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In WP(C) No.15209/84, All India Insurance Employees Association is the Petitioner, while Ummed Singh and another workman are the Petitioners in WP(C) Nos.15210-13/84. WP(C) No.15209/84 has been filed in challenging the Ordinance, which effected the changes to the Act in question. Inasmuch as the said Ordinance has been replaced by the Act, we must hold that these petitions have become infructuous and shall stand disposed of accordingly.

As stated already, by the Act, nationalisation of general insurance business was effected by notification made on September 20, 1972, which brought the Act into force with 2.1.1973 as the appointed date. On 27.9.1974, the scheme of 1974 was issued by the Central Government purported to have been issued under Section 16(1)(g) of the 1972 Act after discussions and negotiations with the employees under the Industrial Disputes Act. On 1.6.1976, another scheme was issued by the Central Government, stated to be unilaterally, under which the Provident Fund benefit granted to the employees under the 1974 scheme was modified. The 1974 scheme granted contribution of 8 per cent based on basic salary, dearness allowance and the personal pay and this was substituted with 10 per cent of basic salary and personal pay. The Provident Fund Act has been made applicable to the workmen of the GIC from 1970 onwards. On 30.7.1977, another scheme was published purportedly under Section 16(1)(g) of the 1972 Act amending the provisions regarding sick leave. The sick leave was available with full pay, but by the new scheme the same was reduced to only half pay. On 30.9.1980, the Central Government published another scheme to amend the 1974 scheme by which the existing employees would retire at the age of 60 years and those who joined the service after 1980 will retire at the age of 58 years. The ceiling on salary including basic, dearness allowance and special pay, if any, was imposed on Class III employees at Rs.2,750/- per month and on Class IV employees at Rs.1,600/- p.m. The graduation increment was withdrawn. Subsequently, the ceiling was increased to Rs.3,500/- p.m. Class III employees and to Rs.2117/- p.m. Class IV employees. However, there is no ceiling at all at present. After the decision in Ajay Kumar Banerjees case [supra] Ordinance 10/84 was promulgated to amend the 1972 Act by introducing Section 17A, retrospectively and modification of Section 16 of the 1972 Act. On 21.9.1984, the Central Government issued the Amendment Scheme of 1984 purportedly under Section 17A of the 1972 Act by reviving the 1980 scheme. It also imposed a condition of compulsory retirement on completion of 55 years of age. The Petitioners have challenged the vires of the Act as well as the schemes in these proceedings.

Thereafter, the Government of India in exercise of powers under Section 16(1)(g) framed a scheme called the General Insurance (Rationalisation and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Scheme, 1974. As per this scheme, contribution to the provident fund was to be at the rate of 8 per cent of the basic salary and dearness allowance with an equal contribution by the General Insurance Corporation or any of its subsidiaries, while, at the same, time, they had maintained parity with other institutions such as LIC and the nationalised banks and for this purpose they had amended the notification issued on 1.6.1976 to provide that provident fund shall be contributed by every employee at the rate of ten per cent of the basic pay plus personal pay and special pay, if any, in place of 8 per cent of the basic salary and dearness allowance. It was also provided that any period of sick leave on half pay may be converted into sick leave on half pay at the option of the employees but in such cases twice the amount of sick leave was to be debited against the leave account of the employee. Provision was also made for the grant of special sick leave for serious ailments like cancer, leprosy, T.B., polymylitis and other serious diseases.

In the original Scheme issued under Section 16(1)(g) of the Act in 1974, there is an indication that the same has been issued after discussion and negotiations with the employees under the Industrial Disputes Act, 1947. On 1.6.1976, another Scheme under Section 16(1)(g) of the Act was issued by the Central Government unilaterally under which the provident fund benefits granted to the employees under the 1974 scheme was modified. The 1974 Scheme granted contributions of 8% based on basic salary dearness allowance and personal pay, and substituted the same with 10% of basic salary and personal pay. The calculations based on dearness allowance were subsequently denied. The Provident Fund Act was applicable to GIC employees from 1970. On 30.7.1977, another scheme was published purportedly under Section 16(1)(g) of the 1972 Act amending the provisions regarding sick leave. The sick leave was available with full pay, but by the new scheme the same was reduced to only half pay. On 30.9.1980, the Central Government published another scheme to amend the 1974 scheme by which the existing employees would retire at the age of 60 years and those who joined the service after 1980 will retire at the age of 58 years. The ceiling on salary including basic, dearness allowance and special pay, if any, was imposed on Class III employees at Rs.2,750/- per month and on Class IV employees at Rs.1,600/- p.m. The graduation increment was withdrawn. Subsequently, the ceiling was increased to Rs.3,500/- p.m. Class III employees and to Rs.2117/- p.m. Class IV employees. However, there is no ceiling at all at present. We have already adverted to the various provisions relating to the issue of the Ordinance X of 1984 replaced by the Amendment Act. If that is the stand of the Petitioners, the stand of the respondents is that on May 13, 1971, the Government of India took over the management of the companies engaged in general insurance business in India under the General Insurance Business Act, 1971. Prior to nationalisation, there were nearly 106 general insurance companies both of Indian and foreign origin. The conditions of service of the employees of the said insurance companies were governed by the respective contracts of service between the companies and the employees. The set- up, working, management and employment of staff by the erstwhile insurance companies showed no uniformity. The erstwhile companies were managed in diverse managerial systems and no uniform pattern of management could be discovered by the Central Government after the nationalisation. There was a pronounced disparity between one company and the other at all levels in the matter of remuneration and designations for similar posts. Employees of different companies were holding different designations and were paid differently for the same kind of work at the same station. Some companies gave very high sounding designations and paid salaries, which were not commensurate with the work. So the necessity for rationalisation of the entire structure of general insurance business, including designations, pay scales and other conditions of service arose.

1. The New India Assurance Company Ltd. (Merger) Scheme, 1973

2. The United India Fire & General Insurance Company Ltd. (Merger) Scheme, 1973

3. The Oriental Fire & General Insurance Company Ltd.

(Merger) Scheme, 1973

4. The National Insurance Company Ltd. (Merger) Scheme, 1973.

All these schemes came into force on 1.1.1974.

The Central Government, in exercise of the powers conferred under Section 16(1)(g) of the Act, framed three schemes for three different categories of employees relating to (i) supervisory, clerical and subordinate staff; (ii) officers; and (iii) development staff. The schemes also provided, inter alia, various provisions like fixation of pay on promotion, increments, provident fund and gratuity, etc. When the process of categorisation and rationalisation was in progress, it was noticed that as per the 1974 scheme, contribution to the provident fund was @ 8 per cent of the basic salary and dearness allowance with an equal contribution of GIC or any of its subsidiaries. However, LIC and nationalized banks were giving provident fund at different rates. So as to keep parity with other similar organisations, the scheme was corrected by an amending notification issued on 1.6.1976 and it was provided that the provident fund shall be contributed by every employee at the rate of 10% of the basic pay plus personal pay and special pay, if any, in place of 8% of the basic salary and dearness allowance.