THE LIFE INSURANCE CORPORATION OF INDIA v. D. J. BAHADUR & ORS

Citation: [1981] 1 S.C.R. 1083

Court: Supreme Court of India

Bench: V.R. KRISHNA IYER, R.S. PATHAK, A.D. KOSHAL

Case summary

This Act was successfully challenged and this court struck clown the said legis. These moves proved to be essays in futility because t,he High Court held that bonus was still payable, that the ID Act prevailed over the LIC Act in the area of industrial relations, the former...

Judgment text

• THE LIFE INSURANCE CORPORATION OF INDIA ... ,_ v. D. J. BAHADUR & ORS. November 10, 1980. [V. R. KRISHNA IYER, R. S. PATHAK & A. D. KOSl! AL, JJ. ] Life Insurance Corporation Act (Act 31), 1956, sections 11, 23 and 49, scope of-Whether a general law or a special law-Industrial Disputes Act (Act 14) 1947, sections 9A, 19(2), (6), 18, 23, 29-0bject of the Act, award and settlement, distinction from the point of view of legal force-Whether a special legislation vis-a-vis Life Insurance Corporation Act-Annual caslr bonus payable to Class-Ill and Class-IV employees of the Corporation under ·the settlement of 1974, e/Jecl o>f-Ejject of notice of termination of the settlements by the Corporation under sections 9A and 19(2) of the Industrial Disputes Act and section 49 of the Life . Insurance Corporation Act-Constitution of India, 1950, Articles 12, 38, 39 and 43 and Regulation 58 of the Life Insurance Corporation of India (Staff) Regulations, 1960.

The Life Insurance Corporation came into existence on the 1st of September, 1956, as a statutory authority established under the Life Insurance Corporation Act (Act 3l), 1956. As from the said date all institutions carrying on Life Insurance business in India were nationalised to th~ extent of such busine:ss and their corresponding assets and liabilities were transferred to the Corporation. Section 11 of the Act provided for the transfer of service of those employees of such institutions who were connected with Life Insurance business immediately before the, said date to the Corporation and for some other matters. Section 23 of the Life Insurance Corporation Act gave to the Corporation 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 empioyed or whose services stood transferred to the Corporation under section 11 would be liable to serve anywhere in India.

Section 49 conferred on the Corporation the power to make regulation~ for the purpose of giving effect to the prnvisions of the Act with the previousapproval of the Central Government. Sub-section (2) of that section enumerated various matters in relation to which such power was particularly conferred. ·On 1st of June, 1957 the Central Government promulgated the Life Insurance Corporation (Alteration of Remuneration and other Terms ar. d Conditions of Service of Employees) Order, 1957 altering the remuneration and other terms and conditions of service of those employees of the Corporation whose service had been transferred to it under sub-section (1) of section 11. Clause 9 of the 1957 Order declared that no bonus would be paid but directed that the Corporation would set aside an amount every year for expenditure on schemes of general benefit to the employees such as free insurance scheme, medical benefit scheme and other am~nities to them.

On the 26th June, 1959, the Central Government amended clause 9 of the 1957 Order 'SO as to provide that non-profit sharing bonus would be paid to those employees of the Corporation whose salary did not exceed Rs. 500 per month. On 2nd of July, 1959 · there was a settlement between the Corporation and its employees providing for paym~nt to them of cash ·bonus at the rate of It months' basic salary for the period from the 1st September, _1956 to the 31st December, 1961. In the year 1960 the Life Insurance Corporation of lndta (Staff) Regulations, 1960 were framed and Regulation 58 dealt \Vttb the payment of grant of no:1-profit sharing bonus to its employees. On 14th April. 1962 and 3rd August, 1963 orders were again issued, the effect of which WJ. 5 to remove the Emit of Rs. 5'00 on the basic salary as a cor;dition of ~Jiaihi1ity for payment of Lonu1. lhe seaiemeoi dated 2r:d July, 1959 was foMow(d bv three o~hers \vhich were arrived at on the 29th January, 1963.

the 20th June, 1970 and the 26th June, 1972, respectively aroJ each one of VJtii£h · provided for payment of bonus at a particular rate. Disputes between the Corporation and its workmen in regard to the latter's conditions of service were received by two settlements dated the 24th )antJdl)'• 1974 and the 6th February, 1974, arrived at in pursuance of the ) provisions of section 18 read with section 2(p) of the Industrial Disputes Act. . / -The Corporation was a party to both the settlements which were identical in terms. _ llowever, while four -of thC 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 ag_ well as bonus. The settlements were approved by the Board of the Corporation and also by the Central Government. The employees of the Corpor:ition having opted for the n;'!

'W scales cf pay, bonus ·\Va~ paid in accordance therewith for the years 1973-74 and 1~7&-75 in April 1974 and in April 1975 resP. ectively. One of the Payment of Bo~us (Am~ndment) Act, 1976 cof'/'l~ng frito force with retrospective effect from 25th Septemb:r, 1975 curtailing the rights of employees of industrial undertakings ·to bonus, though it w';s in::! ppEcable to the Corporation by virtlle of the provisio:is of section 32 of the Payment of Bonus Act, the payme. nt of bonus for the y:ar 1975-76 to the employees of the Corporation was stopped under ir:struc! iGQ5 from the Central Government, whose action in that behalf was ·challenged by the employezs through a petition under Article 226 of the Constitution of India in· th~ High Court of Calcutta. The single Judge of the Higli Court issued a writ of rn1ndamus directing the- Corporation to . act ·in accordance \Vith the terms of the settlement dated the 24th cf January, 1974.

The Corporation preferred a Letters Patent appeal against lhe decision of ·the learned singJe. Judge _and that appeal was pending dispo are general even if they incidentally refer to conditions of service. 1111t H, 1112 A·B] (3) So far as nationalisation of insurance business is concerned, the Life Insurance Corporation is a special legislation, but equaily indubitably, is the' inference, from a bare perusal of the subject, scheme and sections an! i understanding of the anatomy of the Act, that it has nothing to do with thoparticular problem of disputes between employer and employees, and of investigation and adjudication of_ labour dispute. [1126 G~H, 1127 A] ·- LIFE INSURANCE CORPORATION v. D. J. BAHADUR I 08. 7 On the other hand, the Industrial Disputes Act is a special statute devoted A. wholly to investigation and settlement of industrial disputes which provides definitionally for the nature of industrial disputes coming within its ambit.

It creates an infra-structure for investigation into, solution of and adjudication . + upon industrial disputes. It also provides machinery for enforcement of Awards and Settlements. From alpha to omega the I. D. Act has one special mission-the resolution of industrial disputes through specialised agencies according to specialised procedures and with special reference to the weaker B· categories of employees coming within the definition of workmen. Therefore, with reference to industrial disputes between employers and v orkmen, the I. D. Act is a special statute, and the L. I. C. Act does not speak at all with specific reference to workmen. On the other band, its powers relate to the 1 ,,... __general aspects of nationalisation, of 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 c· industrial disputes between workmen and the employer as such, are beyond . - the orbit of and have no specific or special place in the scheme of the L. I. C. Act. [1127 C-F] (4) Thus, vis-a-vis 'industrial disputes' at the termination of the Settlement as between the workmen and the Corporation, the I. D. Act is a special legislation and the L. I. C. Act a general legislation. Like. wise, when D· compensation on nationalisaiion is the question, the L. I. C. Act is the special statute. An application of the generalia maxim makes it clear that the I. D. Act being special law, prevails over L. I. C. Act which is a general law. [1127 H, 1128 A-BJ U. P. State Electricity Board v. H. S. Jain, [1979] l SCR 355, I. K. Cotton Spinning and Weaving Mills Co. Ltd. v. State of Uttar Pradesh, AIR 1'161 SC 1170 at 1174, followed. E (5) Section II of the Life Insuranee Corporation Act, 1956 does not repel _, the Industrial Disputes Act, 1947. The provisions of the L. l.

C. Act which contained provisions regarding conditions of service of employees would not become redundant, if the I. D. Act was held to prevail. For one thing, the provisions of . sections 11 and 49. are the usual general provisions giving a statutory corporation power to recruit and prescribe conditions of service of its total staff-not anything special regarding 'workmen'. Secondly, no case F of redundant words arose because the Corporation, like a University, employed not only workmen but others also and to regulate their conditions of service power was needed. Again, institutions where no dispute arose. power in the employer to fix the terms of employment had to be vested. [1129 F·H, 1130 A-BJ Bangalore Water Supply and Sewarage Board v. Rajappa, [1978] 2 SCC 813; D. N. Banerji v. P. R. Mukhe,rjee & Ors. [1953] SCR 302, followed.

G --4 (6) Whatever be the powers of regulation of conditions of service, including payment or non-payment of bonus e,njoyed by the employees of the Corporation under the L. I. C. Act subject to the directives of the Central Government, they stem from a general Act and cannot supplant, subvert or substitute the special legislation which specifically deals with industrial disputes between workmen and their employees. [1131 F-Hl H rThe Court directed the Corporation to fulfil its obligations in terms of the 1974 settlements and start negotiations like a model employer, for a fair settlement of the conditions of ·ser~~e between itself and its employees having -- realistic and ,equitable regard to the pre,vailing conditions of life, principles of industrial justice and the directives underlying Part IV of the Constitution. ] Per Pathak J. (Concurring with Iyer, J. ) (I) Both the limbs of sub-section + (2) of section 11 of the L. I. C.

Act, 1956 are intended to constitute a composite process of rationalising the scales of remuneration and othe. r terms and conditions of service of transferred employees with a view not 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 Corporation to become a viable and commercially successful enterprise. For that reason, it is open to the Central Government under the sub-section to ignore the guarantee contained in sub-·section (1) of section 11 in favour of the employees or ~1 anything contained in the Industrial Disputes Act, 1947 or any other law tur the time being in force or any award, sr. ttlement or agreement for the lime being in force. [1135 D-G] The second limb of sub-section (2) of section 11 is not related to employees generally, that is to say, both transferred and newly recruited employees, of the Corporation.

It is confined to transferred employees; There is no danger of an order made by the Central Government under the second limb of subsection (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 not been taken in respect of newly recruited employees. So long as such order is confined to what is necessitated by the process nf transfer and integration, the transferred employees constitute a reasonably defined class in themselves and form no common basis with newly recruited employees. [1136 C-E] The power under the second limb of sub-section (2) of section 11 can be exercised more than once. To effectuate the transfer appropriately and completely it may be, necessary to pass through different stages, and at ench stage to make a definite order.

So' Jong as the complex of orders so made is necessarily linked with the process of transfer and integration, it is immaterial that a succession of orders is made. The deletion of the words "from time to time" found in the Bill, is of no consequence. [1136 E-G] (2) The notification dated 26th May, 1980 purporting to amend the Standardisation Order is invalid. It has no effect on the right to bonus by the workmen. The notification was intended to apply to transferred employees only. It declares explicitly that the Central Government is satisfied that a revision of the terms and conditiorni of service of the transferred employees is considered necessary. This is made explicit by the circumstance that identical provisions have been made by the Corporation, with the prior approval of the Central Government, in the new Regulation 58 of a notification issued under both clauses (b) and (bb).

[1137 A-C] (3) A settlement under the Industrial Disputes Act, in essence, is a contract between the employer and the workmen prescribing new terms and conditions. As soon as the settlement is concluded and becomes operative, the contract embodied in it takes effect and the existing terms and conditions of the workmen are modified accordingly. Unless there is somethin2 to the contrary" in a particular term or condition of the Settlement the embodied contract endures indefinitely, continuing to govern the relation between the parties in A. future, subject of course to subsequent alteration through a fresh settlement, award or valid legislation. Settlement is not only a contract but something more. Conceptually, it is a "settlement". It concludes or "settles" a dispute. ~ In order the new contract be afforded a chance of being effectively worked out a mandate obliging the parties to unreservedly comply with it for a period of time is desirable.

It was made "binding" by the statute for such period. On the expiry of such period, the baln lifts, and the parti~s are at liberty B; tu seek an alteration of the contract. (1138 E-H-1139 A-C] The law laid down in South Indian Bank Ltd. v. A. R. Chacko (1964] 5 SCR 825 and Md. Quasim Larry, Factory Manager, Sasamusa Sugar Works v. Md. Shamsuddin & Anr. , [1964] 7 SCR 419 in respect of an Award applies I,. ~ equally in relation to a settlement. [l 140B] (4) The Industrial Disputes Act is a ·special law and must prevail over the Corporation Act, a general law, for the purpose of protecting the sanctity t of transactions concluded under the former enactment. Regulation 58, a product of the Corporation Act, cannot supersede the contract respecting bonus betwe1en the parties resulting from the settlement of 1974. (1142 B-D] Plainly, if a settlement- resolves an industrial dispute under the Industrial Disputes Act, it pertains to the central purpose of that Act. This constitutes ]).

a special law in respect of a settlement reached under the auspices between an employer and his "workmen" employees. The consequences of such ,ettlement are the product of the special law. [1141 E-F] The Corporation Act was enacted primarily for effecting the nationalisation of Life Insurance business by transferring all such business to a Corporation established for that purpose. Clearly, the object behind section II (1), section Z3 and clauses (b) and (bb) of section 49(2) of the L. I. C. Act is to provide staff and Jabour for the purpose of the proper management of the nationalised i life Insurance business. The Corporation Act ·does not possess the features found in the Industrial Disputes Act. No special 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 Dispute>;_ )--·· Act is not the subject matter of the Corporation Act at all.

No corresponding provision in the Corporation Act, a subsequent enactment, deals with the . subject matter enacted in the Industrial Disputes Act. (1140 F, 1141 A, F-G] Yet Parliament intended to provide for the. Corporation's "workmen" employees the same opportWlities as are available under the Industrial Disputes Act to the, workmen of other employers, as demonstrated by section 2(a)(I) of the Corporation Act. The expression "appropriate Government" is G. specifically defined by it in relation to an industrial dispute . ooncerning t~e Life Insurance Corporation. Both the Central Government and the Corporation ~- understood the Industrial Disputes Act in that light, for, Regulation 51(2) of the (Staff) Regulations made bv the Corporation under clauses (b) and (bb) of section 49(2) of the Corporation Act, with the previous approval of the Central Government, speaks of giving effect to a revision of scales of pay, dearness allowance, or other allowances "in pursuance of any award, H.

agreement or settlement. " [1141 G-H, 1142A-C] Life Insurance Corporation of India v. Sunil Kumar Mukherjee, [1964] 5 SCR 528; Sukhder Singh v. Bhagat Ram, [1975] 3 SCR 619, referred to. U. P. State Electricity Board & Ors. v. Bari Shanker lain &: Ors. , [1979] SCR 355; J. K. Cotton Spinning and Weaving MJls Co. Ltd. , v. State of Uttar Pradesh, AIR 1961 SC 1170, followed. Mary Sawards v. The Owner of the "Vera Cruz", (1884] IO A. C 59 _,. _ (ii) 68, quoted with approval. (5) In construing the scope of the Corporatio~'s powers under section 11 (I) of the Corporation Act, appropriate importanee should be attached to the qualifying word "duly". When the Corporation seeks to alter the term; ar. d conditions of transferred employees, it must do so in accordance with l~w, and that requires it to pay proper regard to ihe sac:ctity of rights-acquired by the "workmen" employees under settlements or awards under the I'ldustrial Disputes Act.

[1142H, 1143 A-BJ _{ The provision in section 11(2) has been made for the purpose o(-~ ·C protecting the interests of the Corporation and its policy holders. The policy holders constitute an important and significant sector of public illte1est. Indeed, the avowed object of the entire Corporation Act is to provide absolute security i to the policy holders in the matter of their life insurance protection. That is assured by a wise management of the Corporation's business, and by ensuring that when settlements are negotiated between the Corporation and its workmen or when industrial adjudication is initiated in Labour Court and industrial tribunals, the protection of the policy holders will find appropriately significant emphasis in the deliberations.

(1143 D-E] (6) In the view that the notification dated 26th May, 1978 purporting to amend the Standardisation Order by substituting clause (a) is invaJid and the newly enacted Regulation 58 does not effect the contract in respect of bonus embodied in the Settlements of 1974 between the Life Insurance Corporation and its "workmen" employees, effect must be given to that contract. If the terms and conditions of service created by the contract need to be reconsidered, recourse must be had to the modes ·recognised by law-negotiated settlement, industrial adjudication or appropriate legislation. (1143 F-G] Per Koshal, J. (Contra) (I) The Industrial Disputes ·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 another statute which covers a larger field and may thus be considered "general" as compared to it. It cannot, 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 spe:cial when considered in relation to another piece of legislation but only a general one vis-a-vis ·still another. "Special" and "general" are relative terms and it is the content of one statute as compared to the other . that will determine which of the two is to be regarded as special in relation to the other. Viewed in this light the proposition, namely, "the Industrial Disputes Act is a special law because it deals with adjudication and settlement of matters in dispute between an employer and his workmen while the Life Insurance Corporation Act is a general law" cannot stand scrntiny.

The Industrial Disputes Act would no doubt be a special Act in relation to a law which makes provisions for matters wider than but inclusive of those· covered by it, such as the Indian Contract Act as that is a law relating to contracts 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 Life Insurance Oorporation Act whi~h deals with 'Ci>nditions of service of the employees of the Life Insurance Corporation-a single industrial un . o many words that such power shall be exercisable "notwithstanding anything contained in sub-section (l) or 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 expr~scd in clear and unambiguous terms in this non-obstante clause and is to the effect that the power of the Central Government to alter conditions of service of the employees of the Corporation shall be wholly unfettered and that any provisions to the contrary contained in the Industrial Di·sputes Act or for that matter, in any other law for the time being in force, or in any award, settlement, or agreement for the lime being in force, would not stand in the way of the exercise of that power even if such exercise is to the detriment of the employees of the Corporation. The conferment of the power is thus in express supersession of the Industrial Disputes 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.

Further, in the, face of an expre•s provision, namely, sub-section (4) of section 11 it is r. ot open to the employees to contend that the law laid down in the Il)dustrial Disputes Act and not sub-section (2) of section 11 would govern them. [1154C, 1157 C-H, 1159 A-E, F-G] (3) The rule making power conferred on the Corporation by section 49 ot the Life lnsuranee Corporation Act is exercisable notwithstanding the provisions of the Industrial Disputes: Act. This power is expressly conferred on the Corporation i'n addition to that with which it is invested under clause. (bb) of the same sub-section (2) 0£ section 49. If clauses (b) and (bb} of that sub-section were not meant to override the provisions of the Industrial Disputes Act on· the same subject they would be completely meaningless, and that is a situation running directly counter to one of the accepted principles of interpretation of statutes. Besides, these two clause• are not to be read in isolation from section 11.

The subject matter of the clauses and the sectio! 1 is overlapping and together they form an integrated. whole. The clauses must. therefore, be read in the light of section 11. When the two clauses say that th" Corporation shall have the power to frame regulations. in regard to the terms and conditions of its employees including transferred employees subject, of course, to previous approval of the Central Government, the power may well be exercised in conformity with the provisions of section 11. And if it SI! > exercised the resultant regulations cannot be said to go beyond the limits specified in the statute. [1159 G-H, 1160 A-DJ Life Insurance Corporation of lndia v. Sunil Kumar Mukherjee & Ors. [1964] 5 SCR 528, followed. Hukam Chand etc. v. Union of India and others, AIR 1972 SC 2427; B. E. Vadera ,v. Union of India & Ors. [1968] 3 SCR 575, held inapplicable. U. P. State Electricity Board and Ors. v, Hari Shanker lain and Ors.

, [1975] I SCR 355; Bangalore Water Supply & Sewerage Board etc. v. R. Rajappa & Ors. [1978] 3 SCR 207, explained and distinguished. (4) Section 23 of the L. I. C. Act, which envisages employment of persons by the Corporation no doubt implies settlement cf ccmditrnns of service and that does not mean that once a settlement is arrived at, the same is not liable to be altered except by another settlement reached under section 18 of the I. D. Act. The provisions of sub-sections (1), (2) and (4) of section 1I of the L. I. C. Act and clauses (b)1 and (bb) of ·sub-section (2) of section 49 thereof have overriding effect and the terms and conditions of service of the employees of the Corporation forming part of a settlement under the I. D. Act cannot last after they have be.

en altered in exercise of the powers conferred on the Corporation or the Central Government by these povisions, as was done when the new Regulation 58 was framed under 'Section 49 by the Corporation and the, new clause 9 was inserted in the 1957 order by the Central Government. Nor can any action taken under section 19(2) and 9A of the I. D. Act have any relevance to the exercise of these powers so long as such exercise conform to the provisions of the L. I. C. Act. [1162 G-H, 1163 A-BJ (5) The reliance of the High Court on Madan Mohan Pathak v. Union of India, [1978] 3 SCR 334, for support to the proposition that "the new Regulation 58 framed under section 49 of the L. I. C. Act and the notification issued under sub-section (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 cf the I. D.

Act and which therefore continue to govern the parties thereto", i~ wholly misplaced because: (a) The judgment limited itself to the duration of the settlements as appearing in clause 12 thereof and therefore does not cover any period subsequent to 21st March, 1977. (b) No finding at all was given nor was any observation made to the effect that section~ II and 49 of the L. I. C, Act or the, action taken thereunder (the promulgation of new Regulation 58 and the new clause 9 of the 1957 Order) was ineffective against the operation of the provi'sions of the I. D. Act or of the 1974 settlements.

On the other hand the judgment very specifically proceeded on the ground that the two settlements had to and did conform to the provisions of Regulation 58 inasmuch as the Central Government had accorded its approval to them, (c) Although it was held clearly, rather quite correctly that sub-clause (ii) of clause 8 of the 1974 settlements stood independently of sub-clause (J) thereof, the judgment contains no finding whatsoe. ver to the effect that the conditions of service 'laid down in those settlement could be varied only by a fresh settl. ement or award made under the provisions of the I. D. Act and that till then sub· + c:Iause (ii) afore1;aid would remain in full force. [1165 C-H, 1166 A-BJ (6) The observations . in Chako's case must be taken to mean that the expired award would continue to govern the parties till it is displaced by another contract, or by a relationship otherwise substituted for it in accordanc~ with law.

Jn the present case, there is a special mandate by Parliament to fill the void of the 3rd period following the expiry of 1974 settlements which did not obtain in Chako's case. [1170 A-CJ South Indian Bank Ltd. v. A. R. Chacko, [1964] 5 SCR 625, Indian Link Chain Manufacturers Ltd. v. Their Workmen, [1972] 1 SCR 790, Shukla 9-'6 S C India/ND/81 Ma11seta Industries Pvt. Ltd. v. The Workmen Employed under it. [1978] 1 SCR 249; Haribhau Shinde and another v. F. H. Lala Industrial Tribunal, Bombay and another, AIR 1970 Born. 213, distinguished. . Sukhdev Singh & Ors. v. Bhagatram Sardar Singh Raghuvanghi and anr. , [1975] 3 SCR 619, followed. (7) 1.

Section 11(2) of the Corporation Act suffers from no ambiguity either by reason of the omission therefrom of the expression "from time to time" or otherwise and it is, therefore, not permissible for a reference to be made to the speech of the then Finance Minister in the matter of interpretation the Central Government promulgated the Life Insurance Corporation (Alteration of Remuneration and other Terms and Conditions of Service of Employees) Order, 1957 (the 1957 Order, for short). This related to the conditions of service of the transferees and was not confined only to Class III and Class IV employees among them. It was a general Order, not one limited to workmen as defined in s. 2(s) ·of the ID Act. Clause 9 of the 1957 Order states that no bonus will be paid but certain other benefits of insurance, medical care etc. , are mentioned t! Jerein. Clause 9 was later amended providing for non-profit sharing bonus to certain classes of employees.

Be that as it may, the Corporation, 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 not 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 Corporation. In 1960, the Life Insurance Corporation of India (Staff} Regulations, 1960 (the 1960 Regulations) were framed. Regula'. ion 58 states : The Corporation may, subject to such directions as the Central Government may issue, grant non-profit sharing bonus to its employees and the payment thereof, including conditions of eligibility for the bonus, shall be regulated by instructions issued by the Chairman from time lo time. Here again, it must be noted that '.

he provision is general and covers ·the entlre gamut of employees of the Corporation and is not 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. Consistently with '. he 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 Corporation. Rocketing cost of living, rising aspirations and frustrations of socio-economic life and the general expectations from model employers like the public sector enterprises, have led workmen in this country to make esca. \ating demands for better emoluments, LIFE INSURANCE CORPORATION V. D. J. BAHADUR iIO:J. (Krishna Iyer, !. ) including bonus. Naturally, the workmen under the Corporation 'A raised disputes for bonus and other improved conditions.

The employer, consistently with the long course of conduct 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 . B· these settlements specificated the scale of bonus and clause 12 thereof is more general and may be read here : Clause 8. Bonus : (i) No profit sharing bonus shall be paid. However, the corporation 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. · (ii) 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 D· an employee in respect of the financial year to which the bonus relates.

(iii) 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. E Clause 12: (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. (2) The terms of the settlement shall be subject to the approval of the Board of the Corporation and the Central Government. (3) This Settlement disposes of a\. l the demands raised by the workmen for revision of terms and conditions of their service. ( 4) Except as otherwise . provided or modified by this Settlement, the workme~ shall continue to be governed by all the G terms and condi'. ions of service as set forth and regulated by •. ·~ the Life Insurance Corporation of India (Staa' Regulations), \ 1960 as also the administrative instructions issued from time to i· time and they shall, subject to the provisions thereof including any .

I period of operation specified therein, be entitled to the benefits I II thereunder. It is important and, indeed, is an impressive feature that these two settlements cover a wide ground of which bonus is but one item. 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 covered 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 clown the said legis. Jation in Madan Mohan Pathak v.

Union of India(1) and directed the Corporation to pay to its Class III and IV employees bonus for the years 1-4-1975 to 31-3-1977. Thereupon, the Corporation issued to its workmen certain notices 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 notification 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 Jed to a challenge of their validity in the Allahabad High Court under Art. 226 of the Cons'. itution. If the two notices 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 contended that the proceedings under the UC Act could not prevail against the continued flow of bonus benefits under the ID Act.

·The High Court (Lucknow Bench) struck down the appellant's actions as of no consequence and void and sustained the claim for bonus based on the settlements of 1974. The Corporation has come up in appeal to this Court assailing the findings of the High Court. The Corporation is clearly an 'industry', and the 'workmen' raised demand5 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 Corporation (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 I 1974 but the challenge to its constitutionality was upheld.

When the parliamentary burial of bonus was stultified by judicial resurrection, other measures to effectuate the same purpose were resorted to, both (I) [19781 3 SCR 334. LIFE lNSURANCE CORPORATION V. D.. r. BAHADUR (Krishna Iyer, J. ) under the LIC Act and the ID Act. These moves proved to be essays in futility because t,he High Court 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 Corporation 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 not to reason why; but whether law does allow nullifi. s,etion of an industrial settlement is for judges to decide, not for the Administration to say, why not?

That is Montesquieu functionalism of sorts. So, against this backdrop, I will analyse the submissions, scan their substance and pronounce upon their validity. I may as well formulate, in more particularised form, the various contentions urged on either side-not exhaustively though, because that has been done by my learned brothers. I propose to confine 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 notice given by the Management under s. 19(2) of the ID Act termi·nating the settlements and under s. 9A of its intention to vary the conditions of service bearing on bonus. In case the settlements do not survive the notices, the claim to bonus perishes and nothing more remains to be decided.

But in case I hold that despite the intention to change the service conditions under s. 9A and determination under s. 19(2), the terms of the settlements continue to operate un:til substituted by a new contract arrived at by mutual settlement or by an . F' award, the further issue opens as to whether a settlement under the ID Act cannot be operative since the LIC Act contains provisions vesting power in the Corporation and the Central Government to fix the terms and conditions 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 1s an apparent conflict between the two. The problem of the prevalence of a special statute at against a general statu~e and the determination of which, in a given situation, is the special statute will engage my attention at the appro· priate 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 Corporation and the Central Government under the LIC Act and the Regulations framed thereunder will be sea. Jed. Of course, [1981] 1 S. C. R. if the holding is that the ID Act cannot operate as against the LIC Act and the Regulations framed thereunder, when dealing with the terms and conditions of service of the employees of the Corporation, I may have to venture into the controversy about how effectual are the. measures taken by the two statutory authorities, i. e. the Corpo-· ration and the Central Government, under the provisions of the LIC Act and the Regulations. Every point has been emphatically contested and argued by both sides with erudite niceties. However, the judicial perspective will be the decisive factor in the ultimate analysis. For,~ Brennan, J. has observed :(1) "The law is not an end in itself, nor 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 man's ends, ultimate and mediate. Law cannot stand aside from the social changes around it. " Judicial acceptance of social dynamics, as projected by the Constitution, 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 notice under s. 9A and the formal termina- E' tion 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 not be dissipated in counter-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 conflicts along conciliatory or adjudicatory processes. The objective of this legislation and th\! component of social justice it embodies were underscored in the 2 Bangalore Wa! 'er Supply and Sewerage Board v. Rajappa ( ) thus : .. (1) William J. Brennan Jr. Opinion Roth v. United States 354 U. S. 476 [1958]. (2) [1978] 2 sec 213 at 232. (Krishna Iyer, J.

) 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 contentment and regulates situations of crisis and tension where production may be imperilled by untenable strikts and blackmail lock-outs. The mechanism of the Act is geared to conferment of . regulated benefits to workmen and resolution, according to a sympathetic rule of law, of the conflicts, actual or potential, between managements and workmen. Its goal is amelioration of the conditions of workers, tempered by a practical sense of peaceful co-existence, to the benefit of both-not a neutral position but restraints on laissez faire and concern for the welfare of the weaker lot Empathy with the statute is necessary to understand not 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. lOA, the legal process springs into action. Under s. 11 and award is made after a regular hearing if a . conciliation under s. 12 does not 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(l) the appropriate government declares that the award shall not be enforceable.

Section 17A (4) which is of significance reads thus : (4) Subject to the provisions of sub-section (1) and subsection (3) regarding the enforceability of an award, the· award shall come into operation with effect from such date as may be specified therein, but where no date is so specified, it shall come 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, i(nd a settlement during conciliation or by agreement shall be binding because of statutory sanction. Section 19 relates to ithe 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 comment. Particular attention must be riveted on s. 19(2), (3) and (6) : 19. (1) A settlement shall come into operation on snclr date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on the date on which the memorandum of the settlement is signed by the parties to the dispu,te. (2) Such settlement shall be binding for such period as i. ~ agreed upon by the parties, and if no such period is agreed upon, for a period of six months (from the date on which the memorandum or 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 da:e on which a notice in writing of an intention t0 termindte t'he settle- 1 ment is given by one of the parties to the other party or parties to the settlement.

(3) 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 expi'fy of the said period, extend the period of opera- } trial disputes is comprehensive, G 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 : 29. Any person who commits a breach of any term of any . H. settlement or award, which is binding on him under this Act shall be punishable with imprisonment for a term wh. ich may extend 10-6 S. C.

India/ND/SJ to slx months, or with fine, or with both, and where the breach is a continuing one, with a further fine which may extend to two hundred rupees for every day during which the breach continues after the conviction for the first, and the Court 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 compensation, to any person who, in its opinion has ·been injured by such breach. - There are miscellaneous prov1s10ns to take care of other residuary matters and we get picture of a parliamentary project designed to deal, not piecemeal but wholesale, with a special subject of strategic c. oncern 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 country, with so much leeway to make up, cannot 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(! ) has highlighted '' this core truth. To lose sight of the spinal nature of the legislation, viz. , industrial disputes and their setl'lement through law, and to regard it as a mere enactment bearing on terms and conditions of service in enterprises is to miss the distinctive genre, particular flavour and legislative quintessence of the ID Act. .... (lnterpretation) involves far more than picking out dictionary defini.

t_ions of words or expressions used. Consideration of the context and the setting is indispensable properly to ascertain a meaning. In saying that a verbal expression is plain or unambiguous, we mean little more than 'that we are convinced that virtually anyone competent to understand it, and desiring fairly and impartially to ascertain its signification, would attribute to the expression in its context a meaning such as the one we derive rather than any other; and would consider any different meaning, by comparison, strained, or far-fetched, or unusual, or uniikely. (I) [1978J 2 sec 213. (Krishna Iyer, J. ) .... Implicit in the finding of a plain, clear meaning of an expression in its context, is a finding that such meaning is rational and 1 "makes sense" in that context. ( ) Interpretative insight will suffer, even as the judicial focus will blur, if the legislative target is not sharply perceived.

Indeed, I lay -so much stress on this f1acet because brother Koshal's otherwise faultless logic has, if I may say so with great deference, failed '10 convince me because of this fundamental mis-focus. To repeat for emphasis, the meat of the statute is industrial dispute, not conditions of employment or contract of service as ! Yueh. The line of distinction may be . fine but is real. Be that as it may, a bird's eye view of the ID Act reveals the 1 . statutory structi. Jre and legal engineering centering round dispute settlement in industries according to the rule of law and away . from fight with fists or economic 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-bi tatutory ethos and purpose. Industrial law frown! upon\ a lawless void and under general law the contract of service created by an award or settlement lives so long as a new lawful contract 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 conflict situation to lawless void? Now we will move on to the precedents on the poin1t which bve 1 been summed up by Malhotra thus : ( ) (3) 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 not 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 mann~r prescribed, but the rights and obligations which flow from it are not wiped out. Evidently, by the termination (1) Malhotra, The Law of Industrial Disputes, 2nd Edn. Vol. I p. 656. (Krishna Iyer, J. ) of an award, the contract of employment is not terminated, the obligations created by the award or contract could be altered by a fresh adjudication or fresh contract. (1). In Judhisthir Chandra v. Mukherjee(2) the position as stated above was accepted as correct by the High Court. A Division Bench of the Bombay High Court in Mangaldas Narandas v. Payment of Wages Authority etc. (3) (Shah and Gokhale, JJ) came to the same conclusion and neatly summed up the sequence of triple stages and the difference in legal consequences, and upholding the contention that even after termination of an award under s.

19(6) the terms incorporated in the award continued as a contract between the parties. So much so, no reversion to the pre-award position was permissible on . the part ol' the employer. The head-note which is sufficiently lucid and luminous, sums up the ratiO thus : Where an award is delivered by the industrial tribunal it has the effed of imposing a statutory contract governing the relations of the employer and the employee. It is true that statutory contract may be terminated in the manner prescribed bys. 19(6) of the Industrial Disputes Act. Aft. er the statutory contract is terminated by notice, the employer by failing to abide by the terms of the award does not incur the penalties provided by the Industrial Disputes Act, nor could the award be enforced in the manner prescribed bys. 20 of the Industrial Disputes (Appellate Tribunal) Act, 1950. But the termination of the award has not the effect 1)f extinguishing the rights flowing therefrom. Evidently by the termination of .

the award the conitract of employment is not terminated. The employer and the employee remain master and servant in . the industry in which they are employed, unless by notice the employer has also simultaneously with the termination of the award tern1inated the employment or the employee. If the employment is not termin;ated, it is difficult to hold that the rights which had been granted under the award automatically cease to be effective from the date on which notice of termination of the award becomes effective. The effect of termination of the award is only to prevent enforcement of the obHgations under (1) Workmen of New Elphinstone Theatre v. New Elphimtonc Theatre [1961] 1 LU 105 (119) (Mad); Ma11galdas Narandas v. Payment of Wages Authority [1957] II LLJ 256 (Bombay); Yamuna Mills Co. Ltd. v. Majdoor Mahajan Manda! [1957] I LLJ 620 (Born). H. (2) AIR 1. 950 Cal. 577. (3) [1957] II LLJ 256.

A the award in the manner prescribed, but the rights and obligations which flow from the award are rtot wiped out. Termination of the award or lapsing of the award has not the effect of wiping out the liabilities flowing under the award. An award has the effecc of imposing fresh tenns upon the B contract of employment between the employer and tlw employee to which they have been assented. The termination of such award does not terminate ~Ihe contract. Even after the award is terminated in the manner provided bys. 19(6) of the Industrial Disputes Act, the obligation created by the award <>ould be altered by a fresh contract or a fresh adjudication under the Industrial Disputes Act and not 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 adjudica~ion of disputes between them ; and the object D: of the legislature would be frustrated if after every few months by unilateral action the employer or the employees mav be entitled 110 reopen the dispute and ignore the obligations declared to be binding by the process of adjudication. (emphasis added) There is a remarkable con1inuity in the Bombay High Co:irt (a jurisdiction where industrial unrest is a sensitive issue) because we find that another Division Bench interpreting similar provisions in the Bombay Industrial Relat. ions Act has been persqaded by the same 1 reasoning, well brought out in the Head Note which we excerpt :( ) F· The re~ult of the award ceasing to have effect on notice of termination being given under s.

116(1) of the Bombay Industrial Relations Act is that 1he award ceases to exist. The result of the award ceasing to have effect i~ that it is open to either party to give a notice of change under s. 42 of the Act and attempt to bring about a change. Further it i~ open to the employer in cases in W"hich he could bring a change without a notice of change such as matters enumerated in Sch. III to 'the Act to bring about a change, because the impedhnent placed in his way by s. 46(3) is removed. But until a change is brought about by the act eiihcr -of employer or the employee af'ter following relevant provisions in (l) Yomuna Mills Co. Ltd. v. Majdoor Mahajan Manda/, Baroda & Ors. f957 I LU 620. (Krishna Iyer, J. ) the Bombay Industrial Relations Act, 1946, tVie award that exists, shall continue to regulate the relations between -the employer and the employees.

The effect of termination of an award is not that the rights which flow from that award cease to be available to the employees, but the effect of termination is that the award continues to govern the relations· between the employer and the employees until such time as a change is effected in accordance with the provisions of the Bombay Industrial Relations Act, 1946. (emphasis added) . A. - Indeed, the precise submission that upon termina1don by notice, the award ceased to have effect for all purposes and the employees were not enti'led to benefit thereunder ! ff. as raised and examined as a matter ,. . of great importance to industrial relations. The court, in our view rightly rejected the contention of the employer and with forceful preci- 1 sion argued to reach the conclusion which '.

he only sensible solution :( ) What this sub-section in effect provides is that if a notice of termination is given by eiiher party to the award, then on the expiry of two months from the date of such notice the registered agreement, settlement or award shall cease to have effect. ..... . But the question thar we have been called upon to determine goes a little furiher 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 1termination, already enjoyed under the award or does it preserve t·h~ whole of the award until it is· changed by the procedure prescribed by the Bombay Industrial Relations Act fqr a change? Now, quite obviously 111 would not be possible for any court to take the view that the terminarion of the award creates a vacuum in which the employees are at the tender mercy of the employer; nor does it appear to us to be possible to hold that by terminanation of the award the contract or agreement that governed the relations of the employer and the employees prior to the award is in some manner revived. Initially that contract or agreement had binding effect ; but it ceased to have such effect on the award H (1) 1957 I LLJ 620 at 623-624. .

taking effect and the moment the award became binding on the· parties, :the antecedent contract or agreement was superseded by the award. It is not a case of an antecedent contract or agreement being suspended, because there is no provision 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 seNlement under the Bombay Indus-trial Relations Acit has obviousiy the effect of superseding the contract or agreement that existed and that regulated the relations between the employer and the employees prior {'P the registered agreement, settlement or award taking effect' under the provisions of the Act. Then we come 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 no· principle 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 tlie award. Mr. Patel for the petitioners has argued that on the termination of the award the effect or rather the )'esult that is brought about is that the rights of parties are frozen as of that date. Assuming such a concept of freezing the rights was adopted, even the , freezing would be in respect of rights that have already accrued and it is not quite easy to conceive of rights which would not accrue to an employee under an industrial award and which can· only be contingent. In any event, if the original contracl' or agreement has been superseded by the award, holding that the award· ( ---{ is no longer 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 not been enjoyed; is dissecting the award in a manner not just;ified 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 nothing else than the award itself. The result of t'he award ceasing to have efject is not that the award ceases to exist ; the . result of the award ceasing to have effect is, as I have already pointed ow', that it is open to either party to give a notice of change and to attempt to bring about a change. (emphasis added) (Krishna Iyer, J. ) 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 Court in Sathya 3.

tudlos case(1) stressed the purpose of the ID Act and the preference for that interpretation which will advance that purpose. The Head Note brings out the holding correctly: ...... a combined reading of s. 18(3), sub-ss. (1) to (3) and (6) of s. 19, s. 23 and s. 29 leave no doubt that, bring about, conserve and promote industrial peace, the termination of an award under s. 19(6) does not mean that the terms and conditions evolved by it and applied to the industrial relations concerned would be set at large. AU that the 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. Bwt, so long as the award terminated under s. 19 (6) has not been substituted by an award, the industry concerned has to proceed on the basis that the terms and conditions of 'the award would continue to govern the terms of employment.

(emphasis added) We need not labour the point further because we are bound, precedentially speaking, by three decisions of this Court. Chacko's 2 case, ( ) in a clinching passage, settles the proposition and the Indian 3 Oil Corporaiion case( ) adopt:s a reasoning compelling the same con- 4 clusion even like Mohd. Quasim Larry( ) 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, 5 tlile Court observed( ) : This makes it clear that after the period of operation of an award has expired, the award does not cease to be effective. For, it continues to be binding thereafter on 1,he parties until notice has been given by one of the parties of the intention to terminate it1 and two months have elapsed from the date of such notice.

(1) Sathya Studios v. Labour Court 1978 I LLJ 227 (2) South Indian Bank Ltd. v. A. R. Chacko [1964] 4 SCR 625 (3) Management of Indian Oil Corpn. Ltd. v. Its Workmen [1976] 1 SCR 110 (4), Md. Qasim Larry, Factory Manager, Sasamusa Sugar Works v. Md. Samsuddin & Anr. [1964] 7 SCR 419 (5) [1964] 4 SCR 625 at 630-3_1 The effect of s. 4 of the Industrial Disputes (Ba. nking Companies) Decision Act is that the award ceased to be in force after March 31, 1959. That however has nothing 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 continue to be binding on tihe parties is not in any way affected by s. 4 of the Industrial Disputes (Banking Companies) 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 11:he provisions of s.

19(6) i( will continue to have its effect ns a contract between the parties that has been made by industrial adjudication in place of the old contract. So long as the award remains in operation under s. 19(3), s. 23(c) ! Jtands in the way of any strike by the workmen and lock-out by the employer in respect of . any matter covered 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 no operation. We cmi however see nothing in the scheme of Industrial Disputes Act to justify a conclusion that merely becauS -- substance, constitute a fresh contract between the pitrties.

(emphasis added) Again, a Bench of four Judges in the Indian Oil Corporation 3 case( ) reiterated the same principle in the context of s. 9A of the lb Ac't although the court did not specifically advert to Chacko's case (supra). In the Indian Oil Corporation cas" (supra) the question ~ turned on ilhe ma11agement seeking to effect changes in the service (1) Md. Qasim Larry, Facto1y Manager, Sasamusa Sugar Works v. Md. Samsuddin & Anr [1964] 7 SCR 419 at 422 (2) South Indian Bank Ltd. v. A. R. Chacko [1964] 4 SCR 625. (3) Man(lgement of Indian Oil Corporation Ltd. v. Its workmen [1976] l SCR 110 conditions of the workmen. The Court made observations which have pertinence to the non-extinguishment of the contract of service until a negotiated or adjudicated substitution comes 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 non-compliance with the provisions of this section would m1doubtedly 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 Compensatory Allowance it should have given notice to the workmen, negotiated the matter with them and arrived at some settlement instead of withdrawing ~ j the compensatory allowance overnight. (emphasis added) This ruling shows (a) that unilateral variation by the management is an exercise in futili,try, and (b) an award or settlement must take the place of the·contract sought to be varied. We have a similar situation in the present case vis-a-vis the notice under s. 9A and the ruling in tihe 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 comes 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 no more than between Tweedledum and Tweedledee. A Division Bench of the Bombay High Court had occasion to examine the effect of a notice under s. 19(2) of the ID Act in terminating a selitlement and that ruling deserves special mention because it deals with the the survival beyond the twomonths notice of termination of a settlement (not an award). Tarkunde J, spealdng for the Bench and following Chqcko's case (supra) observed in the context of notice to terminate the set1lement 2 under s. 19. (2) : ( ) Even if a notice of its intent~on to terminate the settlement was given by either party, the settlement did not automatically cease to be operative on the expiry of two months from the date of the notice.

The legal position is that the terms of a settlement continue ~o govern the relations between the parties after the notice of termination and the expiry of two months thereafter, until the settlement is replaced by a valid contract or Liward (I) [1976] 1 SCR 110 at 117 (2) Maruti Mahipati Mullick & Anr. v. M /s Polson Ltd. & Anr. 1970 Lab. 1. C. 308 at 310 (Krishna Iyer, J. ) between the parties. This was laid down by the Supreme Court in South Indian Bank 'Ltd. v. Chacko [1964] 1 LLJ 19-AIR 1964 SC 1522, while dealing with the binding effect of an award under the provisions contained in sub-section (6) of section 19 of the Industrial Disputes Act. The Authority in the present case was, therefore, not justified in rejecting the workmen's 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. Economic freedom of the weaker sections :is behind these precedents, almost reminding us of Tennyson : A land of settled government, A land cif just and old renown, Where freedom slowly broadens down, From precedent to precedent. 'The Jaw is lucid and the justice manifest on termination notice or notice '{)f change the award or settlement does not perish but survives to bind until reincarnation, in any modified form, in a fresh regulation of conditions of service by a settlement or award. Precedent& often broadly guide but when on the same point willy-nilly bind. So here, even if I would,· I could not and even if I could, I would not depart from the ·wisdom in Chacko's case (supra) with consistent case-flow-before and ·after.

An aching void, an abhorrent vacuum, a legicidal situation of industrial clash cannot be a judicial bonus when the constitutional ·~ommand is social justice. The catena of cases we have briefly catalogued discloses an un- 1broken stream of case-law binding on this court, the ratio whereof, even otherwise, commends its. elf to us. The award or settlement under the ID Act replaces the earlier contract of service and is given plenary effect as between the parties. It is not a. case of the earlier contract being kept under suspended animation but suffering supersession.

Once the earlier contract is extinguished and fresh conditions of service are created by the award or the settlement, the inevitable consequence is that even though the period of operation and the span of binding force expire, on the notice to terminate the contract being given, the said contract continues to govern the relations between the parties until a new agreement by way of settlement or statutory contract by the force of an award takes its place. If notice had not been given, the door for raising an industrial dispute and fresh conditions of service, would not 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 not the lethal effect of invitation to industrial trial of strength with no conttract of service or reversion to an obsolete and long ago 'dead' contract 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 notice terminating the settlement were given by the employer. Does industrial law absurdly condemn ,ihe 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 notice under s. 19(2) or (6) terminating ·the set. tlement or a:. vard, tell the workers 1ha1 they would be paid Rs. 100 which was the original contract although in law that contract had been extinguished totally by a later , contract of settlement or by force of an award? The horrendous consequences or such an interpretation may best be Ieft to imagina-tion.

Moreover, if industrial peace is the signature tiUne of industrial law, industrial violence would be the vicious shower of consequences if parties were relegated either to an ancient and obsolete contract or a state of lawless hratus. No canon of interpretation of statutes can compel the court to construe a statutory provision in this manner. We have, no doubt, that the precedents on tlhe point, the principles of industrial law, the constitutional sympathy of Part IV and the sound rules of statutory construction converge to the same point that when a notice intimating termination of an award or settlement is issued the legal import is mere! y that the stage is set for fresh negotiations or industrial adjudication and until either effort ripens into a fresh set of conditions of service the previous award or settlement does regulate the relations between the employer and the employees. The court never holds justice as hostage with law as janitor!

Law, if at all, liberates justice through tff1e judicial process. Fundamental error can be avoided only by remembering fundamental values. At this stage I may record my firm conclusion that for the reasons already given the settlement under the ID Act does not suffer death merely because of t1he notice issned under s. 19(2). 'All that is done is a notice "intimating its intention to terminate the award". The (Krishna Iyer, !. ) award even if it ceases to ·be operative qua award, continues qua contract. Therefore, if the ID Act regulates the jural relations between the LIC and its employees-an 'if' we will present[y scan-then the rights under the settlements of 1974 remain until replaced by a later award or settlement. In my view, to reverse tlhe High Court's holding will be to disregard the consistent current of case-law-a step I hesitate to take in the sensitive area of labour relations under a Constitution with social justice slant. Lord Herscheli in Russell v.

Russell [1897] AC 395 1 observed : ( ) I have no inclination towards a blind adherence to precedents. I am conscious that the law must be moulded by adapting · it on established principles to the changing conditions 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 Corporation employees. Immediately, we are confronted with the question as to whether the LIC Act is a special ligislation or a general legislation because the legal maxim generalia specialibus non derogant is ordinarily attracted where there is a conflict between a special and a general statute and an argument of implied repeal is raised.

Craise states the law 2 correctly : ( ) The general rule, that prior statutes are held to be repealed by implication by subsequent statutes if the two are repugnant, is said not to apply if the prior enactment is special and the subsequent enactment is general, ·the rule of law being, as 3 stated by Lord Selbourne in Mary Seward v. Veera Cruz( ) "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 not 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 pal'ticular intention to do so. " "There is a well-known rule which has application to this case, which is that a subsequent general Aot does not affect a prior special Act by implication.

That this is the law cannot be doubted, and the cases on the subject will be found collected in the third edition of Maxwell is generalia specialibus IWn derogant-i. e. general (! ) Robert Stevens, Law and Politics, p. 92, f. n. 83. (2) Craise on Statute Law, 1963 Edn. pp. 376-7. (3) [1884] 10 AC 59, 68. 11---6 S. C. lndia/ND/81 provisions will not 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 not intended to interfere with the special provision unless it manifests that intention very clearly. Each enactment must: be construed in that respect according to its own subjectmatter 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 latiter pro t'anio repeals or prevails over the eariier 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 conclusion, 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 sp1xial statute the proposition contended for by the appellant that the settlement depending for its sustenance on the ID Act cannot hold good against s. 11 and s. 49 of the LIC Act, read with Reg. 58 thereunder. This exercise constrains me to study the scheme of the two statutes in the context of the specific controversy I am dealing with.

There is no doubt that the LIC Act, as its long title suggests, is an Act to provide for the nationalisa1tion of life insurance business in India by transferring all such business to a Corporation established for the purpose and to provide for the regulation and control of the business of the Corporation and for matters connected therewith or incidental thereto. Its primary purpose was to nationalise private insurance business and to establish the Life Insurance Corporation of India. Inevitably, the enactment spelt out the functions of the Corporation, provided for the transfer of existing life insurance business oo the Corporation and set out in detail how the management, finance, accounts and audit of the Corporation should be conducted. Incidentally, there was provision for transfer of service of existing employees of the insurers to the Corpoartion and, sub-incidentally, their conditions of service also had to be provided for.

The power to make regulations covering 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 concerned, 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 nothing to do with the particular problem of disputes b'etween employer and (Krishna Iyer, J. ) employees, or investigation and ·adjudication of such disputes. It does not deal with workmen and disputes between workmen and employers or with industrial disputes. The Corporation has an army of employees who are not workmen at all. For instance, the higher echelons and other types of employees do not fall within the scope of workmen as defined in s. 2(s) of the ID Act.

Nor is the Corporation's main business investigation and adjudication of labour disputes any more than a motor manufacturer's chief busine~s is spraying paints! In determining whether a SJtatute 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 cannot blur distinctions' when dealing with finer points of law. In law, we have a cosmos of relativity, not 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 coming within its amb~t. 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 oinega 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 not speak a