PETITIONER:
M. VENUGOPAL
Vs.
RESPONDENT:
DIVISIONAL MANAGER
DATE OF JUDGMENT31/01/1994
BENCH:
SINGH N.P. (J)
BENCH:
SINGH N.P. (J)
AHMADI, A.M. (J)
PUNCHHI, M.M.
CITATION:
1994 AIR 1343 1994 SCR (1) 433
1994 SCC (2) 323 JT 1994 (1) 281
1994 SCALE (1)264
ACT:
HEADNOTE:
JUDGMENT:
The Judgment of the Court was delivered by
N.P. SINGH, J.- This appeal has been filed against the
judgment of the High Court dismissing the writ application
filed on behalf of the appellant for quashing the order of
termination of his services during the period of probation.
2. The appellant was appointed as Development Officer by
the respondent Life Insurance Corporation (hereinafter
referred to as “the Corporation”), on probation for a period
of one year from May 23, 1984 to May 22, 1985. The period
of probation of the appellant was extended for a further
period of one year from May 23, 1985 to May 22, 1986.
Clauses 3 to 5 of the order of appointment deal with the
code of conduct to be followed; clauses 6 to 9 deal with
tours, advance deposits, record of work and collection of
premiums; clause 10 deals with the minimum business that the
appellant was expected to do during the period specified,
clause 11 deals with confirmation and is as follows :
“11. Confirmation and Increments.- (i) On your
satisfactorily completing the period of
probation and your observation and compliance
with all conditions set out in this letter of
appointment, you will be confirmed in the
services of the Corporation in Class-11. Your
confirmation will depend inter alia upon the
fulfilment of the minimum business guarantee
set out in para 10 above and upon your record
of posts and service to the Corporation’s
policyholders and other functions performed by
you in the area allotted to you to the
satisfaction of the competent authority.”
3. As the appellant was required to do a minimum business
mentioned in the order and as he failed to achieve the
target so fixed, the Divisional Manager of the Corporation,
by a communication dated February 1, 1986, advised the
appellant to comply with the said term during the extended
period of probation. Yet another communication was issued
to the appellant on April 5, 1986, saying that he had failed
to fulfil the norm prescribed to earn confirmation. He was
asked to improve his performance, failing which his service
was likely to be terminated. Before the expiry of the
extended period of probation, the service of the appellant
was terminated on May 9, 1986.
4. A writ application was filed by the appellant before
the High Court, questioning the legality of the aforesaid
order of termination. A learned Single Judge quashed the
said order holding that as the appellant shall be
326
deemed to be “workman” within the meaning of the Industrial
Disputes Act, the termination of his service will amount to
“retrenchment” within the meaning of Section 2(oo) of the
Act which was null and void in view of noncompliance of the
requirement of Section 25-F of the Act.
5. On an appeal being filed on behalf of the Corporation,
a Division Bench of the High Court took the view that
because of clause (bb) which has been introduced in Section
2(oo) of the Act with effect from August 1 8, 1984, by the
Industrial Disputes (Amendment) Act, 1984 (Act 49 of 1984),
the termination of the appellant by the Corporation within
the period of probation shall not amount to retrenchment
within the meaning of Section 2(oo).
6. Section 2(oo) of the Act says that “retrenchment” means
the termination by the employer of the service of a workman
for any reason whatsoever, otherwise than as a punishment
inflicted by way of disciplinary action. A new clause (bb)
has been introduced apart from the three exceptions
mentioned in Section 2(oo) which shall not be deemed to be
retrenchment within the meaning of Section 2(oo) of the Act.
Clause (bb), which has been introduced by the aforesaid
Amendig Act says:
“(bb) termination of the service of the
workman as a result of the non-renewal of the
contract of employment between the employer
and the workman concerned on its expiry or of
such contract being terminated under a
stipulation in that behalf contained therein;
or”
(emphasis supplied)
7. Clause 11 of the order of appointment specifically said
that on appellant’s satisfactorily completing the period of
probation and on his observance and compliance with all the
conditions set out in the said letter of appointment, he
“will be confirmed in the services of the Corporation……
III that very clause, it was further said that the
confirmation of the appellant was dependent inter alia upon
the fulfilment of the minimum business guarantee
set out in para 10 of the said order of appointment.
According to the Corporation, as admittedly the appellant
did not reach the minimum target fixed in clause 10 of the
order of appointment and his service was found not to the
satisfaction of the competent authority, the contract of
employment was “terminated under a stipulation in that
behalf, contained” in the order of appointment itself and as
such covered by clause (bb) of Section 2(oo) of the Act.
8. Regulation 14 of the Life Insurance Corporation of
India (Stiff) Regulations, 1960 which shall now be deemed to
be Rules framed under Section 48(2)(cc) of the Life
Insurance Corporation Act (hereinafter referred to as
“Corporation Act”) provides :
“14. (1) Persons appointed to posts belonging
to Classes 1 and 11 shall, on the first
appointment in the Corporation service, be
required to be on probation for a period of
one year from the date of appointment.
(2)
327
(3) Subject to the provisions of any law for
the time being in force the appointing
authority may, at its discretion, dispense
with, reduce or extend the probationary
period, but in no case shall the total period
of probation exceed :
(a) In case of employees belonging to
Classes I & II two years
(b) In other cases one year
(4) During the period of probation an
employee shall be liable to be discharged from
service without any notice.”
9. Regulation 14 aforesaid has to be read as a statutory
term of the contract of employment between the Corporation
and the appellant. The order of appointment had fixed a
target in respect of the performance of the appellant which
admittedly the appellant failed to achieve within the period
of probation which was extended up to two years. As such
the Corporation was entitled not to confirm the appellant in
terms of the order of appointment and to terminate his
service during the period of probation without any notice in
terms of Regulation 14(4) aforesaid. Clauses 10 and 11 of
the order of appointment along with Regulation 14 shall be
deemed to be stipulations of the contract of employment
under which the service of the appellant has been
terminated. Any such termination, even if the provisions of
the Industrial Disputes Act were applicable in the case of
the appellant, shall not be deemed to be “retrenchment”
within the meaning of Section 2(oo), having been covered by
exception (bb). Before the introduction of clause (bb) in
Section 2(oo), there were only three exceptions so far as
termination of the service of the workman was concerned,
which had been excluded from the ambit of retrenchment (a)
voluntary retirement; (b) retirement on reaching the age of
superannuation; and (c) on ground of continued 111-health.
This Court from time to time held that the definition of
“retrenchment” being very wide and comprehensive in nature
shall cover, within its ambit termination of service in any
manner and for any reason, otherwise than as a punishment
inflicted by way of disciplinary action. The result was
that even discharge simpliciter was held to fall within the
purview of the definition of “retrenchment”. (State Bank of
India v. N. Sundara Money’, Santosh Gupta v. State Bank of
Patiala2.) Now with introduction of one more exception to
Section 2(oo), under clause (bb) the legislature has
excluded from the purview of “retrenchment” (i) termination
of the service of the workman as a result of the non-renewal
of the contract of employment between the employer and the
workman concerned on its expiry; (ii) such contract being
terminated under a stipulation in that behalf contained in
contract of employment. It need not be impressed that if in
the contract of employment no such stipulation is provided
or prescribed, then such contract shall not be covered by
clause (bb) of Section 2(oo). In the present case, the
termination of service of the appellant is as a result of
the contract of employment having
1 (1976) 1 SCC 822: 1976 SCC (L & S) 132: AIR 1976 SC 1111
2 (1980) 3 SCC 340: 1980 SCC (L & S) 409: AIR 1980 SC 1219
328
been terminated under the stipulations specifically provided
under Regulation 14 and the order of the appointment of the
appellant. In this background, the non-compliance of the
requirement of Section 25-F shall not vitiate or nullify the
order of termination of the appellant.
10. There is yet another aspect of the matter. The
Corporation Act vests power in the Central Government to
make rules in order to carry out the purposes of the Act.
By Life Insurance Corporation (Amendment) Act, 1981 (Act 1
of 198 1), clause (cc) was added to sub-section (2) of
Section 48 with effect from January 31, 198 1. Clause (cc)
provides
“(cc) the terms and conditions of service of
the employees and agents of the Corporation,
including those who became employees and
agents of the Corporation on the appointed day
under this Act;”
With introduction of clause (cc), the Central Government can
by notification in Official Gazette, make rules in respect
of the terms and conditions of the service of the employees
and agents of the Corporation. By the aforesaid Amending
Act, three new sub-sections were also introduced, which are
relevant for the present case :
“(2-A) The regulations and other provisions as
in force immediately before the commencement
of the Life Insurance Corporation (Amendment)
Act, 1981, with respect to the terms and
conditions of service of employees and agents
of the Corporation including those who became
employees and agents of the Corporation on the
appointed day under this Act, shall be deemed
to be rules made under clause (cc) of sub-
section (2) and shall, subject to the other
provisions of this section, have effect
accordingly.
(2-B) The power to make rules conferred by
clause (cc) of subsection (2) shall include
(i) the power to give retrospective effect
to such rules; and
(ii) the power to amend by way of addition,
variation or repeal, the regulations and other
provisions referred to in sub-section (2-A),
with retrospective effect,
from a date not earlier than the twentieth day
of June, 1979.
(2-C) The provisions of clause (cc) of sub-
section (2) and subsection (2-B) and any rules
made under the said clause (cc) shall have
effect, and any such rule made with
retrospective effect from any date shall also
be deemed to have had effect from the date,
notwithstanding any judgment, decree or order
of any court, tribunal or other authority and
notwithstanding anything contained in the
Industrial Disputes Act, 1947 (14 of 1947) or
any other law or any agreement, settlement,
award or other instrument for the time being
in force.”
Sub-section (2-A) provided that regulations and other
provisions in force immediately before the commencement of
the aforesaid Amending Act with respect to the terms and
conditions of service of employees and agents of the
Corporation shall be deemed to be rules made under clause
(cc) of sub-
329
section (2) of Section 48. Sub-section (2-B) empowered the
Central Government to make rules under power conferred by
clause (cc) of subsection (2), which power includes to give
retrospective effect to such rules. It also authorised the
Central Government to add, vary or repeal the regulations
already framed and in existence. Sub-section (2-C) contains
a non obstante clause saying that notwithstanding anything
contained in the Industrial Disputes Act, 1947 or any other
law or any agreement, settlement, award or other instrument
for the time being in force, the provisions of clause (cc)
of sub-section (2) aforesaid and any rules made under the
said clause (cc) shall have effect. In view of the
introduction of clause (cc) in Section 48(2) and sub-section
(2-A) in Section 48 of the Corporation Act, it shall be
deemed that Regulation 14 aforesaid, which had been
originally framed under Section 49 of the Corporation Act,
will be a rule framed under clause (cc) of sub-section (2)
and shall have overriding effect because of sub-section (2-
C) over the provisions of the Industrial Disputes Act in
respect of terms and conditions of an employee of the
Corporation, who is covered by the definition of “workman”
under the Industrial Disputes Act. It may be pointed out
that by the same Amending Act clause (bb) of sub-section (2)
of Section 49 which authorised the Corporation with the
previous approval of the Central Government to make
regulations in respect of the terms and conditions of the
services of the employees and agents of the Corporation was
deleted. By a statutory fiction, the regulations relating
to the terms and conditions of the employees and agents of
the Corporation framed under Section 49(2)(bb) shall be
deemed to be now the rules framed under Section 48(2)(cc) of
the Corporation Act, and such rules shall have overriding
effect over the provisions contained in the Industrial
Disputes Act, so far as the terms and conditions of the
employment of such employees who also conform to the
requirement of the definition of “workman” under the
Industrial Disputes Act, are concerned.
11. The effect of a deeming clause is well-known.
Legislature can introduce a statutory fiction and courts
have to proceed on the assumption that such state of affairs
exists on the relevant date. In this connection, one is
often reminded of what was said by Lord Asquith in the case
of East End Dwellings Co. Ltd. v. Finsbury Borough Council3
that when one is bidden to treat an imaginary state of
affairs as real, he must surely, unless prohibited from
doing so, also imagine as real the consequences and
incidents which inevitably have flowed from it one must not
permit his “imagination to boggle” when it comes to the
inevitable corollaries of that state of affairs. In view of
the amendments aforesaid introduced in Section 48 it has to
be held that Regulation 14 referred to above in respect of
termination of the service of an employee of the Corporation
within the period of probation shall be deemed to be a rule
framed under Section 48(2)(cc) having overriding effect over
Section 2(oo) and Section 25-F of the Industrial Disputes
Act.
3 (1952) AC 109 B: (1951) 2 All ER 587
330
12. The Industrial Disputes Act as well as the Corporation
Act both have been framed by the Parliament. But the
amendments aforesaid have been introduced in the Corporation
Act in Section 48 with effect from January 3 1, 1981 with a
non-obstante clause. In sub-section (2-C), the intention of
the Parliament has been made apparent and obvious. It was
pointed out in Aswini Kumar Ghose v. Arabinda Bose 4 , A. V.
Fernandez v. State of Kerala 5 and South India Corporation
(P) Ltd. v. Secretary, Board of’ Revenue, TrivandruM6 that
the effect of non obstante clause is to obliterate in regard
thereto the provisions which were earlier applicable. The
framers of the Corporation Act through the amendments
aforesaid have given the provisions of tile Corporation Act
an overriding effect over tile provisions of the Industrial
Disputes Act, so far as the provisions relating to the terms
and conditions of employment, which are in conflict with the
provisions of the Industrial Disputes Act are concerned.
Unless the said attempt is held to be ultra vires being in
conflict with any of the provisions of the Constitution it
was open to the Parliament to treat the employees and agents
of the Corporation as a separate class for purpose of fixing
their terms and conditions of service.
13. Earlier such employees used to be governed by the
regulations framed by the Corporation under Section 49 of
the Corporation Act as well as by the provisions of the
Industrial Disputes Act, being “workman” within the meaning
of that Act. It was up to them to enforce the rights or
remedies in terms of the regulation so framed under the
Corporation Act or in accordance with the provisions of the
Industrial Disputes Act. But after the amendment introduced
by the Parliament in Section 48, the employees of the
Corporation shall not be entitled to protections to which
they were entitled before the coming into force of the
amendment aforesaid. The amendments cannot be held to be
violative of Article 14 of the Constitution merely on the
ground that a section of the employees of the Corporation
had the benefit or protection of the provisions of tile
Industrial Disputes Act which now they have been deprived
of. The wisdom of the legislature in extending the
protection of the provisions of the Industrial Disputes Act
or denying the same cannot be judged by the courts unless
any such step is held to be violative of any of the
provisions of the Constitution. This Court has considered
the validity of the aforesaid Life Insurance Corporation
(Amendment) Act, 1981 in the case of A. V. Nachane v. Union
of India7 and it has been held that the said Amending Act
shall operate but prospectively insofar it seeks to nullify
the terms of 1974 Settlement in regard to payment of bonus
in that case. It was said in the said case that Section
48(2-C) read with Section 48(2)(cc) authorises the Central
Government to make rules to carry out the purposes of the
Act notwithstanding the Industrial Disputes Act
4 AIR 1952 SC 369: 1953 SCR 1
5 AIR 1957 SC 657: 1957 SCR 837: 8 STC 561
6 AIR 1964 SC 207: (1964) 4 SCR 280: (1964)15 STC 74
7 (1982) 1 SCC 205: 1982 SCC (L & S) 53: (1982) 2 SCR 246
331
or any other law, which meant that in respect of the matters
covered by the rules, the provisions of the Industrial
Disputes Act or any other law will not be operating. It was
pointed out that it was not really the rules framed by the
Central Government that override the Industrial Disputes Act
or any existing law but the power of abrogating the existing
laws was in sub-section (2-C) of Section 48 enacted by
Parliament itself and as such there was no question of any
excessive delegation. The grievance that excluding the
employees of the Corporation from the purview of the
Industrial Disputes Act amounted to discrimination against
them and as such the provisions of the Amending Act were
violative of Article 14 of the Constitution, was also
rejected.
14. The amendments introduced in Section 48 of the
Corporation Act have clearly excluded the provisions of the
Industrial Disputes Act so far as they are in conflict with
the rules framed under Section 48(2)(cc). The result
whereof will be that termination of the service of the
appellant shall not be deemed to be a “retrenchment” within
the meaning of Section 2(oo) even if sub-section (bb) had
not been introduced in the said section. Once Section 2(oo)
is not attracted, there is no question of application of
Section 25-F on the basis of which the termination of the
service of the appellant can be held to be invalid. The
termination of the service of the appellant during the
period of probation is in terms of the order of appointment
read with I Regulation 14 of the Regulations, which shall be
deemed to be now Rules under Section 48(2)(cc) of the
Corporation Act.
15. Even under general law, the service of a probationer
can be terminated after making an overall assessment of his
performance during the period of probation and no notice is
required to be given before termination of such service.
This aspect has been examined by this Court in the case of
The Governing Council of Kidwai Memorial Institute of
Oncology, Bangalore v. Dr Pandurang Godwalka8 where it has
been pointed out that if the performance of the employee
concerned during the period of probation is not found to be
satisfactory on overall assessment, then it is open to the
competent authority to terminate his service.
16. Accordingly, the appeal falls. But in the facts and
circumstances of the case, there shall be no order as to
costs.
333