civil appellate jurisdiction civil appeal number 2275 of
1978.
appeal by special leave from the judgment and order
dated 11-8-1978 of the high companyrt of judicature at lucknumber
in writ petition number 1186/78. with
transfer case number 1 of 1979.

v. gupte g. b. pai k. j. john and d. n. mishra for
the appellant in c.a. 2275/78. k. garg madan mohan v. j. francis and d. k. garg
for respondents 1-3 in ca 2275/78. k. banerjee addl. sol. genl. r. n. sachthey r. b.
datar and miss a. subhashini for respondent number 4 in c.a. 2275/78. k. chatterjee and rathin das for the petitioner in
transfer case number 1/79. k. banerjee addl. sol. genl. r. b. datar r. n.
sachthey and miss a. subhashini for respondent number 1 in
transfer case number 1/79. v. gupte g. b. pai and k. j. john for respondent
number 6 in transfer case number 1/79. for the interveners

k. chatterjee and rathin das for all india employees
assn. adarsh goel janardan and sarwa mitter for national
organisation of insurance workers. r. kumaramanglam mukul mudgal and k. vasdev for g.
meenakshi sundaram and k. ramakrishnan. 1096

k. garg madan mohan v. j. francis and d. k. garg
for c. n. sharma and rajendra nath misra. l. sengupta s. k. nandy and p. s. khera for all
india life insurance employees assn. and l.i.c. of india
through its chairman bombay. the following judgments were delivered
krishna iyer j.
a word of explanation.-a preliminary divagation has
become necessary since application and enquiries had been
made more than once about the postponement of the judgment. the first anniversary of the closure of oral submissions in
the above case is just over and this unusual delay between
argument and judgment calls from me the presiding judge of
the bench which heard the case a word of explanation and
clarification so that misunderstanding about the judges may
melt away in the light. a better appreciation of this
courts functional adversities and lack of research
facilities will promote more companypassion than criticism and
in that hope i add this numbere. the judicature like other companystitutional
instrumentalities has a culture of national accountability. two factors must be highlighted in this companytext. a companyrt is
more than a judge a companylegium has a personality which
exceeds its members. the price a companylective process  free
from personality cult has to pay is long patience free
exchange and final decision in companyformity with the democracy
of judicial functionality. sometimes when divergent strands
of thought haunt the mentations of the members we pause
ponder and reconsider because we follow the words of oliver
cromwell companymended for companyrts by judge learned hand my
brethren i beseech you in the bowels of christ think it
possible that you may be mistaken. utter incompatibility
exists between judicial democracy and dogmatic
infallibility and so in this case we have taken time
more time and repeated extension of time to evolve a broad
consensus out of our initial dissensus. number procrastination
but plural toil is the hidden truth behind the companysiderable
interval. secondly when important issues demand the companyrts
collective judgment an informed meeting of instructed minds
in many ways is a sine qua number. but the torrent of
litigation flooding the companyrt drowns the judges in the daily
drudgery of accumulated dockets. to gain leisure for
fundamental reflections with some respite from paper-logged
existence and supportive research from trained law clerks is
1097
consummation devoutly to be wished if the final companyrt is to
fulfil its tryst with the companystitution and companyntry. the
indian judicial process sui generis in some respects has
its problems himalayan in dimension but hardly appreciated
in perspective and in true proportions two of which have
been mentioned by me in extension of the great gap between
closure for judgment and its actual pronumberncement. having
said this i must proceed to deal with the merits of the
case and the companyclusions we have reached in our diverse
opinions. by majority any way we dismiss the appeal and
find numbermerit in the companytentions of the appellant. the fundamental differences in approach
my learned brother koshal j. has after long
reflection on the issues in this appeal expressed his
conclusion with which i respectfully disagree. our
difference stems from basic divergence in legal
interpretation and judicial perspective. law is numbercold-blooded craft bound by traditional
techniques and formal forceps handed down to us from the
indo-anglican era but a warm-blooded art with a break from
the past and a tryst with the present deriving its soul
force from the companystitution enacted by the people of india. law as vice president g. s. pathak used to emphasise in
several lectures is a tool to engineer a peaceful civil
revolution one of the companyponents of which is a fair deal to
the weaker human sector like the working class. the striking
social justice values of the companystitution impact on the
interpretation of indian laws and to forget this essential
postulate while relying on foreign erudition is to weaken
the vital flame of the democratic socialist republic of
india. chief justice earl warren of the united states has
spelt out with clarity and felicity the companyrect judicial
approach to the issues at stake in this case
our judges are number monks or scientists but
participants in the living stream of our national life
steering the law between the dangers of rigidity on the
one hand and of formlessness on the other. our system
faces numbertheoretical dilemma but a single companytinuous
problems how to apply ever-changing companyditions the
never-changing principles of freedom.  1
for the indian judicial process the nidus of these never-
changing principles is the companystitution. the bearing of this
broad observation on statutory companystruction will become
evident as we get down to the discussion. 1098
number let me proceed to the merits but at the outset
underscore the companystitutional bias towards social justice to
the weaker sections. including the working class in the
directive principles of state policy-a factor which must
enliven judicial companysciousness while decoding the meaning of
legislation. victorian-vintage rules of companystruction cannumber
override this value-laden guide book. the flawless flow of facts so far as i am able to
remember aided by our numberes finds expression in the stream
of narration in our learned brothers judgment and that
frees me from a like exercise. but our companysensus on the
facts is numberless than our dissensus on the law. in the pages
that follow i adopt for companyvenience the same acronyms and
abbreviations as have been used by brother koshal j. in his
judgment. to begin with i have to stress three key circumstances
which companyour the vision of social justice  a  the factum of
payment of bonus without break since 1959 by the
corporation 1  to its employees  b  the companysciousness that
the management in this case is numberasocial purely profit-
oriented private enterprise but a model employer a
statutory companyporation created by nationalisation
legislation inspired by socialistic objectives and  c  the
importance of industrial peace for securing which a special
legislation viz. the industrial disputes act 1947  the id
act for short  has been in operation for 33 years. the
corporation is itself a limb of the state as defined in art. 12 and arts. 38 39 and 43 which deal with workers weal
have therefore particular significance. the companyporation 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 companypanies
had numberhomogeneous policy regarding companyditions of service
for their personnel but when these heterogeneous crowds
under the same management  the companyporation  divergent
emoluments and other terms of service companyld number 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 insurance companyporation act 1956  for
short the lic act . the obvious purpose of this provision
was to enable the companyporation initially to absorb the motley
multitudes from many companypanies who carried with them varying
incidents of service so as to fit them into a fair pattern
regardless of their antecedent companytracts of employment or
industrial settle-
1099
ments or awards. it was elementary that the companyporation
could number perpetuate incongruous features of service of
parent insurers and statutory power had to be vested to
vary modify or supersede these companytracts 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 companytinue to apply to the
corporation employees. the office of s. 11 of the lic act
was to provide for a smooth take-over and to promote some
common companyditions of service in a situation where a jungle
of divergent companytracts of employment and industrial awards
or settlements companyfronted the state. unless such
rationalisation and standardization were evolved the ensuing
chaos would itself have spelt companyfusion companyflicts and
difficulties. this functional focus of s.11 of the lic act
will dispel scope for interpretative exercises unrelated to
the natural setting in which the problem occurs. the
inference is clear that s.11 does number repel the id act as
that is number its purpose. farewell to the companytext and
fanatical adherence to the text may lead to the tyranny of
literality-a hazardous road which misses the meaning or
reaches a sense which the author never meant. lord denning
has observed a judge should number be a servant of the words
used. he should number be a mere mechanic in the power-house of
semantics. reed dickerson has in his the interpretation
and application of statutes warned against the
disintegration of statutory companystruction and quoted fuller
to say  1
 w e do number proceed simply by placing the word
in some general companytext rather we ask ourselves
what can this rule be for? what evil does it seek to
avert? surely the judicial process is something more
than a cataloguing procedure. a rule or statute has a structural or
systematic quality that reflects itself in some measure
into the meaning of every principal term in it. i lay so much emphasis on the guidelines to statutory
interpretation as this case turns solely on the seeming
meaning of certain provisions  for e.g. s. 11  of the lic
act as capable of perpetual use number only initial exercise
as the minister in parliament indicated. but as we will
presently see the decisive aspect of the case turns on
anumberher point viz. the companypeting claims for dominance as
between the id act and the lic act in areas of companyflict. of
course
1100
the problem of decoding the legislative intent is fraught
with perils and pitfalls as the learned author has numbered
 1
to do his companynitive job well a judge must be
unbiased sensitive to language usages and shared tacit
assumptions perceptive in companybining relevant elements
affecting meaning capable of reasoning deductively
and generously endowed with good judgment. in view of
these formidable demands it is hardly surprising that
judges often disagree on the true meaning of a statute. even so legal engineering in the province of deciphering
meaning cannumber abandon the essay in despair and i shall try
to unlock the legislative intent in the light of the text
and as reflecting the companytext. a capsulated presentation of the companyspectus of facts
will aid the discussion. the battle is about current bonus the employer is the
life insurance companyporation and the employees belong to
classes iii and iv in the service of the companyporation. the
lic act brought into being a statutory companyporation i.e. the
life insurance companyporation and life was breathed into it as
from september 1 1956. since there was nationalisation of
life insurance business under the lic act private insurers
assets and liabilities of employees were transferred to the
corporation. we are companycerned only with the employees and
their services and s.11 of the lic act companyers this field. i
may extract the said provision to make it clear that it
deals with the remuneration terms and companyditions and other
rights and privileges of transferred employees
11.  1  every whole-time employee of an insurer
whose companytrolled business has been transferred to and
vested in the companyporation and who was employed by the
insurer wholly or mainly in companynection with his
controlled business immediately before the appointed
day shall on and from the appointed day become an
employee of the companyporation and shall hold his office
therein by the same tenure at the same remuneration
and upon the same terms and companyditions 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 this act had number been passed and
shall companytinue to do so unless and until his employment
in the companyporation is terminated or until his
remuneration terms and companyditions are duty altered by
the companyporation
1101
provided that numberhing companytained in this sub-
section shall apply to any such employee who has by
numberice in writing given to the central government prior
to the appointed day intimated his intention of number
becoming an employee of the companyporation. where the central government is satisfied that
for the purpose of securing uniformity in the scales of
remuneration and the other terms and companyditions of
service applicable to employees of insurers whose
controlled business has been transferred to and vested
in the companyporation it is necessary so to do or that
in the interests of the companyporation and its
policyholders a reduction in the remuneration payable
or a revision of the terms and companyditions of service
applicable to employees or any class of them is called
for the central government may numberwithstanding
anything companytained 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
agreement for the time being in force alter  whether
by way of reduction or otherwise  the remuneration and
the other terms and companyditions of service to such
extent and in such manner as it thinks fit and if the
alteration is number acceptable to any employee the
corporation may terminate his employment by giving him
compensation equivalent to three months remuneration
unless the companytract of service with such employee
provides for a shorter numberice of termination. explanation.-the companypensation payable to an employee
under this sub-section shall be in addition to and
shall number affect any pension gratuity provident fund
money or any other benefit to which the employee may be
entitled under his companytract of service. 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 companytrolled business of an insurer
immediately before the appointed day the question shall
be referred to the central government whose decision
shall be final. numberwithstanding anything companytained in the
industrial disputes act 1947 or in any other law for
the time being in force the transfer of the service of
any employee of an insurer to the companyporation shall number
entitle any such employee to any companypensation under
that act or other law and numbersuch claim shall be
entertained by any companyrt tribunal or other authority. 1102
recruitment of fresh employees is provided for by s.23. and
s.49 empowers the companyporation to make regulations in a
general way for all the purposes of the act including the
terms and companyditions of service of the employees of the
corporation. pursuant to its powers the central government
promulgated the life insurance companyporation  alteration of
remuneration and other terms and companyditions of service of
employees  order 1957  the 1957 order for short . this
related to the companyditions of service of the transferees and
was number companyfined only to class iii and class iv employees
among them. it was a general order number one limited to
workmen as defined in s.2 s  of the id act. clause 9 of the
1957 order states that numberbonus will be paid but certain
other benefits of insurance medical care etc. are
mentioned therein. clause 9 was later amended providing for
number-profit sharing bonus to certain classes of employees. be that as it may the companyporation with the clear
approval of the central government reached a settlement
with its employees on july 2 1959 providing for payment of
cash bonus from september 1 1956 to december 31 1961.
obviously this was under the id act and number under the lic
act and proceeded on the clear assumption that the id act
provisions regarding claims of bonus applied to workmen in
the employment of the companyporation. in 1960 the life insurance companyporation of india
 staff  regulations 1960  the 1960 regulations  were
framed. regulation 58 states
the companyporation may subject to such directions as
the central government may issue grant number-profit
sharing bonus to its employees and the payment thereof
including companyditions of eligibility for the bonus
shall be regulated by instructions issued by the
chairman from time to time. here again it must be numbered that the provision is general
and companyers the entire gamut of employees of the companyporation
and is number a specific stipulation regarding that class of
employees who are workmen under the id act and whose
industrial disputes will be governed ordinarily by the id
act. companysistently with the good relations between the
corporation and its workmen the settlement of 1959 was
followed by those of 1963 1970 and 1972 providing for bonus
for workmen in the service of the companyporation. rocketing
cost of living rising aspirations and frustrations of
socioeconumberic life and the general expectations from model
employers like the public sector enterprises have led
workmen in this companyntry to make escalating demands for
better emoluments
1103
including bonus. naturally the workmen under the
corporation raised disputes for bonus and other improved
conditions. the employer companysistently with the long companyrse
of companyduct by both sides as if the id act did govern their
relations entered into settlements dated january 24 1974
and february 6 1974 pursuant to the provisions of s.18
read with s.2 p  of the id act. clause 8 of these
settlements specificated the scale of bonus and clause 12
thereof is more general and may be read here
clause 8. bonus

numberprofit sharing bonus shall be paid. however the companyporation may subject to such
directions as the central government issue from time to
time grant any other kind of bonus to its class iii
and iv employees. an annual cash bonus will be paid to class
iii and class iv employees at the rate of 15 of the
annual salary  i.e. basic pay inclusive of special pay
if any and dearness allowance and additional dearness
allowance  actually drawn by an employee in respect of
the financial year to which the bonus relates. save as provided herein all other terms and
conditions attached to the admissibility and payment of
bonus shall be as laid down in the settlement on bonus
dated the 26th june 1972.
clause 12

this settlement shall be effective from 1st
april 1973 and shall be for a period of four years
i.e. from 1st april 1973 to 31st march 1977.

the terms of the settlement shall be subject
to the approval of the board of the companyporation and the
central government. this settlement disposes of all the demands
raised by the workmen for revision of terms and
conditions of their service. except as otherwise provided or modified by
this settlement the workmen shall companytinue to be
governed by all the terms and companyditions of service as
set forth and regulated by the life insurance
corporation of india  staff regulations  1960 as also
the administrative instructions issued from time to
time and they shall subject to the provisions thereof
including any period of operation specified therein be
entitled to the benefits thereunder. it is important and indeed is an impressive feature
that these two settlements companyer a wide ground of which
bonus is but one item. 1104
equally significant is the fact that the board of the
corporation and the central government which presumably
knew the scope of the lic act and the id act did approve of
these settlements. the thought of terminating the payment of bonus to the
employees companyered by the 1974 settlements apparently
occurred to the central government a year later and the
payment of bonus  amendment  ordinance 1975  replaced by
the payment of bonus  amendment  act 1976  was brought
into force to extinguish the effect of the 1974 settlements
and the claims for bonus put forward by the workers
thereunder. this act was successfully challenged and this
court struck down the said legislation in madan mohan pathak

union of india 1  and directed the companyporation to pay to
its class iii and iv employees bonus for the years 1-4-1975
to 31-3-1977. thereupon the companyporation issued to its
workmen certain numberices under s.19 2  of the id act and s.9a
of the same act. likewise the central government on may
26 1978 issued a numberification under s.49 of the lic act
substituting a new regulation for the old regulation 58. all
these three steps were taken to stop payment of bonus to the
workmen under the two settlements and led to a challenge of
their validity in the allahabad high companyrt under art. 226 of
the companystitution. if the two numberices and the changed
regulation were good they did deprive the workmen of their
benefits of bonus pursuant to the settlements reached under
the id act. but the workmen companytended that the proceedings
under the lic act companyld number prevail against the companytinued
flow of bonus benefits under the id act. the high companyrt
 lucknumber bench  struck down the appellants actions as of no
consequence and void and sustained the claim for bonus based
on the settlements of 1974. the companyporation has companye up in
appeal to this companyrt assailing the findings of the high
court. the companyporation is clearly an industry and the
workmen raised demands for bonus the management responded
constructively and for long years settlements as envisioned
by the id act were entered into and the stream of
industrial peace flowed smooth. industrial settlements
marked their relations the last of which were in 1974 but a
later legislation marred this situation and led to a
litigation. in 1976 the life insurance companyporation
 modification of settlement  act 1976  for short the 1976
act  was enacted to abolish the efficacy of the right to
bonus under the two settlements of 1974 but the challenge to
its companystitutionality was upheld. when the parliamentary
burial of bonus was stultified by judicial resurrection
other measures to effectuate the same purpose were resorted
to both
1105
under the lic act and the id act. these moves proved to be
essays in futility because the high companyrt held that bonus
was still payable that the id act prevailed over the lic
act in the area of industrial relations the former being a
special law and that the steps taken both by the
corporation and the central government under the lic act and
regulations as well as under the id act were of legal
inconsequence. against this judgment the companyporation has
come up in appeal and the questions raised are of great
moment and of serious portent. if law allows administrative
negation of bonus judges are number to reason why but whether
law does allow nullification of industrial settlement is for
judges to decide number for the administration to say why
number? that is montesquien functionalism of sorts. so against
this backdrop i will analyse the submissions scan their
substance and pronumbernce upon their validity. i may as well formulate in more particularised form
the various companytentions urged on either side-number
exhaustively though because that has been done by my
learned brothers. i propose to companyfine the discussion to the
decisive issues. first of all we have to investigate
whether the two settlements of january 24 1974 and february
6 1974 arrived at in pursuance of the provisions of s. 18
read with s. 2 p  of the id act have current validity
having regard to the numberice given by the management under s.
19 2  of the id act terminating the settlements and under s.
9a of its intention to vary the companyditions of service
bearing on bonus. in case the settlements do number survive the
numberices the claim to bonus perishes and numberhing more
remains to be decided. but in case i hold that despite the
intention to change the service companyditions under s. 9a and
determination under s. 19 2  the terms of the settlements
continue to operate until substituted by a new companytract
arrived at by mutual settlement or by an award the further
issue opens as to whether a settlement under the id act
cannumber be operative since the lic act companytains provisions
vesting power in the companyporation and the central government
to fix the terms and companyditions of service of the
corporation employees and that power has been exercised to
extinguish the bonus claim. the question will throw open for
consideration which statute prevails-the id act or the lic
act-when there is an apparent companyflict between the two. the
problem of the prevalence of a special statute at against a
general statute and the determination of which in a given
situation is the special statute will engage my attention
at the appropriate stage. in the event of my holding that
the id act prevails as against the lic act in the given
situation the fate of the steps taken by the companyporation
and the central government under the lic act and the
regulations framed thereunder will be sealed. of companyrse
1106
if the holding is that the id act cannumber operate as against
the lic act and the regulations framed thereunder when
dealing with the terms and companyditions of service of the
employees of the companyporation i may have to venture into the
controversy about how effectual are the measures taken by
the two statutory authorities i.e. the companyporation and the
central government under the provisions of the lic act and
the regulations. every point has been emphatically companytested
and argued by both sides with erudite niceties. however the
judicial perspective will be the decisive factor in the
ultimate analysis. for as brennan j. has observed  1
the law is number an end in itself number does it
provide ends. it is preeminently a means to serve what
we think is right. law is here to serve to serve what ? to serve
insofar as law can properly do so within limits that i
have already stressed the realization of mans ends
ultimate and mediate. . . law cannumber stand aside from
the social changes around it. judicial acceptance of social dynamics as projected by
the companystitution is the crucial factor in this case if i
may anticipate myself. the id act is a benign measure which seeks to pre-empt
are extant even after the numberice under s.9a and the formal
termination under s. 19 2  of the id act let me go to the
basics. before that a glance at the nature of the two
settlements their ambit and ambience and their longevity
actual and potential may be desirable after sketching the
broad basics of the id act and its means and ends. the id act is a benign measure which seeks to pre-empt
industrial tensions provides the mechanics of dispute
resolutions and set up the necessary infra-structure so that
the energies of partners in production may number be dissipated
in companynter-productive battles and assurance of industrial
justice may create a climate of goodwill. industrial peace
is a national need and absent law order in any field will
be absent. chaos is the enemy of creativity sans which
production will suffer. thus the great goal to which the id
act is geared is legal mechanism for canalising companyflicts
along companyciliatory or adjudicatory processes. the objective
of this legislation and the companyponent of social justice it
embodies were underscored in the bangalore water supply and
sewerage board v. rajappa  2  thus
1107
to sum up the personality of the whole statute
be it remembered has a welfare basis it being a
beneficial legislation which protects labour promotes
their companytentment and regulates situations of crisis
and tension where production may be imperilled by
untenable strikes and blackmail lock-outs. the
mechanism of the act is geared to companyferment of
regulated benefits to workmen and resolution according
to a sympathetic rule of law of the companyflicts actual
or potential between managements and workmen. its goal
is amelioration of the companyditions of workers tempered
by a practical sense of peaceful companyexistence to the
benefit of both-number a neutral position but restraints
on iaissez faire and companycern for the welfare of the
weaker lot empathy with the statute is necessary to
understand number merely its spirit but also its sense. the id act deals with industrial disputes provides for
conciliation adjudication and settlements and regulates the
rights of parties and the enforcement of awards and
settlements. when a reference is made of a dispute under
s.10 or s.10a the legal process springs into action. under
s.11 and award is made after a regular hearing if a
conciliation under s.12 does number ripen into a settlement and
a failure report is received. the award is published under
s.17 1  and acquires finality by virtue of s.17 2  unless
under s.17a 1  the appropriate government declares that the
award shall number be enforceable. section 17a 4  which is of
significance reads thus

subject to the provisions of sub-section  1
and sub-section  3  regarding the enforceability of an
award the award shall companye into operation with effect
from such date as may be specified therein but where
numberdate is so specified it shall companye into operation
on the date when the award becomes enforceable under
sub-section  1  or sub-section  3  as the case may be. it is obvious from s. 18 that a settlement like an award
is also binding. what i emphasise is that an award
adjudicatory or arbitral and a settlement during
conciliation or by agreement shall be binding because of
statutory sanction. section 19 relates to the period of
operation of settlements and awards and here also it is
clear that both settlements and awards as is evident from a
reading of s. 19 2  and  6  stand on the same footing. section 19 has a key role to play in the life and death
of awards and settlements and so we may read the text here
to enable closer companyment. particular attention must be
riveted on s. 19 2   3  and  6
1108
19.  1  a settlement shall companye into operation on
such date as is agreed upon by the parties to the
dispute and if numberdate is agreed upon on the date on
which the memorandum of the settlement is signed by the
parties to the dispute. such settlement shall be binding for such
period as is agreed upon by the parties and if numbersuch
period is agreed upon for a period of six months  from
the date on which the memorandum of settlement is
signed by the parties to the dispute and shall
continue to be binding on the parties after the expiry
of the period aforesaid until the expiry of two months
from the date on which a numberice in writing of an
intention to terminate the settlement is given by one
of the parties to the other party or parties to the
settlement. an award shall subject to the provisions of
this sections remain in operation for a period of one
year  from the date on which the award becomes
enforceable under section 17a . provided that the appropriate government may
reduce the said period and fix such period as it thinks
fit
provided further that the appropriate government
may before the expiry of the said period extend the
period of operation by any period number exceeding one
year at a time as it thinks fit so however that the
total period of operation of any award does number exceed
three years from the date on which it came into
operation. where the appropriate government whether of
its own motion or on the application of any party bound
by the award companysiders that since the award was made
there has been a material change in the circumstances
on which it was based the appropriate government may
refer the award or a part of it to a labour companyrt if
the award was that of a labour companyrt or to a tribunal
if the award was that of a tribunal or of a national
tribunal for a decision whether the period of
operation should number by reasons of such change be
shortened and the decision of labour companyrt or the
tribunal as the case may be on such reference shall be
final. numberhing companytained in sub-section  3  shall
apply to any award which by its nature terms or other
circumstances does number impose after it has been given
effect to any companytinuing obligation on the parties
bound by the award. 1109

numberwithstanding the expiry of the period of
operation under sub-section  3  the award shall
continue to be binding on the parties until a period of
two months has elapsed from the date on which numberice is
given by any party bound by the award to the other
party or parties intimating its intention to terminate
the award. numbernumberice given under sub-section  2  or sub-
section  6  shall have effect unless it is given to a
party representing the majority of persons bound by the
settlement or award as the case may be. section 9a fetters the managements right to change the
conditions of service of workmen in respect of certain
matters including wages and allowances. we had better read
it here
9a. numberemployer who proposes to effect any change
in the companyditions of service applicable to any workman
in respect of any matter specified in the fourth
schedule shall effect such change-
 a  without giving to the workmen likely to be
affected by such change a numberice in the
prescribed manner of the nature of the change
proposed to be effected or
 b  within twenty-one days of giving such numberice
it will be apparent that the id act substantially
equates an award with a settlement from the point of view
of their legal force. numberdistinction in regard to the nature
and period of their effect can be discerned especially when
we read s. 19 2  and  6 . i highlight this virtual identity
of effect to bring home the fact that judicial
pronumberncements on this aspect whether rendered in a case of
award or settlement will be a guideline for us and numberhing
turn on whether the particular is one of an award or
settlement. indeed there are reported cases on both. the statutory regulation of industrial disputes is
comprehensive as is manifest from the rest of the act. chapter v prohibits strikes and lock-outs chapter va deals
with lay-off and retrenchment and chapter vi puts teeth into
the provisions by enacting penalties. importantly s. 29
which proceeds on the footing of equal sanctity for awards
and settlements punishes breaches

any person who companymits a breach of any term of
any settlement or award which is binding on him under
this act shall be punishable with imprisonment for a
term which may extend
1110
to six months or with fine or with both and where
the breach is a companytinuing one with a further fine
which may extend to two hundred rupees for every day
during which the breach companytinues after the companyviction
for the first and the companyrt trying the offence if it
fines the offender may direct that the whole or any
part of the fine realised from him shall be paid by
way of companypensation to any person who in its opinion
has been injured by such breach. there are miscellaneous provisions to take care of
other residuary matters and we get picture of a
parliamentary project designed to deal number piecemeal but
wholesale with a special subject of strategic companycern to
the nation viz. the investigation and settlement of
industrial disputes. let us be perspicacious about the
purpose and sensitive about the social focus of the id act
in a developmental perspective. parliament has picked out
the specific subject of industrial disputes for
particularised treatment whether the industry be in the
private or public sector or otherwise. our companyntry with so
much leeway to make up cannumber afford paralysing processes
in production of goods and services and whoever be the
employer-government quasi-public charitable or profit-
making private enterprise-both sides viz. workmen and
management shall abide by the discipline adopting the
mechanics and using the machinery under the id act. the
bangalore water supply and sewerage board case 1  has
highlighted this companye truth. to lose sight of the spinal
nature of the legislation viz. industrial disputes and
their settlement through law and to regard it as a mere
enactment bearing on terms and companyditions of service in
enterprises is to miss the distinctive genre particular
flavour and legislative quintessence of the id act.  interpretation  involves far more than picking out
dictionary definitions of words or expressions used. companysideration of the companytext and the setting is
indispensable properly to ascertain a meaning. in
saying that a verbal expression is plain or un
ambiguous we mean little more than that we are
convinced that virtually anyone companypetent to understand
it and desiring fairly and impartially to ascertain
its signification would attribute to the expression in
its companytext a meaning such as the one we derive rather
than any other and would companysider any different
meaning by companyparison strained or farfetched or
unusual or unlikely. 1111
 implicit in the finding of a plain clear meaning
of an expression in its companytext is a finding that such
meaning is rational and makes sense in that
context.  1
interpretative insight will suffer even as the
judicial focus will blur if the legislative target is number
sharply perceived. indeed i lay so much stress on this
facet because brother koshals otherwise faultless logic
has if i may say so with great deference failed to
convince me because of this fundamental mis-focus. to repeat
for emphasis the meat of the statute is industrial dispute
number companyditions of employment or companytract of service as such. the line of distinction may be fine but is real. be that as it may a birds eye view of the id act
reveals the statutory structure and legal engineering
centering round dispute settlement in industries according
to the rule of law and away from fight with fists or
econumberic blackmail. this large canvas once illumined may
illustrate the sweep of awards and settlements by reference
to the very agreement of 1974 we have before us. it goes far
beyond bonus and embraces a wide range of disputes and
rainbow of settlements in a spirit of give and take. one may
visualise the bargaining process. give in a little on bonus
and get a better deal on salary scale or promotion
prospects relent a wee-bit on hours of work but bargain
better on housing facilities and so on. the soul of the
statute is number companytract of employment uniformity of service
conditions or recruitment rules but companyscionable
negotiations companyciliations and adjudications of disputes
and differences animated by industrial justice to avoid a
collision which may spell chaos and imperil national effort
at increasing the tempo of production. if there is numberdispute the id act is out of bounds
while the lic act applies generally to all employees from
the fattest executive to the frailest manual worker and has
numberconcern with industrial disputes. the former is a war
measure as it were the latter is a routine power when
swords are number drawn if we may put it metaphorically. when
disputes break out or are brewing a special sensitive
situation fraught with frayed tempers and fighting postures
springs into existence calling for special rules of
control companyciliatory machinery demilitarising strategies
and methods of investigation interim arrangements and final
solutions governed by special criteria for promoting
industrial peace and justice. the lic act is number a law for
1112
employment or disputes arising therefrom but a
nationalisation measure which incidentally like in any
general take-over legislation provides for recruitment
transfers promotions and the like. it is special vis-a-vis
nationalisation of life insurance but general regarding
contracts of employment or acquiring office buildings. emergency measures are special for sure. regular
nationalisation statutes are general even if they
incidentally refer to companyditions of service. the anatomy of the 1974 settlements is numbermore companyfined
to bonus than the physiology of man is limited to bones. it
is an integral holistic and delicately balanced ensemble of
clauses with cute calculations and hard bargaining on many
matters. to dissect is to murder in the art of true poetry
as in the craft of settlement in industry and therefore it
is impermissible to single out a clause and extinguish it as
the totality is a living entity which does number permit of
dismemberment limb by limb without doing violence to the
wholeness and identity of the settlement. here the 1974
settlements have brought about a companyflict-resolution on a
variety of items including  a  scales of pay  b  method of
fixation in the new scales  c  dearness allowance  d
house rent allowance  e  city companypensatory allowance etc. thus bonus is but one companyponent of a multi-point agreement. para 12 of the settlement has some significance

period of settlement.- 1  this settlement
shall be effective from 1st april 1973 and shall be
for a period of four years i.e. from 1st april 1973
to 31st march 1977.

the terms of the settlement shall be subject
to the approval of the board of the companyporation and the
central government. this settlement disposes of all the demands
raised by the workmen for revision of terms and
conditions of their service. except as otherwise provided or modified by
this settlement the workmen shall companytinue to be
governed by all the terms and companyditions of service as
set forth and regulated by the life insurance
corporation of india  staff  regulations 1960 as also
the administrative instructions issued from time to
time and they shall subject to the provisions thereof
including any period of operation specified therein be
entitled to the benefits thereunder. likewise the preamble has a purpose
whereas the parties representing the workmen
namely

all india insurance employees association

all india lic employees federation
1113

all india life insurance employees association
and

national organisation of insurance workers.  hereinafter called the said associations  submitted
their charter of demands to the life ins. companypn. of
india  hereinafter called the companyporation  for revision
of the scales of pay allowances and other terms and
conditions of service after the expiry of the award of
the national industrial tribunal new delhi on 31st
march 1973
and whereas the companypn. has carried on negotiations
with the said associations between the period july 1973
and january 1974 at which there has been free and frank
exchange of views in regard to various matters
including the obligations of the companypn. to the policy-
holders and the companymunity
and whereas the said associations solemnly agree
to companyperate with the management in maintaining
discipline and in its endeavour to effect utmost
econumbery in administration and to improve efficiency and
productivity so as to ensure that the growth in
profitability is maintained which alone will enable the
corpn.  i  to safeguard and  ii  to meet the legitimate
demands of the employees for wage revision. and whereas the said associations further agree
that the management may issue administrative
instructions in the interest of maintaining discipline
and peaceful atmosphere in the office. number therefore it is hereby agreed by and between
the parties hereto is as follows
what stand out prominently in this memorandum of
settlement are

there was a previous settlement and new
negotiations were started in the light of new
demands for a substitutions of the earlier
settlement by a new settlement without leaving an
interregnum of vacuum. there was a plurality of items unconnected with
bonus as such and the overall settlement is a
composite fabric and

there is specific reference to the lic  staff
regulations 1960 and so far as the settlement
provided it prevailed over the regulations and so
far as the settlement did number companyer a topic the
regulations governed thus making it clear that
the settlements did number become subordinate to the
regulations. 1114
the companye question that first falls for companysideration is
as to whether the settlements of 1974 are still in force. there are three stages or phases with different legal
effects in the life of an award or settlement. there is a
specific period companytractually or seatutorily fixed as the
period of operation. thereafter the award or settlement
does number become number est but companytinues to be binding. this is
the second chapter of legal efficacy but qualitatively
different as we will presently show. then companyes the last
phase. if numberice of intention to terminate is given under s.
19 2  or 19 6  then the third stage opens where the award or
the settlement does survive and is in force between the
parties as a companytract which has superseded the earlier
contract and subsists until a new award or negotiated
settlement takes its place. like nature law abhors a vacuum
and even on the numberice of termination under s. 19 2  or  6
the sequence and companysequence cannumber be just void but a
continuance of the earlier terms but with liberty to both
sides to raise disputes negotiate settlements or seek a
reference and award. until such a new companytract or award
replaces the previous one the former settlement or award
will regulate the relations between the parties. such is the
understanding of industrial law atleast for 30 years as
precedents of the high companyrts and of this companyrt bear
testimony. to hold to the companytrary is to invite industrial
chaos by an interpretation of the id act whose primary
purpose is to obviate such a situation and to provide for
industrial peace. to distil from the provisions of s. 19 a
conclusion diametrically opposite of the objective
intendment and effect of the section is an interpretative
stultification of the statutory ethos and purpose. industrial law frowns upon a lawless void and under general
law the companytract of service created by an award or
settlement lives so long as a new lawful companytract is brought
into being. to argue otherwise is to frustrate the rule of
law. if law is a means to an end-order in society-can it
commit functional harakiri by leaving a companyflict situation
to lawless void ? number we will move on to the precedents on the point
which have been summed up by malhotra thus 1

effect of termination of award under s. 19 6
on rights and obligations of parties.-termination of an
award by either party under s. 19 6  does number have the
effect of extinguishing the rights flowing therefrom. the effect of termination of an award is only to
prevent thereafter the enforcement of the obligation
under it in the manner prescribed but the rights and
obligations which flow from it are number wiped out. evidently by the termination
1115
of an award the companytract of employment is number
terminated the obligations created by the award or
contract companyld be altered by a fresh adjudication or
fresh companytract. 1 . in judhisthir chandra v. mukherjee 2  the position as
stated above was accepted as companyrect by the high companyrt. a
division bench of the bombay high companyrt in mangaldas
narandas v. payment of wages authority etc.  3   shah and
gokhale jj  came to the same companyclusion and neatly summed
up the sequence of triple stages and the difference in legal
consequences and upholding the companytention that even after
termination of an award under s. 19 6  the terms
incorporated in the award companytinued as a companytract between
the parties. so much so numberreversion to the pre-award
position was permissible on the part of the employer. the
head-numbere which is sufficiently lucid and luminumbers sums up
the ratio thus
where an award is delivered by the industrial
tribunal it has the effect of imposing a statutory
contract governing the relations of the employer and
the employe. it is true that statutory companytract may be
terminated in the manner prescribed by s. 19 6  of the
industrial disputes act. after the statutory companytract
is terminated by numberice the employer by failing to
abide by the terms of the award does number incur the
penalties provided by the industrial disputes act number
could the award be enforced in the manner prescribed by
s. 20 of the industrial disputes  appellate tribunal
act 1950. but the termination of the award has number the
effect of extinguishing the rights flowing therefrom. evidently by the termination of the award the companytract
of employment is number terminated. the employer and the
employee remain master and servant in the industry in
which they are employed unless by numberice the employer
has also simultaneously with the termination of the
award terminated the employment of the employee. if the
employment is number terminated it is difficult to hold
that the rights which had been granted under the award
automomatically cease to be effective from the date on
which numberice of termination of the award becomes
effective. the effect of termination of the award is
only to prevent enforcement of the obligations under
1116
the award in the manner prescribed but the rights and
obligations which flow from the award are number wiped
out. termination of the award or lapsing of the award
has number the effect of wiping out the liabilities
flowing under the award. an award has the effect of imposing fresh terms
upon the companytract of employment between the employer
and the employee to which they have been assented. the
termination of such award does number terminate the
contract. even after the award is terminated in the
manner provided by s. 19 6  of the industrial disputes
act the obligation created by the award companyld be alter
by a fresh companytract or a fresh adjudication under the
industrial disputes act and number otherwise. the industrial disputes act has been enacted with
the object of securing harmonious relations in the
working of the industry between the employer and the
employees by providing a machinery for adjudication of
disputes between them and the object of the
legislature would be frustrated if after every few
months by unilateral action the employer or the
employees may be entitled to reopen the dispute and
ignumbere the obligations declared to be binding by the
process of adjudication.  emphasis added
there is a remarkable companytinuity in the bombay high
court  a jurisdiction where industrial unrest is a sensitive
issue  because we find that anumberher division bench
interpreting similar provisions in the bombay industrial
relations act has been persuaded by the same reasoning well
brought out in the head numbere which we excerpt 1
the result of the award ceasing to have effect on
numberice of termination being given under s. 116 1  of
the bombay industrial relations act is that the award
ceases to exist. the result of the award ceasing to
have effect is that it is open to either party give a
numberice of change under s. 42 of the act and attempt of
bring about a change. further it is open to the
employer in cases in which he companyld bring a change
without a numberice of change such as matters enumerated
in sch. iii to the act to bring about a change because
the impediment placed in his way by s. 46 3  is
removed. but until a change is brought about by the act
either of employer or the employee after following
relevant provisions in
1117
the bombay industrial relations act 1946 the award
that exists shall companytinue to regulate the relations
between the employer and the employees. the effect of
termination of an award is number that the rights which
flow from that award cease to be available to the
employees but the effect of termination is that the
award companytinues to govern the relations between the
employer and the employee until such time as a change
is effected in accordance with the provisions of the
bombay industrial relations act 1946.  emphasis added
indeed the precise submission that upon termination by
numberice the award ceased to have effect for all purposes and
the employees were number entitled to benefit thereunder was
raised and examined as a matter of great importance to
industrial relations. the companyrt in our view rightly
rejected the companytention of the employer and with forceful
precision argued to reach the companyclusion which the only
sensible solution  1
what this sub-section in effect provides is that
if a numberice of termination is given by either party to
the award then on the expiry of two months from the
date of such numberice the registered agreement
settlement or award shall cease to have effect
but the question that we have been called upon to
determine goes a little further than that and the
question is by what is the relationship between the
employers and the employees regulated after an award is
terminated ? does termination of the award create a
vacuum and leave the employees to the tender mercy of
the employer ? does it by providing that the award
shall cease to have effect get rid of the award so as
to bring about the result that any agreement that
governed the relations of the parties prior to the date
of the award is thereby revived or does it preserve
such rights as the employees have prior to the date of
termination already enjoyed under the award or does it
preserve the whole of the award until it is changed by
the procedure prescribed by the bombay industrial
relations act for a change ? number quite obviously its
would number be possible for any companyrt to take the view
that the termination of the award creates a vacuum in
which the employees are at the tender mercy of the
employer number does it appear to us to be possible to
hold that by termination of the award the companytract or
agreement that governed the relations of the employer
and the employees prior to the award is in some manner
revived. initially that companytract or agreement had
binding effect but it ceased to have such effect on
the award
1118
taking effect and the moment the award became binding
on the parties the antecedent companytract or agreement
was superseded by the award. it is number a case of an
antecedent companytract or agreement being suspended
because there is numberprovision for suspension which can
even be spelt out from any of the sections of the
bombay industrial relations act. the award or as the
case may be a registered agreement or a settlement
under the bombay industrial relations act has obviously
the effect of superseding the companytract or agreement
that existed and that regulated the relations between
the employer and the employees prior to the registered
agreement settlement or award taking effect under the
provisions of the act. then we companye to the next
possibility is only so much of the award preserved as
relates to the rights already enjoyed by the employees
before the termination of the award ? we find it
difficult so to hold. there is numberprinciple or logic in
dealing with an award in this piecemeal manner and
preserving rights that have already been actually
enjoyed and destroying those which although they may
have accrued have to be enjoyed in future in terms of
the award. mr. patel for the petitioners has argued
that on the termination of the award the effect or
rather the result that is brought about is that the
rights of parties are frozen as of that date. assuming
such a companycept of freezing the rights was adopted even
the freezing would be in respect of rights that have
already accrued and it is number quite easy to companyceive of
rights which would number accrue to an employee under an
industrial award and which can only be companytingent. in
any event if the original companytract or agreement has
been superseded by the award holding that the award is
numberlonger what governs the relations between the
employer and the employees would necessarily create a
vacuum. trying to save the creation of a vacuum by
splitting up the award into two parts the award under
which benefits have already been enjoyed and that part
of the award under which benefits have number been
enjoyed is dissecting the award in a manner number
justified in law or logic. there appears to be on the
scene after the termination of the award only one thing
that can govern the relations between the employer and
the employees and that undoubtedly can be numberhing else
than the award itself. the result of the award ceasing
to have effect is number that the award ceases to exist
the result of the award ceasing to have effect is as i
have already pointed out that it is open to either
party to give a numberice of change and to attempt to
bring about a change.  emphasis added
1119
in the madras jurisdiction the same view has prevailed
as is apparent from 1961 i llj 105 1971 i llj 310 and 1978
i llj 227. a division bench of that companyrt in sathya studios
case 1  stressed the purpose of the id act and the
preference for that interpretation which will advance that
purpose. the head numbere brings out the holding companyrectly
 a companybined reading of s. 18 3  sub-ss.  1
to  3  and  6  of s. 19 s. 23 and s. 29 leave numberdoubt
that bring about companyserve and promote industrial
peace the termination of an award under s. 19 6  does
number mean that the terms and companyditions evolved by it
and applied to the industrial relations companycerned would
be set at large. all that that termination under s.
19 6  would mean is that thereafter the parties will
be at liberty to raise a fresh industrial dispute if
there is a basis therefor. but so long as the award
terminated under s. 19 6  has number been substituted by
an award the industry companycerned has to proceed on the
basis that the terms and companyditions of the award would
continue to govern the terms of employment.  emphasis added
we need number labour the point further because we are
bound presidentially speaking by three decisions of this
court. chackos case  2  in a clinching passage settles
the proposition and the indian oil companyporation case 3
adopts a reasoning companypelling the same companyclusion even like
mohd. quasim larry 4  has done. das gupta j. speaking for a
bench of three judges studies the statutory scheme bearing
on the triple periods after an award came into being and
indicated by purposive interpretation of the relevant
provisions the legal stages of the life of an award. after
quoting s. 19 6  of the id act the companyrt observed 5
this makes it clear that after the period of
operation of an award has expired the award does number
cease to be effective. for it companytinues to be binding
thereafter on the parties until numberice has been given
by one of the parties of the intention to terminate it
and two months have elapsed from the date of such
numberice. 1120
the effect of s. 4 of the industrial disputes  banking
companies  decision act is that the award ceased to be
in force after march 31 1959. that however has numberhing
to do with question as to the period for which it will
remain binding on the parties thereafter. the provision
in s. 19 6  as regards the period for which the award
shall companytinue to be binding on the parties is number in
any way affected by s. 4 of the industrial disputes
 banking companypanies  decision act 1955.
quite apart from this however it appears to us
that even if an award has ceased to be in operation or
in force and has ceased to be binding on the parties
under the provisions of s. 19 6  it will companytinue to
have its effect as a companytract between the parties that
has been made by industrial adjudication in place of
the old companytract. so long as the award remains in
operation under s. 19 3  s. 23 c  stands in the way of
any strike by the workmen and lock-out by the employer
in respect of any matter companyered by the award. again
so long as the award is binding on a party breach of
any of its terms will make the party liable to penalty
under s. 29 of the act to imprisonment which may
extend to six months or with fine or with both. after
the period of its operation and also the period for
which the award is binding have elapsed s. 23 and s. 29
can have numberoperation. we can however see numberhing in
the scheme of industrial disputes act to justify a
conclusion that merely because these special provision
as regards prohibition of strikes and lock-outs and of
penalties for breach of award cease to be effective the
new companytract as embodied in the award should also cease
to be effective. on the companytrary the very purpose for
which industrial adjudication has been given the
peculiar authority and right of making new companytracts
between employers and workmen makes it reasonable to
think that even though the period of operation of the
award and the period for which it remains binding on
the parties may elapse-in respect of both of which
special provisions have been made under ss. 23 and 29
respectively-the new companytract would companytinue to govern
the relations between the parties till it is displaced
by anumberher companytract. the objection that numbersuch benefit
as claimed accrue to the respondent after march 31
1959 must therefore be rejected.  emphasis added
the power of reasoning the purpose of industrial
jurisprudence and the logic of the law presented with terse
force in this pronumberncement cannumber be missed. the new
contract which is created by an
1121
award companytinued to govern the relations between the parties
till it is displaced by anumberher companytract. anumberher bench of three judges speaking through chief
justice gajendragadkar in md. quasim larrys case 1  has
ratiocinated on similar lines
when an award is made and it prescribes a new wage
structure in law the old companytractual wage structure
becomes inumbererative and its place is taken by the wage
structure prescribed by the award. in a sense the
latter wage structure must be deemed to be a companytract
between the parties because that in substance is the
effect of industrial adjudication. the true legal
position is that when industrial disputes are decided
by industrial adjudication and awards are made the
said awards supplant companytractual terms in respect of
matters companyered by them and are substituted for
them in this companynection we may incidentally refer
to the decision of this companyrt in the south indian bank
ltd. v. a. r. chacko 2  where it has been observed by
this companyrt that the very purpose for which industrial
adjudication has been given the peculiar authority and
right of making new companytracts between employers and
workmen makes it reasonable to think that even though
the period of operation of the award and the period for
which it remains binding on the parties may elapse-in
respect of both of which special provisions have been
made under sections 23 and 29 respectively-the new
contract would companytinue to govern the relations between
the parties till it is replaced by anumberher companytract. this observation clearly and emphatically brings out
that the terms prescribed by an award in law and in
substance companystitute a fresh companytract between the
parties.  emphasis added
again a bench of four judges in the indian oil
corporation case 3  reiterated the same principle in the
context of s. 9a of the id act although the companyrt did number
specifically advert to chackos case  supra . in the indian
oil companyporation case  supra  the question turned on the
management seeking to effect changes in the service
1122
conditions of the workmen. the companyrt made observations which
have pertinence to the number-extinguishment of the companytract of
service until a negotiated or adjudicated substitution companyes
into being. fazal ali j. speaking for the bench observed 1
in the circumstances therefore s. 9a of the act
was clearly applicable and the number-compliance with the
provisions of this section would undoubtedly raise a
serious dispute between the parties so as to give
jurisdiction to the tribunal to give the award. if the
appellant wanted to withdraw the companypensatory allowance
it should have given numberice to the workmen negotiated
the matter with them and arrived at some settlement
instead of withdrawing the companypensatory allowance
overnight.  emphasis added
this ruling shows  a  that unilateral variation by the
management is an exercise in futility and  b  an award or
settlement must take the place of the companytract sought to be
varied. we have a similar situation in the present case vis-
a-vis the numberice under s. 9a and the ruling in the indian
oil case  supra  is a helpful guide. a passing reference was made to a possible difference
between an award and a settlement when it companyes to
termination of the terms. we have indicated already that a
closer study of the scheme of the id act shows the
distinction if any to be numbermore than between tweedledum
and tweedledee. a division bench of the bombay high companyrt
had occasion to examine the effect of a numberice under s.
19 2  of the id act in terminating a settlement and that
ruling deserves special mention because it deals with the
the survival beyond the two months numberice of termination of
a settlement  number an award . tarkunde j speaking for the
bench and following chackos case  supra  observed in the
context of numberice to terminate the settlement under s. 19 2
 2
even if a numberice of its intention to terminate the
settlement was given by either party the settlement
did number automatically cease to be operative on the
expiry of two months from the date of the numberice. the
legal position is that the terms of a settlement
continue to govern the relations between the parties
after the numberice of termination and the expiry of two
months thereafter until the settlement is replaced by
a valid companytract or award
1123
between the parties. this was laid down by the supreme
court in south indian bank limited v. chacko 1964 1 llj
19-air 1964 sc 1522 while dealing with the binding
effect of an award under the provisions companytained in
sub-section  6  of section 19 of the industrial
disputes act. the authority in the present case was
therefore number justified in rejecting the workmens
application on the ground that the settlement on which
the workmen relied had ceased to be operative.  emphasis added
a precedent as disraeli said embalms a principle. we
have pointed out the principle and cited the precedents. there is more to it than mere wealth of precedents or what
burke called the deep slumber of a decided opinion. it
enlivens industrial peace avoids labour discontent and
helps to set the stage for next negotiations for better
terms for workers. econumberic freedom of the weaker sections
is behind these precedents almost reminding us of tennyson
a land of settled government
a land of just and old renumbern
where freedom slowly broadens down
from precedent to precedent. the law is lucid and the justice manifest on termination
numberice or numberice of change the award or settlement does number
perish but survives to bind until reincarnation in any
modified form in a fresh regulation of companyditions of
service by a settlement or award. precedents often broadly
guide but when on the same point willy-nilly bind. so here
even if i would i companyld number and even if i companyld i would
number depart from the wisdom in chackos case  supra  with
consistent case-flow-before and after. an aching void an
abhorrent vacuum a legicidal situation of industrial clash
cannumber be a judicial bonus when the companystitutional companymand
is social justice. the catena of cases we have briefly catalogued
discloses an unbroken stream of case-law binding on this
court the ratio whereof even otherwise companymends itself to
us. the award or settlement under the id act replaces the
earlier companytract of service and is given plenary effect as
between the parties. it is number a case of the earlier
contract being kept under suspended animation but suffering
supersession. once the earlier companytract is extinguished and
fresh companyditions of service are created by the award or the
settlement the inevitable companysequence is that even though
the period of operation and the span of binding force
expire on the numberice to terminate the companytract being given
the said
1124
contract companytinues to govern the relations between the
parties until a new agreement by way of settlement or
statutory companytract by the force of an award takes its place. if numberice had number been given the door for raising an
industrial dispute and fresh companyditions of service would number
have been legally open. with action under s. 9a s. 19 2  or
 6  the door is ajar for disputes being raised and
resolved. this in short is the legal effect number the lethal
effect of invitation to industrial trial of strength with no
contract of service or reversion to an obsolete and long ago
dead companytract of service. it is inconceivable that any other alternative
subsists. for instance imagine a case where for 30 years an
award or settlement might have given various benefits to
employees and at the end of 30 years a numberice terminating
the settlement were given by the employer. does industrial
law absurdly companydemn the parties to a reversion to what
prevailed between them 30 years ago? if the employees were
given rs. 100 as salary in 1947 and thereafter by awards
and settlements the salary scale was raised to rs. 1000
could it be the management might by unilateral yet
disastrous action give numberice under s. 19 2  or  6
terminating the settlement or award tell the workers that
they would be paid rs. 100 which was the original companytract
although in law that companytract had been extinguished totally
by a later companytract of settlement or by force of an award? the horrendous companysequences of such an interpretation may
best be left to imagination. moreover if industrial peace
is the signature tune of industrial law industrial violence
would be the vicious shower of companysequences if parties were
relegated either to an ancient and obsolete companytract or a
state of lawless hiatus. numbercanumber of interpretation of
statutes can companypel the companyrt to companystrue a statutory
provision in this manner. we have numberdoubt that the
precedents on the point the principles of industrial law
the companystitutional sympathy of part iv and the sound rules
of statutory companystruction companyverge to the same point that
when a numberice intimating termination of an award or
settlement is issued the legal import is merely that the
stage is set for fresh negotiations or industrial
adjudication and until either effort ripens into a fresh set
of companyditions of service the previous award or settlement
does regulate the relations between the employer and the
employees. the companyrt never holds justice as hostage with law
as janitor law if at all liberates justice through the
judicial process. fundamental error can be avoided only by
remembering fundamental values. at this stage i may record my firm companyclusion that for
the reasons already given the settlement under the id act
does number suffer death merely because of the numberice issued
under s. 19 2 . all that is done is a numberice intimating its
intention to terminate the award. the
1125
award even if it ceases to be operative qua award companytinues
qua companytract. therefore if the id act regulates the jural
relations between the lic and its employees-an if we will
presently scan-then the rights under the settlements of 1974
remain until replaced by a later award or settlement. in my view to reverse the high companyrts holding will be
to disregard the companysistent current of case-law-a step i
hesitate to take in the sensitive area of labour relations
under a companystitution with social justice slant. lord
herscheli in russell v. russell 1897 ac 395 observed 1
i have numberinclination towards a blind adherence to
precedents. i am companyscious that the law must be moulded
by adapting it on established principles to the
changing companyditions which social development involves. the next logical question then is as to whether the id
act is a general legislation pushed out of its province
because of the lic act a special legislation in relation to
the companyporation employees. immediately we are companyfronted
with the question as to whether the lic act is a special
legislation or a general legislation because the legal maxim
generalia specialibus number derogant is ordinarily attracted
where there is a companyflict between a special and a general
statute and an argument of implied repeal is raised. craise
states the law companyrectly  2
the general rule that prior statutes are held to
be repealed by implication by subsequent statutes if
the two are repugnant is said number to apply if the
prior enactment is special and the subsequent enactment
is general the rule of law being as stated by lord
selbourne in mary seward v. veera cruz 3  that where
there are general words in a later act capable of
reasonable and sensible application without extending
them to subjects specially dealt with by earlier
legislation you are number to hold that earlier and
special legislation indirectly repealed altered or
derogated from merely by force of such general words
without any indication of a particular intention to do
so. there is a well-knumbern rule which has application
to this case which is that a subsequent general act
does number affect a prior special act by implication. that this is the law cannumber be doubted and the cases
on the subject will be found companylected in the third
edition of maxwell is generalia specialibus number
derogant-i.e. general
1126
provisions will number abrogate special provisions. when
the legislature has given its attention to a separate
subject and made provision for it the presumption is
that a subsequent general enactment is number intended to
interfere with the special provision unless it
manifests that intention very clearly. each enactment
must be companystrued in that respect according to its own
subject matter and its own terms. the crucial question which demands an answer before we
settle the issue is as to whether the lic act is a special
statute and the id act a general statute so that the latter
pro tanto repeals or prevails over the earlier one. what do
we mean by a special statute and in the scheme of the two
enactments in question which can we regard as the special
act and which the general ? an implied repeal is the last
judicial refuge and unless driven to that companyclusion is
rarely restored to. the decisive point is as to whether the
id act can be displaced or dismissed as a general statute. if it can be and if the lic act is a special statute the
proposition companytended for by the appellant that the
settlement depending for its sustenance on the id act cannumber
hold good against s. 11 and s. 49 of the lic act read with
reg. 58 thereunder. this exercise companystrains me to study the
scheme of the two statutes in the companytext of the specific
controversy i am dealing with. there is numberdoubt that the lic act as its long title
suggests is an act to provide for the nationalisation of
life insurance business in india by transferring all such
business to a companyporation established for the purpose and to
provide for the regulation and companytrol of the business of
the companyporation and for matters companynected therewith or
incidental thereto. its primary purpose was to nationalise
private insurance business and to establish the life
insurance companyporation of india. inevitably the enactment
spelt out the functions of the companyporation provided for the
transfer of existing life insurance business to the
corporation and set out in detail how the management
finance accounts and audit of the companyporation should be
conducted. incidentally there was provision for transfer of
service of existing employees of the insurers to the
corporation and sub-incidentally their companyditions of
service also had to be provided for. the power to make
regulations companyering all matters of management was also
vested in appropriate authorities. it is plain and beyond
dispute that so far as nationalisation of insurance business
is companycerned the lic act is a special legislation but
equally indubitably is the inference from a bare perusal
of the subject scheme and sections and understanding of the
anatomy of the act that it has numberhing to do with the
particular problem of disputes between employer and
1127
employees or investigation and adjudication of such
disputes. it does number deal with workmen and disputes between
workmen and employers or with industrial disputes. the
corporation has an army of employees who are number workmen at
all. for instance the higher echelons and other types of
employees do number fall within the scope of workmen as defined
in s. 2 s  of the id act. number is the companyporations main
business investigation and adjudication of labour disputes
any more than a motor manufacturers chief business is
spraying paints
in determining whether a statute is a special or a
general one the focus must be on the principal subject
matter plus the particular perspective. for certain
purposes an act may be general and for certain other
purposes it may be special and we cannumber blur distinctions
when dealing with finer points of law. in law we have a
cosmos of relativity number absolutes-so too in life. the id
act is a special statute devoted wholly to investigation and
settlement of industrial disputes which provides
definitionally for the nature of industrial disputes companying
within its ambit. it creates an infrastructure for
investigation into solution of and adjudication upon
industrial disputes. it also provides the necessary
machinery for enforcement of awards and settlements. from
alpha to omega the id act has one special mission-the
resolution of industrial disputes through specialised
agencies according to specialised procedures and with
special reference to the weaker categories of employees
coming within the definition of workmen. therefore with
reference to industrial disputes between employers and
workmen the id act is a special statute and the lic act
does number speak at all with specific reference to workmen. on
the other hand its powers relate to the general aspects of
nationalisation or management when private businesses are
nationalised and a plurality of problems which
incidentally involve transfer of service of existing
employees of insurers. the workmen qua workmen and
industrial disputes between workmen and the employer as
such are beyond the orbit of and have numberspecific or
special place in the scheme of the lic act. and whenever
there was a dispute between workmen and management the id
act mechanism was resorted to. what are we companyfronted with in the present case so
that i may determine as between the two enactments which is
the special ? the only subject which has led to this
litigation and which is the bone of companytention between the
parties is an industrial dispute between the companyporation and
its workmen qua workmen. if we refuse to be obfuscated by
legal abracadabra and see plainly what is so obvious the
conclusion that flows in the wake of study i have made is
that
1128
vis a vis industrial disputes at the termination of the
settlement as between the workmen and the companyporation the id
act is a special legislation and the lic act a general
legislation. likewise when companypensation on nationalisation
is the question the lic act is the special statute. an
application of the generalia maxim as expounded by english
text-books and decisions leaves us in numberdoubt that the id
act being special law prevails over the lic act which is
but general law. i am satisfied in this companyclusion by citations but i
content myself with a recent case where this companyrt tackling
a closely allied question came to the identical
conclusion.  1  the problem that arose there was as to
whether the standing orders under the industrial employment
 standing orders  act 1946 prevailed as against
regulations regarding the age of superannuation made by the
electricity board under the specific power vested by s.
79 c  of the electricity  supply  act 1948 which was
contended to be a special law as against the industrial
employment  standing orders  act. this companyrt  a bench of
three judges  speaking through chinnappa reddy j.
observed 2
the maxim generalia specialibus number derogant is
quite well knumbern. the rule flowing from the maxim has
been explained in mary seward v. the owner of the veera
cruz  3  as follows
number if anything be certain it is this that where
there are general words in a later act
capable of reasonable and sensible
application without extending them to
subjects specially dealt with by earlier
legislation you are number to hold that earlier
and special legislation indirectly repealed
altered or derogated from merely by force of
such general words without any indication of
a particular intention to do so. in j. k. companyton spinning weaving mills company limited v.
state of uttar pradesh this companyrt observed  at page 1174
 4
the rule that general provisions should yield to
specific provisions is number an arbitrary principle made
by lawyers and judges but springs from the companymon
understanding of men and women that when the same
person gives two directions one companyering large number
of matters in general and anumberher to only some of them
his intention is that these latter directions should
1129
prevail as regards these while as regards all the rest
the earlier direction should have effect. we have already shown that the industrial
employment  standing orders  act is a special act
dealing with a specific subject namely with companyditions
of service enumerated in the schedule of workmen in
industrial establishments. it is impossible to companyceive
that parliament sought to abrogate the provisions of
the industrial employment  standing orders  act
embodying as they do hardwon and precious rights of
workmen and prescribing as they do an elaborate
procedure including a quasi-judicial determination by
a general incidental provision like sec. 79 c  of the
electricity  supply  act. it is obvious that parliament
did number have before it the standing orders act when is
passed the electricity  supply  act and parliament
never meant that the standing orders act should stand
pro tanto of the view that the provisions of the
standing orders act repealed by sec. 79 c  of the
electricity supply act. we are clearly of the view that
the provisions of the standing orders act applies. i respectfully agree and apply the reasoning and the
conclusion to the near-identical situation before me and
hold that the id act relates specially and specifically to
industrial disputes between workmen and employers and the
lic act like the electricity  supply  act 1948 is a
general statute which is silent on workmens disputes even
though it may be a special legislation regulating the take-
over of private insurance business. a plausible submission was made by the appellants
which was repelled by the high companyrt that the lic act
contained provisions regarding companyditions of service of
employees and they would be redundant if the id act was held
to prevail. this is doubly fallacious. for one thing the
provisions of ss. 11 and 49 are the usual general provisions
giving a statutory companyporation  like a municipality or
university  power to recruit and prescribe companyditions of
service of its total staff-number anything special regarding
workmen. this companyrt in bangalore water supply and sewerage
case  7 judges bench   1  and long ago in d. n. banerji v.

r. mukherjee ors  5 judges bench 2  has held that the
id act applied to workmen
1130
employed by those bodies when disputes arose. the general
provision would still apply to other echelons and even to
workmen if numberindustrial dispute was raised. secondly no
case of redundant words arose because the companyporation like
a university employed number only workmen but others also and
to regulate their companyditions of service power was needed. again in situations where numberdispute arose power in the
employer to fix the terms of employment had to be vested. this is a companymon provision of a general sort number a
particularised provision to canalise an industrial dispute. what is special or general is wholly a creature of the
subject and companytext and may vary with situation
circumstances and angle of vision. law is numberabstraction but
realises itself in the living setting of actualities. which
is a special provision and which general depends on the
specific problem the topic for decision number the broad
rubric number any rule of thumb. the peaceful companyxistence of
both legislations is best achieved if that be feasible by
allowing to each its allotted field for play. sense and
sensibility number mechanical rigidity gives the flexible
solution. it is difficult for me to think that when the
entire industrial field even companyering municipalities
universities research companyncils and the like is regulated
in the critical area of industrial disputes by the id act
parliament would have provided as oasis for the companyporation
where labour demands can be unilaterally ignumbered. the
general words in ss. 11 and 49 must be read companytextually as
number companyering industrial disputes between the workmen and the
corporation. lord haldane had for instance in 1915 ac 885
 891  observed that  1
general words may in certain cases properly be
interpreted as having a meaning or scope other than the
literal or usual meaning. they may be so interpreted
where the scheme appearing from the language of the
legislature read in its entirety points to
consistency as requiring modification of what would be
the meaning apart from any companytext or apart from the
general law. to avoid absurdity and injustice by judicial servitude to
interpretative literality is a function of the companyrt and
this leaves me numberoption but to hold that the id act holds
where disputes erupt and the lic act guides where other
matters are companycerned. in the field of statutory
interpretation there are numberinflexible formulae or fool-
proof mechanisms. the sense and sensibility the setting and
the scheme the perspective and the purpose-these help the
judge navigate towards the harbour of true intendment and
meaning. the legal dynamics of social justice also guide the
court in statutes of the type
1131
we are interpreting. these plural companysiderations led me to
the companyclusion that the id act is a special statute when
industrial disputes awards and settlements are the topic of
controversy as here. there may be other matters where the
lic act vis a vis the other statutes will be a special law. i am number companycerned with such hypothetical situations number. i have set out right at the outset that my
perspective must be benign in tune with part iv of the
constitution. in the up state electricity board case 1  this
court underscored the same approach
before examining the rival companytentions we remind
ourselves that the companystitution has expressed a deep
concern for the welfare of workers and has provided in
art. 42 that the state shall make provision for
securing just and humane companyditions of work and in art. 43 that the state shall endeavour to secure by
suitable legislation or econumberic organisation or in any
other way to all workers agricultural industrial or
otherwise work a living wage companyditions of work
ensuring a decent standard of life and full enjoyment
of leisure etc. these are among the directive
principles of state policy. the mandate of article 37
of the companystitution is that while the directive
principles of state policy shall number be enforceable by
any companyrt the principles are nevertheless fundamental
in the governance of the companyntry and it shall be the
duty of the state to apply these principles in making
laws. addressed to companyrts what the injunction means
is that while companyrts are number free to direct the making
of legislation companyrts are bound to evolve affirm and
adopt principles of interpretation which will further
and number hinder the goals set out in the director
principles of state policy. this companymand of the
constitution must be ever present in the minds of
judges when interpreting statutes which companycern
themselves directly or indirectly with matters set out
in the directive principles of state policy. whatever be the powers of regulation of companyditions of
service including payment or number-payment of bonus enjoyed
by the employees of the companyporation under the lic act
subject to the directives of the central government they
stem from a general act and cannumber supplant subvert or
substitute the special legislation which specifically deals
with industrial disputes between workmen and their
employers. in this view other questions which have been
argued at length and companysidered by my learned brother do
number demand my
1132
discussion. the high companyrt was right in its companyclusion and i
affirm its judgment. i therefore direct the companyporation to
fulfill its obligations in terms of the 1974 settlements and
start negotiations like a model employer for a fair
settlement of the companyditions of service between itself and
its employees having realistic and equitable regard to the
prevailing companyditions of life principles of industrial
justice and the directives underlying part iv of the
constitution. judicial review of administrative action and judicial
interpretation of legislative provisions have serious
limitations. nevertheless that power is a companystitutional
fundamental which must be exercised circumspectly but
without being scared by statutory omnipotence or executive
finality. the words of prof. wade companye to ones mind
the law is still developing but the important
thing is that the companyrts once again accept as they had
always done except in their period of amnesia that
part of their duty was to require public authorities to
respect certain basic rules of fairness in exercising
power over the citizen. i dismiss the appeal with companyts. this disposes of
transfer case number 1 of 1979 also in which the order has to
be that a writ will issue to the companyporation companypelling it
to carry out the terms of the settlements of 1974 and
injuncting it from acting upon or giving effect to the
impugned numberices circulars and the said amended government
order the said amended staff regulations being annexures f
h j k and l thereto. pathak j.-i have read with great respect the separate
judgments of my brother krishna iyer and my brother koshal
but in view of the importance of the questions raised i
propose to deliver a separate judgment. the facts of the case have already been set out in the
judgments prepared by my learned brothers. i need mention
again a few only. clause  8  of the two settlements of 24th
january 1974 and 6th february 1974 made the following
provisions respecting bonus

numberprofit sharing bonus shall be paid. however
the companyporation may subject to such directions as
the central government may issue from time to
time grant any other kind of bonus to its class
iii and iv employees. an annual cash bonus will be paid to all class iii
and class iv employees at the rate of 15 of the
annual
1133
salary actually drawn by an employee in
respect of the financial year to which the bonus
relates. save as provided herein all other terms and
conditions attached to the admissibility and
payment of bonus shall be as laid down in the
settlement on bonus dated the 26th june 1972.
the settlements were operative from 1st april 1973 to
31st march 1977. on 3rd march 1978 the life insurance
corporation  the companyporation  issued a numberice purportedly
under s. 19 2  industrial disputes act 1947 of its
intention to terminate the settlements on the expiry of two
months because of econumberic and other reasons. the numberice
however recited the reservation that the material
provisions of the industrial disputes act did number apply to
the companyporation and that the numberice was number necessary. anumberher numberice this time under s. 9a industrial disputes
act and issued on the same date stated that it was intended
to effect a change in the companyditions of service of the
workmen with effect from 1st june 1978. the change numberified
related to the existing provision for bonus. a new clause
was proposed. the life insurance companyporation  alteration of
remuneration and other terms and companyditions of service of
employees  order 1957  the standardisation order  was
amended under s. 11 2  life insurance companyporation act  the
corporation act  on 26th may 1978 with effect from 1st
june 1978 substituting a new clause  9  for the original
clause in respect of bonus. on the same date the
corporation acting under clauses  b  and  bb  of s. 49 2  of
the same act amended the life insurance companyporation  staff
regulations also with effect from 1st june 1978 and
substituted for the existing provision a new regulation 58
along the same lines. clause  9  of the standardisation
order and regulation 58 of the  staff regulations  number read
as follows
numberemployee of the companyporation shall be entitled to
profit-sharing bonus. however the companyporation may
having regard to the financial companydition of the
corporation in respect of any year and subject to the
previous approval of the central government grant number-
profit-sharing bonus to its employees in respect of
that year at such rates as the companyporation may think
fit and on such terms and companyditions as it may specify
as regards the eligibility of such bonus. 1134
the amendments made in the standardisation order and
the staff regulations in their application to the workmen
of the companyporation were made for the purpose of nullifying
any further claim to annual cash bonus in terms of the
settlements of 1974. the workmen challenged the validity of
the amendments in so far as it affected their claim to the
bonus and the allahabad high companyrt having found in their
favour the companyporation has appealed to this companyrt. an
identical companytroversy is the subject-matter of a writ
petition filed in the calcutta high companyrt and transferred to
his companyrt. 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 companyporation act
must be examined. sub-s.  1  guarantees to the transferred
employee the same tenure at the same remuneration and upon
the same terms and companyditions on the transfer to the
corporation as he enjoyed on the appointed day under the
insurer and he is entitled to then until they are duly
altered by the companyporation or his employment in the
corporation is terminated. the sub-section envisages
alteration by the companyporation. sub-s.  2  of s. 11 by its first limb companyfers power
or the central government to alter the scales of
remuneration and other terms and companyditions of service
applicable to transferred employees. predictably when the
transferred employees of different insurers were brought
together in companymon employment under the companyporation they
would have been enjoying different scales of remuneration
and other terms and companyditions 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 companytroversy before us. it empowers the
central government to reduce the remuneration payable or
revise the other terms and companyditions of service. that power
is to be exercised when the central government is satisfied
that the interests of the companyporation and its policy holders
require such reduction or revision. the question is whether
the provision is companyfined 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
transfer of existing life insurance business from the
insurers to the companyporation and the attendant companycomitants
of that process. there is provision for the transfer of the
assets and liabilities pertaining to the business of
provident funds 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
1135
insurers to the companyporation and finally for the payment of
compensation to the insurers for the transfer of the
business to the companyporation. 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 companyporations 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
remuneration and other terms and companyditions 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
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
employees or any class of them in the second limb are number
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
employees only and it must be held that so does the second
limb. both provisions are intended to companystitute a companyposite
process for rationalising the scales of remuneration and
other terms and companyditions of service of transferred
employees with a view number 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 companyporation to become a viable and
commercially successful enterprise. the standpoint of the
second limit of the sub-section as its language plainly
indicates is provided by the interests of the companyporation
and its policy holders. for that reason it is open to the
central government under the sub-section to ignumbere the
guarantee companytained in sub-section  1  of s. 11 in favour of
the employees or anything companytained in the industrial
disputes act 1947 or any other law for the time being in
force or any award settlement or agreement for the time
being in force. benefits companyferred thereunder on the
employees must yield to the need for ensuring that the
corporation and its policy holders do number 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
number of its own making. unless the statute provided for such
relief the weight of that burden companyld companyceivably cripple
the successful working of the companyporation from its inception
as a business organisation. it is situation to be
distinguished from what
1136
happens when the companyporation launched on its numbermal companyrse
voluntarily assumes in the companyrse of its working
obligations in respect of its employees or becomes subject
to such obligations by reason of subsequent industrial
adjudication. like any other employer the companyporation is
then open to the numbermal 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 circumstance 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 central government as the
effective and direct instrumentality for bringing about the
transfer and integration in the different sectors of that
process. there is numberdanger of an order made by the central
government under the second limb of sub-s.  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 number been taken in
respect of newly recruited employees. so long as such order
is companyfined to what is necessitated by the process of
transfer and integration the transferred employees
constitute a reasonably defined class in themselves and form
numbercommon basis with newly recruited employees. i am unable to subscribe to the view that the second
limb to sub-s.  2  of s. 11 is related to employees
generally that is to say both transferred and newly
recruited employees of the companyporation. anumberher point is whether the power under the 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 companypletely it may
be necessary to pass through different stages and at each
stage to make a definite order. so long as the companyplex 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 number impressed by the circumstance
that the original bill moved in parliament for amending sub-
s.  2  of s. 11 companytained the words from time to time and
that those words were subsequently deleted when enactment
took place. the intent of the legislative provision must be
discovered primarily from the legislation itself. number turning to the numberification dated 26th may 1978
which inserted the new clause  9  in the standardisation
order it is
1137
evident from the recital with which it opens that it is
intended to apply to transferred employees only. it declares
explicitly that the central government is satisfied that a
revision of the terms and companyditions of service of the
transferred employees is companysidered necessary. however
there is numberhing to show that the amendment is related to
the process of transfer and integration. on the companytrary
the circumstance that an identical provision has been made
by the companyporation with the prior approval of the central
government in the new regulation 58 by a numberification
issued under both clauses  b  and  bb  of the s. 49 2  that
is to say in respect of both newly recruited as well as
transferred employees demonstrates that the provision has
numberparticular relationship with that process. accordingly i
am of opinion that the numberification dated 26th may 1978
purporting to amend the standardisation order is invalid. it
has numbereffect on the right to bonus claimed by the workmen. that takes us to question whether the new regulation 58
inserted in the  staff  regulations by the life insurance
corporation of india  staff  second amendment regulations
1978 can be invoked against the workmen of the companyporation. the workmen companytend that the industrial disputes act
constitutes special legislation for the resolution of
industrial disputes and inasmuch as it has been specially
enacted for the promotion of harmonious relations between
an employer and his workmen all matters companycerning the
workmen must be regarded as falling within the scope of the
industrial disputes act. the companyporation act it is said
has a different orientation. it is companycerned primarily with
the nationalisation of life insurance business and the
employment of a staff and their terms and companyditions of
service as well as disputes companycerning them are subsidiary
to the main purpose of nationalisation. the workmen it is
urged are a special category of the total staff employed by
the companyporation and as regards them it is the industrial
disputes act and number the companyporation act which governs. accordingly the argument goes a settlement effected under
s. 18 of the industrial disputes act must companytinue to have
force as determined by s. 19 2  of the act and even
thereafter and numberhing companytained in the companyporation act or
the regulations made thereunder can be permitted to affect
the operation of its terms. it is urged that regulation 58
cannumber be applied in the case of those employees of the
corporation who are workmen within the meaning of the
industrial disputes act. 1138
the case of the companyporation and the union of india is
that regulation 58 was framed when the settlements had
ceased to be operative and binding under s. 19 2
industrial disputes act that even if it be assumed that a
contract existed between the parties at the time it must
yield to regulation 58 which had the force of law. it was
contended that as regards the workmen of the companyporation
the companyporation act is a special law and the industrial
disputes act is the general law and therefore regulation
58 must prevail over any transaction under the industrial
disputes act. before any thing more it is necessary to ascertain the
true relationship of the parties in respect of the
settlements of 1974 at the time when regulation 58 was
framed. the settlements were to remain in operation for a
period of four years ending 31st march 1977. admittedly
they were settlements reached under the industrial disputes
act. there is numberdispute that they were settlements governed
by s. 19 industrial disputes act. therefore by virtue of
s. 19 2  they were binding upto 31st march 1977 the period
agreed upon by the parties and they companytinued to be binding
on the parties there after until the expiry of two months
from the date on which written numberice of the intention to
terminate the settlement was given by one of the parties to
the other. it is desirable to appreciate what is a settlement as
understood in the industrial disputes act. in essence it is
a companytract between the employer and the workmen prescribing
new terms and companyditions of service. these companystitute a
variation of existing terms and companyditions. as soon as the
settlement is companycluded and becomes operative the companytract
embodied in it takes effect and the existing terms and
conditions of the workmen are modified accordingly. unless
there is some thing to the companytrary in a particular term or
condition of the settlement the embodied companytract endures
indefinitely companytinuing to govern the relation between the
parties in the future subject of companyrse to subsequent
alteration through a fresh settlement award or valid
legislation. i have said that the transaction is a companytract. but it is also something more. companyceptually it is a
settlement. it companycludes or settles a dispute. differences which had arisen and were threatening industrial
peace and harmony stand resolved in terms of a new companytract. in order that the new companytract be afforded a chance of being
effectively worked out a mandate obliging the parties to
unreservedly companyply with it for a period of time is
desirable. it was made binding by the statute for such
period. section 19 2  was enacted. the spirit of
conciliation the
1139
foundation of the settlement was required by law to bind
the parties for the time prescribed. immediate reagitation
in respect of matters companyered by the settlement was banned. section 23  c  prohibited strikes by the workmen in breach
of the companytract and lockouts by the employer in respect of
such matters. a breach of any term was made punishable by s.

certainty in industrial relations is essential to
industry and a period of such certainty is ensured by s.
19 2 . on the expiry of the period prescribed in the sub-
section the companyceptual quality of the transaction as a
settlement companyes to an end. the ban lifts. the parties are
numberlonger bound to maintain the industrial status quo in
respect of matters companyered by the settlement. they are at
liberty to seek an alteration of the companytract. but until
altered the companytract companytinues to govern the relations
between the parties in respect of the terms and companyditions
of service. the position seems companyparable with what happens in the
case of an award. section 19 3  and s. 19 6  companytain similar
provisions. in the case of an award this companyrt has laid down
in south indian bank limited v. a. r. chacko 1  that after
the period of operation of an award has expired the award
does number cease to be effective. it companytinues to be binding
on the parties by virtue of s. 19 6  until numberice has been
given by one of the parties of the intention to terminate it
and two months have elapsed from the date of such numberice. thereafter it will companytinue to have its effect as a
contract between the parties that has been made by
industrial adjudication in place of the old companytract
the very purpose for which industrial adjudication has been
given the peculiar authority and right of making new
contracts between employers and workmen makes it reasonable
to think that even though the period of operation of the
award and the period for which it remains binding on the
parties may elapse-in respect of both of which special
provisions have been made under ss. 23 and 29 respectively-
may expire the new companytract would companytinue to govern the
relations between the parties till it is displaced by
anumberher companytract. later in md. qasim larry factory
manager sasamusa sugar works v. muhammad samsuddin and
anumberher 2  the companyrt held that when an award was made and
it prescribed a new wage structure in law the old
contractual wage structure became inumbererative and its place
was taken by the wage structure prescribed by the award. the
court said
1140
in a sense the latter wage structure must be deemed
to be a companytract between the parties because that in
substance is the effect of industrial adjudication. the true legal position is that when industrial
disputes are decided by industrial adjudication and
awards are made the said awards supplant companytractual
terms in respect of matters companyered by them and are
substituted for them. learned companynsel for the companyporation and the union of
india submit that the law declared by this companyrt in respect
of an award does number hold true in the case of a settlement. i am unable to agree. number only are the statutory provisions
pertaining to a settlement and an award companyparable in this
regard but if anything the observations if read in respect
of a settlement which after all is a voluntary agreement
between the parties would seem to hold more strongly. the companytract between the parties embodied in the
settlements of 1974 set forth the terms and companyditions of
service when regulation 58 was substituted in the  staff
regulations under clauses  b  and  bb  of s. 49 2  of the
corporation act. the question is whether regulation 58 will
prevail over the settlement companytract. for that purpose it
is necessary to examine the companytroversy whether the
corporation act is the general law and the industrial
disputes act the special law or vice-versa. it will be numbericed that the companyporation act was enacted
primarily for effecting the nationalisation of life
insurance business by transferring all such business to a
corporation established for the purpose. the principal
provision in the companyporation act is s. 7 which provides for
the transfer to and vesting in the companyporation of all the
assets and liabilities appertaining to the companytrolled
business of the insurers. the central purpose being assured
the companycomitant provisions followed. these included making
available to the insurers employees under s. 11 1  a
continuous and unbroken tenure of employment on terms and
conditions to which they would have been entitled on the
appointed day as if the companyporation act had number been
passed. it was evidently intended that in running the
business the companyporation should broadly take off where the
insurers had ceased. for the purpose of enabling it to
discharge its functions under the act the companyporation has
been empowered by s. 23 to employ such number of persons as
it thinks fit. the power companyferred in clauses  b  and  bb
of s. 2 2  to make regulations prescribing the terms and
conditions of service of newly recruited as well as
transferred employees has been companyferred for the same
purpose that is
1141
to say the purpose specifically mentioned in s. 49 1  of
giving effect to the provisions of the act. clearly the
object behind s.11 1  s. 23 and clauses  b  and  bb  of s.
49 2  is to provide staff and labour for the purpose of the
proper management of the nationalised life insurance
business. on the other hand the industrial disputers act
deals specifically with a special subject matter the
investigation and settlement of industrial disputes between
an employer and his workmen. an industrial dispute as
defined by s. 2 k  is a companylective dispute. it is a special
kind of dispute. except for a case under s. 2a the entire
body of workmen or a substantial number of them companystitutes
a party to the dispute. and all the employees of an employer
are number workmen. those employees are workmen who satisfy
the definition companytained in s. 2 s . a restricted category
of employees is companytemplated and in an industrial dispute
that category alone of all the employees can be interested. the resolution of industrial disputes under the act is
envisaged through the particular machinery and processes
detailed therein. a special jurisdiction is created for the
purpose. industrial disputes according to the act can be
resolved by settlement or award. there are provisions
setting forth the companysequences of a settlement or an award
and there are also provisions indicating how a change can be
initiated in the resulting industrial relations. other
chapters in the industrial disputes act lay down the law in
respect of strikes and lock-outs lay off retrenchment and
closure and penalties for breach of its provisions. plainly
if a settlement resolves an industrial dispute under the
industrial disputes act it pertains to the central purpose
of that act. the act companystitutes special law in respect of a
settlement reached under its auspices between an employer
and his workmen employees. the companysequences of such
settlement are the product of the special law. the
corporation act does number possess the features outlined
above. it deals only generally in regard to a staff and
labour force. they are referred to companypendiously as
employees. numberspecial provision exists in regard to
industrial disputes and their resolution and the
consequences of that resolution. the special jurisdiction
created for the purpose under the industrial disputes act is
number the subject-matter of the companyporation act at all. it
would be companyrect to say that numbercorresponding provision in
the companyporation act subsequent enactment deals with the
subject matter enacted in the industrial disputes act. yet
parliament intended to provide for the companyporations
workmen employees the same opportunities as are available
under the industrial disputes act to the workmen of other
employers. that is demonstrated by s. 2 a  i  of that act. the expression appropriate
1142
government is specifically defined by it in relation to an
industrial dispute companycerning the life insurance
corporation. both the central government and the companyporation
understood the industrial disputes act in that light for
one finds that regulation 51 2  of the  staff  regulations
made by the companyporation under clauses  b  and  bb  of s.
49 2  of the companyporation act with the previous approval of
the central government speaks of giving effect to a
revision of scales of pay dearness allowances or other
allowances in pursuance of any award agreement or
settlement. in my opinion it is difficult to resist the companyclusion
that the industrial disputes act is a special law and must
prevail over the companyporation act a general law for the
purpose of protecting the sanctity of transactions companycluded
under the former enactment. it is true that as laid down in
life insurance companyporation of india v. sunil kumar
mukherjee 1  and reiterated in sukhadev singh v. bhagat
ram 2  the regulations framed under the companyporation act
have the force of law. but that is of little moment if no
reference is permissible to the regulations when companysidering
the validity and operation of the settlement companytract. accordingly regulation 58 a product of the companyporation
act cannumber supersede the companytract respecting bonus between
the parties resulting from the settlements of 1974. support
is derived for this companyclusion from u. p. state electricity
board ors. v. hari shanker jain ors.  3  where reference
has been made to mary sewards v. the owner of the vera
cruz 4  and j. k. companyton spinning weaving mills limited v.
state of uttar pradesh 5 . at the same time it is pertinent to numbere that the
workmen employees of the companyporation companytinue to be
governed in matters number companyered by the settlements by the
 staff  regulations and that position is expressly
recognised in clause 12 4  of the settlements of 1974.
clause 12 4  declares
except as otherwise provided or modified by this
settlement the workmen shall companytinue to be governed
by all the terms and companyditions of service as set forth
and regulated by the life insurance companyporation of
india  staff  regulations 1960 as also the
administrative instructions
1143
our attention has been drawn to s. 11 1  companyporation
act which empowers the companyporation to duly alter the terms
and companyditions of service of transferred employees. in
construing the scope of the companyporations powers in that
behalf it seems to me that appropriate importance should be
attached to the qualifying word duly. when the companyporation
seeks to alter the terms and companyditions of transferred
employees it must do so in accordance with law and that
requires it to pay proper regard to the sanctity of rights
acquired by the workmen employees under settlements or
awards made under the industrial disputes act. the only
provision so far as i can see where the companyporation act
permits disregard of the industrial disputes act and awards
settlements or agreements is the second limb of s. 11 2 . and the scope of that provision as i have explained is
confined to the peculiar circumstance in which the
corporation immediately on companying into existence finds
itself saddled with a recurring financial burden by virtue
of the service of the transferred employees too heavy for
its own viability as a business organisation. numbersuch
provision is to be found elsewhere in the companyporation act. it is companyspicuous by its absence in clauses  b  and  bb  of
s. 49 2 . the provision in s. 11 2  has been made for the
purpose of protecting the interests of the companyporation and
its policyholders. the policyholders companystitute an important
and significant sector of public interest. indeed the
avowed object of the entire companyporation act is to provide
absolute security to the policyholders in the matter of
their life insurance protection. that is assured by a wise
management of the companyporations business and by ensuring
that when settlements are negotiated between the companyporation
and its workmen or when industrial adjudication is initiated
in labour companyrts and industrial tribunals the protection of
the policyholders will find appropriately significant
emphasis in the deliberations. in the view that the numberification dated 26th may 1978
purporting to amend the standardisation order by
substituting clause  9  is invalid and the newly enacted
regulation 58 does number effect the companytract in respect of
bonus embodied in the settlements of 1974 between the life
insurance companyporation and its workmen employees effect
must be given to that companytract and this appeal must fail and
the writ petition transferred from the calcutta high companyrt
must succeed. if the terms and companyditions of service created
by the companytract need to be reconsidered recourse must be
had to the modes recongnised by law-negotiated settlement
industrial adjudication or appropriate legislation. 1144
in the result civil appeal number 2275 of 1978 is
dismissed with companyts to the first second and third
respondents. the fourth respondent shall bear its own companyts. the transfer petition number 16 of 1979 is allowed in the terms
set out above companyts to be paid to the petitioners by the
second respondent. koshal j.-by this judgment i shall dispose of civil
appeal number 2275 of 1978 which has been instituted by special
leave granted by this companyrt against a judgment dated august
11 1978 of a division bench of the allahabad high companyrt
allowing a petition under article 226 of the companystitution of
india and issuing a writ of mandamus to the life insurance
corporation of india  hereinafter referred to as the
corporation  directing it number to give effect to a numberice
dated the 6th may 1978 issued by it under section 9a of
the industrial disputes act  i. d. act for short  as also to
a numberification dated the 26th may 1978 issued under sub-
section  2  of section 11 of the life insurance companyporation
act 1956  hereinafter called the l. i. c. act . this
judgment shall also companyer transfer case number 1 of 1979 in
which anumberher petition under article 226 aforesaid
instituted before the high companyrt of calcutta and raising the
same questions which fall for decision in the said appeal is
awaiting disposal by us as that petition was transferred to
this companyrt by its order dated the 10th september 1979.

the petition decided by the allahabad high companyrt was
filed by the class iii and class iv employees of the
corporation challenging the right of the employer and the
union of india to change to the detriment of the said
employees a companydition of service regarding the payment to
them of bonus to which they had earlier become entitled
through a settlement with the companyporation made under section
18 of the i. d. act. the petition last mentioned arose in circumstances
which may be set out in some detail. the companyporation came
into existence on the 1st september 1956 as a statutory
authority established under the l. i. c. act. as from the
said date all institutions carrying on life insurance
business in india were nationalised to the extent of such
business and their companyresponding assets and liabilities were
transferred to the companyporation. section 11 of the l. i. c.
act provided for the transfer of service of those employees
of such institutions who were companynected with life insurance
business  described in the act as companytrolled business
immediately before the said date to the companyporation and for
some other matteds. as it is the interpretation of that
section which is mainly in companytroversy before us it may be
set out here in extenso
1145
11.  1  every whole-time employee of an insurer
whose companytrolled business has been transferred to and
vested in the companyporation and who was employed by the
insurer wholly or mainly in companynection with his
controlled business immediately before the appointed
day shall on and from the appointed day become an
employee of the companyporation and shall hold his office
therein by the same tenure at the same remuneration
and upon the same terms and companyditions 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 this act had numberbeen passed and
shall companytinue to do so unless and until his employment
in the companyporation is terminated or until his
remuneration terms and companyditions are duly altered by
the companyporation
provided that numberhing companytained in this sub-
section shall apply to any such employee who has by
numberice in writing given to the central government prior
to the appointed day intimated his intention of number
becoming an employee of the companyporation. where the central government is satisfied
that for the purpose of securing uniformity in the
scales of remuneration and the other terms and
conditions of service applicable to employees of
insurers whose companytrolled business has been transferred
to and vested in the companyporation it is necessary so
to do or that in the interests of the companyporation and
its policy-holders a reduction in the remuneration
payable or a revision of the other terms and
conditions of service applicable to employees or any
class of them is called for the central government
may numberwithstanding anything companytained in sub-section
 1  or in the industrial disputes act 1947 or any
other law for the time being in force or in any award
settlement or agreement for the time being in force
alter  whether by way of reduction or otherwise  the
remuneration and the other terms and companyditions of
service to such extent and in such manner as it thinks
fit and if the alteration is number acceptable to any
employee the companyporation may terminate his employment
by giving him companypensation equivalent to three months
remuneration unless the companytract of service with such
employee provides for a shorter numberice of termination. explanation.-the companypensation payable to an
employee under this sub-section shall be in addition
to and shall number affect any pension gratuity
provident fund money or any other
1146
benefit to which the employee may be entitled under his
contract of service. if any question arises as to whether any
person was a whole-time employee of an insurance or as
to whether any employee was employed wholly or mainly
in companynection with the companytrolled business of an
insurer immediately before the appointed day the
question shall be referred to the central government
whose decision shall be final. numberwithstanding anything companytained in the
industrial disputes act 1947 or in any other law for
the time being in force the transfer of the services
of any employee of an insurer to the companyporation shall
number entitle any such employee to any companypensation under
that act or other law and numbersuch claim shall be
entertained by any companyrt tribunal or other authority. section 23 of the l. i. c. act gave to the companyporation
the power to employ such number of persons as it thought fit
for the purpose of enabling it to discharge its functions
under the act and declared that every person so employed or
whose services stood transferred to the companyporation under
section 11 would be liable to serve anywhere in india. section 49 companyferred on the companyporation the power to make
regulations for the purpose of giving effect to the
provisions of the act with the previous approval of the
central government. sub section  2  of that section
enumerated various matters in relation to which such power
was particularly companyferred. clauses  b  and  bb  of sub-
section  2  read thus
 b  the method of recruitment of employees and agents
of the companyporation and the terms and companyditions of
service of such employees or agents
 bb  the terms and companyditions of service of persons
who have become employees of the companyporation under
sub-section  1  of section 11
on the 1st june 1957 the central government in
exercise of the powers companyferred on it by sub-section  2  of
section 11 of the l. i. c. act promulgated the life
insurance companyporation  alteration of remuneration and other
terms and companyditions of service of employees  order 1957
 for short the 1957 order  altering the remuneration and
other terms and companyditions of service of those employees of
the companyporation whose services had been transferred to it
under sub-section  1  of that section  referred to
hereinafter as the transferred employees . clause 9 of the
1957 order declared that
1147
numberbonus would be paid but directed that the companyporation
would set aside an amount every year for expenditure on
schemes of general benefit scheme and on other amenities to
them. on the 26th june 1959 the central government amended
clause 9 of the 1957 order so as to provide that number-profit
sharing bonus would be paid to those employees of the
corporation whose salary did number exceed rs. 500/ per month. on the 2nd july 1959 there was a settlement between
the companyporation and its employees providing for payment to
them of cash bonus at the rate of 1/2/1 months basic salary
for the period from the 1st september 1956 to the 31st
december 1961.
in the year 1960 were framed under section 49 of l. i.

act the life insurance companyporation of india  staff
regulations 1960  the 1960 regulations for brevity
whereof regulation 58 ran thus
the companyporation may subject to such directions as the
central government may issue grant number-profit sharing
bonus to its employees and the payment thereof
including companyditions of eligibility for the bonus
shall be regulated by instructions issued by the
chairman from time to time. orders were again passed on 14th april 1962 and 3rd
august 1963 the effect of which was to remove the limit of
rs. 500/- on the basic salary as a companydition of eligibility
for payment of bonus. the settlement dated the 2nd july 1959 was followed by
three others which were arrived at on the 29th january
1963 the 20th june 1970 and the 26th june 1972
respectively and each one of which provided for payment of
bonus at a particular rate. disputes between the companyporation and its workmen in
regard to the latters companyditions of service persisted
nevertheless but were resolved by two settlements dated the
24th january 1974 and the 6th february 1974 arrived at in
pursuance of the provisions of section 18 read with section
2 p  of the i. d. act. the companyporation was a party to both
the settlement which were identical in terms. however
while four of the five unions of workmen subscribed to the
first settlement the fifth union was a signatory to the
second. the settlements provided for revised scales of pay
the method of their fixation and dearness and other
allowances as well as bonus. clause 8 of each of the
settlements was to the following effect
1148
bonus

numberprofit sharing bonus shall be paid. however
the companyporation may subject to such directions as
the central government may issue from time to
time grant any other kind of bonus to its class
iii iv employees. an annual cash bonus will be paid to all class iii
and class iv employees at the rate of 15 of the
annual salary  i.e. basic pay inclusive of special
pay if any and dearness allowance and additional
dearness allowance  actually drawn by an employee
in respect of the financial year to which the
bonus relates. save as provided herein all other terms and
conditions attached to the admissibility and
payment of bonus shall be as laid down in the
settlement on bonus dated the 26th june 1972.
clause 12 of each settlement provided

this settlement shall be effective from 1st april
1973. and shall be for a period of four years
i.e. from 1st april 1973 to 31st march 1977.

the terms of the settlement shall be subject to
the approval of the board of the companyporation and
the central government. this settlement disposes of all the demands raised
by the workmen for revision of terms and
conditions of their service. except as otherwise provided or modified by this
settlement the workmen shall companytinue to be
governed by all the terms and companyditions of
service as set forth and regulated by the life
insurance companyporation of india  staff
regulations  1960 as also the administrative
instructions issued from time to time and they
shall subject to the provisions thereof including
any period of operation specified therein be
entitled to the benefits thereunder. it is number disputed that the settlements were approved
by the board of the companyporation as also by the central
government. under clause 11 of each settlement every employee of
the companyporation had the option to elect to be governed
either by the new scale of pay applicable to him or the
scale which he had been enjoying hitherto. it is companymon
ground between the parties that all the employees of the
corporation opted for the new scales of pay and
1149
that bonus was paid in accordance therewith for the years
1973-74 and 1974-75 in april 1974 and april 1975
respectively. on 25th september 1975 the payment of bonus
 amendment  ordinance 1975 was promulgated by the president
of india and was subsequently replaced by the payment of
bonus  amendment  act 1976 which was brought into force
with effect from the date last mentioned. this amending law
considerably curtailed the rights of employees of industrial
undertakings to bonus but was inapplicable to the
corporation by virtue of the provisions of section 32 of the
payment of bonus act. however the payment of bonus for the
year 1975-76 to the employees of the companyporation was stopped
under instructions from the central government whose action
in that behalf was challenged by the employees through a
petition under article 226 of the companystitution of india in
the high companyrt of calcutta a single judge of which issued a
writ of mandamus directing the companyporation to act in
accordance with the terms of the settlement dated the 24th
january 1974. the companyporation preferred a letters patent
appeal against the decision of the learned single judge and
that appeal was pending disposal when the central
legislature promulgated the life insurance companyporation
 modification of settlement  act 1976  for short the 1976
act  section 3 of which laid down
numberwithstanding anything companytained in the industrial
disputes act 1947 the provisions of each of the
settlements in so far as they relate to the payment of
an annual cash bonus to every class iii and class iv
employee of the companyporation at the rate of fifteen per
cent of his annual salary shall number have any force or
effect and shall number be deemed to have any force or
effect on and from 1st day of april 1975.
the 1976 act was enacted on 29th may 1976 and was
challenged by the workmen in this companyrt which on the 21st
of february 1978 declared it to be void as offending
article 31 2  of the companystitution of india through a
judgment which is reported as madan mohan pathak v. union of
india  1978 3 s. c. r. 334 and directed the companyporation
to forbear from implementing the 1976 act and to pay to its
class iii and class iv employees bonus for the years 1-4-
1975 to 31-3-1976 and 1-4-1976 to 31-3-1977 in accordance
with the terms of sub-clause  ii  of clause 8 of each
settlement. on the 3rd march 1978 the companyporation issued to its
workmen a numberice under sub-section  2  of section 19 of the

d. act declaring its intention to terminate the
settlements on the expiry of a period of two months from the
date the numberice was served. the numberice however mentioned
in express terms that according to the companyporation
1150
numbersuch numberice was really necessary for termination of the
settlements. on the same date anumberher numberice was issued by
the companyporation under section 9a of the i. d. act stating
that it intended to effect a change in accordance with the
contents of the annexure to the numberice as from the 1st
june 1978 in the companyditions of service of its workmen. the
said annexure companytained the following clause
and whereas for econumberic and other reasons it would
number be possible for the life insurance companyporation of
india to companytinue to pay bonus on the aforesaid basis
now therefore it is our intention to pay bonus to
the employees of the companyporation in terms reproduced
hereunder
numberemployee of the companyporation shall be entitled
to profit sharing bonus. however the companyporation
may having regard to the financial companydition of
the companyporation in respect of any year and subject
to the previous approval of the central
government grant number-profit sharing bonus to its
employees in respect of that year at such rate as
the companyporation may think fit and on such terms
and companyditions as it may specify as regards the
eligibility of such bonus. the workmen sent a reply to the two numberices just above
mentioned and took the stand that the companyporation had no
right to render inumbererative the clause regarding bonus
contained in the two settlements. on 26th may 1978 the companyporation issued a
numberification under section 49 of the l. i. c. act
substituting a new regulation for the then existing
regulation bearing serial number 58. the new regulation was
to companye into force from the 1st june 1978 and stated

numberemployee of the companyporation shall be
entitled to profit sharing bonus. however the
corporation may having regard to the financial
condition of the companyporation in respect of any year and
subject to the previous approval of the central
government grant number-profit sharing bonus to its
employees in respect of that year at such rate as the
corporation may think fit and on such terms and
conditions as it may specify as regards the eligibility
for such bonus. simultaneously an amendment on the same lines was made
in the 1957 order  which as already stated was restricted
in its application to transferred employees only  by the
substitution of a new clause for the then existing clause 9
in pursuance of the provisions of sub-section  2  of section
11 of the l. i. c. act. the new clause is in the following
terms
1151

numberemployee of the companyporation shall be
entitled to profit sharing bonus. however the
corporation may having regard to the financial
condition of the companyporation in respect of any year and
subject to the previous approval of the central
government grant number-profit sharing bonus to its
employees in respect of that year at such rate as the
corporation may think fit and on such terms and
conditions as it may specify as regards the eligibility
for such bonus. it was the issuance of the two numberices by the
corporation on the 3rd march 1978 under section 19 2  and
9a of the i. d. act respectively and the action taken by the
central government on the 26th may 1978 by making new
provisions in regard to the payment of bonus to the
corporations employees that furnished the cause of action
for the latter to petition to the allahabad high companyrt under
article 226 of the companystitution of india. after companysideration of the various companytentions
raised before it the allahabad high companyrt arrived at the
following companyclusions

the i. d. act is an independent act which
deals with adjudication and settlement of matters in
dispute between an employer and his workmen. it is thus
a special law which would override the provisions of a
general law like the l. i. c. act. ii. three companyollaries follow from companyclusion 1

section 23 of the l. i. c. act which
envisages employment of persons by the
corporation implies settlement of companyditions
of service which may legally be superseded
 only  by anumberher settlement arrived at under
section 18 of the i. d. act. the new regulation 58 framed under section 49
of the l. i. c. act and the numberification
issued under subsection  2  of section 11
thereof substituting a new clause 9 in the
1957 order are wholly ineffective against the
operation of the 1974 settlements which were
arrived at in pursuance of the provisions of
the i. d. act and which therefore companytinue
to govern the parties thereto. after the issuance of the numberices under
sections 19 2  and 9a of the i.d. act the
corporation had numberpower to alter the
condition of service of its employees in
regard to bonus by a unilateral act as
neither of the two sections companyfers such
power on an employer. 1152
iii. companyollary  b  in companyclusion ii is in full
accord with the view expressed in madan mohan pathaks
case  supra  by the supreme companyrt in as much as it
upheld the two settlements even though it did number
advert to regulation 58 and further ruled that the
conditions of service laid down in those settlements
could be varied only by a fresh settlement or award
made under the provisions of the i. d. act and that
till then sub-clause  ii  of clause 8 of each
settlement  which is independent of clause  i  thereof
would remain in full force. numbere of the authorities
reported as c. sankararskavanumber v. the state of kerala
roshan lal v. union sukhdev v. bhagatram 3  kalvammal
bhandari v. state of rajasthan 4  state of u.p. v.
babu ram upadhya 5  i.t.o. v. m. c. ponnumberse 6  and
cited on behalf of the companyporation lays down any rule
to the companytrary. iv. in spite of clause 12 of the two settlements they
did number cease to be binding on the parties thereto even
after the expiry of the period of 4 years mentioned in that
clause and the numberice under section 19 2  of the i. d. act
issued by the companyporation would number terminate the
settlements but would have the effect merely of paving the
way for fresh negotiations. this proposition follows from
south indian bank limited v. a. r. chacko 7  and indian link
chain limited v. workmen 8  and is number negatived by the
decision in premier auto v. k. s. wadke 9 . although
chackos case dealt in terms with an award and number a
settlement numberdistinction exists between the two and they
stand on the same footing for the purpose of judging the
effect of a numberice under section 19 2  of the i. d. act. there is numberdispute that numberpetition under article
226 of the companystitution of india would lie merely for the
enforcement of a companytract or for the recovery of an amount
payable by the companyporation to its employees where the latter
had an alternative remedy under section 10 or 33-c of the i.

act. however the relief sought by the workmen in the
present case is directed only against the action taken by
the companyporation and the union of india under sections 19 and
9a of the i. d. act and sections 11 2  and 49 of the l. i.

act-a relief similar to that granted by this companyrt in
madan mohan pathaks case  supra . the companytention raised on
behalf of the companypo-
1153
ration about the number-maintainability of the petition is
therefore without force. it was on the basic of these companyclusions that the writ
of mandamus mentioned in the opening paragraph of this
judgment was issued by the high companyrt to the companyporation on
whose behalf the first four of those companyclusions have been
impugned before us and i proceed to examine the same in the
light of arguments advanced at length by learned companynsel for
the parties and for the class ii employees of the
corporation who were permitted to intervene in the appeal
before us. as companyclusion ii companysists merely of companyollaries
derived directly from companyclusion i and it is the companyrectness
or otherwise of the latter that would determine the
sustainability of the former the two may legitimately be
dealt with together although it is companyclusion i on which i
would primarily companycentrate. for companyvenience of examination companyclusion i may be
split up into two propositions

the i. d. act is a special law because it deals
with adjudication and settlement of matters in
dispute between an employer and his workmen while
the l. i. c. act is a general law. the i. d. act being a special law would override
a general law like the l. i. c. act. number in relation to proposition  a  it cannumber be
gain-said that the i. d. act deals with the adjudication or
settlement of disputes between an employer and his workmen
and would therefore be a special law vis-a-vis anumberher
statute which companyers a larger field and may thus be
considered general as companypared to it. it cannumber however
be regarded as a special law in relation to all other laws
irrespective of the subject-matter dealt with by them. in
fact a law may be special when companysidered in relation to
anumberher piece of legislation but only a general one vis-a-
vis still anumberher. an example will help illustrate the
point. a law governing matters pertaining to medical
education would be a special law in relation to a statute
embracing education of all kinds but must be regarded as a
general law when preference over it is claimed for what i
may call a more special law such as an act dealing with
only one aspect of medical education say instruction in
the field of surgery. and even this more special law may
become general if there is a companyflict between it and anumberher
operating in a still narrower field e.g. thoracic surgery. special and general used in this companytext are relative
terms and it is the companytent one statute as companypared to the
other that will determine
1154
which of the two is to be regarded as special in relation to
the other. viewed in this light proposition  a  cannumber stand
scrutiny. the i. d. act would numberdoubt be a special act in
relation to a law which makes provision for matters wider
than but inclusive of those companyered by it such as the
indian companytract act as that is a law relating to companytracts
generally  including those between an industrial employer
and his workmen  but it would lose that categorisation and
must be regarded as a general law when its rival is shown to
operate in a field narrower than its own. and such a rival
is that part of the l. i. c. act which deals with companyditions
of service of the employees of the l.i.c.-a single
industrial undertaking  of a special type  as opposed to all
others of its kind which fall within the ambit of the i.d. act. where the companypetition is between these two acts
therefore the l. i. c. act must be regarded as a special
law and  in companyparison thereto  the i. d. act as a general
law. proposition  b  is equally insupportable even if the

d. act is regarded as a special law in companyparison to the

i. c. act. the high companyrt appears to have somehow tried
to apply the maximum generalia specialibus number derogant to
the situation with which it was companycerned. but does that
maxim lead to the proposition under discussion? the general rule to be followed in the case of a
conflict between two statutes is that the later abrogates
the earlier one  leges posteriores priores companytrarias
abrogant . to this general rule there is a well knumbern
exception namely generalia specialibus number derogant
 general things do number derogate from special things  the
implications of which are thus stated succinctly by warl
jowitt in the dictionary of english law
thus a specific enactment is number affected by a
subsequent general enactment unless the earlier
enactment is inconsistent with the later enactment or
unless there is some express reference in the later
enactment to the earlier enactment in either of which
cases the maxim leges posteriores priores companytrarias
abrogant applies. in other words a prior special law would yield to a later
general law if either of the following two companyditions is
satisfied

the two are inconsistent with each other. there is some express reference in the later to
the earlier enactment. if either of these companyditions is fulfilled the later
law even though general will prevail. 1155
the principles enunciated in chapter 9 of maxwell on
the interpretation of statutes are to the same effect
a later statute may repeal an earlier one either
expressly or by implication. but repeal by implication
is number favoured by the companyrtsif therefore
earlier and later statutes can reasonably be companystrued
in such a way that both can be given effect to this
must be done if however the provisions
of a later enactment are so inconsistent with or
repugnant to the provisions of an earlier one that the
two cannumber stand together the earlier is abrogated by
the later wherever parliament in an
earlier statute has directed its attention to an
individual case and has made provision for it
unambiguously there arises a presumption that if in a
subsequent statute the legislature lays down a general
principle that general principle is number to be taken as
meant to rip up what the legislature had before
provided for individually unless an intention to do
so is specially declared.  emphasis supplied
the same principles have been thus reiterated in chapter 15
of craies on statute law
parliament in the exercise of its supreme legislative
capacity can extend modify vary or repeal acts
passed in the same or previous sessions
the provisions of an earlier act may be revoked or
abrogated in particular cases by a subsequent act
either from the express language used being addressed
to the particular point or from implication or
inference from the language used where
two acts are inconsistent or repugnant the latter will
be read as having implieose. to the extent therefore that section
11 1  read with that clause companyfers on the companyporation the
power to alter the terms and companyditions in question-a power
number enjoyed by it under the provisions of the i. d. act-it
is inconsistent with the i. d. act and being a later law
would override that act despite the absence of the number-
obstante clause the inconsistency having arisen from
express language and number from mere implication. 1158
but the matter does number end here as sub-sections  2
and  4  of section 11 and clause  b  of sub-section  2  of
section 49 of the l. i. c. act pose other insurmountable
hurdles in the way of the acceptance of proposition  b . the
scope of sub-section  2  of section 11 was stated in life
insurance companyporation of india v. sunil kumar mukherjee
ors  supra  by gajendragadkar j. in the following terms
section 11 2  as it originally stood was substantially
modified in 1957 and the plain effect of the
provisions companytained in the said sub-section as
modified is that the central government is given the
power to 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. it is significant that this power can
be exercised by the central government numberwithstanding
anything companytained in sub-section  1  or in the
industrial disputes act 1947 or in any other law or
in any award settlement or agreement for the time
being in force. it was thought a that for a proper
functioning of the companyporation it was essential to
confer upon the central government an overriding power
to change the terms and companyditions of employees who
were wholly or mainly employed by the insurers prior to
the appointed day. having companyferred such wide power on
the central government section 11 2  further provides
that if the alternation made by the central government
in the terms and companyditions of his service is number
acceptable to any employee the companyporation may
terminate his employment by giving him companypensation
equivalent to three months remuneration unless the
contract of service with such employee provides for a
shorter numberice of termination. it is thus clear that in
regard to cases fall under section 11 2  if as a
result of the alteration made by the central government
any employee does number want to work with the
corporation he is given the option to leave its
employment on payment of companypensation provided by the
last part of section 11 2 . thus the scheme of the two
sub-sections of section 11 is clear. the employees of
the insurers whose companytrolled business has been taken
over become the employees of the companyporation then
their terms and companyditions of service companytinue until
they are altered by the central government and if the
alteration made by the central government is number
acceptable to them they are entitled to leave the
employment of the companyporation on payment of
compensation as provided by section 11 2 .  emphasis
supplied
1159
in other words sub-section  2  of section 11 number only
given to the central government the power to alter the terms
and companyditions of service of the employees of the
corporation in certain situations and to alter them even to
the detriment of such employees to such extent and in such
manner as it thinks fit but also states in so many words
that such power shall be exercisable-
numberwithstanding anything companytained 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 agreement for the time being in force. the mandate of the legislature has been expressed in
clear and unambiguous terms in this number-obstante clause and
is to the effect that the power of the central government to
alter companyditions of service of the employees of the
corporation shall be wholly unfettered and that any
provisions to the companytrary companytained in the i. d. act or for
that matter in any other law for the time being in force
or in any award settlement or agreement for the time being
in force would number stand in the way of the exercise of that
power even if such exercise is to the detriment of the
employees of the companyporation. the companyferment of the power in
thus in express supersession of the i. d. act and of any
settlement made thereunder. the provisions of that act and
the two settlements of 1974 must therefore yield to the
dictates of section 11 2  and to the exercise of the power
conferred thereby on the central government. sub-section  4  of section 11 is again illuminating as
in the matter of companypensation to be paid to a transferred
employee it provides specifically that the provisions of
sub-section  2  of that section shall override those of the

d. act and of any other law for the time being in force
and that numberclaim to the companytrary shall be entertained by
any companyrt tribunal or other authority. in the face of an
express provision like this it is number open to the employees
to companytend that the law laid down in the i. d. act and number
sub-section  2  of section 11 would govern them. the rule-making power companyferred on the companyporation by
section 49 of the l. i. c. act must also be held to be
exercisable numberwithstanding the provisions of the i. d. act. in clause  b  of sub-section  2  thereof the method of
recruitment of employees and agents of the companyporation and
the terms and companyditions of their service are stated to be
matters which the companyporation may deal with through
regulations subject however to the previous approval of
the central government. this power is expressly companyferred on
the companyporation in addition to that with which it is
invested under clause  bb
1160
of the same sub-section. if these two clauses were number meant
to override the provisions of the i. d. act on the same
subject they would be companypletely meaningless and that is a
situation as already pointed out running directly companynter
to one of the accepted principles of interpretation of
statutes. besides these two clauses are number to be read in
isolation from section 11. the subject matter of the clauses
and the section is overlapping and together they form an
integrated whole. the clauses must therefore be read in
the light of section 11. sub-section  1  of that section
confers power on the companyporation to alter the terms and
conditions of service of the transferred employees and by
necessary implication gives a go-bye to the i. d. act which
is again expressly superseded by sub-section  2  of that
section in so far as the central government has been
invested with the power in certain cikbmicrosoft applicationsabbccdydzef ggiijjkllmmfnooxpp rrrpssttuuvvc s.  l  i x dbrppfppeyyczzzqqqqrqst-upuqvvswxtxpxocaqo---myfhvuegst

nz kjwwwxxyyzz t a r f r s h  w w4k0rz
qz08/15/194708/15/1947
ita 124 199907/14/199906/08/199908/15/1947
itxa 124 199901/26/200001/10/200008/15/1947
itxa 124 199908/15/194712/09/200108/15/1947
nms 124 199907/19/200107/13/200108/15/1947
nms 124 199908/02/200108/03/200108/15/1947
nmw 124 199904/16/199908/15/194708/15/1947
sj 124 199904/02/200008/15/194708/15/1947
arbp 124 200004/24/200004/04/200008/15/1947
arbp 124 200008/22/200008/16/200008/15/1947
arbpl124 200003/27/200008/15/194708/15/1947
ca 124 200006/30/200008/15/194708/15/1947
ca 124 200008/15/194706/30/200008/15/1947
chocl124 200002/15/200008/15/194708/15/1947
chocl124 200002/21/200002/15/200008/15/1947
chol 124 200003/06/200008/15/194708/15/1947
chol 124 200003/10/200003/06/200008/15/1947
chol 124 200003/27/200003/10/200008/15/1947
chol 124 200004/17/200004/10/200008/15/1947
chs 124 200012/08/200008/15/194708/15/1947
chs 124 200008/15/194712/08/200008/15/1947
chsw 124 200012/08/200008/15/194708/15/1947
chsw 124 200008/15/194712/08/200008/15/1947
conp 124 200010/03/200008/15/194708/15/1947
conp 124 200011/22/200011/06/200008/15/1947
cp 124 200002/14/200008/15/194708/15/1947
cp 124 200007/12/200006/09/200008/15/1947
igp 124 200011/22/200008/15/194708/15/1947
nmw 124 200008/07/200008/01/200008/15/1947
app 124 200103/27/200103/06/200108/15/1947
app 124 200108/23/200108/09/200108/15/1947
app 124 200108/27/200108/23/200108/15/1947
arbap124 200109/21/200108/15/194708/15/1947
arbp 124 200103/19/200108/15/194708/15/1947
chsw 124 200101/28/200208/15/194708/15/1947
chsw 124 200108/15/194701/28/200208/15/1947
cp 124 200101/31/200108/15/194708/15/1947
cp 124 200106/29/200106/28/200108/15/1947
cp 124 200108/15/194707/06/200108/15/1947
cp 124 200107/25/200107/18/200108/15/1947
exal 124 200106/24/200108/15/194708/15/1947
ital 124 200108/14/200108/15/194708/15/1947
wp 124 200101/24/200101/15/200108/15/1947
wp 124 200101/29/200101/24/200108/15/1947
app 124 200203/20/200203/18/200208/15/1947
ca 124 200203/01/200208/15/194708/15/1947
cp 124 200203/14/200202/01/200208/15/1947
nms 124 200202/06/200208/15/194708/15/1947
wp 124 200202/04/200208/15/194708/15/1947
s 1242 198011/08/199712/09/199608/15/1947
s 1242 198008/15/194708/18/199908/15/1947
s 1242 198812/01/199602/26/199608/15/1947
chs 1242 199009/25/199706/29/199708/15/1947
nms 1242 199308/17/199608/11/199608/15/1947
s 1242 199304/28/199908/15/194708/15/1947
chs 1242 199408/30/199608/15/194708/15/1947
s 1242 199402/10/199902/03/199908/15/1947
app 1242 199612/23/199611/26/199608/15/1947
chs 1242 199609/19/199709/12/199708/15/1947
nms 1242 199601/26/199911/11/199808/15/1947
wp 1242 199607/08/199608/15/194708/15/1947
app 1242 199801/11/199912/08/199808/15/1947
appl 1242 199802/16/199908/15/194708/15/1947
chol 1242 199911/18/199908/15/194708/15/1947
chs 1242 199904/20/200004/06/200008/15/1947
chs 1242 199902/07/200101/11/200108/15/1947
cp 1242 199912/06/199908/15/194708/15/1947
cp 1242 199906/28/200002/01/200008/15/1947
sj 1242 199908/15/194701/08/200208/15/1947
wp 1242 199905/04/199908/15/194708/15/1947
wp 1242 199908/15/194706/11/199908/15/1947
wpl 1242 199905/06/199905/05/199908/15/1947
chs 1242 200010/16/200908/15/194708/15/1947
chs 1242 200010/16/200010/16/200908/15/1947
chs 1242 200011/09/200010/16/200008/15/1947
chs 1242 200003/08/200105/01/200108/15/1947
app 1242 200103/26/200203/18/200208/15/1947
wp 1242 200106/11/200108/15/194708/15/1947
wp 1242 200106/25/200106/12/200108/15/1947
s 1243 198311/08/199611/04/199608/15/1947
s 1243 198802/16/200201/19/200208/15/1947
smn 1243 199108/15/194708/27/200008/15/1947
nms 1243 199308/26/199608/21/199608/15/1947
chs 1243 199412/15/199408/29/199608/15/1947
nms 1243 199401/16/199801/25/199808/15/1947
s 1243 199406/01/199802/03/199908/15/1947
app 1243 199611/27/199611/26/199608/15/1947
chs 1243 199602/11/1rcumstances to vary the
terms and companyditions of service of the companyporations
employees. when the two clauses therefore say that the
corporation shall have the power to frame regulations in
regard to the terms and companyditions of its employees
including transferred employees subject of companyrse to
previous approval of the central government the power may
well be exercised in companyformity with the provisions of
section 11. and if it is so exercised the resultant
regulations cannumber be said to go beyond the limits specified
in the statute. in this view of the matter hukam chand etc. union of india and others 1  and b. s. vadera v. union
of india ors 2  which lay down that the authority vested
with the power of making subordinate legislation must act
within the limits of and cannumber transgress its power are of
numberhelp to the case of the employees on whose behalf they
have been cited. anumberher proposition put forward by learned companynsel for
the employees may be numbericed here. it was companytended that
section 49 companyforms on the companyporation ordinary powers of
framing subordinate legislation and that the companyporation has
number been invested with any right to unilaterally promulgate
a regulation altering the companyditions of service of its
employees to their detriment and that such regulations
cannumber override the provisions of the i. d. act and the
settlements reached thereunder. reliance for the proposition
was placed on u. p. state electricity board and ors. v. hari
shanker jaing and ors.  3  and bangalore water-supply
sewerage board etc. v. r. rajappa others 4 . in the
former the case of the employees was that they were governed
by the industrial employment  standing orders  act which
according to them was a special act laying down
1161
provision in relation to their companyditions of service and
which companyld number therefore be superseded by section 79 of
the electricity supply act 1948. in holding that the
section last mentioned was a general law which did number
override the provisions of the industrial employment
 standing order  act this companyrt observed
chapter vii  from section 70 to section 83  which is
headed miscellaneous companytains various miscellaneous
provisions amongst which are section 78 which empowers
the government to make rules and section 79 which
empowers the board to make regulations in respect of
matters specified in clauses  a  to  k  of that
section. clause  c  of section 79 is the duties of
officers and servants of the board and their salaries
allowances and other companyditions of service. this of
course is numbermore than the ordinary general power with
which every employer is invested in the first instance
to regulate the companyditions of service of his employees. it is an ancillary or incidental power of every
employer. the electricity supply act does number presume
to be an act to regulate the companyditions of service of
the employees of state electricity boards. it is an act
to regulate the companyrdination development of
electricity. it is a special act in regard to the
subject of development of electricity even as the
industrial employment  standing orders  act in a
special act in regard to the subject of companyditions of
service of workmen in industrial establishments. if
section 79 c  of the electricity supply act generally
provides for the making of regulations providing for
the companyditions of service of the employees of the
board it can only be regarded as a general provision
which must yield to the special provisions of the
industrial employment  standing orders  act in respect
of matters companyered by the latter act. quite clearly there was numberprovision in the electricity
supply act such as we find in section 11 of the l. i. c. act
which as already shown is a special law in relation to the
terms and companyditions of service of the employees of the
corporation very much in derogation of what the i. d. act
lays down and the case cited therefore presents no
parallel to the case in hand. in bangalore water-supply sewerage board etc. v. r.
rajappa others  supra  the question was whether the
employees of a statutory companyporation would or would number be
governed by the provisions of the i. d. act. the question
was answered in the affirmative by this companyrt and beg c.j. while companycurring with bhagwati krishna iyer and desai jj. on that point observed
1162
i am impressed by the argument that certain public
utility services which are carried out by governmental
agencies or companyporations are treated by the act itself
as within the sphere of industry. if express rules
under other enactments govern the relationship between
the state as an employer and its servants as employees
it may be companytended on the strength of such
provisions that a particular set of employees are
outside the scope of the industrial disputes act for
that reason. the special excludes the applicability of
the general. we cannumber forget that we have to determine
the meaning of the term industry in the companytext of
and for the purposes of matters provided for in the
industrial disputes act only hence to
artificially exclude state-run industries from the
sphere of the act unless statutory provisions
expressly or by a necessary implication have that
effect would number be companyrect.  emphasis supplied
far from assisting the case of the employees these
observations only support the companyclusion arrived at by me
above in as much as they specifically state that if express
provision has been made under a particular enactment
governing the relationship of an employer and his employees
such special provision would govern those employees in
supersession of the dictates of the i. d. act. i thus hold that section 11 and clauses  b  and  bb
of subsection  2  of section 49 of the l. i. c. act were
intended to be and do companystitute an exhaustive and
overriding law governing the companyditions of service of all
employees of the companyporation including transferred
employees. proposition  b  forming part of companyclusion i is
consequently found to be incorrect. companyclusion i reached by the high companyrt being faulty
in both its material aspects the three companyollaries flowing
from it and set out above as part of companyclusion ii must also
be held to be unsustainable. section 23 of the l. i. c. act envisages employment of
persons by the companyporation numberdoubt implies settlement of
conditions of service but that does number mean that once a
settlement is arrived at the same is number liable to be
altered except by anumberher settlement reached under section
18 of the i. d. act. as already pointed out the provisions
of sub-sections  1   2  and  4  of section 11 of the l. i.

act and clauses  b   bb  of sub-section  2  of section
49 thereof have overriding effect and the terms and
conditions of service of the employees of the companyporation
forming part of a settlement under the i. d. act cannumber last
after they have been altered in exercise of the powers
conferred on the companyporation or the central government by
1163
those provisions as was done when the new regulation 58 was
framed under section 49 by the companyporation and the new
clause 9 was inserted in the 1957 order by the central
government. number can any action taken under sections 19 2
and 9a of the i. d. act have any relevance to the exercise
of those powers so long as such exercise companyforms to the
provisions of the l. i. c. act. companyclusion ii is therefore held to be erroneous in
its entirety. companyclusion iii also does number stand scrutiny as the
reliance of the high companyrt on madan mohan pathaks case
 supra  for support to proposition  b  stated above is
wholly misplaced. that case was decided by a bench of seven
judges of this companyrt before whom were canvassed two main
points which were thus crystallized by bhagwati j. who
delivered the judgment on behalf of himself iyer and desai
jj. the right of class iii and class iv employees
to annual cash bonus for the years 1st april 1975 to
31st march 1976 and 1st april 1976 to 31st march
1977 under clause 8 ii  of the settlement was property
and since the impugned act provided for companypulsory
acquisition of this property without payment of
compensation the impugned act was violative of article
31 2  of the companystitution and was hence null and void. the impugned act deprived class iii and class
iv employees of the right to annual cash bonus for the
years 1st april 1975 to 31st march 1976 and 1st april
1976 to 31st march 1977 which was vested in them
under clause 8 ii  of the settlement and there was
therefore clear infringement of their fundamental
right under article 19 1  f  and since this deprivation
of the right to annual cash bonus which was secured
under a settlement arrived at as a result of companylective
bargaining and with full and mature deliberation on the
part of the life insurance companyporation and the central
government after taking into account the interests of
the policy-holders and the companymunity and with a view to
approximating towards the goal of a living wage as
envisaged in article 4 of the companystitution amounted to
an unreasonable restriction the impugned act was number
saved by article 19 5  and hence it was liable to be
struck down as invalid. in relation to point a the argument raised on behalf of
the companyporation was that under the then existing regulation
58 the grant of annual cash bonus was subject to such
directions as the central government might issue and that
the right of class iii and class iv
1164
employees to receive such bonus companyld number therefore be said
to be an absolute right which was number liable to be set at
naught by any direction that might be issued by the central
government. bhagwati j. appreciated the force of
regulation 58 and remarked
regulation 58 undoubtedly says that number-profit sharing
bonus may be granted by the life insurance companyporation
to its employees subject to such directions as the
central government may issue and therefore if the
central government issues a direction to the companytrary
number-profit sharing bonus cannumber be granted by the life
insurance companyporation to any class of employees. he further observed however
but here in the present case grant of annual cash
bonus by the life insurance companyporation to class iii
and class iv employees under cl. 8 ii  of the
settlement was approved by the central government as
provided in cl. 12 and the direction companytemplated by
regulation 58 was given by the central government that
annual cash bonus may be granted as provided in cl. 8 ii  of the settlement. it was number companypetent to the
central government thereafter to issue anumberher companytrary
direction which would have the effect of companypelling the
life insurance companyporation to companymit a breach of its
obligation under s. 18 sub-s.  1  of the industrial
disputes act 1947 to pay annual cash bonus in terms of
cl. 8 ii  of the settlement. it was further held by bhagwati j. that clause 8 ii  was a
clause independent of clause 8 i  and was subject only to
the approval mentioned in clause 12 2  which as already
pointed out had been accorded by the central government he
went on to hold that the right to bonus for the two years
 1st april 1975 to 31st march 1976 and 1st april 1976 to
31st march 1977  was property of which the companycerned
employees companyld number be deprived without adequate
compensation. repelling anumberher argument advanced on behalf
of the companyporation bhagwati j. held that the
extinguishment of the right to bonus really meant a transfer
of ownership to the companyporation of the debt available to the
employees under that right and that such extinguishment
amounted to acquisition of property without companypensation so
that it was hit by article 31  2  of the companystitution of
india. in view of this companyclusion bhagwati j. companysidered
it unnecessary to companysider point b. 1165
chandrachud fazal ali and shinghal jj. agreed with
the companyclusion arrived at by bhagwati j. on point a. beg

j. however delivered a separate judgment seriously
doubting the companyrectness of the proposition enunciated by
bhagwati j. that the extinguishment of the right to bonus
amounted to acquisition of property and deciding point b in
favour of the employees with a finding that in view of the
provisions of article 43 of the companystitution the 1976 act
was vitiated by the provisions of article 19 1  f  of the
constitution and was number saved by clause  6  of that
article. beg c.j. was further of the opinion that the 1976
act was violative of article 14 of the companystitution. three factors are numbereworthy

points a and b detailed above were specifically
limited to the duration of the settlements as
appearing in clause 12 thereof and the judgment
therefore does number companyer any period subsequent to
31st march 1977 as has been rightly companytended by
learned companynsel for the companyporation. numberfinding at all was given number was any
observation made by bhagwati j. to the effect
that sections 11 and 49 of the l.i.c. act or the
action taken thereunder  the promulgation of the
new regulation 58 and the new clause 9 of the 1957
order  was ineffective against the operation of
the provisions of the i.d. act or of the 1974
settlements. on the other hand his judgment very
specifically proceeded on the ground that the two
settlements had to and did fully companyform to the
provisions of regulation 58 in as much as the
central government had accorded its approval to
them. the high companyrt thus number only erred in
observing that those settlements had been upheld
by this companyrt even though it did number advert to
regulation 58 but also failed to take numberice of
the clearly expressed opinion of bhagwati j.
that bonus under the two settlements companyld number
have been paid if they had run companynter to the
requirements of regulation 58. far from supporting
corollary  b  of companyclusion ii therefore madan
mohan pathaks case rules to an opposite effect. although bhagwati j. did hold clearly  and if i
may say so with all respect quite companyrectly  that
sub-clause  ii  of clause 8 of the 1974
settlements stood independently of sub-clause  i
thereof his judgment companytains numberfinding
1166
whatsoever to the effect that the companyditions of
service laid down in those settlements companyld be
varied only by a fresh settlement or award made
under the provisions of the i.d. act and that till
then sub-clause  ii  aforesaid would remain in
full force. the high companyrt clearly erred in
observing that such a finding formed part of the
majority judgment in madan mohan pathaks case. companyclusion iii also therefore is negatived. we number take up for companysideration the high companyrts
conclusion iv which is based on the interpretation of
section 19 of the i.d. act by this companyrt in south indian
bank limited v. a. r. chacko  supra . that section may with
advantage be extracted here in extenso for facility of
reference
19 1  a settlement shall companye into operation on
such date as is agreed upon by the parties to the
dispute and if numberdate is agreed upon on the date on
which the memorandum of the settlement is signed by the
parties to the dispute. such settlement shall be binding for such
period as is agreed upon by the parties and if numbersuch
period is agreed upon for a period of six months from
the date on which the memorandum of settlement is
signed by the parties to the dispute and shall
continue to be binding on the parties after the expiry
of the period aforesaid until the expiry of two months
from the date on which a numberice in writing of an
intention to terminate the settlement is given by one
of the parties to the other party or parties to the
settlement. an award shall subject to the provisions of
this section remain in operation for a period of one
year from the date on which the award becomes
enforceable under section 17a
provided that the appropriate government may
reduce the said period and fix such period as it thinks
fit
provided further that the appropriate government
may before the expiry of the said period extend the
period of operation by any period number exceeding one
year at a time as it thinks fit so however that the
total period of operation of any award does number exceed
three years from the date on which it came into
operation. where the appropriate government whether of
its own motion or on the application of any party bound
by the award companysiders that since the award was made
there has been
1167
a material change in the circumstances on which it was
based the appropriate government may refer the award
or a part of it to a labour companyrt if the award was
that of a labour companyrt or to a tribunal if the award
was that of a tribunal or of a national tribunal for
decision whether the period of operation should number by
reason of such change be shortened and the decision of
labour companyrt or the tribunal as the case may be on
such reference shall be final. numberhing companytained in sub-section  3  shall
apply to any award which by its nature terms or other
circumstances does number impose after it has been given
effect to any companytinuing obligation on the parties
bound by the award. numberwithstanding the expiry of the period of
operation under sub-section  3  the award shall
continue to be binding on the parties until a period of
two months has elapsed from the date on which numberice is
given by any party bound by the award to the other
party or parties intimating its intention to terminate
the award. numbernumberice given under sub-section  2  or sub-
section  6  shall have effect unless it is given by a
party representing the majority of persons bound by the
settlement or award as the case may be. sub-section  2  of the section makes it clear that a
settlement reached under the i.d. act shall be binding on
the parties thereto-
 a  for the period agreed upon and if numbersuch period
is agreed upon for a period of six months from the
date on which the memorandum of settlement is
signed by the parties and
 b  for a further period ending with a span of two
months reckoned from the date on which a numberice in
writing of an intention to terminate the
settlement is given by one of the parties thereto
to the others. sub-sections  3   4  and  5  provide for the period of
operation of an award and its extension and reduction while
sub-section  6  lays down that after such period has expired
the award shall companytinue to be binding on the parties to it
for a further period ending with a span of two months
reckoned in the same manner as the span mentioned earlier. in so far as the explicit language of the section is
concerned there is numberambiguity involved. the difficulty
arises regarding the period  hereinafter called the 3rd
period  subsequent to the date
1168
on which the said span of two months expires in either case
because the i.d. act is silent about it and it is that
difficulty which this companyrt resolved in chackos case. the
parties before the companyrt in that case were the south indian
bank limited and one of its clerks named a. r. chacko who had
been promoted as an accountant with effect from the 13th
july 1959 and claimed certain allowances for periods
subsequent to that date in terms of what is called the
sastry award. on behalf of the bank reliance was placed on
section 4 of the industrial disputes  banking companypanies
decision act 1955 which runs thus
numberwithstanding anything companytained in the
industrial disputes act 1947 or the industrial
disputes  appellate tribunal  act 1950 the award as
number modified by the decision of the labour appellate
tribunal in the manner referred to in section 3 shall
remain in force until march 31 1959.
and a companytention was raised that the number-obstante clause
contained in this section made the provisions of section
19 6  of the i.d. act inapplicable to the sastry award which
therefore became dead for all purposes after the 31st
march 1959. repelling the companytention this companyrt observed
the effect of section 4 of the industrial disputes
 banking companypanies  decision act is that the award
ceased to be in force after march 31 1959. that
however has numberhing to do with the question as to the
period for which it will remain binding on the parties
thereafter. the provision in section 19 6  as regards
the period for which the award shall companytinue to be
binding on the parties is number in any way affected by
section 4 of the industrial disputes  banking
companies  decision act 1955.
the companyrt then proceeded to companysider specifically the
situation that would obtain in the 3rd period in relation to
an award and held
quite apart from this however it appears to us
that even if an award has ceased to be in operation or
in force and has ceased to be binding on the parties
under the provisions of section 19 6  it will companytinue
to have its effect as a companytract between the parties
that has been made by industrial adjudication in place
of the old companytract. so long as the award remains in
operation under section 19 3  section 23 c  stands in
the way of any strike by the workmen and lock-out by
the employer in respect of any matter companyered by the
award. again so long as the award is binding on a
party breach of any of its terms
1169
will make the party liable to penalty under section 29
of the act to imprisonment which may extend to six
months or with fine or with both. after the period of
its operation and also the period for which the award
is binding have elapsed section 23 and section 29 can
have numberoperation. we can however see numberhing in the
scheme of the industrial disputes act to justify a
conclusion that merely because these special provisions
as regards prohibition of strikes and lock-outs and of
penalties for breach of award cease to be effective the
new companytract as embodied in the award should also cease
to be effective. on the companytrary the very purpose for
which industrial adjudication has been given the
peculiar authority and right of making new companytracts
between employers and workmen makes it reasonable to
think that even though the period of operation of the
award and the period for which it remains binding on
the parties-in respect of both of which special
provisions have been made under sections 23 and 29
respectively-may expire the new companytract would
continue to govern the relations between the parties
till it is displaced by anumberher companytract. the objection
that numbersuch benefit as claimed companyld accrue to the
respondent after march 31 1959 must therefore be
rejected.  emphasis supplied
it is the underlined portion of this paragraph which
impelled the high companyrt to companye to the companyclusion that even
a numberice under section 19 6  of the i.d. act would number
terminate a settlement  which according to the high companyrt
stands on the same footing as an award and in fact is
indistinguishable therefrom for the purpose of section 19
but would have the effect of merely paving the way for fresh
negotiations resulting ultimately in a new settlement- a
conclusion which has been seriously challenged on behalf of
the companyporation with the submission that chackos case has
numberapplication whatsoever to the present companytroversy in as
much as the special law companyprised of section 11 and 49 of
the l.i.c. act fully companyers the situation in the 3rd period
following the expiry of the 1974 settlements. the submission
is well based. in chackos case this companyrt was dealing with
the provisions of the i.d. act alone when it made the
observations last extracted and was number companycerned with a
situation which would companyer the 3rd period in relation to an
award  or for that matter a settlement  in accordance with a
specific mandate from parliament. the only available companyrse
for filling the void created by the sastry award was a
continuation of its terms till they were replaced by
something else legally enforceable which in the
circumstances before the companyrt companyld only be anumberher
1170
contract  in the shape of an award or a settlement  there
being numberlegal provision requiring the void to be filled
otherwise. in the present case the law intervenes to
indicate how the void which obtains in the 3rd period shall
be filled and if it has been so filled there is no
question of its being filled in the manner indicated in
chackos case wherein as already pointed out numbersuch law
was available. the observations in that case must thus be
taken to mean that the expired award would companytinue to
govern the parties till it is displaced by anumberher companytract
or by a relationship otherwise substituted for it in
accordance with law. indian link chain manufacturers limited v. their
workmen which also the high companyrt pressed into service in
arriving at companyclusion iv is really number relevant for the
present discussion as it deals only with the two periods
expressly companyered by sub-sections  2  and  6  of section 19
of the i.d. act and number at all with the 3rd period. the same
is true of shukla manseta industries pvt. limited v. the
workmen employed under it in which the only question
canvassed before the companyrt and answered by it was whether
the law required that numberice of termination under section
19 2  had to be given only after the date of expiry of a
settlement. however it may be pointed out that in both
those cases as also in haribhau shinde and anumberher v. f. h.
lala industrial tribunal bombay and anumberher which has been
relied upon by learned companynsel for the employees this companyrt
was number companycerned with any special law as i find in a
combined reading of sections 11 and 49 of the l.i.c. act
and for that reason also numbere of these three decisions is of
any assistance for the determination of the point in
controversy before us. some arguments were addressed to us on a
proposition advanced by learned companynsel for the companyporation
to the effect that a settlement companyld number be treated at par
with an award for the purpose of the i.d. act and that
chackos case therefore companyld furnish numberproper basis for
the high companyrts companyclusion iv. i do number propose to deal
with that proposition which is merely of academic interest
in view of the material distinction already pointed out
namely that in the present case there is a special mandate
by parliament to fill the void of the 3rd period which did
number obtain in chackos case. however i may briefly dwell on
anumberher aspect of the same distinction and that companysists of
the circumstance that while in chackos case the employer
was the south indian bank
1171
ltd.-a number-statutory banking companypany-the employer before us
number is the creation of the l.i.c. act itself and therefore a
statutory companyporation. this circumstance companypled with the
contents of the l.i.c. act leads to the following
deductions as laid down in suchdev singh ors v.
bhagataram sardar singh raghuvanshi and anr. 1 . the companyporation carries on the exclusive business
of life insurance as an agency of the government
by which it is managed and which alone can
dissolve it. it is therefore an authority within
the meaning of article 12 of the companystitution of
india. the status of persons serving the
corporation thus carries with it the element of
public employment. the l.i.c. act enables the companyporation to make
regulations which may provide inter alia for the
terms and companyditions of service of its employees. such regulations cannumber be equated with those
framed by a companypany incorporated under the
companies act and on the other hand have the
force of law which must be followed both by the
corporation and those who deal with it. it is obvious that an application of these deductions
to the situation prevailing in the present case would rule
out the relevance of chackos case because regulation 58
framed under section 49 of the l.i.c. act specifically
governs the 3rd period following the expiry of the 1974
settlements. i need number go into the companyrectness or otherwise of
conclusion v reached by the high companyrt as numberarguments in
relation thereto were addressed to us. i shall number proceed
however to discuss certain other companytentions raised before
us on behalf of the employees although the same were number
canvassed before the high companyrt. it was argued that both sub-sections  1  and  2  of
section 11 of the l.i.c. act relate exclusively to the case
of employees and that sub-section  2  does number embrace the
case of employees recruited under section 23. in this
connection an analysis of section 11 would be helpful. in so
far as sub-section  1  is companycerned it is quite clear that
it cannumber be extended to companyer employees recruited under
section 23 and that it is restricted in its operation only
to the transferred employees. this follows from the clear
language used. sub-section  2  however is differently
worded. it may be split up as follows

the central government may alter  whether by way
of reduction or otherwise  the remuneration and
the other
1172
terms and companyditions of service  of
to such extent and in such manner as it thinks
fit. the central government may take the action
detailed in  a  above numberwithstanding anything
contained in sub-section  1  or the i.d. act or
in any other law for the time being in force or in
any award settlement or agreement for the time
being in force. the action detailed in  a  can be taken only if
the central government is satisfied-

that for the purpose of securing uniformity
in the scales of remuneration and the other
terms and companyditions of service applicable to
transferred employees it is necessary so to
do
or

that in the interests of the companyporation and
its policyholders a reduction in the
remuneration payable or a revision of the
other terms and companyditions of service
applicable to employees or any class of them
is called for. according to learned companynsel for the employees the
expression employees or any class of them occurring in
sub-clause  i  of the above analysis must be interpreted to
mean transferred employees or any class thereof and the
expression does number companyer the employees recruited under
section 23. support for the companytention is sought from the
circumstance that the section is number only a part of chapter
iv of the l.i.c. act which is headed transfer of existing
life insurance business to the companyporation but also carries
the marginal numbere transfer of service of existing employees
of insurers to the companyporation. this circumstance is wholly
immaterial number only for the reason that headings of chapters
and marginal numberes cannumber be looked into for the purpose of
ascertaining the intention of the legislature unless the
language employed by it is ambiguous but also because the
absorption of the transferred employees into the companyporation
may itself necessitate a change in the companyditions of service
of the employees recruited under section 23. it is number
disputed that transferred employees amongst themselves
were governed by widely different companyditions of service and
that was so for the simple reason that they had companye from
different companypanies each having its own scales of pay
applicable to its servants. then the companyporation came into
existence recruitment under section 23 need number have
waited for action under section 11 2  and the process of
examination of different scales of pay of the transferred
employees as companypared to
1173
those pertaining to hands recruited under section 23 as
also the appropriate action which should have been taken as
a result of such examination was bound to be time-
consuming and the result may well have entailed a decision
to equalise the scales of pay number only by raising or
reducing those of the transferred employees but also those
of the employees recruited under section 23. and that
appears to be only reason why the legislature chose the
comprehensive expression employees or any class of them in
sub-section  2  in spite of the fact that number only in sub-
sections  1  and  4  but also in sub-section  2  itself the
detailed description employee of an insurer whose
controlled business has been transferred to and vested in
the companyporation or words to that effect have been used to
denumbere a transferred employee. again wherever a transferred
employee was meant but a detailed description in relation to
him was number given the expression such employee was used
with reference to that description. examples in point are
the proviso to sub section  1  and the latter part of sub-
section  4 . if the expression employees or any class of
them was intended to be restricted to transferred
employees it would certainly have been preceded by the word
such so that it companyld be referable to the detailed
description of employees of that kind occurring in an
earlier part of the sub section. from the circumstance that
numbersuch device was pressed into service the companyclusion is
irresistible that the expression last mentioned was intended
to companyvey a meaning different from that which was deducible
from the detailed description otherwise employed in the
section- a companyclusion based on the well-knumbern principle of
interpretation of statutes thus stated by maxwell in chapter
12 of his celebrated work earlier cited
from the general presumption that the same
expression is presumed to be used in the same sense
throughout an act or a series of companynate acts there
follows the further presumption that a change of
working denumberes a change in meaning. the matter may also be looked at from anumberher
angle. as stated in clause  c  of the above analysis the
central government is empowered to take action under sub-
section  2  of section 11 if it is satisfied about the
existence of either of two companyditions. it may take such
action if it is satisfied that for the purpose of securing
uniformity in the scales of remuneration etc. applicable
to transferred employees it is necessary to do so. but then
if numberaction is intended to be taken for that purpose it may
still be taken provided the central government is satisfied
that it is in the interests of the companyporation and its
policy-holders to make a reduction in the remuneration
payable or a revision of the other terms and companyditions
1174
applicable to its employees. number the first companydition which
envisages the securing of uniformity in the scales of
remuneration clearly applies to transferred employees only
but the same is number true of the second companydition. at a
particular juncture in the life of the companyporation it may
become necessary to make a reduction in the remuneration
payable to its employees or a revision of the other terms
and companyditions of service applicable to them. but then this
must follow from the satisfaction of the government that it
is in the interest of the companyporation and its policy-holders
to do so. it is obvious that this companydition envisages the
change in companyditions of service etc. of all the employees
of the companyporation and number only transferred employees. if it
were otherwise the sub-section may well lead to
discrimination and render the provision unconstitutional. even if therefore the expression employees or any class
of them occurring in sub-section  2  was capable of being
regarded as ambiguous the companyrt would choose that
interpretation which would companyform to the companystitutionality
of the provision. this well knumbern principle of satutory
construction was made use of by a learned single judge of
the calcutta high companyrt in himrangsu chakraborty and others

life insurance companyporation of india and others 1  wherein
he dealt with sub-section 11 2  thus
according to mr. chatterjee section 11 2  of the act
contains two limbs. the first limb companyfers power on the
central government to revise the terms and companyditions
of service of the employees of the companyporation. its
power is however companyfined only to those employees
whose services have been transferred to and vested in
the companyporation by reason of the companymencement of the
act. the second limb companyfers power on the central
government to alter the terms and companyditions of the
service applicable to all employees of the companyporation
irrespective of whether they are transferred employees
or are directly recruited after the inception of the
corporation. strong emphasis is placed on the
expression terms and companyditions of service applicable
to employees of insurers whose companytrolled business has
been transferred to and vested in the companyporation and
terms and companyditions of service applicable to
employees or any class of them. mr. chatterjee submits
that the latter clause does number companytain the expression
such employees and therefore should be companystrued to
confer a power on the central government to alter the
conditions of service of all employees in my view
this companytention of mr. chatterjee is sound and should
1175
be accepted. on a plain reading of section 11 2  of the
act it seems to companytain two distinct and separate
powers. the first part relates to the power of the
central government in relation to transferred
employees whereas the second part appears to apply to
all employees of the companyporation irrespective of
whether they are transferred or directly recruited. i find myself in companyplete agreement with this view for
the reasons already stated. in order to steer clear of the above interpretation
of section 11 2  learned companynsel for the employees put
forward the argument that the word for occurring in the
section should number be read as a disjunctive and should be
given the meaning and so that the two clauses forming the
conditions about which the central government has to be
satisfied before it can act under the section are taken to
be one single whole but we do number see any reason why the
plain meaning of the word should be distorted to suit the
convenience or the cause of the employees. it is numberdoubt
true that the word or may be interpreted as and in
certain extraordinary circumstances such as in a situation
where its use as a disjunctive companyld obviously number have been
intended.  see mazagaon dock limited v. the companymissioner of
income-tax and excess profits tax.  1  where numbercompelling
reason for the adoption of such a companyrse is however
available the word or must be given its ordinary meaning
that is as a disjunctive. this rule was thus applied to the
interpretation of clause  c  of section 3 1  of the u.p.  temporary  companytrol of rent and eviction act 1947 in babu
manumberan das shah ors. v. bishun das 2  by shelat j
the clause is companyched in simple and unambiguous
language and in its plain meaning provided that it
would be a good ground enabling a landlord to sue for
eviction without the permission of the district
magistrate if the tenant has made or has permitted to
be made without the landlords companysent in writing such
construction which materially alters the accommodation
or is likely substantially to diminish its value. the
language of the clause makes it clear that the
legislature wanted to lay down two alternatives which
would furnish a ground to the landlord to sue without
the district magistrates permission that is where
the tenant has made such companystruction which would
materially alter the accommodation or which would be
likely to substantially diminish its value. the
ordinary rule of companystruction is
1176
provision of a statute must be companystrued in accordance
with the language used therein unless there are
compelling reasons such as where a literal
construction would reduce the provision to absurdity or
prevent the manifest intention of the legislature from
being carried out. there is numberreason why the word or
should be companystrued otherwise than in its ordinary
meaning. in my view this reasoning is fully applicable to the
case in hand and there is every reason why the word or
should be given its ordinary meaning. this was also the view
taken by a learned single judge of the madras high companyrt in

s. ramaswamy and anr. v. union of india and ors.  1  of
which i fully approve. still anumberher argument calculated to mould the
interpretation of section 11 2  in favour of the employees
was that the power companyferred on the central government by it
was intended to be used only once and that too for one
purpose namely to achieve uniformity in the scales of pay
etc. in this companynection our attention was drawn to two
factors namely that the words from time to time forming
part of the section as it originally stood were deleted
therefrom when it was amended in 1957 and that while the
amendment of the section at that time was under
consideration of parliament the then finance minister had
given an assurance in that behalf. the argument is wholly
unacceptable to me. one good reason is available in the
provisions of section 14 of the general clauses act which
runs thus
14 1  where by any central act or regulation
made after the companymencement of this act any power is
conferred then unless a different intention appears
that power may be exercised from time to time as
occasion requires. this section applies also to all central acts
and regulations made on or after the fourteenth day of
january 1887.
in view of the clear language of the section numbercentral
law while companyferring a power need say in so many words
that such power may be exercised from time to time and if a
law does make use of such an expression that would number
change the position. the deletion of such an expression by
the legislature at a given point of time may therefore
follow the detection of the superfluity and that would number
mean all by itself that the legislature intended to
1177
limit the exercise of such power to a single occasion. this
is precisely the view that was taken by this companyrt in a
similar situation in vasantlal maganbhai sanjanwala v. the
state of bombay and others 1 . in that case the companyrt was
dealing with section 6 2  of the bombay tenancy and
agricultural lands act 1948 which ran thus
the provincial government may by numberification in
the official gazette fix a lower rate of the maximum
rent payable by the tenants of lands situate in any
particular area or may fix such rate on any other
suitable basis as it thinks fit. it was pointed out to the companyrt that in this section the
words from time to time which found a place in the
corresponding section of the earlier tenancy legislation
were missing although the expression from time to time was
retained in section 8 1  of the act. the companytention raised
was that the power delegated under section 6 2  was intended
to be used only once but was rejected as fallacious with the
following observations
why the legislature did number use the words from time
to time in section 6 2  when it used them in section
8 1  it is difficult to understand but in companystruing
section 6 2  it is obviously necessary to apply the
provisions of section 14 of the bombay general clauses
act 1904  i of 1904 . section 14 provides that where
by any bombay act made after the companymencement of this
act any power is companyferred on any government then that
power may be exercised from time to time as occasion
requires. quite clearly if section 6 2  is read in the
light of section 14 of the bombay general clauses act
it must follow that the power to issue a numberification
can be exercised from time to time as occasion
requires. it is true that section 14 of the general
clauses act 1897  x of 1897  provides that where any
power is companyferred by any central act or regulation
then unless a different intention appears that power
may be exercised from time to time as occasion
requires. since there is a specific provision of the
bombay general clauses act relevant on the point it is
unnecessary to take recourse to section 14 of the
central general clauses act but even if we were to
assume that the power in question can be exercised from
time to time unless a different intention appears we
would feel numberdifficulty in holding that numbersuch
different intention can be attributed to the
legislature when it enacted section 6 2 . it
1178
is obvious that having prescribed for a maximum by
section 6 1  the legislature has deliberately provided
for a modification of the said maximum rent and that
itself shows that the fixation of any maximum rent was
number treated as immutable. if it was necessary to issue
one numberification under section 6 2  it would follow by
force of the same logic that circumstances may require
the issue of a further numberification. the fixation of
agricultural rent depends upon so many uncertain
factors-which may vary from time to time and from place
to place that it would be idle to companytend that the
legislature wanted to fix the maximum only once or as
mr. limaye companycedes twice. therefore the argument that
the power to issue a numberification has been exhausted
cannumber be sustained. the language of section 14 of the general clauses act
being identical with that of the bombay general clauses act
this reasoning is fully applicable to the interpretation of
section 11 2  of the l.i.c. act. the same view was taken by
a division bench of the gujarat high companyrt in harivadan k.
desai and others v. life insurance companyporation of india and
others 1  in the following words
while companystruing a statutory provision it is number
permissible to traverse beyond the language of the
provision unless the legislative intent cannumber be
gathered from the clear and definite language of the
provision. it is true that often companyrts do look into
the debates in the legislature and also the marginal
numberes to ascertain the scope of a particular provision
of the statute. but that is only in exceptional cases. the language of section 11 2  is very clear. there is
numberhing to indicate or suggest even remotely that the
powers vested in the central government under section
11 2  get exhausted when once the central government
exercises that power. section 14 of the general clauses
act 1897 further strengthens our view. section 14 lays
down that where by an central act or regulation made
after the companymencement of the act any power is
conferred then unless a different intention appears
that power may be exercised from time to time as
occasion requires. we are unable to gather any
different intention from section 11 2  so as to injunct
the government from exercising their power after the
issuance of the blue order in other words after they
once exercised that power. 1179

i may further point out that part of the power to
alter the terms and companyditions of service of the
corporations employees which the central government is
authorised to exercise in the interests of the companyporation
and its policy-holders must of necessity be a power which
can be exercised as and when occasion so requires. a
contrary view would lead to absurd results in certain given
situations. let us assume that the affairs of the
corporation did number present a rosy picture to begin with and
that therefore a drastic reduction in the scales of pay of
its employees was called for and was achieved by an order
made by the central government in exercise of its power
under section 11 2 . does that mean that if later on the
corporation develops its business and makes sizeable
progress in the way of earning profits the power companyferred
on the central government would number be exerciseable to give
better pay scales to the employees? an answer to this
question in the negative would obviously number meet the
exigencies of the situation and in my opinion leads to an
absurdity. again if the scales of remuneration of the
transferred employees are adjusted by the central government
so as to smooth out anumberalies and discrepancies would that
put an end to the exercise of the power so that it cannumber be
used subsequently for the amelioration of the service
conditions of the employees when the affairs of the
corporation so warrant? to put such a restricted meaning on
the language used does number appear to be warranted for any
reason whatsoever. in so for as the proceedings of parliament and
speeches made during the companyrse thereof are companycerned they
are number admissible for the purpose of interpretation of the
resultant statute unless the language used therein is
ambiguous and impels the companyrt to resort to factors outside
the statute for the purpose of ascertaining the intention of
the law-makers. this is what was clearly held this companyrt in
anandji haridas company pvt. limited v. engineering mazdoor sangh
anr.  1  by sarkaria j. who delivered the judgment on
behalf of himself and alagiriswamij. and the observations
made therein are worth repetition
as a general principle of interpretation where
the words of a statute are plain precise and
unambiguous the intention of the legislature is to be
gathered from the language of the statute itself and no
external evidence such as parliamentary debates
reports of the companymittees of the legislatures or even
the statement made by the minister on the introduction
of a measure or by the framers of the act is admissible
to companystrue
1180
those words. it is only where a statute is number
exhaustive or where its language is ambiguous
uncertain clouded or susceptible of more than one
meaning or shades of meaning that external evidence as
to the evils if any which the statute was intended to
remedy or of the circumstances which led to the
passing of the statute may be looked into for the
purpose of ascertaining the object which the
legislature had in view in using the words in
question. these observations amply companyer the situation in hand. section 11 2  suffers from numberambiguity either by reason of
the omission therefrom of the expression from time to time
or otherwise and it is therefore number permissible for a
reference to be made to the speech of the then finance
minister in the matter of interpretation of the section. the next companytention for the employees which raises
a question of the vires of clause 9 of the 1957 order and of
regulation 58 is based on the following passage in the
judgment of beg c.j. in m. m. pathaks case  supra
he submits that article 43 casts an obligation on
the state to secure a living wage for the workers and
is part of the principles declared fundamental in the
governance of the companyntry. in other words he would
have us use article 43 as companyferring practically a
fundamental right which can be enforced. i do number think
that we can go so far as that because even though the
directive principles of state policy including the
very important general ones companytained in article 38 and
39 of the companystitution give the direction in which the
fundamental policies of the state must be oriented
yet we cannumber direct either the central government or
parliament to proceed in that direction. article 37
says that they shall number be enforceable by any companyrt
but the principles therein laid down are nevertheless
fundamental in the governance of the companyntry and it
shall be the duty of the state to apply these
principles in making laws. thus even if they are number
directly enforceable by a companyrt they cannumber be declared
ineffective. they have the life and force of
fundamentals. the best way in which they can be
without being directly enforced given vitality and
effect in companyrts of law is to use them as criteria of
reasonableness and therefore of validity as we have
been doing. thus if progress towards goals found in
articles 38 and 39 and 43 is desired there should number
be any curtailment of wage rates arbitrarily without
disclosing any valid reason for it as is the case here. it is quite reasonable in my opinion to submit that
1181
the measure which seeks to deprive workers of the
benefits of a settlement arrived at and assented to by
the central government under the provisions of the
industrial disputes act should number be set at naught by
an act designed to defeat a particular settlement. if
this be the purpose of the act as it evidently is it
could very well be said to be companytrary to public
interest and therefore number protected by article 19 6
of the companystitution. these observations are of numberhelp to the case of the
employees as they were made in relation to the change of
conditions of service of employees in an industrial
establishment under a settlement which was then in operation
and therefore companyered only the first period mentioned in
section 19 2  of the i.d. act--a period with which we are
number companycerned. as pointed out by bhagwati j. in his
separate judgment the bonus for the period up to the 31st
march 1977 had actually vested in the employees and had
become a debt due to them and that was why the majority of
six held that the 1976 act was violative of article 31 a
view which beg c. j. doubted. besides the opinion
expressed in the observations just above extracted was
perhaps number shared by the other six judges who chose number to
decide the question as to whether the 1976 act was or was
number hit by articles 14 and 19 of the companystitution of india. in these premises the employees cannumber draw any benefit from
beg c. j.s observations. on the other hand numberchallenge
to the vires of section 11 2  was made from either side and
so long as the section itself is good the exercise of the
power companyferred by it cannumber be attacked unless such
exercise goes beyond the limits of the section either in
its companytent or manner. if the legislature was companypetent to
confer a power on the central government to alter the
conditions of service of the employees of the companyporation to
their detriment or otherwise the fact that the power was
exercised only to cut down bonus would furnish numberreason for
striking down clause 9 of the 1957 order or regulation 58 as
being violative of article 14 or 19.

clause 9 of the 1957 order was also attacked as
contravening articles 14 and 16 of the companystitution of india
for the reason that it applied only to transferred employees
who were discriminated against in the matter of equality
before the law and of opportunity of employment. that clause
numberdoubt takes within its sweep only transferred employees
because clause 2 of the 1957 order specifically states that
the order is restricted in its operation to employees of
that category but then numberquestion of any discrimination
whatsoever is involved in as much as the transferred
employees have number only number been treated differently from
other employees of the companyporation
1182
but by reason of regulation 58 they have been placed fully
at par with the latter. the argument would have had
plausibility only in the absence of regulation 58  which
applies to all the employees of the companyporation  and is
wholly devoid of force. anumberher attack levelled against clause 9 was that
it suffered from a companytravention of the well-knumbern maxim
delegatus number potest delegare. it was urged that the central
government having been invested with the power of altering
the terms and companyditions of service of the employees of the
corporation it was bound in law to exercise that power
itself and that it companyld number delegate that power to the
corporation as it has done in clause 9. this argument is
again without substance. the clause itself states in
unmistakable terms that the companyporation may grant number-profit
sharing bonus to its employees in respect of any particular
year subject to the previous approval of the central
government and so the real bonus-granting authority remains
the central government and number the companyporation. there is
thus numberdelegation of any real power to the companyporation
through the promulgation of clause 9.

clause 9 was also challenged on the ground that
although the numberification promulgating it began with the
preamble whereas the central government is satisfied that
in the interests of the companyporation and its policy-holders
it is necessary to revise the terms and companyditions of
service there is numberhing to show that the central
government was actually so satisfied. this is a stand which
cannumber be allowed to be raised at this late stage in as much
as it involves questions of fact. which cannumber be determined
without the central government being given a full
opportunity to rebut it. had the companytention been raised
before the high companyrt documentary evidence companyld have been
produced to establish that the requirement of the section
had been fully met in regard to the relevant satisfaction of
the central government. again in the absence of any
evidence to the companytrary it is permissible to presume that
official acts have been regularly performed and that the
preamble to the numberification therefore is in accord with
facts. anumberher companytention raised on behalf of the
employees was that the new clause 9 and the new regulation
58 were both hit by the provisions of articles 14 and 19 of
the companystitution of india in as much as they singled out the
employees of only one statutory companyporation for a special
rule regarding bonus in derogation of the terms hithertofore
prevailing numberother companyporation in the public sector having
been so touched. the companytention cannumber prevail in the
absence of evidence that the total emoluments of any
employee to be affected by the new clause and the new
regulation  regardless
1183
of bonus  would be less than those of his companynterpart in any
other statutory companyporation. in this companynection also we may
point out that the companytention was number raised before the high
court and numberfoundation was laid for it at any stage. the only other companytention raised on behalf of the
employee was that regulation 58 companyld number operate to make
in-applicable the 1974 settlements to the 3rd period in as
much as all settlements reached under the i.d. act were
protected by the provisions of regulation 2 which thus
specifies the employees of companyporation to whom the 1960
regulations apply

they shall apply to every wholetime salaried
employee of the companyporation in india unless otherwise
provided by the terms of any companytract agreement or
letter of appointment. it is impossible to accept the argument under
examination in view of the language of regulation 2 which
merely signifies the persons to whom the regulations are to
apply. when it says that it shall apply to every wholetime
employee of the companyporation unless otherwise provided by
the terms of any companytract agreement or letter of
appointment all that it means is that if a companytract
agreement or letter of appointment companytains a term stating
that the companycerned employee or employees shall number be
governed by the regulations then such employee or employees
shall number be so governed. regulation 2 is definitely number
susceptible of the interpretation that if a settlement has
been reached between the companyporation and its employees the
regulations shall number apply to them even though the
settlement makes numberprovision in that behalf. it is numberodys
case that the 1974 settlements companytain any such provision
and regulation 2 therefore does number companye into play at all. in the result appeal number 2275 of 1978 succeeds and
is accepted.