in an unjust, unfair and un-reasonable manner, taking advantage of the unequal bargaining power over the petitioners. The learned counsel however, fairly submits that the petitioners are not seeking regularization of their service under the respondent No 1.
WP(C) Nos.2169/2016 & 3314/2016 Page 5 of 16
9. Resisting the arguments advanced on behalf of the writ petitioners, Mr. S. P. Choudhury, learned counsel for the respondents, submits an objective assessment of the working of the Scheme was made by the Board of the Corporation whereafter, a decision was taken to discontinue with the FSEs beyond the period of 8th years. The learned counsel submits that the policy decision had been taken on the basis of a proper review as regards the organizational requirement for continuance of the FSEs. The learned counsel submits that the policy decision has been applied uniformly throughout the country, after giving sufficient prior notice to the affected persons. As such, according to Mr. Choudhury, the action on the part of the respondents cannot be termed as arbitrary or un-reasonable. In support of his aforesaid argument, Mr. Choudhury has also relied upon the decision of the Hon'ble Supreme Court in the case of Gridco Limited and another vs. Sadananda Doloi and others reported in (2011) 15 SCC 16. Mr Choudhury further submits that the challenge made to the said policy decision of the respondent No.1 by similarly situated FSEs from other states before the different High Court on identical grounds have ended in dismissal.
10. Substantially adopting the arguments advanced by Mr. Choudhury, Mr. S. Nath, learned counsel appearing for the respondents in WP(C) No.3314/2016, while inviting the attention of this Court to Clause 24 of the Scheme document, submits that the writ WP(C) Nos.2169/2016 & 3314/2016 Page 6 of 16 petitioners have been given the option to become agents under the respondent No.1 and therefore, it cannot be said that the petitioners are being denied of a fair opportunity to earn their livelihood.
11. I have bestowed my anxious consideration to the arguments advanced by and on behalf of the parties and have also examined the materials available on record.
12. A bare reading of the Scheme of 2007 goes to show that the respondent No.1 had formulated the aforementioned scheme with a specific objective of promoting its business activities by engaging marketing personals in the form of FSEs. The specific responsibility of the FSE was to procure new business, to provide policy servicing and other related jobs from the Bank branches/other outlets allotted to them. The respondent No.1 had also laid down, from time to time, the minimum business targets that the FSEs would be required to achieve so as ensure their continuity under the Scheme.
13. A reading of the Circular dated 01.01.2015 goes to show that a conscious decision had been taken by the respondent No.1 at the Corporate level not to renew the services of the FSE all over the country beyond the period of 8th year. The contents of the circular dated 01.01.2015 is quoted herein below for ready reference :-
"Ref. : CO/MBAC/ZD/01/2015 1st January, 2015 All Zonal Managers, All Regional Managers (B&AC), WP(C) Nos.2169/2016 & 3314/2016 Page 7 of 16 All Sr./Divisional Managers.
Re : INSTRUCTIONS FOR IMPLEMENTATION of LIC of India (Financial Services Executives) Scheme 2007 As amended on 05.09.2014.
The Competent Authority has approved renewal of contract for eligible FSEs for the 8th year subject to performance and suitability. Details regarding Remuneration, Minimum Business Parameters, Incentive, etc. for the 8th year will be conveyed separately.
This is the last and final extension of Contractual Period to the FSEs. Please note that there will not be any further extension of contractual period to any of the FSEs, after completion of the 8th year.
Effective Date : These instructions come into force with immediate effect.
Please circulate the above instructions to concerned officers immediately.
Sd/- Illegible Executive Director (M-B & AC)"
14. Pursuant to the order dated 01.11.2016 passed by this Court the respondents had also filed an additional affidavit dated 10.11.2016 categorically stating that a decision has been taken not to extend the contractual services of the FSEs after completion of 8th year and that the respondents have neither engaged any FSE after October, 2014 nor do they have the intention to do so under the scheme in near future. The averments made in paragraph 4 of the said additional affidavit is extracted herein below for ready reference :-WP(C) Nos.2169/2016 & 3314/2016 Page 8 of 16
"4. That the answering respondent begs to state that the engagement under the LIC of India (Financial Service Executive) Scheme, 2007 was absolutely contractual initially for a period of three years and subsequently it was extended upto 8th year on the basis of performance of the engaged persons and the contract of Financial Service Executives after completion of their 8th year period have not been extended any further which was duly communicated to them earlier. Be it mentioned herein that vide letter dated 5.11.2016 which has been issued by the respondent No.3 it is clarified that the respondents have not engaged any new Financial Service Executive after October 2014 and moreover there is no intention to recruit any Financial Service Executive under the scheme in near future. It has also been mentioned in the said letter that to earn their livelihood the FSEs who have completed their 8th year contractual period can join the existing CLIA scheme or as Direct Agent."
15. A careful scrutiny of the aforementioned materials available on record leave no manner of doubt about the fact that the respondent No.1 had taken a conscious decision to discontinue with the services of the FSEs and the said decision has been uniformly applied in case of all such FSE's throughout the country who have completed 8 years of continuous service. That apart, as noted above, it is also the pleaded stand of the respondents that they have not engaged any FSE since 2014 nor do they intend to do so in near future. Nothing has been brought on record by the petitioners to show that the respondent WP(C) Nos.2169/2016 & 3314/2016 Page 9 of 16 corporation has acted contrary to the said stand projected in the additional affidavit.
16. There is no wrangle at the bar that the appointment of the petitioners as FSE was purely contractual and for the fixed tenure mentioned in their appointment orders. Therefore, the rights and liabilities of the petitioners will be strictly governed by the condition of the contract, which makes it abundantly clear that the renewal of the contract beyond the initial period of three years would be on the sole discretion of the corporation. By issuing the impugned orders, the respondents have merely conveyed the decision of the corporation not to re-new the contract beyond the 8th year which stand they were entitled to take as per the terms of the contract.
17. It is not in dispute that the purpose behind framing the scheme of 2007 permitting engagement of FSEs was to promote the business activities of the respondent No. 1. Therefore, it appears that the framing of the scheme was a business decision taken by the respondent no. 1 at the corporate level with a view to augment its revenue. Needless to say, such decision of the corporation to engage business development agents in the form of FSEs will have its own financial implications and therefore, it would always be open to the respondent no.1 to review the performance of the scheme and take a decision on the question of its continuation. Such decision would wholly depend on the discretion of the respondent corporation and WP(C) Nos.2169/2016 & 3314/2016 Page 10 of 16 this court, in exercise of its power of judicial review under art. 226 of the Constitution, cannot sit in appeal over the merit of such policy decision.
18. In the case of Gridco Limited (supra) the Hon'ble Supreme Court had the occasion to deal with a similar issue pertaining to the power of judicial review of the Court in the matter of administrative decisions based on contractual obligations whereby the Supreme Court had made the following observations :-
"39. A conspectus of the pronouncements of this court and the development of law over the past few decades thus show that there has been a notable shift from the stated legal position settled in earlier decisions, that termination of a contractual employment in accordance with the terms of the contract was permissible and the employee could claim no protection against such termination even when one of the contracting parties happened to be the State. Remedy for a breach of a contractual condition was also by way of civil action for damages/compensation. With the development of law relating to judicial review of administrative actions, a writ Court can now examine the validity of a termination order passed by public authority. It is no longer open to the authority passing the order to argue that its action being in the realm of contract is not open to judicial review. A writ Court is entitled to judicially review the action and determine whether there was any illegality, perversity, unreasonableness, unfairness or irrationality that would vitiate the action, no matter the action is in the realm of contract. Having said that we must add that judicial review cannot extend to the Court acting as an appellate authority sitting in judgment over the decision. The Court cannot sit in the arm chair of the Administrator to decide whether a more reasonable decision or course of action could have WP(C) Nos.2169/2016 & 3314/2016 Page 11 of 16 been taken in the circumstances. So long as the action taken by the authority is not shown to be vitiated by the infirmities referred to above and so long as the action is not demonstrably in outrageous defiance of logic, the writ Court would do well to respect the decision under challenge.
40. Applying the above principles to the case at hand, we have no hesitation in saying that there is no material to show that there is any unreasonableness, unfairness, perversity or irrationality in the action taken by the Corporation. The Regulations governing the service conditions of the employees of the Corporation, make it clear that officers in the category above E-9 had to be appointed only on contractual basis.
41. It is also evident that the renewal of the contract of employment depended upon the perception of the management as to the usefulness of the respondent and the need for an incumbent in the position held by him. Both these aspects rested entirely in the discretion of the Corporation. The respondent was in the service of another employer before he chose to accept a contractual employment offered to him by the Corporation which was limited in tenure and terminable by three months' notice on either side. In that view, therefore, there was no element of any unfair treatment or unequal bargaining power between the appellant and the respondent to call for an over- sympathetic or protective approach towards the latter."
After hearing the learned counsel for both the parties I am of the un-hesitant opinion that the ratio of the aforesaid decision would be squarely applicable in the facts and circumstances of the present case as well.
WP(C) Nos.2169/2016 & 3314/2016 Page 12 of 16
19. In so far as the decision of the Supreme Court in Mohd. Abdul Kadir and another (supra) is concerned, that was a case where the Government of India had formulated the "Prevention of Infiltration of Foreigners Scheme" (PIF scheme) for strengthening the machinery for detection and deportation of foreigners from Assam. Under the PIF scheme, the government of India had agreed to reimburse the cost and allowances of persons employed in the additional posts subject to conditions that such posts were filled up only by ex-servicemen. Accordingly, selection and appointment of suitable candidates were made by the State agencies. The appointment orders inter-alia contained a condition that the appointment will be for a fixed term of one year and after the termination of their service, the ad-hoc employee would be entitled to seek fresh appointment for another one year. In terms of the said condition, the state had followed a system of termination and re-appointment of the ad-hoc employees notwithstanding the fact that the PIF scheme of the Government was in continuation without any break. It was in such fact situation that the Supreme Court had observed that when an ad-hoc appointment was under a scheme and in accordance with the selection process prescribed by the scheme, there is no reason why those appointed under the scheme should not be continued as long as the scheme continues. It was in such context that the Supreme Court had further observed that Ad-hoc appointments under a scheme are normally WP(C) Nos.2169/2016 & 3314/2016 Page 13 of 16 co-terminus with the scheme (subject of course to earlier termination either on medical or disciplinary grounds, or for unsatisfactory service or on attainment of normal age of retirement).
20. As noted above, in the present case, the respondent No.1 corporation had discontinued with the scheme of 2007 and no fresh appointment of FSEs had been made since the year 2014. Therefore, it is not a case of non-renewal of the contract of the petitioners during the continuance of the scheme but due to discontinuance of the scheme. As such the decision of the Supreme Court in the case of Mohd. Abdul Kadir and another (supra) is clearly distinguishable in facts and therefore, will be of no assistance to the learned counsel for the petitioners in the facts of the present case. Rather the observation made in paragraph 15 of the said decision, in my considered opinion, would go against the petitioner. The observations made in para 15 is extracted here-in-below for ready reference :
"15. On completion of the project or discontinuance of the scheme, those who were engaged with reference to or in connection with such Project or Scheme cannot claim any right to continue in service, nor seek regularization in some other project or service. (See Bhagwan Dass v. State of Haryana - 1987 (4) SCC 634, Delhi Development Horticulture Employees Union v. Delhi Administration - 1992 (4) SCC 99, Hindustan Steel Works Construction Ltd., vs. Employees Union - 1995 (3) SCC 474, UP Land Development Corporation vs. Amar Singh - 2003 (5) SCC 388, Madhyamik Shiksha Parishad UP v. Anil Kumar Mishra - 2005 (5) SCC 122, Secretary, State of Karnataka v. Umadevi - 2006 (4) SCC 31, Indian Council of Medical WP(C) Nos.2169/2016 & 3314/2016 Page 14 of 16 Research vs. K. Rajyalakshmi - 2007 (2) SCC 332, and Lal Mohammed vs. Indian Railway Construction Co. Ltd. - 2007 (2) SCC
513). In view of this settled position, the appellants will not be entitled to regularization."
21. Clause 3 of the Scheme of 2007 categorically provided that the engagement of the petitioners would be purely on contractual basis initially for a period of three years. In their appointment orders also it has been mentioned that the appointment of the petitioners as FSE would be for a period of three years which was renewable for another two years only at the sole discretion of the Corporation. From the above materials available on record it is apparent that the appointment/engagement of the petitioners as FSE was for fixed tenure of three years subject to renewal by another two years. The petitioners were, therefore, all along aware of the temporary nature of the engagement which was co-terminus with the period mentioned in the contract. Under the circumstances, the respondents cannot be compelled to permit the petitioners to continue as FSE in a manner contrary to the terms of the contract, more so when a conscious decision has been taken by the Corporation to discontinue with the Scheme of 2007.
22. For the reasons stated herein above, I am of the view that the petitioners have failed to make out any good ground warranting interference of this court in the matter. In the result, both the writ petitions fail and are hereby dismissed.
WP(C) Nos.2169/2016 & 3314/2016 Page 15 of 16
23. Before parting with the record, it would be apposite to mention herein that both in the scheme document as well as in the additional affidavit dated 10th November, 2016 the respondents have made it clear that notwithstanding the disengagement of the petitioners as FSE they would have the option to work as direct agents under the respondent No.1. In view of the aforesaid offer made by the respondent No.1, it is made clear that if any of the petitioners' choose to exercise the option under Clause 24 of the Scheme document, in that case, without prejudice to their rights and contentions in the matter, they would be permitted to function as such, with immediate effect. It is also made clear that in the event the respondents decide to revive and / or continue with the Scheme of 2007 any time in future by engaging fresh FSEs, then in that event the cases of the writ petitioners would also be considered by giving due weightage to their past performance and experience in the field of operation.
Having regard to the facts and circumstances of the case, there will be no order as to cost.
JUDGE T U Choudhury WP(C) Nos.2169/2016 & 3314/2016 Page 16 of 16