Holding

The classification of employees based on the date of entry into service is a valid classification with a reasonable nexus, and Regulation 19(2) does not violate Articles 14 and 16; therefore the High Court's striking down of the regulation was erroneous.

Summary

The case concerned the constitutional validity of Regulation 19(2) of the Life Insurance Corporation of India (Staff) Regulations, 1960, as amended in 1977, which required employees appointed on or after 1 September 1956 and belonging to Class I or II to retire at age 58, with a provision for retirement at 50 in the corporation's interest. S.S. Srivastava, a transferred employee promoted from Class III to Class I, challenged the regulation, arguing that the differing retirement ages for transferred and directly recruited employees violated Articles 14 and 16 of the Constitution. The corporation and the Union of India contended that the classification based on the date of entry was a reasonable and necessary distinction rooted in historical facts and the need for uniformity among transferred staff. The Supreme Court held that the classification was reasonable, had a rational nexus to the statutory purpose, and that the retirement age of 58 for post‑1956 appointees was not arbitrary or unconstitutional. Consequently, the Court set aside the High Court's order striking down the regulation and dismissed the writ petition, allowing the appeals.

Issues considered

The constitutional validity of Regulation 19(2) of the LIC (Staff) Regulations, 1960 as amended in 1977.
Whether the classification of employees into transferred and post‑1956 recruits for the purpose of fixing retirement age violates Articles 14 and 16 of the Constitution.
Whether promotion of a transferred employee from Class III to Class I alters his entitlement to the higher retirement age of 60 years.
Whether fixing the retirement age at 58 years for employees appointed after 1 September 1956 is unreasonable or arbitrary.
Whether the powers conferred on the Central Government under Section 11(2) and Section 49(2) of the Life Insurance Corporation Act, 1956 permit such differential treatment.

Legislation cited

Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970s. 12(2)
Constitution of Indias. Article 14, s. Article 16
Industrial Disputes Act, 1947s. 18(1), s. 2(p)
Life Insurance Corporation Act, 1956s. 11(1), s. 11(2), s. 48(2), s. 48(2A), s. 49(2)

Subjects

constitutional lawequalityArticles 14 and 16public sector corporationage of superannuationretirement ageemployee classificationpromotiontransferred employeesLife Insurance Corporation of India

Judgment

'
A LIFE INSURANCE CORPORATION OF INDIA &
ANOTHER ETC.
v.
S.S. SRIVASTAVA & OTHERS

MAY 5, 1987
B
[E.S. VENKATARAMIAH AND K.N. SINGH JJ.]

Life Insurance Corporation of India (Staff) Regulations 1960- -4' •
Retirement of Class I and Class II Employees appointed on or after
September 1, 1956 at 58 years-Whether valid and legal. "#'
c Life Insurance Corporation Act, 1956--Section 11(2)-Fixation
of 60 years as age of superannuation for transferred employees-
Whether unreasonable.

Constitution of India, 1950-Articles 14 and 16-Different ages of
D retirement for Class I and II Officers-Classification of employees into
two categories for fixing of age of superannuation depending on dates of
entry into service-Whether valid and legal.

The Life Insurance Corporation was established 011 September 1,
1956 under the Life l11Sura11ce Act of 1956 (Act 31 of 1956) by
E amalgamati11g about 200 i11surers carrying on life insurance business in
the country. It had no employees ofits own to carry on the vast business
which had been taken over and the nature of the work was such that the
Corporation required the services of employees with experience and
expertise in running life insurance business. In order to meet the above
need, Sectio11 11 ol'the Act came to be enacted. Sub-section (1) provided
F that with e!Tect from September 1, 1956, every whole time employee of
the erstwhile insurers would become an employee of the Corporation
and hold oftice therein by the same tenure, at the same remuneration,
and upon the same terms and conditioPS and with the same rights and
privileges as to pension and gratuity and other matters as he would have
held on September 1, 1956, had the Act not been passed.
G
The conditions of service of the employees whose services were
transferred to the Corporation under Section U(l) were not uniform.
The conditions governing the retirement of those employees were also
diverse and dill'erent. In some cases the age of retirement had been
fixed at 55 years, in some at 58 years and in some others at 60 years. In
H many cases, the insurers had permitted their employees to continue in
180
L.I.C. v. S.S. SRIVASTAVA 181

their services even beyond 60 years depending upon their etliciency and A
physical capacity.

For the purposes of rationalising the pay scales of the transferred
employees, under sub-section (2) of Section 11 the Central Government
was empowered to alter the terms of service of the employees as to their
remuneration in such manner as it thought lit. The sub-section was B
amended by Acts 17 and 36of19S7.

Clause (bb) of sub-section (2) of Section 49 conferred power on the
Corporation to make regulations with the previous approval of the
Central Government as regards 'the terms and conditions of service of
persons who had become employees of the Corporation under sub- c
section (1) of Section 11'.

Under clauses (b) and (bb) of Section 49(2) of the Act, Begulations
were framed prescribing the ages of retirement of the employees of the
Corporation belonging to different categories with the previous
approval of the Central Government and were incorporated in the Life D
Insurance Corporation of India (Stall) Begulations, 1960 made by the
Corporation which came into effect on July, 1960.

Under Begulation 19(1), all transferred employees were entitled
to remain in service till they completed 60 years of age but the appoint·
ing authority was empowered to retire any such transferred employee E
on completion of 55 years of age or at any time thereafter, if his elli·
ciency was found to have been impaired. Under Regulation 19(2) emp·
Ioyees appointed to the service of the Corporation on or after September,
1956, were required to retire on completion of 58 years of age but the
appointing authority was empowered to retire any such employee on
completion of 55 years of age or thereatler if his elliciency was found to F
have been impaired.

In the case of the transferred employees this regulation was made
in conformity with the 'standardisation order' passed in respect of
Class III and Class IV transferred employees. in whose case the age of
t retirement was fixed at 60 years. The result was that the regulation G
made a clear and distinct classitication of all the employees of the
Corporation belonging to all dasses into two groups-transferred emp·
loyees and the employees appointed after September 1, 1956 for
purposes of the age of retirement having regard to the historical
reasons.
H
182 SUPREME COURT REPORTS [1987] 3 S.C.R.

A Consequent upon the settlement arrived at, upon an industrial
dispute which arose between Class III and Class IV employees who were
appointed subsequent to September 1, 1956 in the Corporation, Fegula-
tion 19 of the Life Insurance Corporation of India (Stall) Regulations
1960 which came into force w.e.f. July 1, 1960 was amended and the
employees of the Corporation were divided both longitudinally and
latitudinally insofar as the age of retirement was concerned. Longitudi-
nally, all the transferred employees belonging to Class I and II became
entitled to continue in service till they attained the age of 60 years, the
Corporation being empowered to retire any of them prematurely on
completion of 55 years of age if his etliciency was found to have been
impaired, and all the Class I and Class II otlicers appointed to the
c service of the Corporation on or atler September 1, 1956 had to retire
on completion of 58 years of age subjet again to the power of the Corpo-
ration to retire any such employee on completion of 55 years of age or at
any time thereatler if his etliciency was found to have been impaired.
Latitudinally, the employees were divided into two groups and .all the
employees belonging to Class III and Class IV, irrespective of the fact
D whether they were translerred employees or employees appointed after
September 1, 1956 were entitled to continue in service till 60 years of
age, but the employees belonging to Class I and Class II who were
appointed to the service of the Corporation on or aller September 1,
1956 had to retire on the completion of 58 years of age subject to the
usual clause relating to premature retirement.
E
Sub-regulation (2) of Fegulation 19 was modified empowering the
appointing authority to extend at its discretion of service of any emp-
loyee of the Corporation belonging to Class. I or Class II categories
appointed to service on or aller September 1, 1956 for one year at a time
upto 60 years of age. The power to extend the service of employees
F belonging to Class I and Class II appointed on or after September 1,
1956 beyond 58 years of age was withdrawn from January 21, 1977 and
the Corporation was permitted to retire an employee on completion of
50 years of age.

The first respondent joined the Corporation as a Class III emp-
G loyee on March 22, 1957. Subsequently, he was promoted to a Class I ~
post and ultimately as Assistant Divisional Manager. Since he was born
in the month of June, 1926, notice was issued to him in February, 1984
of his retirement which was due on June 30, 1984 on his completing the
age of 58 years. Before the date of his retirement, he instituted a writ
Petition in the High Court questioning the validity of Fegulation 19(2)
H of the (Stall) Regulations, 1960, as it stood then and prayed for the issue
L.I.C. v. S.S. SRIVASTAVA 183

o!' writ o!' mandamus directing the Corporation not to retire him before A
he attained the age ol' 60 years.

It was contended by the first respondent before the High Coulft
that there was no justification to prescribe two different ages ol' retire-
ment one for the transferred employees belonging to Class I and Class
II categories and the other for the employees who joined the service of B
the Corporation after September 1, 1956 and who also belonged to
Class I and Class II categories, and that in regard to those who joined
the service after being appointed to Class III post aller September 1,
1956, there could not be any reduction of age of retirement from 60 to
58 years on their being promoted to a Class I or Class II post. Since he
· had the right to continue in service if he had remained in Class III only C
till he attained the age of 60 years as a Class Ill employee, age of
retirement could not be reduced to 58 years only because he had been
promoted to a Class I post.

It was urged on behalf of the Corporation and the Union of India
that the transferred employees and the employees who joined the D
service after September 1, 1956 belonged to two distinct and separate
classes which had been treated differently throughout for valid reasons.
Since there was no uniformity in the establishments in which the trans-
ferred employees were working prior to nationalisation of the life
insurance business, it became necessary to fix the age of retirement of
the transferred employees on a fair, equitable and just basis. In the 'E
circumstances, the classification of the employees into two categories,
namely, transferred employees and others who joined on or after
September 1, 1956 for the purposes of age of superannuation was a
valid classification and Articles 14 and 16 of the Constitution had not
been violated. It was further submitted that the discrimination made
between the employees belonging to Class I and Class II on the one hand F
and the employees belonging to Class III and Class IV on tbe other in the
matter o!' the age of superannuation was not invalid since they belonged
to two different categories of employees who were governed by dill'erent
conditions of service as regards pay, perquisites, allowances, adminis-
trative powers etc.
G
The High Court did not !ind any unconstitutionality in a rule or
regulation providing the age of retirement at 60 years of employees who
had been absorbed from the service of the erstwhile insurers and to that
extent it held that the grouping being reasonable the Court might not
travel into the domain of legislative policy. It, however, found that
when once a transferred employee belonging to Class III and an emp- H
184 SUPREME COURT REPORTS (1987] 3 S.C.R.

loyee appointed after 1st September, 1956 by the Corporation to a Class
A
III post is promoted to Class I, the distinction of the transferred emp-
loyee _and direct appointee could not be maintained, as on promotion
tiley became persons belonging to the same category of employees
enjoying the same conditions of service. Hence the age of retirement
should be the same in the case of both such promotees. It accordingly
B held that the first respondent was entitled to continue till he attained the
age of 60 years as other Class I employees belonging to the category of
transferred employees. The Writ Petition was allowed and RegulaHon
19(2) was struck down as being violative of Articles 14 and 16 of the
Constitution of India and the Corporation was directed not to retire the
first respondent before he attained the age of 60 years.
c Allowing the appeals, by special wave, of the Life. Insurance
Corporation oflndia and the Union oflndia, this Court,

HELD: 1.1 The decision taken by the Corporation and the Cen-
tral Government as regards the ages of retirement of the different clas-
D ses of the employees of the Corporation is a bona tide one aod cannot be
characterised as unreasonable aod it is not, therefore, liable to be upset
by a decision of the Court. [222G J

1.2 In the instant case, the High Court erred in striking down
Regulation 19(2) of the L.l.C. (Staff) Regulations 1960 as amended in
E the year 1977 and in directing the Corporation to continue the first
respondent in its service till he completed the age of 60 years. [223A]

2.1 Classification of employees into two categories fQr purposes of
tiiQng the age of' superannuation depending up6n the date of entry into
service is not something which is unusual, aod such classification
F becomes necessary on account of historical facts and the need for treat-
ing the employees in a fair and just way. [220G]

2.2 Merely because the pay, allowances and other perquisites
drawn by the transferred employees and by the employees appointed
after September 1, 1956 by the Corporation are the same, it ca11Dot be
G said that the transferred employees and the other employees had been ~
integrated so as to form one cadre. So far as the age of retirement is
concerned, they are being treated diflerently right from the date on
which the Corporation was established. [221G]

2.3 In the instant case, since the classification of the employees
H for the purpose of age of retirement into two categories is reasonable
L.I.C. v. S.S. SRIVASTAVA 185

and not arbitrary and there is a reasonable nexus between the classi- A
fication and the object to be attained thereby, it is not possible to bold
that Regulation 19(2) is violative of Articles 14 and 16 of the Consti-
tution. [222C]

3. The Act itself made a distinction between the transferred emp·
loyees and the employees recruited to the service of the Corporation B
after September 1, 1956 by making amendments in Section 11 and in
clauses (b) and (bb) of sub-section (2) of Section 49 of the Act. In the
(Staft) Regulations, 1956 and the (Staft) Regulations, 1960 there was
again a distinction made between the transferred employees and the
employees recruited after September 1, 1956. The distinction between
the two classes is recognised by Parliament even as late as 1981 which it C
amended Section 49 of the Act by deleting clause (bb) of sub-section (2)
thereof and by amending Section 48 of the Act by introdudng clause
(cc) in sub-section (2) and the new sub-section (2A) in it. At no point of
time the transferred employees were integrated into ane cadre along-
with employees appointed after September 1, 1956 as such and the
transferred employees have retained their birth-marks throughout. The D
!'act that the pay, allowances and other conditions of services have been
made the same in respect of both the transferred employees and the
employees of the Corporation recruited after September 1, 1956 has not
brought about the integration of the two Cla8Ses of employees into one
single cadre. [214GH; 215A: E-F]
E
4.1 The determination of 58 years as age of superannuation, in
the case of the employees, who entered service after September 1, 1956
by itself cannot be considered to be arbitrary since in almost all the
public sector corporations, Central services and the State services, 58
years age is considered to be a reasonable age at which officers can be
directed to retire from their service. [212C] F

4.2 Regarding the discrimination in the age of retirement bet-
ween employees belonging to Class I and Class II on the one hand and
Class III and Class IV on the other, it is true that originally employees
belonging lo Class III and Class IV categories amongst the transferred
employees were given the benefit of retirement at the age of 60 years, G
but the employees belonging to Class III and Class IV categories atler
1st September, 1956 were required to retire ou the completion of 58
years of age. Pursuant to the settlement arrived at between the Manage-
ment and the Class III and IV employees recruited after September 1,
1956, this discrimination was removed and Regulation 19 was amended
w.e.f.June 19, 1965. [212D-F] H
186 SUPREME COURT REPORTS (1987] 3 S.C.R.

A 4.3 Having regard to the lower emoluments and other benefits
which the employees belonging to Class III and Class IV are entitled to
get from the Corporation and the higher emoluments and other benefits
to which ollicers belonging to Class I and Class II are entitled to and
also the nature of their work and the powers enjoyed by them, fixation
B of ditJerent ages of retirement to the different classes of employees
could not by itself be violative of Articles 14 and 16 of the Constitu-
tion. [212F-G I

5. Having regard to different conditions of service that were pre-
vailing in the varions establishments whose business was taken (Iver by
the Corporation, fixation of age of superannuation is one of the essential
C parts of the process of transfer and integration to which sub-section (2)
of Section 11 of the Act is applicable. The lixation of 60 years as the age
of superannuation in the case of transferred employees cannot be con-
sidered to be unreasonable in view ot'the history of this case. [208C-D] y·
D 6. The transferred employees who are treated favourably belong
to a vanishing group and, perhaps, within a period of two years none of
them would be in the service of the Corporation. Thereafter, only one
class of employees would be in the service of the Corporation, namely,
those appointed subsequent to September 1, 1956 by the Corporation in
respect of whom the Corporation has fixed the age of retirement as 58
E years which corresponds to the age of retirement in almost all the public
sector establishments, the Central Government services and the State
Government services. [221C-E]

7. The High Court was right in holding that it was not discrimi-
natory to extend the benefit of the age of 60 years to the transferred
F employees. However, it was not correct in holding that on promotion
from Class III to Class I, the transferred employees and the directly
recruited employees would lose their birth-marks. The intention of
Parliament was that even as late as in 1981 the two groups of employees,
namely, the transferred employees and employees recruited after
September 1, 1956 in the Corporation should be kept separate. In these
G .circumstances, the High Court was in the error in holding that when
employees are recruited to a lower grade from two sources, no favour-
able treatment should be extended to recruits t'rom one source on their
promotion to the higher grade. The fact that an employee had entered
the service of the Corporation aller September 1, 1956 in a Class III
post and is later on promoted to a Class I post does not make any
H difference. [216E-H; 217D]
L.1.C. v. S.S. SRIVASTAVA 187

8. In the instant case, when the first respondent was promoted to A
the Class I post in 1963 the age of retirement of officers in the Class I
post had been fixed at 58 years and was not different from the age of
retirement of Class III employees. It was only in 1965 under the settle-
ment, the age of retirement of employees in Class III and Class IV who
joined service after September 1, 1956 was raised to 60 years. If he felt
that the conditions of service of Class I officers were Ukely to be prejudi- B
cial to him, he could have refused the promotion offered to him. Having
accepted the promotion alongwith the higher benefits flowing from it he
cannot contend after several years that he had been prejudicially af-
fected by the condition relating to the age of retirement applicable to
Class I officers appointed after September 1, 1956. That apart, the
higher emoluments and other perquisites to which Class I employees C
may be entitled to and the better conditions of work which are enjoyed
by them substantially compensate the effect of the lowering of the age of
retirement from 60 years to 58 years. [213E-G]

Christopher Pimenta and Others v. Life Insurance Corporation of
India, A.I.R. 1958 Bombay 451; Life Insurance Corporation of India v. D
D.J. Bahadur & Ors., [1981] 1 S.C.R. 1083; Ram Lal Wadhwa & Anr.
v. The State of Haryana & Ors., [1973] l S.C.R. 608; State of Punjab v.
Joginder Singh, [1963] Supp. 2 S.C.R. 169; Tejinder Singh and Another
v. Bharat Petroleum Corporation Ltd. and Anr., [1986] 4 S.C.C. l37;
Roshan Lal Tandon v. Union of India, [1968] 1 S.C.R. 185; Miss Lena
Khan v. Union of India and Ors., Jt. [1987] 2 S.C. 19; Railway Board v. E
A. Pitchumani, [1972] 2 S.C.R. 187; Manindra Chandra Sen v. Union
of India & Ors., A.I.R. 1973 CAL. 385; M/s British Paints (India) Ltd.
v. The Workmen, [1966] 2 S.C.R. 523; Mohammad Shujat Ali & Ors.
etc. v. Union of India & Ors. etc. lt975] 1S.C.R.449; Workmen of the
Bharat Petroleum Corporation Ltd. (Refining Division) Bombay v.
Bharat Petroleum Corporation Ltd. and Another, [1984] 1 S.C.R. 251; F
Tamil Nadu Education Department Ministerial & General Subordi-
nate Service Association v. State of Tamil Nadu & Anr., [1980] 1
S.C.R. 1026, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1076-
1077 of 1987. G

t From the Judgment and Order dated 17.8.1985 of the Allahabad
High Court in C.M. Writ No. 6849 of 1984.

K. Parasaran, B. Datta, P.P. Rao, K.L. Hathi, Anil Nauriya,
S.R. Aggarwal, Y. Ramachandran, U.J. Rana, R.P. Srivastava, Hem- H
188 SUPREME COURT REPORTS [1987] 3 S.C.R.

A ant Sharma, P. Parmeshwaran, Ms. Sushma Suri and C. V. Subba Rao
for the Appellants.

M.K. Ramamurthy, C.S. Vaidyanathan, S. Ravindra Bhatt,
Mohan, S.R. Setia and Probir Choudhary for the Respondents.

B The Judgment of the Court was delivered by

VENKATARAMIAH J. The question involved in these appeals
by special leave which are filed against the judgment dated August 17,
1985 of the High Court of Allahabad in Civil Miscellaneous Writ No.
6849 of 1984 relates to the constitutional validity of regulation 19(2) of
the Life Insurance Corporation of India (Staff) Regulations, 1960
c (hereinafter referred to as 'the (Staff) Regulations, 1960'}, as amended
on 21. !. 1977 by the Life Insurance Corporation of India (hereinafter
referred to as 'the Corporation') which provides that an employee
belonging to Class I or Class II appointed to the service of the Cor-
poration on or after 1st September, 1956 shall retire on completion of
D 58 years of age but the competent authority may, if it is of the opinion
that it is in the interest of the Corporation to do so, direct such emp-
loyee to retire on completion of 50 years of age and at any time there-
after on giving him three months' notice or salary in lieu thereof.

Prior to January, 1955 tl~ere were more than 200 insurers carry-
E ing on life insurance business in India. As it came to the notice of the
Government that the Indian life insurers, with a few exceptions, were
virtually controlled by few individuals who were utilising the funds of
those companies to the detriment of the industry and the policy-
holders, the Government decided to nationalise the life insurance
business. Pursuant to the said decision, the President of India promul-
F gated the Life Imurance (Emergency Provisions) Ordinance, 1956 on
January 19, 19.56 providing for the vesting of the management of the
life insurance business (which was called the controlled business under
the Ordinance) which was being carried on by any insurer in India on
that day in the Central Government and providing for its management.
On the passing of the said Ordinance the management of the control-
G led business of all the insurers in India thus vested in the Central
Government and pending the appointment of the custodians for the
controlled business of any insurer the person in charge of the manage-
ment of such business immediately before the passing of the Ordinance
was required to be in charge of the management of the business for and
on behalf of the Central Government. The Ordinance contained de-
H tailed provisions for the carrying on of the life insurance business by
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH. J.) 189

the Government for the time being. The Ordinance was replaced by A
the Life Insurance (Emergency Provisions) Act, 1956 which was
published on 21st of March, 1956. The said Act was followed by the
Life Insurance Corporation Act, 1956 (Act 31 of 1956) (hereinafter
referred to as 'the Act') which was published in the Gazette on 18th
June, 1956. The Act, however, came into force on ]st July, 1956. The
Act provided for the establishment and incorporation of the Corpora- B
tion. The Corporation was accordingly established on fat September,
1956. Under the Act the expression 'appointed day' is defined as the
date on which the Corporation is established. The appointed day for
the purposes of the Act is, therefore, September 1, 1956. By virtue of
section 7 of the Act on the appointed day all the assets and liabilities
appertaining to the controlled business of all insurers, the manage-
ment of which it had been taken over earlier by the Central Goven-
c
ment, stood transferred to and vested in the Corporation. When the
Corporation thus came into existence it had no empioyees of its own to
carry on the vast business of the large number of ins'1rers which had
been taken over by it. It, therefore, became necessary to transfer the
services of the existing employees of the insurers to the Corporation D
beca!lse without the services of those employees it was almost impossi-
ble for the Corporation to run the life insurance business in India
which involved management of the various offices situated in different
parts of India, servicing nf lakhs of insurance policies, the administra-
tion of the assets taken over from the insurers and several other
activities connected with the life insurance business. The nature of the E
work of the Corporation was such that it required the services of the
employees with sufficient experience and expertise in running the life
insurance business. In order to meet the above need section 11 of the
Act came to be enacted. Section 11 of the Act originally stood as
follows:
F
"11. Transfer of service of existing employees of insurers
to the Corporation-

( l) Every whole-time employee of an insurer whose
controlled business has been transferred to and vested in
the Corporation and who was employed by the insurer G
wholly or mainly in connection with his controlled business
immediately before the appointed day shall, on and from
the appointed day, become an employee of the Corpora-
tion, and shall hold his office therein by the same tenure, at
the same remuneration and upon the same terms and con-
ditions and with the same rights and privileges as to pen- H
190 SUPREME COURT REPORTS [1987] 3 S.C.R.

A sion and gratuity and other matters as he would have held
the same on the appointed day if this Act had not been
passed, and shall continue to do so unless and until his
employment in the Corporation is terminated or until his
remuneration, terms and conditions are duly altered by the
Corporation:
B
Provided that nothing contained in this sub-section
shall apply to any such employee who has, by notice in ·+
writing given to the Central Government prior to the
appointed day, intimated his intention of not becoming an •
employee of the Corporation.
c (2) Notwithstanding anything contained in sub-sec-
tion (1) or in any contract of service, the Central Govern-
ment may, for the purposes of rationalising the pay scales y
of employees of insurers whose controlled business has
been transferred to and vested in it or for the purpose of
D reducing the remuneration payable to employees in cases
where in the interest of the Corporation and its policy-
holders a reduction is called for, alter the terms of service
of the employees as to their remuneration in such manner
as it thinks fit; and if the alteration is not acceptable to any
employee the Corporation may terminate his employment
E on giving him compensation equivalent to three months'
remuneration unless the contract of service with such emp-
loyee provides for a shorter notice of termination.

Explanation: The compensation payable to an emp-
lGyee under this sub-section shall be in addition to and shall
F not affect any pension, gratuity, provident fund money or
any other benefit to which the employee may be entitled
under his contract of service.

(3) If any question arises as to whether any person
was a whole-time employee of an insurer or as to whether
G any employee was employed wholly or mainly in connec-
tion with the controlled business of an insurer immediately
before the appointed day the question shall be referred to
the Central Government whose decision shall be final.

(4) Notwithstanding anything contained in the
H Industrial Disputes Act, 1947 (14 of 1947), or in any other
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 191

law for the time being in force, the transfer of the services
A
of any employee of an insurer to the Corporation shall not
entitle any such employee to any compensation under that
Act or other law, and no such claim shall be entertained by
any Court, tribunal or other authority."

Sub-section (1) of section 11 of the Act provided that every B
whole-time employee of an insurer whose controlled business had
been transferred to and vested in the Corporation and who was emp-
loyed by the insurer wholly or mainly in connection with the controlled
business immediately before the appointed day, i.e., September 1,
1956, would on and from the appointed day become an employee of
the Corporation, and would hold his office therein by the same tenure,
at the same remuneration and upon the same terms and conditions and
c
with the same rights and privileges as to pension and gratuity and other
matters as he would have held the sam~ on the appointed day if the
Act had not been passed, and would continue to do so unless and until
his employment in the Corporation was tern1inated and until his re-
muneration, terms and conditions were duly altered by the Corpora- D
tion. The proviso to that sub-section provided that nothing contained
in sub-section (1) of section 11 of the Act would apply to any such
employee who had by notice in writing given to the Central Govern-
ment prior to September 1, 1956 intimated his intention of not becom-
ing an employee of the Corporation. The whole-time employees of the
erstwhile insurers whose services were thus transferred to the Corpo- E
ration are hereinafter referred to as 'the transferred employees' of the
Corporation. As mentioned earlier, there were more than 200 insurers
whose controlled business had been taken over by the Corporation and
we are informed that there were about 27 ,000 whole-time employees
working in them. The conditions of service of these transferred emp-
loyees of the Corporation whose services were transferred to the F
Corporation under section 11(1) of the Act were not uniform. It was
naturally difficult to continue after the establishment of the Corpora-
tion in the cases of all the transferred employees, the conditions of
service enjoyed by them when they were in the employment of the
former insurers. The conditions governing the retirement of those offi-
cials with which we are concerned in these appeals were also diverse G
and different. In some cases the age of retirement had been fixed at
55 years, in some at 58 years and in some others at 60 years. In many
cases the insurers had permitted their employees to continue in their
service even beyond 60 years depending upon their efficiency and
physical capacity. The conditions of service of employees and in
particular the terms of remuneration prevalent in some of the former H
192 SUPREME COURT REPORTS [1987] 3 S.C.R.

A insurance organisations were also disadvantageous to the policy-
holders. It, therefore, became necessary to bring about uniformity in
the conditions of service of the transferred employees. Parliament,
therefore, enacted sub-section (2) of section 11 of the Act which pro-
vided that notwithstanding anything contained in sub-section (I) of
section 11 or in any contract of service, the Central Government might
B for the purposes of rationalising the pay scales of employees of insurers
whose controlled business had been transferred to and vested in it or
for the purposes of reducing the remuneration payable to those emp-
loyees in cases where in the interest of the Corporation and its policy-
holders a reduction was called for, alter the terms of service of the
employees as to their remuneration in such manner as it thought fit
C and if the alteration was not acceptable to any employee the Corpora-
tion might terminate his employment on giving him compensation
equivalent to three months' remuneration unless the contract of
service with such employee provided for a shorter notice of termina-
tion. Doubts arose as regards the meaning of sub-section (2) of section
1i of the Act. In Christopher Pimenta and Others v. Life Insurance
P Corporation of India, A.LR. 1958 Bombay 451 the High Court of
Bombay opined that under section 11(2) of the Act the Central
Government could alter the terms and conditions of service of the
employees only as to the remuneration and that the said sub-section
had no reference to the other terms and conditions of the service. The
above decision of the Bombay High Court was delivered on 16.4.1957.
E It is stated that there were cases pending in other courts also question-
ing the scope and ambit of sub-section (2) of section 11 of the Act as it
stood originally. Hence in order to remove all doubts the President of
India promulgated an ordinance (which was replaced by Act 17/1957)
substituting a new sub-section in the place of the original sub-section
(2) of section 11'of the Act making it more comprehensive and thus
F enabling the Central Government to alter suitably all conditions of
service of the transferred employees. The new sub-section (2) of sec-
tion 11 of the Act was further modified by Act 36 of 1957. Thereafter
sub-section (2) of section 11 of the Act read as follows:

"(2) Where the Central Government is satisfied that for
G the purpose of securing uniformity in the scales of re-
muneration and the other terms and conditions of service
applicable to employees of insurers whose controlled busi-
ness has been transferred to, and vested in the Corpora-
tion, it is necessary so to do, or that, in the interest of the
Corporation and its policy-holders, a reduction in the re-
H muneration payable, or a revision of the other terms and
L.1.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 193
}- conditions of service applicable, to employees or any class A
of them is called for, the Central Government may, not-
withstanding anything contained in sub-section (1), or in
the Industrial Disputes Act, 1947, or in any other law for
the titn~ being in force, or in any award, settlement or
agreement for the time being in force, alter (whether by
way of reduction or otherwise) the remuneration and the B
f other terms and conditions of service to such extent and in
such manner as it thinks fit, and if the alteration is not
acceptable to any employee, the Corporation may termi-
nate his employment by giving him compensation equiva-
lent to three months' remuneration unless the contract of
service with such employee provides for a shorter notice of C
termination.

Explanation-The compensation payable to an employee
under this sub-section shall be in addition to, and shall not
affect, any pension, gratuity, provident fund money or any
other benefit to which the employee may be entitled under D
his contract of service."

Section 49(1) of the Act conferred powers on the Corporation to
make with the previous approval of the Central Government regula-
tions not inconsistent with the Act and the rules made thereunder. It
provided for making regulations to provide for all matters for which E
provision was expedient for the purposes of giving effect to the provi-
sions of the Act. Clause (b) of sub-section (2) of section 49 of the Act
in particular conferred power on the Corporation to make regulations
as regards the method of recruitment of employees and agents of the
Corporation and the terms and conditions of such employees or
agents. It was felt that clause (b) of section 49(2) of the Act was not in F
terms applicable to the transferred employees who became the emp-
loyees of the Corporation under sub-section ( 1) of section 11 of the
Act but only referred to the employees and agents of the Corporation
who were employed after the Corporatin was established, that is,
after 1st September 1956. To remove the above doubt by Act 17 of
1957 section 49 of the Act was amended by introducing clause (bb) in G
sub-section (2) of section 49 of the Act which expressly conferred
power on the Corporation to make regulations with the previous
approval of the Central Government as regards 'the terms and condi-
tions of service of persons who have become employees of the Corpo-
ration under sub-section (1) of section 11'. The above clause was intro-
duced into the Act with retrospective effect along with the new sub- H
19-1 SUPREME COURT REPORTS [1987] 3 S.C.R.

A section (2) of section 11 of the Act. It is this to be seen that the
conditions of service of the transferred employees were to be regulated
by the provisions of the Act, by an order made by the Central Govern-
ment under section 11(2) of the Act and the regulations made under
clause (bb) of section 49(2) of the Act. Even before clause (bb) was
actually introduced into the Act with retrospective effect by Act 17 of
lJ 1957 the Corporation had promulgated the Life Insurance Corpora-
tion of India (Staff) Regulations, 1956 (hereinafter referred to as 'the
(Staff) Regulations, 1956'). Under regulation 21 of the (Staff) Regula-
tions, 1956 provision was made regarding superannuation and retire-
ment of the employees of the Corporation. Regulation 21 reads as
follows:
c "21. An employee shall retire at fifty-five years of age pro-
vided that the appointing authority may at its discretion
extend the service every year upto 60 years of age.

Provided, however, that in respect of some of the
D employees of insurers who are allowed to continue in
service beyond age 60 because of the terns and conditions
of employment having not been favourable in the past, the
Executive Committee may at its discretion extend their
service every year upto age 65.

E Provided further that during the three years, begin-
ning from 1st September, 1956, the Executive Committee
may, at its discretion, extend the service of a class I emp-
loyee, who has completed sixty years of age for such period
as may be specified but not exceeding one year at a time if
such extension is considered necessary in the interest of the
F Corporation.

Explanation-Notwithstanding anything contained in
this Regulation, where an employee has privilege leave
earned but not availed of as on the date of retirement as
prescribed in the above Regulation he may be permitted to
G avail of the leave and in that case the employee will be
deemed to retire from service at the expiry of the leave."

The above regulation fixed the age of retirement of an employee
at 55 years while empowering the authority to extend the service of an
employee, at its discretion, every year upto 60 years of age. The first
H proviso to regulation 21 of the (Staff) Regulations, 1956, however,
L.1.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 195

authorised the Corporation to allow some of the employees of insurers A
who were allowed to continue in service beyond the age of 60 years for
the reasons mentioned therein. The above regulation thus made a
distinction between an employee who entered the service of the
Corporation after it was established, i.e., after 1st September, 1956
and the transferred employees insofar as the age of retirement was
concerned. B

Pursuant to the power conferred on it under sub-section (2) of
section 11 of the Act the Central Government issued an order on
1.6.1957 called the Life Insurance Corporation of India (Alteration of
Remuneration and other Terms & Conditions of Service of Employ-
ees) Order, 1957 which came into force retrospectively from 1st C
September, 1956. This order is called the 'standardisation order'. This
Order applied to all transferred employees who had become emp-
loyees of the Corporation under section 11( 1) of the Act and who were
in supervisory, clerical and subordinate grades (now classified as Class
III and Class IV employees) of the erstwhile insurers on 31st August,
1956. Clause 13 of the above Order, which related to the age of D
superannuation read as follows:

"13. Retirement:

The normal age of retirement shall be 60. But the
Corporation may require any employee who has attained E
the age of 55 to retire if his efficiency is found to have been
impaired."

Clause 13 of the above Order, therefore, modified regulation 21
of the (Staff) Regulations, 1956 to the extent indicated therein with
effect from the commencement of the Corporation. After the promul- F
gation of the Order the transferred employees to whom it applied were
entitled to continue in the service of the Corporation till they attained
the age of 60 years subject to the Corporation exercising its powers to
retire a transferred employee on his attaining the age of 55 years if his
efficiency was found to have been impaired. In the case 'lf the other
employees who joined service subsequent to 1st September, ~956 regu- G
lation 21 of the (Staff) Regulations, 1956, which prescribed the age of
retirement at 55 years subject to the appointing authority at it; discre-
tion extend the age of retirement to 60 years as provided therein,
continued to apply. This Order applied to the members of foe staff of
the Corporation belonging to Class III and Class IV categories. As
regards the transferred officers belonging to the Class II category, H
196 SUPREME COURT REPORTS [1987] 3 S.C.R.

A namely, the Field Officers, a standardisation order was made under
sub-section (2) of section 11 of the Act on 30th December, 1957.
Clause 6 of that order originally read as follows:

"6. Leave and retirement-In the matter of leave and
retirement, Field Officers shall be governed by the same
B regulations as are applicable to Class I officers of the +
Corporation."

The above clause 6 was substituted by a new clause on 25 .11.1962
which read as follows:

c "6. Leave and retirement-In the matter of leave and re-
tirement, Development Officers shall be governed by the
Life Insurance Corporation of India (Staff) Regulations,
1960, as amended from time to time."

It may be noted that the Field Officers referred to in the former
D clause 6 had been redesignated as the Development Officers before it
was substituted by the later clause 6 of the standardisation order.
y
Insofar as the transferred officers belonging to Class I were concerned,
the question of determination of their age of superannuation was
taken up for consideration by the Services and Budget Committee of
the Corporation on 20th November, 1959. Para 9 of the office note
E circulated amongst the members of that committee gave a true picture
of the conditions prevailing then. It read thus:

"9. As regards retirement, the Government has men-
tioned that the Department of Expenditure has objected to
raising the date of superannuation to 58 years of age on the
F ground that other statutory Corporations a1e also demand-
ing the same benefit on the analogy of the Life Insurance
Corporation's proposal. Standardisation Order provides
that an employee shall retire at 60 years of age, but the
competent authority may require an employee to retire at
any time after 55 years of age if his efficiency is found to
G have been impaired. In the amended Regulations approved
by the Board, this provision of the Standardisation Order
was incorporated as far as employees in Classes III & IV
are concerned but in the case of transferred officers and
Field Officers, the retirement age was fixed at 55 extensible
to 58 with a further proviso that in special circumstances
H only the competent authority may extend the services
L.J.C. v. S.S. SRIVASTAVA (VENKATARAMIAH, J.) 197

beyond age 58 and upto 60 years of age. The Board has also A
decided that administratively we shall grant extension upto
60 liberally till the end of 1963. Most of the insurers permit-
ted their officers to continue in service upto 60 years of age
and even beyond, depending upon their efficiency. There is
no reason why there should be distinction between officers
and staff in this matter as both of them had similar B
privileges with regard to retirement in the past. There is
thus a strong case for extending the provisions of the
Standardisation Order regarding retirement to the transfer-
red officers also. As regards new recruits, it was thought
that there was no justification to bring down the retirement
age from 60 to 55 all of a sudden nor was it considered C
necessary to maintain any distinction between officers and
staff. All the employees have often reJ1lfesented that the
age of retirement should be raised to 60. A compromise
was, therefore, struck by fixing the age at 58. In the light of
the above it is suggested that the provisions of the
Standardisation Order may be extended to transferred D
officers and the retirement age may be retained at 58 for
persons recruited on or after 1st January 1959. It may be
added that this would mean a modification of the earlier
decision of the Board in this matter."

After the matter was duly considered by the Services and the E
Budget Committee and by the Corporation, regulations were framed
under clauses (b) and (bb) of section 49(2) of the Act prescribing the
ages of retirement of the employees of the Corporation belonging to
different categories with the previous approval of the Central Govern-
ment and were incorporated in the (Staff) Regulations, 1960 made by
the Corporation which came into effect on July 1, 1960. Regulation 19 F
of the (Staff) Regulations, 1960 dealt with the subject of superannua-
tion and retirement of the employees of the Corporation. It reads thus:

"Superannuation and Retirement:

19(1). A transferred employee shall retire on completion G
of age 60; but the appointing authority may direct such
employee to retire on completion of 55 years of age or at
any time thereafter, if his efficiency is found to have been
impaired.

(2) An employee appointed to the service of the H
198 SUPREME COURT REPORTS [1987] 3 S.C.R.

A Corporation on or after 1st September, 1956 shall retire on
completion of 58 years of age; but the appointing authority
may direct such employee to retire on completion of 55
years of age or at any time thereafter, if his efficiency is
found to have been impaired.
B
"

It is seen from the above regulation that the cases of all transfer-
red employees were dealt with by sub-regulation (1) of regulation 19
and the cases of employees appointed to the service of the Corporation
that year after !st September, 1956 were dealt with by sub-regulation (2)of
regulation 19. All the transferred employees were entitled to remain in
C service till they completed 60 years of age but the appointing authority
was empowered to retire any such transferred employee on completion
of 55 years of age or at any time thereafter if his efficiency was found
to have been impaired. All employees appointed to the service of the
Corporation on or after !st September, 1956 were required to retire on
D completion of 58 years of age but the appointing authority was
empowered to retire any such employee on completion of 55 years of
age or at any time thereafter if his efficiency was found to have been
impaired. This regulation was made in supersession of all other earlier
regulations. In the case of the transferred employees the regulation
was in conformity with the standardisation order passed in respect of
E Class III and Class IV transferred employees in whose case the age of
retirement was fixed at 60 years. The result was that the regulation
made a clear and distinct classification of all the employees of the
Corporation belonging to all classes into two groups-transferred
employees and the employees appointed after 1st September, 1956, for
purposes of the age of retirement having regard to the historical
F reasons. It would appear that an industrial dispute arose between the
Class III and Class IV employees who entered the service of the
Corporation on or after 1st September, 1956 and the Corporation and
one of the points of dispute related to the age of retirement. These
employees demanded that their age of retirement should also be fixed
at 60 years as in the case of Class III and Class IV employees belonging
G to the category of transferred employees. The dispute ultimately
ended in a settlement which was incorporated in the Memorandum of
Settlement arrived at under section 2(p) and section 18(1) of the
Industrial Disputes Act, 1947 and rule 58 of the Industrial (Central)
Disputes Rules, 1957 dated 29th January, 1965. The relevant part of
the settlement arrived at between the parties to the said industrial
H dispute as regards the age of retirement of class III and class IV emp-
L.I.C. v. S..S. SRIVASTAVA [VENKATARAMIAH, J.) 199

loyees who entered the service of the Corporation on or after 1st A
September, 1956 read as follows:

"1. Retirement age for new employees:

There will be no distinction between Class III and
Class IV 'transferred employees' and Class III and Class IV B
employees who entered the service of the Corporation on
or after 1. 9.1956 in regard to retirement age which shall be
60."

After the above settlement was arrived at regulation 19 of the
(Staff} Regulations, 1960, which had been brought into force with c
effect from July l, 1960, was suitably amended to bring it in con-
formity with the settlement. The relevant part of the amended regula-
tion 19which was notified on 19.6.1965 read thus:

" 19( 1). An employee belonging to Class III or Class IV
and a transferred employee belonging to Class I or Class II D
shall retire on completion of age 60; but the appointing
y authority may direct such employee to retire on completion
of 55 years of age or at any time thereafter, if his efficiency
is found to have been impaired.

(2) .An employee belonging to Class I or Class II E
appointed to the service of the Corporation on or after 1st
September, 1956 shall retire on completion of 58 years of
age, but the appointing authority may direct such employee
to retire on completion of 55 years of age or at any time
thereafter, if his efficiency is found to have been impaired.
F
(2A) Notwithstanding what is stated in sub-regula-
tions (1) and (2) above, an employee may be permitted to
retire at any time after he has completed age 55.
"

On account of the settlement arrived at between Class III G
and Class IV employees, who were appointed subsequent to 1st
t September, 1956 and the Corporation, which was followed up by the
amendment of the (Staff} Regulations with effect from 19.6.1965, the
employees of the Corporation were divided both longitudinally and
latitudinally insofar as the age of superannuation was concerned. The
longitudinal division of the employees was as follows. All the transfer- H
200 SUPREME COURT REPORTS [1987] 3 S.C.R.

A red employees belonging to Class I and Class II became entitled to )
continue in service till they attained the age of 60 years subject of
course to the power of the Corporation to retire any of them prema-
turely on completion of 55 years of age if his efficiency was found to
have been impaired and all the Class I and Class II officers appointed
to the service of the Corporation on or after 1st September, 1956 had
B to retire on completion of 58 years of age subject again to the power of
the Corporation to retire any such employee on completion of 55 years ~·
of age or at any time thereafter if his efficiency was found to have been
impaired. The employees of the Corporation were divided latitudi-
nally into two groups. All the employees belonging to Class III and ""
Class IV irrespective of the fact whether they were transferred emp-
c loyees or employees appointed after 1st September, 1956 were entitled
to continue in service till 60 years of age, but the employees belonging
to Class I and Class II, who were appointed to the service of the
Corporation on or after 1st September, 1956 had to retire on the y
completion of 58 years of age subject to the usual clause relating to
premature retirement. Sub-regulation (2) of regulation 19 which
D affected the employees belonging to Class I and Class II appointed to
the service of the Corporation on or after 1st September, 19.56 was
substituted by a new sub-regulation which was notified on September y
3, 1966. This new sub-regulation (2) of regulation 19 read as follows:

"(2). An employee belonging to the Class I or Class II
E appointed to the service of the Corporation on or after 1st
September, 1956 shall retire on completion of 58 years of
age, but the appointing authority may at its discretion,

F
extend his service for one year at a time upto 60 years of
age. The appointing authority may, however, direct an
employee to retire on completion of 55 years of age or at
any time thereafter if his efficiency is found to have been
impaired."
1
The modification made by the new sub-regulation (2) of regula-
tion 19 empowered the appointing authority to extend at its discretion
the service of any employee of the Corporation belonging to the Class
G I or Class II categories appointed to the service of the Corporation on
or after 1st September, 1956 for one year at a time upto 60 years of
age. Since the Corporation found that the discretion conferred on the
-+
appointing authority to extend the services of Class I or Class II offi-
cers beyond 58 years of age at its discretion was not being exercised
satisfactory but very often abused, sub-regulation (2) was again
H amended on 21. 1.1977 withdrawing the power to extend the service of
L.1.C. v. S.S. SRIVASTAVA (VENKATARAMIAH, J.) 201

employees belonging to Class I and Class II appointed to the service of A
the Corporation on or after 1st September, 1956 beyond 58 years of
age. It also provided that in the interest of the Corporation, the
Corporation could retire an employee after completion of 50 years of
age. The relevant part of regulation 19 amended on 21.1.1977 reades
thus:
B
"19(1). An employee belonging to Class III or Class IV
and a transferred employee belonging to Class I or Class II
shall retire on completion of age 60; but the competent
authority may, if it is of the opinion that it is in the interest
of the Corporation to do so, direct such employee to retire
on completion of SS years of age or at any time thereafter, C
on giving him three months' notice or salary in lieu thereof.

(2). An employee belonging to Class I or Class II appoin-
ted to the service of the Corporation on or after 1st
September, 1956 shall retire on completion of 58 years of D
age, but the competent authority may, if it is of the opinion
that it is in the interest of the Corporation to do so, direct
such employee to retire on completion of 50 years of age or
at any time thereafter on giving him three months' notice
or salary in lieu thereof."
E
The 1st Respondent S.S. Srivastava entered the service of the
Corporation as a Class III employee on 22.3.1957 on which date he
was appointed as an Assistant in the Corporation. From the said Class
III post he was promoted to the Class I post (since there was no
necessity to pass through a Class II post before entering a Class I post)
on 8.10.1963 and was appointed as Assistant Branch Manager F
(Admn.). From the post of Assistant Administrative Officer he was
promoted to the post of Administrative Officer in June, 1971 and.was
further promoted as Assistant Divisional Manager on 18. 7 .1978. Since
he was born in the month of June, 1926, notice was issued in February,
1984 to Respondent No. 1 of his retirement which was due on 30th
+ June, 1984 on his completing the age of 58 years. Before the date of G
his retirement, he instituted a writ petition out of which these appeals
arise in Civil Miscellaneous Writ No. 6849 of 1984 on the file of the
High Court of Allahabad questioning the validity of regulation 19(2)
of the (Staff) Regulations, 1960 as it stood then and praying for the
issue of a writ in the nature of mandamus to the Corporation not to
retire him before he completed the age of 60 years. The High Court H
co2 SUPREME COURT REPORTS [1987] 3 S.C.R.
j
A issued an interim order of stay of his retirement on May 22, 1984.
Hence, he was not retired on the 30th June, 1984 as originally notified
and allowed to continue in service. The Writ Petition was allowed
striking down regulation 19(2) as being violative of Articles 14 and 16
of the Constitution of lpdia and the Corporation was directed not to
retire the 1st Respondent before he attained the ·age of 60 years. By
B virtue of the judgment of the High Court, the 1st Respondent con- -1-
tinued in the service of the Corpora~ion till he completed 60 years of
age. He was retired from service on 30th of June, 1986 during the ~·
pendency of these appeals.

In the Writ Petition filed by the 1st Respondent it was contended
C that there was no justification to prescribe two different ages of retire-
ment one for the transferred employees belonging to Class I and Class
II categories and the other for the employees who joined the service of '1
the Corporation after lst September, 1956 and who also belonged to
Class I and Class II categories. It was also contended that whatever
may be the position in respect of persons who were appointed directly
D to any post belonging to Class I or Class II category after 1st
September, 1956, as regards those who joined the service of the '!
Corporation on being appointed to a Class III pdst after 1st
September, 1956 there could not be any reduction of the age of retire-

1
ment from 60 years to 58 years on their being promoted to a Class I
post or Class II post. In other words the contention of the lst Respon-
E dent before the High Court was that since lie had the right to continue
in service if he had remained in Class III only till he attained the age of
60 years as a Class III employee by virtue of the settlement and the
amendment of the regulation 19 in the year 1965, the age of retirement
in his case could not be reduced to 58 years only because he had been
promoted to a Class I post. The Writ Petition wail contested by the
F Corporation and the Union of India. It was urged on behalf of the
Corporation and the Union of India that the transferred employees
and the employees who joined the service after 1st September, 1956
belonged to two distinct and separate classes which had been treated
differently throughout for valid reasons. It was pleaded by them that
on the establishment of the Corporation under the Act it became
G necessary to continue the services of the employees of the erstwhile--\-
insurers whose life insurance business was taken over by the Corpora-
tion to run the business ofthe Corporation because the Corporation
had no employees of its own in the month of September, 1956 when it
was established. Since as regards the age of retirement there was no
uniformity in the establishments in which the transferred employees
H were working prior to the nationalisation of the life insurance business
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.) 203

and as in some cases the age of retirement had been fixed at 55 years, A
in some other cases it was 58 years, in few other cases at 60 years and in
many cases there was no age of retirement and the employees could '
continue as long as they were found to be physically and mentally fit, it
became necessary to fix the age of retirement of the transferred emp-
loyees on a fair, equitable and just basis. The Central Government and B
the Corporation felt that 60 years of age could be a proper age of
retirement in the circumstances in respect of the transferred
employees and that was the reason why by regulation 19 and the
standardisation order issued earlier in the case of certain classes of
transferred employees under section 11(2) of the Act the retirement
age was fixed at 60 years and this was done with a view to retaining the
services of the experienced employees of the erstwhile insurers. It was C
pleaded on behalf of the Corporation and the Union of India that in
the circumstances the classification of the employees into two cate-
gories, namely, transferred employees and others who joined the
service of the Corporation on or after 1st September, 1956 for the
purposes of the age of superannuation was a valid classification and
Articles 14 and 16 of the Constitution of India had not been violated. D
It was further pleaded that the discrimination made between the emp-
loyees belonging to Class I and Class II on the one hand and the
employees belonging to Class III and Class IV on the other in the
matter of the age of superannuation was not invalid since they be-
longed to two distinct categories of employees who were governed by
different conditions of service as regards pay, perquisites, allowances, E
administrative powers etc. After hearing the arguments of both the
sides the learned Judges of the High Court allowed the Writ Petition.
The Higb Court did not find any unconstitutionality in a rule or regula-
tion providing the age of retirement at 60 years of employees who had
been absorbed from the service of the erstwhile insurers and to that
extent it observed that one could say that the grouping being reason- F
able the Court migbt not travel into the domain of legislative policy. It,
however, found that when once a transferred employee belonging to
Class III and an employee appointed after 1st September, 1956 by the
Corporation to a Class III post are promoted to Class I the distinction
of transferred employee and direct appointee could not be maintained G
as on promotion they became persons belonging to the same category
+ of employees enjoying the same conditions of service. Hence the age
of retirement should be the same in the case of both such promotees. It
accordingly held that the 1st Respondent was entitled to continue till
he attained the age of 60 years as other Class I employees belonging to
the category of transferred employees. Aggrieved by the judgment of H
204 SUPREME COURT REPORTS (1987) 3 S.C.R.

A the High Court the Corporation and the Union of India have filed J
these appeals by special leave.

It should be stated at the outset that some of the questions raised
before us are already covered by pronouncements made by this Court.
The object of enacting section 11 of the Act is dealt with in.detail by
B this Court in the Life Insurance Corporation of India v. D.l. Bahadur
& Ors., [1981) 1 S.C.R. 1083 which unfortunately was not brought to +
the notice of the High Court. Krishna Iyer, J. at pages 1098-1099 has
observed in the iourse of the said decision thus: '<t

"The Corporation, to begin with, had to take over
the staff of the private insurers lest they should be thrown
c out of employment on nationalisation. These private com-
panies had no homogenous policy regarding conditions of '!"
service for their personnel, but when these heterogenous
crowds under the same management (the Corporation)
divergent emoluments and other terms of service could not
b survive and broad uniformity became a necessity. Thus, the
statutory transfer of service from former employers and
standardization of scales of remuneration and other condi-
tions of employment had to be and were taken care of by

1
s. 11 of the Life Insurance Corporation Act, 1956 (for
short, the LIC Act). The obvious purpose of this provision
E was to enable the Corporation initially to absorb the
motley multitudes from many companies who carried with
them varying incidents of service so as to fit them into a fair
pattern, regardless of their antecedent contracts of employ-
ment or industrial settlements or awards. It was cilementary
that the Corporation could not perpetuate incongruous fea-
F tures of service of parent insurers, and statutory power had
to be vested to vary, modify or supersede these contracts,
geared to fair, equitable and, as far as possible, uniform
treatment of the transferred staff. Unless there be unmis-
takable expression of such intention, the ID Act will con-
tinue to apply to the Corporation employees. The office of
G s. 11 of the LIC Act was to provide for a smooth take-over --+·
and to promote some common conditions of service in a
situation where a jungle of divergent contracts of employ-
ment and industrial awards or settlements confronted the
State. Unless such rationalisation and standardization were
evolved the ensuing chaos would itself have spelt confu-
H sion, conflicts and difficulties. The functional focus of s. 11
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, 1.) 205

of the LIC Act will dispel scope for interpretative exercises A
unrelated to the natural setting in which the problem
occurs."

Pathak, J. (as he then was) in his judgment in the same case
observed at pages I 134 to I 136 thus:
B
"The first question is whether the new clause (9) of
the Standardisation Order succeeds in defeating the claim
of the workmen. To determine that, s. 11 of the Corpora-
tion AC! must be examined. Sub-s. ( 1) guarantees to the
transferred employee the same tenure, at the same re-
muneration and upon the same terms and conditibns on the C
transfer to the Corporation as he enjoyed on the appointed
day under the insurer, and he is entitled to them until they
are duly altered by the Corporation or his employment in
the Corporation is terminated. The sub-section envisages
alteration by the Corporation.
D
Sub-s. (2) of s. 11, by its first limb, confers power on
the Central Government to alter the scales of remunera-
tion and other terms and conditions of service applicable to
transferred employees. Predictably, when the transferred
employees of different insurers were brought together in
common employment under the Corporation they would E
have been enjoying different scales of remuneration and
other terms and conditions of service. The power under
this part of sub-s. (2) is intended for the purpose of secur-
ing uniformity among them. The second limb of sub-s. (2)
is the source of controversy before us. It empowers the
Central Government to reduce the remuneration payable F
or revise the other terms and conditions of service. That
power is to be exercised when the Central Government is
satisfied that the interests of the Corporation and its Policy
holders require such reduction of revision. The question is
whether the provision is confined to transferred employees
..j.. only or extends to all employees generally. In my opinion, G
it is confined to transferred employees. The provision is a
part of the scheme enacted in Chapter IV providing for the
transfer of existing life insurance business from the insurers
to the Corporation, and the attendant concomitants of that
process. There is provision for the transfer of the assets and
liabilities pertaining to the business, of provident funds, H
206 SUPREME COURT REPORTS [1987] 3 S.C.R.

A superannuation and other like funds, of the services of
existing employees of insurers to the Corporation and also
of the services of existing employees of chief agents of the
insurers to the Corporation, and finally for tire payment of
compensation to the insurers for the transfer of the busi-
ness to the Corporation. They are all provisions relating to
B the process of transfer. Sub-s. (2) of s. 11 is a part of that
process, involving as it does the integration of the Corpora-
tion's staff and labour force. While the first limb of the
sub-section provides for securing uniformity among the •
transferred employees in regard to the scales of remunera-
tion and other terms and conditions of service, the second
c limb provides that if after such uniformity has been
secured, or even in the process of securing such uniformity,
the Central Government finds that the interests of the y
Corporation and its policy holders require a reduction in
the remuneration payable or revision of the other terms
and conditions of service applicable to those employees, it
D may make an order accordingly. It is true that the words
"employees or any class of them" in the second limb are ·--.(
not prefaced by the qualifying word "transferred" or
"such". But that was hardly necessary when regard is had

1
to the mosaic of sections in which the provision is located.
Admittedly, the first limb of sub-s. (2) relates to transfer-
E red employees only, and it must be held that so does the
second limb. Both provisions are intended to constitute a
composite process for rationalising the scales of remunera- ·
tion and other terms and conditions of service of transfer-
red employees with a view not only to effecting a standardi-
sation between the transferred employees but also to revis-
F ing their scales of remuneration, and terms and conditions
of service to a pattern which will enable the newly estab-
lished Corporation to become a viable and commercially -
successful enterprise. The standpoint of the second limb of
the sub-section, as its language plainly indicates, is pro-
vided by the interests of the Corporation and its policy
G holders. For that reason, it is open to the Central Govern- _i-
ment under sub-section to ignore the guarantee contained
in sub-section (1) of s. 11 in favour of the employees, or
anything contained in the Industrial Disputes Act, 1947, or
any other law for the time being in force or any award,
settlement or agreement for the time being in force.
H Benefits conferred thereunder on the employees must yield
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 207

to the need for ensuring that the Corporation and its policy A
holders do not suffer unreasonably from the burden of such
benefits. The need for such a provision arises because it is a
burden by which the Corporation finds itself saddled upon
the transfer a burden not of its own making. Unless the
statute provided for such relief, the weight of that burden
could conceivably cripple the successful working of the B
Corporation from its inception as a business organisation. It
is a situation to be distinguished from what happens when
the Corporation, launched on its normal course, volun-
tarily assumes, in the course of its working, obligation in
respect of its employees or becomes subject to such obliga-
tions by reason of subsequent industrial adjudication. Like c
f
any other employer, the Corporation is then open to the
-,- normal play of industrial relations in contemporary or
future time. That the two provisions of sub-s. (2) are linked
with the process of transfer and integration is further indi-
cated by the circumstances that the power thereunder is
vested in the Central Government. The scheme of the sec- D
tions in Chapter IV indicates generally that Parliament has
appointed the Central Government as the effective and
direct instrumentality for bringing about the transfer and
integration in the different sectors of that process.

There is no danger of an order made by the Central E
Government under the second limb of sub-section (2) in
respect of transfe"ed 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 of transfer F
and integration, the transfe"ed employees constitute a
reasonably defined class in themselves and form no common
basis with newly recruited employees."
(underlining by us) emphasis supplied

Pathak, J. also observed at Page 1136 thus: G

"Another point is whether the power under the sec-
ond limb of sub-s. (2) of s. 11 can be exercised more than
once. Clearly, the answer must be in the affirmative. To
effectuate the transfer appropriately and completely it may
be necessary to pass through different stages, and at each H
208 SUPREME COURT REPORTS [1987] 3 S.C.R.
j
A stage to make a definite order. So long as the complex of
orders so made is necessarily linked with the process of trans-
fer and integration, it is immaterial that a succession of or-
ders is made. I am not impressed by the circumstances that
the original Bill moved in Parliament for amending sub-s.
(2) of s. 11 contained the words "from time to time" and
B that these words were subsequently deleted when enact- \-
ment took place. The intent of the legislative provision
must be discovered primarily from the legislation itself."

We have given extracts from the above decisions which are fairly
•
long since they relate to the identical provisions of law and also cover a
large part of the arguments urged before us.
c
Having regard to the different conditions of service that were
prevailing in the various establishments whose business was taken over
by the Corporation it can hardly be disputed that the fixation of age of
superannuation is one of the essential parts of the process of transfer
D and integration to which sub-section (2) of section 11 of the Act is ,.
applicable. The fixation of 60 years as the age of superannuation in the -{
case of transferred employees cannot be considered to be unreason-
able in view of the history of this case. The observation made by
Pathak, J. in the course of his judgment that "there is no danger of an
order made by the Central Government under the second limb of
E sub-section (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" is significant. A discrimination made by a
State between the employees who are directly recruited to the service
of the State and the employees whose services are taken over by the
F State on the taking over of the institutions where they were working
has been held to be not unconstitutional by this Court in Ram Lal
1
Wadhwa & Anr. v. The State of Haryana & Ors., [1973] 1 S.C.R. 608.
The facts of that case were these. There were some schools run by
municipal boards and district boards in the then State of Punjab which
were taken over by the Punjab Government with effect from October
G 1, 1957. The teachers then employed in those schools, thus became --+
State employees. Those teachers called 'provincialised' teachers were
to be given the same grades of pay and other allowances as were given
to their counterparts in Government employment. The teachers in
Government employment were governed by the Pun jab Educational
Service Class III School Cadre Rules, 1955. On February 13, 1961, the
H Punjab Government promulgated under the proviso to Article 309 of
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 209

the Constitution, the Punjab Educational Service (Provincialised A
Cadre) Class III Rules, giving them retrospective effect from October
1, 1957. By these Rules the provinci~lised teachers were treated as
falling under a Cadre separate and distinct from teachers in the-State
Cadre governed by the 1955 Rules. The 'provincialised' Cadre was to
be a diminishing cadre to become extinct in course of time. There was
to be no further recruitment to that cadre and all vacancies arising in B
that cadre were to be replenished by direct recruitment to the State
cadre. The transfer of such posts to the State cadre was to be done by
splitting up such vacant posts into blocks of 7 and 6 by rotation.
Consequently, the selection grade of 15% in the State cadre progres-
sively increased in strength which was determined by the total cadre
strength while the selection grade in the provincialised cadre progres- C
sively decreased. Thus those recmited to the State cadre bad a prog-
ressively larger chance of getting into the selection grade. In State of
Punjab v. JoginderSingh, (1963] Supp. 2 S.C.R. 169 this Court upheld
the validity of the 1961 Rules repelfing challenge under Articles 14 and
16 of the Constitution. In the view of the majority in that case the two
cadres started as independent services, they were never integrated into D
one service and, therefore, the dissimilarity of the treatment by the
Rules was not a denial of equal opportunity. But, the Puni'!b Govern-
ment never implemented the Rules at any time. On the reorganisation
of the erstwhile Punjab State into Punjab and Haryana on November
1, 1966, the 'Haryana Government put the 1961 Rules into operation.
The petitioners in the above case, i.e., Ram Lal Wadhwa & Anr. v. E
The State of Haryana & Ors., (supra) appointed in the local bodies
Schools before 'provincialisation', challenged the validity of the 1961
Rules. Their complaint was that the Rules created, without any valid
justification, two cadres, the State cadre and the provincialised cadre,
the former including not only the Government School teachers but
also those recmited after October 1, 1957 and posted in the provin- F
cialised schools; that by reason of having two cadres and providing for
both a uniform 15 per cent for selection grade posts, coupled with
making the provincialised cadre a diminishing one, the result had been
that teachers deemed to have been appointed to the State cadre with
effect from October 1, 1957 and even those recmited thereafter bad
been promoted to the selection grade, while those in the provincialised G
cadre, though senior in service and performed identical duties and had
t identical scales of pay, remained in the ordinary grade. According to
the petitioners in that case these Rules and their implementation con-
travened Articles 14 and 16 of the Constitution. The petitioners in that
petition contended that the earlier decision of this Court in State of
Punjab v. Joginder Singh, {supra) required reconsideration. In the H
210 SUPREME COURT REPORTS [1987] 3 S.C.R.

A course of its decision this Court while rejecting the contention of the
petitioners observed thus at pages 635-636:

"The principles on which discrimination and breach
of Arts. 14 and 16 can be said to result have been by now so
well settled that we do not think it necessary to repeat them
B here once again. As already seen, ever since 1937 and even
before, the two categories of teachers have always re-
mained distinct, governed by different sets of rules,
recruited by different authorities and having, otherwise
than in the matter of pay scales and qualifications, different
conditions of service. This position remained as late as
February 13, 1961. On that day whereas the State cadre
c teachers were governed by 1955-Rules, rules had yet to be
framed for the provincialised cadre a diminishing one and
bringing about ultimately through that principle one cadre
only in the field in a phased manner. If through historical
reasons the teachers had remained in two separate cate-
D gories, the classification of the provincialised teachers into
a separate cadre could not. be said to infringe Art. 14 and
Art. 16. It was also not incumbent on the Government to
frame the 1961-Rules uniformly applicable to both the
categories of teachers, firstly, because a rule framing
authority need not legislate for all the categories and can
E select for which category to legislate, (see Sakhawat Ali v.
State of Orissa, [1955] 1 S.C.R. 1004; Madhubhai Amat-
hala/ Gandhi v. The Union of India, [1961] 1 S.C.R. 191
and Vivian Joseph Ferreria v. The Municipal Corporation
of Greater Bombay, (1972] 1 S.C.R. 70, and secondly,
because it had already come to a decision of gradually
F diminishing the provincialised cadre so that ultimately only
the state cadre would remain in the service. That was one
way of solving the intricate difficulty of inter se seniority.
There can be no doubt that if there are two categories of
employees, it is within Government's power to recruit in
one (and) not recruit in the other. There is no right in a
G government employee to compel it to make fresh appoint-
ments in the cadre to which he belongs. It cannot also be
disputed that government had the power to make rules with
retrospective effect, and therefore, could provide therein
that appointments made between October 1, 1957 and
February 13, 1961 shall be treated as appointments in the
H State cadre. That had to be done for the simple reason that
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 211

the provincialised cadre was already frozen even before A
October 1, 1957 and Government had decided not to make
fresh appointments in that cadre since that cadre was to be
a diminishing one."

It has to be observed in the case before us also that the transfer-
red employees belong to a diminishing cadre. When the Corporation B
-+ was established they were about 27 ,000 in number and we are
informed today that there are only about 22 % of those employees in
..,. service. Already 30 years have elapsed from the date of the establish-
ment of the Corporation. All the transferred employees who have
already retired have retired only after completion 60 years. The re-
maining transferred employees are likely to go out of office within a c
short period. Thereafter only the employees who are directly recruited
by the Corporation who are about 54,000 in number would continue to
y remain in its service. The observation made by this Court in Ram Lal
Wadhwa & Anr. v The State of Haryana & Ors., (supra) clearly applies
to the case before us also.
D
As this stage we should refer to another aspect of the case pre-
} sented before us which relates to 16 persons who were appointed as the
!
employees of the Corporation by virtue of an Order dated March 15,
1966. There was a department in existence in the year 1963 called
Department of Insurance. The Government and the Corporation felt
that the services 16 persons who were working in the Department of E
Insurance were required by the Corporation. Accordingly, the Presi-
dent of India agreed to release 16 persons from the service of the
y Government of India to enable the Corporation to appoint them in its
service by the Order of the Central Government dated 25th February,
---', 1964. The resignation of those 16 persons from the service of the
Government of India was accepted on 15th March, 1966 and from that F
date those persons became the employees of the Corporation. Out of
those 16, 13 have already retired from service on attaining the age of
60 years. Only three of them are now in the service of the Corporation.
One of them is no longer an employee of the Corporation since he is
holding the post of the Chairman of the Corporation. The second of
them is due to .retire within 2/3 months and only one of them would G
t-
I
continue in the service of the Corporation for about a period of two
years more. In the case of those 16 people the Corporation passed a
separate order fixing their age of retirement as 60 years having regard
to the negotiations which had taken place between the Corporation
and the Government before the taking over of their services by the
Corporation. They again belong to a different category altogether and H
A
212 SUPREME COURT REPORTS (1987] 3 S.C.R.

the fixation of the age of retirement in their case at 60 years cannot be
challenged by those who were directly recruiteli by the Corporation after
j
September 1, 1956 as there is no similarity between them and the said
16 officers.

The next question for consideration is whether the fixation of 58
B years as the age of superannuation in the case of the employees who
entered the service after 1st September, 1956 is unreasonable. While -\·
dealing with this question, the Court can take judicial notice of the
different ages of retirement prevailing in the several services in India.
In almost all the public sector corporations, Central services and State *
services 58 years age is considered to be a reasonable age at which
c officers can be directed to retire from their service. So, the determina-
tion of 58 years as the age of superannuation by itself cannot be con-
sidered to be arbitrary. ...,
We do not also find much substance in the contention of the 1st
Respondent that there cannot be any discrimination as regards the age
D of retirement between the employees belonging to Class I and Class II
on_ the one hand and Class III and Class IV on the other. It is true that
·~
originally employees belonging to Class Ill and Class IV categories
amongst the transferred employees were given the benefit of retire-
ment at the age of 60 years but the employees belonging to Class III
and Class IV categories recruited after 1st September, 1956 were re-
E quired to retire on the completion of 58 years of age. In the Settlement
which was arrived at between the management and the Class III and
Class IV employees recruited after 1st September, 1956 it was agreed
that there should be no discrimination as regards the age of retirement ' i
between the employees belonging to Class III and Class IV categories
amongst the transferred employees and the Class III and Class IV
F employees recruited after 1st September, 1956. It was pursuant to the
said settlement that regulation 19 was amended with effect from
19.6.1965. Having regard to the lower emoluments and other benefits
which the employees belonging to Class III and Class IV are entitled to
get from the Corporation and the higher emoluments and other
benefits to which officers belonging to Class I and Class II are entitled
G and also the nature of their work and the powers enjoyed by them we
are of the view that fixation of different ages of retirement to the -.+
different classes of employees would not by itself be violative of Arti-
cles 14 and 16 of the Constitution. In Tejinder Singh and Another v.
Bharat Petroleum Corporation Ltd. and Anr., [1986] 4 S.C.C. 237 this
Court has observed at page 239 thus:
H
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.) 213

"This Court in Workmen v. Bharat Petroleum Corpn, Ltd., A
directed the retirement age of the clerical staff of the
Refinery Division of respondent 1 to be fixed at 60 years.
Petitioners have contended that the disparity in the age of
retirement between two groups of employees gives rise to
discriminatory treatment. This stand is not tenable for
more than one reason. Clerical staff and officers of the B
management staff belong to separate classifications and no
argument is necessary in support of it. Petitioners have not
contended and perhaps could not legitimately contend,
that the two classes of officers stand at par. In the Work-

- men case itself, this Court did not extend the benefit of
superannuation at the age of 60 to all clerical staff but C
limited the same to that category of employees working in
the Refinery Division, Bombay. Classification on the basis
of reasonable differentia is a well known basis and we are
of the view that the petitioners are not entitled in the facts
of the case to seek support from Article 14 for their claim."
D
It was, however, contended on behalf of the 1st Respondent that
since he had been recruited originally into the Class III post and he
would have had the benefit of retirement at the age of 60 years if he
had remained in that Class, the said benefit cannot be denied to him on
his promotion to the Class I category. We do not find any merit in this
contention too. When the 1st Respondent was promoted to the Class I E
post in 1963 the age of retirement of officers in the Class I post had
·y been fixed at 58 years and was not different from the age of retirement
of Class III employees. It was only in 1965 under the settlement the
age of retirement of employees in Class III and Class IV who joined
service after September 1, 1956 was raised to 60 years. If he felt that
the conditions of service of Class I officers were likely to be prejudicial F
to him he could have refused the promotion offered to him. Having
accepted the promotion along with the higher benefits flowing from it
he cannot contend after several years that he had been prejudicially
affected by the condition relating to the age of retirement applicable to
Class I officers appointed after September 1, 1956. That apart the
higher emoluments and other perquisites to which Class I employees G
+- may be entitled to and the better conditions of work which are enjoyed
by them substantially compensate the effect of the lowering of the age
of retirement from 60 years to 58 years. We do not find any substance
in the argument urged on behalf of the 1st Respondent relying upon
the judgment of this Court in Roshan Lal Tqndon v. Union of India,
[1968] 1 S.C.R. 185 which lays down that when employees are H
214 SUPREME COURT REPORTS [1987] 3 S.C.R.

A recruited to a lower grade from two sources no favourable treatment
should be extended to recruits from one source on their promotion to
the higher grade. In the decision, referred to above, the facts were
these. Vacancies in grade 'D' of Train Examiners were filled by (a)
direct recruits, i.e., apprentice train examiners who had completed the
prescribed period of training, and (b) promotees from skilled artisans.
B Promotion from grade 'D' to 'C' was on the basis of seniority-cum-
suitability. In October, 1965 the Railway Board issued a notification
by which it was provided that eighty percent of the vacancies in grade
'C' were to be filled up from apprentice train examiners recrnited on
or after April 1, 1966 and the remaining twenty per cent by train

e
examiners from grade 'D'. The notification further provided that ap-
prentice train examiners who had already been absorbed in grade 'D'
before April, 1966 should en bloc be accommodated in grade 'C' in the
-
eighty per cent of the vacancies without undergoing any selection and
with regard to twenty per cent of the vacancies, reserved for the other
class promotion was to be on selection basis and not on the basis of
seniority-cum-suitability. The petitioner in the said case who entered
D Railway service in 1954 as a skilled artisan and was selected and con-
firmed in grade 'D' challenged that part of the notification which gave
favourable treatment to apprentice train examiners who had already
been absorbed in grade 'D' as arbitrary and discriminatory and viola-
tive of Article 14 and 16 of the Consitution. This Court held that when
once the direct recrnits and promotees were absorbed in one cadre
E they formed one class and they could not be distinguished again for the
purpose of further promotion to the higher grade 'C'. The Court
further observed that before the impugned notification was issued -'{
there was only one rnle of promotion applicable to both ·direct recruits
and promotees but by the impugned notification discriminatory treat-
ment was made in favour of the apprentice train examiners who had
F already been absorbed in grade 'D'. The Court, therefore, held that
the notification was discriminatory. This decision has no relevance to
the present case although the High Court has relied on it in deciding
this case. We have already shown that the Act itself made a distinction
between the transferred employees and the employees recruited to the
service of the Corporation after !st September, 1956 by making
G amendments in section 11 and in clauses (b) and (bb) of sub-section (2)
of section 49 of the Act. In the (Staff) Regulations, 1956 and the
(Staff) Regulations, 1960 there was again a distinction made between
the transferred employees and employees recruited after !st Septem-
ber, 1956. We find that the distinction between the two classes is
recognised by Parliament even as late as 1981 when it amended section
H 49 of the Act by deleting clause (bb) of sub-section (2) thereof and by
L.I.C. v. ~.S. SRIVASTAVA (VENKATARAMIAH, J.) 215

amending section 48 of the Act by introducing clause (cc) in sub- A
section (2) and the new sub-section (2A) in it. After the amendment,
the relevant part of section 48 reads thus:

"48. (2) ........................................... .
(cc). The terms and conditions of service of the employees
and agents of the Corporation, including those who became B
employees and agents of the Corporation on the appointed
day under this Act, ................................... .

(2A). The regulations and other provisions as in
force immediately before the commencement of the Life
Insurance Corporation (Amendment) Act, 1981, with c
respect to the terms and conditions of service of employees
and agents of the Corporation including those who became
employees and agents of the Cbrporation 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." D
(underlining by us) emphasis supplied

Clause (cc) of section 48(2) of the Act, however, has been given
retrospective effect from 20th June, 1979. Sub-section (2A) of section
48 has given statutory recognition to the (Staff) Regulations of 1960
and in particular to Regulation 19(2) as amended in 1977 which is E
impugned in these proceedings. It is thus seen that at no point of time
)- the transferred employees were integrated into one cadre along with
the employees appointed after September !, 1956 as such and the
transferred employees have retained their birth-marks throughout.
The fact that the pay, allowances and other conditions of service have
been made the same in respect of both the transferred employees and F
the employees of the Corporation recruited after !st September, 1956
has not brought about the integration of the two classes of employees
into one single cadre. Even the High Court in the instant case accepts
that it was just and proper to extend the benefit of the higher age of
retirement to the transferred employees but it has held that when once
~ a transferred employee is promoted he would lose thnight to a special G
· · . , treatment as regards the age of superannuation. The relevant portion
'' of the judgment of the High Court reads thus:

"A reasonable classification which prevents a Court
from dissecting it is one which includes all persons who are
similarly situated with respect to the purpose of law or H
216 SUPREME COURT REPORTS [1987] 3 S.C.R.

A objective which the rule or section seeks to achieve. The
apparent or inherent intention sought to be achieved by the
regulation 19 framed by Corporation was to continue upto
age of sixty years the employees of insurers as the age of
superannuation in some of the companies was sixty and to
derive benefit from expertise and experience of employees
B
who had worked with insurers. May be laudable, reasonable
and proper. But is it like that? Obviously not. An employee
in Class III of insurer could be continued upto sixty. But
what happens when he climbs the ladder of promotion and
reaches Class I. Does he still carry the stamp of experience
and expertise of having worked with insurer? Once a trans-
c ferred employee of Class III and a direct appointee in
(that) class are promoted to Class I obviously on merit,
efficiency and seniority then how can the distinction of
'transferred' and 'direct' be maintained. So long employees
are in Class III they can be said to constitute two different
classes of transferred and direct appointees but once they
D are promoted they become similarly situated and the dis-
tinction stands obliterated. They on promotion form one
integrated cadre of Class I officers. To segregate them here
for purposes of retirement is invidious when their pay,
responsibility and benefits are same."
E While we agree with the first part of the observations made in the
above· extract from the judgment of the High Court, namely, that it
was not discriminatory to extend the benefit of the age of 60 years to· '{
the transferred employees, we do not agree with the latter part of the
observations made therein which suggests that on promotion from
F Class III to Class I the transferred employees and the directly recruited
employees would lose their birth-marks. Pathak, J., as he then was,
has observed in D.J. Bahadur's case (supra) that it is open to the
Government to make an order under section 11(2) of the Act from
time to time in respect of the transferred employees and that power is
not exhausted when it is exercised once. It suggests that the transfer-
red employees are always amenable for separate treatment and they
G do not lose their identity. It appears to be the intention of Parliament
that even as late as in 1981 that the two categories of employees,
namely, the transferred employees and employees recruited after 1st
September, 1956 in the Corporation should be kept separate. Jn these
circumstances the High Court was in error in relying upon the judg-
H ment of this Court in Roshan Lal Tandon's case (supra).
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 217

In O.P. No. 5295 of 1985 and connected cases on the file of the A
High Court of Kerala which was decided on 4.2.1987 the claim of the
employees of the Corporation belonging to class I but appointed after
1st September, 1956 to continue in service till they attained the age of
60 years arose for consideration. The High Court has negatived it. In
the course of its judgment it has referred to the judgment under appeal
in this case but has only distinguished it. The High Court of Kerala was B
right in not following the decision of the High Court of Allahabad
which is now under appeal. It, however, distinguished it on the ground
~ that the employees in question had not been promoted from Class III
to Class I as it was the case here but the petitioners refore it had
continued in Class I or Class II right from the commencement. We,
however, approve of the reasons given by the High Court of Kerala in C
holding that the employees of the Corporation belonging to Class I and
')-·· Class II who had entered service of the Corporation after 1st
September, 1956 were not entitled to continue in service beyond the
age of 58 years. In our view the fact that an employee had entered the
service of the Corporation after September 1, 1956 in a Class III post
and is later on promoted to ~ Class I post does not make any difference D
in so far as the question which arises for decision before us. The High

r Court of Delhi has rejected two petitions in which the very question
raised in this case arose for consideration, namely, N.L. Aneja v.
Union of India and Others, (Civil Writ No. 1911 of 1986) and H.S.
Kochar v. L.l.C. of India & Ors., (C.W. No. 1660 of 1986) at the stage
of admission itself giving reasons, though short, for its orders. The two
decisions, referred to above, have been rendered by two different
E

y Division Benches.

We may also refer to one decision of the Madras High Court and
~ another decision of the Calcutta High Court which arose under the
provisions of the Banking Companies (Acquisition and Transfer of F
Undertakings) Act, 1970 (Act 5 to 1970) where again the claim of
employees of the banks in question who joined their service after
nationalisation to the benefit of the conditions prescribed in the case of
employees of the former banking companies whose services were
taken over on nationalisation as regards the age of retirement arose for
L consideration. The scheme of section 12(2) of the Banking Companies G
I (Acquisition and Transfer of Undertakings) Act, 1970 and the scheme
of section 11(1) of the Act, which is under consideration before us,
were the same. In Govindarajulu v. The Management of Union Bank
of India & Ors., (Writ Petition No. 5486 of 1980) the High Court of
Madras rejected the said claim by its judgment dated 21.11.1986. In
Dr. Nikhil Bhushan Chandra v. Union of India & Ors., (Civil Order H
A
218 SUPREME COURT REPORTS [1987] 3 S.C.R.

No. 13958 (W) of 1980} decided on December 21, 1982 the High Court
I
of Calcutta has rejected a similar claim. We may at this stage refer to a
recent decision of this Court in Miss Lena Khan v. Union of India and
Ors., J.T. 1987 2 S.C. 19 decided on 30.3.1987 in which the validity of
the continuation of some foreign Air Hostesses beyond the prescribed
age of retirement came up for consideration. The Court rejected the
B petition stating that the management of Air India having taken a deci-
sion "to phase out U .K. incumbents when they attain the age of 45", it
was not discriminatory to Air Hostesses of Indian origin who were to
retire at the age of 35 years and was not unconstitutional. The princi-
ple enunciated in this case can be applied to the cases of three officers
who belong to the Department of Insurance who joined the service of
C the Corporation after resigning their posts in the 6overnment of India
in the year 1965, there being no chance of any addition to their class.
-
Classification of employees into two categories for purposes of
fixing the age of superannuation depending upon their elates of entry
into service when the necessity for doing so arises on account of certain
D historical reasons is not unknown. This Court had to deal with a case
involving a similar situation in Railway Board v. A. Pitchumani, (1972]
2 S.C.R. 187. Several railway companies which were running their own
railways in different parts of India were amalagamated with the Indian
Railway Administration in 1947. On such amalagamation servants of
the railway companies, whose railways were taken over, became the
E employees of the Indian Railway Administration. On the absorption
of the services of the servants of the previous railway companies it
became necessary for the Indian Railway Administration to frame "'(
rules with regard to their conditions of service including the determi-
nation of the age of retirement of those railway employees. Accord-
ingly, rule 2046 (F.R. 56) of the Indian Railway Fundamental Rules
F had to be modified. That rule was, therefore, substituted by a new rule
on January 11, 1967. The new rule read as follows:

"2046. (FR. 56)-(a) Except as otherwise provided in this
rule, every railway servant shall retire on the clay he attains
the age of fifty-eight years.
G
(b ). A ministerial railway servant who entered ~
Government service on or before the 31st March, 1938 and
held on that date-

(i) a lien or a suspended lien on a permanent post, or
H
L.l.C. v. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 219

(ii) a permanent post in a provisional substantive A
capacity under Clause (d) of " .le 2008 and continued to
hold the same without interruption until he was confirmed
in that post,

shall be retained in service till the day he attains the age of
sixty years. B

NOTE: For the purpose of this Clause, the expres-
sion "Government Service" includes service rendered in
ex-company, and ex-State Railways, and in a former pro-
vincial Government.''

. .
In the above new rule every railway servant, whose case did not fall
under clause (b) of that rule was required to retire on the date he
attained the age of .58 years. Clause (b), however, provided that every
c

ministerial railway servant who had entered the Government service
on or before 31st March, 1938 and who satisfied the conditions
mentioned either in sub-clause (i) or sub-clause (ii) thereof was D
entitled to continue in service till he attained the age of 60 years. As
may be seen from that rule, the classification of the employees was
made on the basis of the date of entry into the service of the Govern-
ment. That clause (b) of the said rule applied also to the employees of
ex-companies and ex-State railways which were taken over by the
Indian Railway Administration is clear from the note attached to E
clause (b) of rule 2046 which prorvided that for the purpose of that
'r clause the expression 'Government Service' included service rendered
in ex-company and ex-State railway& and in a former provincial
Government. On December 27, 1967 the Indian Railway Administra-

, tion substituted the note attached to clause (b) of rule 2046 by the new
note which read thus:

"For the purpose of this clause the expression
'Government Service' includes service rendered in a
former provincial government and in ex-company and ex-
F

State Railways, if the rules of the Company or the State
had a provision similar to Clause (b) above." G

The effect of the new note was that an employee who satisfied the
condition in sub-section (i) or sub clause (ii) of clause (b) was entitled
to continue upto 60 years after December 23, 1967 only if the rules of
the company in which he was formerly working had a provision similar
to clause (b) of rule 2046 which fixed the age of retirement at 60 years. H ·-'
220 SUPREME COURT REPORTS [1987] 3 S.C.R.

A The Respondent in that case, that is, A. Pitchumani while he was J
entitled before December 23, 1967 to continue in service till he
attained the age of 60 years as he had joined the service of the Madras
and Southern Mahratta Railway Company on August 16, 1927, i.e.,
prior to March 31, 1938 and satisfied the other conditions mentioned
in clause (b) of rule 2046 could not have the benefit of that clause on
B and after December 23, 1967 since in the Madras and Southern
Mahratta Railway Company where he was formerly working there was x
no rule similar to clause (b) as regards the age of retirement. He was
asked to retire from service on April 14, 1968 on which date he was · ~
completing the age of 58 years. The Respondent, A. Pitchumani
questioned before the High Court of Mysore (Karnataka) the validity
c of the note substituted by the Order dated December 23, 1967 which
took away his right to continue in service till he attained the age of 60
years which he otherwise possessed before the introduction of the said
note. The High Court of Mysore struck down a part of the new note
-
only on the ground that it was discriminatory and directed that the
Respondent, A. Pitchumani should be allowed to continue in the
D service till he completed the age of 60 years. On appeal, the, judgment
of the High Court was affirmed by this Court in Railway Board v. A. "'I
Pitchumani (supra). This Court did not find fault with the classification
that had been made between the persons falling under clause (a) and
persons falling under clause (b) on the basis of the date of entry into
service since clauses (a) and (b) of rule 2046 had uniform application
E to all the employees of the Indian Railway Administration who came
within the respective clauses. It, however, agreeing with the High
Court found fault with the classification of the employees falling under ~
clause (b) into two categories, namely, those employees belonging to a
company where there was a rule similar to clause (b) as regards the age
of superannuation and those employees who came from companies
F where there was no rule similar to clause (b) as regards the age of
~'
superannuation. In Manindra Chandra Sen v. Union of India & Ors.,
A.LR. 1973 CAL. 385 Sahyasachi Mukharji J., has upheld the said
classification of railway employees into two categories viz. those who
joined on or before 31.3.1938 and those who joined after 31.3.1938 for
purposes of fixing the age of superannuation on the basis of same
G historical facts which are set out in detail in that judgment. Such clas-
sification for purposes of fixing the age of superannuation depending
~
upon the date of entry into services is not, therefore, something which
is unusual and such classification becomes necessary on account of
., historical facts and the need for treating the employees in a fair and
~,
just way.
H
-----------------

L.l.C. v. S.S. SRIVASTAVA (VENKATARAMIAll. J.] 221

On behalf of the 1st Respondent reliance is placed on the deci- A
sion of this Court in Mis. British Paint.I (India) Ltd. v. The Workmen,
[1966] 2 S.C.R. 523 in support of his case that there should be no
discrimination amongst the employees of an establishment with regard
to the age of superannuation. That decision was rendered in an appeal
against an award passed by ~n Industrial Tribunal. In that decision this
Court has, no doubt, observed that generally speaking there should B
not be any difference in the age of retirement of existing workmen and
others to be employed in future unless there are special circumstances
justifying such difference. By making the above observation this Court
has virtually accepted the position that when there are special
!
circumstances justifying the difference, it is open to fix different ages
of retirement for the employees of an establishment in appropriate C
cases. We have already explained earlier the reason for treating the
transferred employees differently from the employees appointed after
!st September, 1956 by the Corporation. The transferred employees
who are treated favourably belong to a vanishing group and, perhaps,
within a period of few years none of them would be in the service of
the Corporation. Thereafter only one class of employees would be in D
the service ·of the Corporation, namely, those appointed subsequent to
!st September, 1956 by the Corporation in respect of whom the Corpo-
ration has fixed the age of retirement as 58 years which corresponds to
the age of retirement in almost all the public sector establishments, the
Central Government services 11nd the State Government services. ·
E
·The 1st R.espondent cannot derive any assistance from the deci-
sion of this Court in Mohammad Shujat Ali & Ors. etc. v. Union of
India & Ors. etc., [1975] 1 S.C.R. 449 in support of his case before us.
In the above decision this Court was concerned with reservation of
posts for graduate Supervisors in the cadre of Assistant Engineers
giving them a preferential treatment over non-graduate Supervisors F
who were also eligible to be promoted along with the graduate
Supervisors to the cadre to Assistant Engineers after the graduates and
non-graduates ·had been integrated into one cadre of Supervisors.
Merely because the pay, allowances and other perquisites drawn by
the transferred employees and by the employees appointed after 1st
September, 1956 by the Corporation are the same it cannot be said G
that the transferred employees and the other employees had been
integrated so as to form one cadre. So far as the age of retirement is
concerned as it is already shown they are being treated differently right ·
from the date on which the Corporation was established.

The decision of this Court in Workmen of the Bharat Petroleum H
222 SUPREME COURT REPORTS ( 1987] 3 S.C.R.
l
A Corporation Ltd. (Refining Division) Bombay v. Bharat Petroleum
Corporation Ltd. and Another, (1984] I S.C.R. 251 no doubt lays
down that under the modem conditions there is a general trend in
favour of raising the age of retirement in the case of employees in
industrial establishments. It may be so. We are not concerned in this
case with the question whether the age of retirement of employees who
B have joined the service of the Corporation after !st September, 1956
should be raised to 60 years. That is a ·matter of policy which has got to
be decided by the Corporation and the Central Government. We are
only concerned with the question whether the employees appointed
after 1st September, 19.56 have been subjected to any hostile discrimi·
nation while fixing the age of retirement contrary. to Article 14 and
C Article 16 of the Constitution. Since the classification of the employees
for the purpose of age of retirement into two categories in this case
appears to us to be reasonable and not arbitrary and that there is a
reasonable nexus beiween the classification and the object to be at;
tained thereby, it is not possible to hold that regulation 19(2) is viola·
tive of Article 14 and 16 of the Constitution.
D
We may at this stage refer to the following passage in Tamil
Nadu Education Department Ministerial & General Subordinate
Service Association v. State of Tamil Nadu & Anr., (1980] 1 S.C.R.
1026.

"In Service Jurisprudence integration is a complicated
administrative problem where, in doing broad justice t<Y
many, some bruise to a few cannot be ruled out. Some play
in the joints, even some wobbing, must be left to Govern·
ment without fuss)' forensiC inOnitoring, since the adminis-
tration has been entrusted by the Constitution to the
F Executive, not to the Court. All life, including administra·
tive life, involves experiment, trial and error, but within
the leading strings of fundamental rights, and, absent
unconstitutional 'excesses'~ judicial correction is not right.
Under Article 32, this Court is the constitutional sentinel
not the national ombudsman..-We need an ombudsman but
G the court cannot make-do." (page 1031)

The decision taken by the Corporation and the Central Govern·
-<ment as regards the ages of retirement of the different classes of the
· employees of the Corporation in the instant case is a bona fide one and
cannot be characterised as unreasonable. It is not, therefore, liable to
H be upset by a decision of the Court. On a careful consideration of all
L.1.C. I'. S.S. SRIVASTAVA [VENKATARAMIAH, J.] 223

the aspects of the case we feel that the High Court erred in striking A
down regulation 19(2) of the (Staff) Regulations, 1960 as amended in
the year 1977, and in directing the Corporation to continue the 1st
Respondent in its service till he completed the age of 60 years. We,
therefore, set aside the judgment of the High Court and dismiss the
writ petition filed in the High Court. The appeals are accordingly B
allowed. There shall, however, be no order as to costs.

N.P.V. Appeals allowed.