Holding

The Industrial Disputes Act, being a special statute, prevails over the Life Insurance Corporation Act, so the 1974 settlements remain binding and LIC must continue to pay the bonus until a new settlement, award or valid legislation supersedes them.

Summary

The Life Insurance Corporation (LIC) and its workmen entered into two 1974 settlements under the Industrial Disputes Act (ID Act) that provided a cash bonus to Class III and IV employees. After the settlements expired, LIC issued notices under s.19(2) and s.9A of the ID Act and the Central Government amended Regulation 58 and Clause 9 of the 1957 Order to discontinue the bonus. The workmen challenged these actions, arguing that the settlements remained binding and that the ID Act, as a special law dealing with industrial disputes, prevailed over the LIC Act, a general statute. The Supreme Court held that the ID Act is a special statute and overrides the LIC Act; the 1974 settlements continue to bind the parties until replaced by a fresh settlement, award, or valid legislation, and LIC must honour the bonus. The Court dismissed the appeal and upheld the High Court’s order directing LIC to comply with the settlements.

Issues considered

The 1974 settlements under the ID Act remain in force despite notices of termination and subsequent regulatory amendments.
Whether the Industrial Disputes Act is a special law that prevails over the Life Insurance Corporation Act, which is a general law.
Whether the 1978 amendment of Regulation 58 and Clause 9 of the 1957 Order can override the bonus obligations created by the settlements.
The scope and effect of s.11(2) of the LIC Act, including its non‑obstante clause, on the rights of workmen under the settlements.
Constitutional validity of the actions under Articles 12, 14, 31(2), 38, 39 and 43 of the Constitution.

Legislation cited

Constitution of Indias. Article 12, s. Article 14, s. Article 31(2), s. Article 37, s. Article 38, s. Article 39, s. Article 43
General Clauses Acts. 14
Industrial Disputes Act, 1947s. 18, s. 19(2), s. 19(6), s. 23, s. 29, s. 9A
Life Insurance Corporation Act, 1956s. 11, s. 23, s. 49
Payment of Bonus (Amendment) Act, 1976

Subjects

Industrial disputesSettlementBonus entitlementStatutory interpretationSpecial vs general legislationNon‑obstante clauseEmployment lawConstitutional lawDirective principlesLife Insurance Corporation Act

Judgment

•
...,_
THE LIFE INSURANCE CORPORATION OF INDIA A
v.
D. J. BAHADUR & ORS.
November 10, 1980.
[V. R. KRISHNA IYER, R. S. PATHAK & A. D. KOSl!AL, JJ.]
B
Life Insurance Corporation Act (Act 31), 1956, sections 11, 23 and 49,
scope of-Whether a general law or a special law-Industrial Disputes Act
(Act 14) 1947, sections 9A, 19(2), (6), 18, 23, 29-0bject of the Act, award
and settlement, distinction from the point of view of legal force-Whether a
special legislation vis-a-vis Life Insurance Corporation Act-Annual caslr
bonus payable to Class-Ill and Class-IV employees of the Corporation under
·the settlement of 1974, e/Jecl o>f-Ejject of notice of termination of the settle- c
ments by the Corporation under sections 9A and 19(2) of the Industrial
Disputes Act and section 49 of the Life .Insurance Corporation Act-Constitu-
tion of India, 1950, Articles 12, 38, 39 and 43 and Regulation 58 of the Life
Insurance Corporation of India (Staff) Regulations, 1960.
The Life Insurance Corporation came into existence on the 1st of
September, 1956, as a statutory authority established under the Life Insurance
Corporation Act (Act 3 l), 1956. As from the said date all institutions D
carrying on Life Insurance business in India were nationalised to th~ extent
of such busine:ss and their corresponding assets and liabilities were transferred
to the Corporation. Section 11 of the Act provided for the transfer of service
of those employees of such institutions who were connected with Life Insurance
business immediately before the, said date to the Corporation and for some
other matters. Section 23 of the Life Insurance Corporation Act gave to the
Corporation the power to employ such number of persons as it thought fit E
for the purpose of enabling it to discharge its functions under the Act and
declared that every person so empioyed or whose services stood transferred
to the Corporation under section 11 would be liable to serve anywhere in
India. Section 49 conferred on the Corporation the power to make regulation~
for the purpose of giving effect to the prnvisions of the Act with the previous-
approval of the Central Government. Sub-section (2) of that section enumerated
various matters in relation to which such power was particularly conferred. F
·On 1st of June, 1957 the Central Government promulgated the Life Insurance
Corporation (Alteration of Remuneration and other Terms ar.d Conditions
of Service of Employees) Order, 1957 altering the remuneration and other
terms and conditions of service of those employees of the Corporation whose
service had been transferred to it under sub-section (1) of section 11. Clause
9 of the 1957 Order declared that no bonus would be paid but directed that
the Corporation would set aside an amount every year for expenditure on G
schemes of general benefit to the employees such as free insurance scheme,
medical benefit scheme and other am~nities to them. On the 26th June,
1959, the Central Government amended clause 9 of the 1957 Order 'SO as to
provide that non-profit sharing bonus would be paid to those employees of
the Corporation whose salary did not exceed Rs. 500 per month. On 2nd
of July, 1959 · there was a settlement between the Corporation and its
employees providing for paym~nt to them of cash ·bonus at the rate of It H
SUPREME COURT REPORTS [1981] 1 S.C.R.

A months' basic salary for the period from the 1st September, _1956 to the
31st December, 1961. In the year 1960 the Life Insurance Corporation of
lndta (Staff) Regulations, 1960 were framed and Regulation 58 dealt \Vttb
the payment of grant of no:1-profit sharing bonus to its employees. On 14th
April. 1962 and 3rd August, 1963 orders were again issued, the effect of which
WJ.5 to remove the Emit of Rs. 5'00 on the basic salary as a cor;dition of
~Jiaihi1ity for payment of Lonu1. lhe seaiemeoi dated 2r:d July, 1959 was
D foMow(d bv three o~hers \vhich were arrived at on the 29th January, 1963.
the 20th June, 1970 and the 26th June, 1972, respectively aroJ each one of
VJtii£h · provided for payment of bonus at a particular rate.

Disputes between the Corporation and its workmen in regard to the
latter's conditions of service were received by two settlements dated the 24th
)antJdl)'• 1974 and the 6th February, 1974, arrived at in pursuance of the
C provisions of section 18 read with section 2(p) of the Industrial Disputes Act.
)
./
-The Corporation was a party to both the settlements which were identical in
terms._ llowever, while four -of thC five Unions of workmen subscribed to the
first settlement, the fifth Union was a signatory to the .second. The settlements
provided for revised scales of pay, the method of their fixation and dearness
and other allowances ag_ well as bonus. The settlements were approved by
the Board of the Corporation and also by the Central Government. The
D employees of the Corpor:ition having opted for the n;'!'W scales cf pay, bonus
·\Va~ paid in accordance therewith for the years 1973-74 and 1~7&-75 in
April 1974 and in April 1975 resP.ectively. One of the Payment of Bo~us
(Am~ndment) Act, 1976 cof'/'l~ng frito force with retrospective effect from 25th
Septemb:r, 1975 curtailing the rights of employees of industrial undertakings
·to bonus, though it w';s in::!ppEcable to the Corporation by virtlle of the
provisio:is of section 32 of the Payment of Bonus Act, the payme.nt of bonus
E for the y:ar 1975-76 to the employees of the Corporation was stopped under
ir:struc!iGQ5 from the Central Government, whose action in that behalf was
·challenged by the employezs through a petition under Article 226 of the
Constitution of India in· th~ High Court of Calcutta. The single Judge of
the Higli Court issued a writ of rn1ndamus directing the- Corporation to .act
·in accordance \Vith the terms of the settlement dated the 24th cf January, 1974.
The Corporation preferred a Letters Patent appeal against lhe decision of
F ·the learned singJe. Judge _and that appeal was pending dispo<ial when t!::te
, Central Government promulgated the Life Insurance Corporation (Modification
··of.Settlement) Act, 1976 on 2')th ~fay, 1976. The said ~ct \Yas challeni::.ed
ty the werkm\!n in the Supreme Court which by a judgment dated 21st
February, 1980 (Madan Mohan Pathak v. Union of Ind/a, [1978] 3 SCR J34)
declarect it to be void as offe:lding Article 31(2) of the Conititution of Indja
·and directed the Corporation to forbear from implementing the 1976 .\ct and
G to pay to its Class-III and Class-IV employees bonus for the y~ars Jst_ Apdl
1975 to 31st March 1976 and 1st April 1976 to 31st !\larch 1977 in accord1.nce
\vith the terms of sub-clause (ii) of clause 8 of e~ch settlement.

On 3rd March, 1978 the Corporation issued to its workmen a notice
under sub-section ·(2) rJJf- Sl!'Ctidn 19 of the Industrial Disputes Act declaring
its intention to terminate the settlements on the expiry of a periOd (;( two
H ·months -from the date of the notice was_ served. The notice, however
; mentioned in express terms that according to the Corporation co such notice .~
·v..'as really necessary for termination of the settlements. On the san1e date.
··aaOther· "notice was issued by the Corporation under section 9A of the Indus!rial
LIFE INSURANCE CORPOllATION V. D. J. BAHADUR 108 5

Disputes Act statini: that it intended to effect a chan2e in accordance with A
the contents of the annexure to the notice, as from the !st June, 1978, in the
conditions of &ervice ot its workmen. On 26th May, I 9n, the Central
-Government issued a notification under section 49 of the Life Insurance
Corporation Act substituting a new regulation for the then existing regulation
bearinll serial number 58. The new regulation was to come into force from
the !st of June, 1978. Simultaneously, an amendment on the same lines was
made in the 1957 Order by the substitution of a new clause for the then B
existing clause 9 in pursuance of the provisions of sub-section (2) of section
11 of the L. I. C. Act.
These two notices dated 3rd March, 1978 by the Corporation under
-sections 19(2) and 9A of the Industrial Disputes Act respectively and the action
·taken by the Central Government on the 26th May, 1978 by making new
provisions in regard to the payment of bonus to the Corporation's employees
were challen2ed successfully by the workmen in a petition to the Allahabad
c
'High Court under Article 226 of the Constitution of India and hence the
3ppeal by the Corporation.

Allowing the appeal by majority, the Court
HELD:
Per Iyer, J.-A. The Industrial Disputes Act is a benign measure which D
·seeks to pre-empt industrial tensions, provide the mechanics ,,f dispute resolu-
tions and set up the necessary infra-structure so that the energies of partners in
·production may not b! dissipated in counter-productive battles and assurance of
industrial justice may create a climate of goodwill. Its object is "the investiga-
tion and settlement of industrial disputes". Parliament has picked out the ~pecific
·subject of industrial disputes for particularised treatment, whether !he industry
be in the private or public sector or otherwise. The meat of the st,,tute is
E
industrial dispute, not conditions of employment or contract of service as such.
l1106E, 1110D, 1111B-C]

Bangalore Water Supply and Sewemge Board v. Rajappa, [1978] 2 SCC
213, applied.

B, (1) The Industrial Disputes Act substantially equate~ an award with a F
-settlement, from the point of view of their legal force. No distinction in
regard to the nature and period of their effect can be discerned, especially
when one reads section 19(2) and (6). Further, it is clear from section 18
that a settlement, like an Award, is also binding. Thus both settlements and
Awards stand on the same footing. [1 I09F, G, 1109 E]

(2) There are three stages or phases with different legal effects in the G
life of an Award or Settlement. There is a specific period contractnally or
statutorily fixed as the period of operation. Thereafter, the Award or
Settlement doe• not become non est, but continues to be binding. This is
the second chapter o~ legal efficacy but qualitatively different. Then comes
the last phase. If notice of intention to terminate is given -.mder secticm
19(2) or 19(6), then the third stage opens. where the Award or the Settlement
does ~urvive ~nd is in force between the parties as a contract which has H
'superseded the earlier contract and subsists until a new Award or negotiated
settlemo.nt takes its place. Like nature, Law abhors a vacuum and even on
the notice of termination under section 19(2) or (6), the 'equence and
1086 SUPREME COURT REPORTS [1981] 1 S.C.R. ·

A consequence cannot be just void but a coi;itinuance of the earlier terms, bu't
with liberty to both sides to raise disputes, negotiate settlements or· seek a • 4.
reference and Award. Until such a new contract or Award replaces the
previous one, the former settlement or Award wiIJ regulate the relation
between the parties. Industrial law frowns upon a lawless void and under
general law the contract of service created by an Award or Settlement Jive$
so long as a new lawful contract is brought into being. [1114 A-F]
B (3) The precedents on the point, the principles of Industrial Law. th"'
constitutional empathy of Part IV and the sound rules of statutory cons1ruction·
converge to the same point that when a notice intimating termination of aru
Award or Settl::ment is issued the legal import i;i merely that the stag~ is.:
set for fresh negotiations or industrial adjudication and until either effort.
ripens into a fresh set of conditions of_ service the prt!vious Award or
Settlement does regulate the relations between the employer and the employees ..
c (1124 F-G]
Judhisthir Chandra v. Mukherjee, AIR 1950 Cal. 577; Mllngaldas
llarandas v. Payment of Wages Authority etc., (1957) II LU 256 (Bombay
D. B.); JVorkmen of New Elph1~nstone Theatre v. New Elphinstone Theatre,.
(1961) I LU 105 (119) (Madras); Yamuna Mills Co. Ltd. v. Majdoor Mahajan
Manda/, Baroda & Ors.. (1957) I LLJ 620 (Born.); Sathya Studios v. Labour
Court,/(1978) I LU 227 (Madras); Maruti Mahipati Mullick & Anr. v. M/s •
+
.D Polson Ltd. & Anr., (1970) Lab. & I. C. 308 (Born.), approved. •
South Indian Bank Ltd. v.' A. R. Chako, (1964] 4 SCR 62,5; Management"
of Indian Oil Corporation Ltd. v. Its Wqrkmen, 1 SCR 110; Md. Qasim Larry,
Factory Manages, Sasamusa Sugar Works v. Md. Samsuddin & Anr., [1964] T
SCR,419; followed.
E (4) The Settlement under tho I. D. Act does not suffer death merely
because of the notice issued under section 19(2). All that is done is a notice
"intimating its intention to terminate the Award". The Award even if it
ceases to be cperative qua a\vard, continues q:1a contract. Therefore, if the
Industrial Disputes Act regulates the jural relations between the L. I. C. acd
its employees-an ..if'-then the rights under the settlements of 1.974 remain
until replaced by a later Award or Settlement. [1124 G-H. 1125 A-B]
C. (1) In determining whether a statute is a special or a general one-, the
focus must be on the principal subject matter plus the particular perspective~
For certain purposes, the Act may be general and for certain other purpose!
ii may be special. (1127 B-C]
F (2) The Life Insurance Corporation Act is riot a Jaw for employment or
disputes arising therefrom, but a nationalisation measure which incidentaJly,.
like in any general take-over legislation,,, provides for recruitment, tr:insfer3,.
promotions and the like. It is special vi.{-a-vis nationalisation of life insurance,
but general regarding Contracts of employment or acquiring office buildin£:!1.
Emergency measures are special, for sure, Reg4lar na.tionatisation statut.."1> are
G general even if they incidentally refer to conditions of service. 1111 t H, 1112
A·B]
(3) So far as nationalisation of insurance business is concerned, the Life
Insurance Corporation is a special legislation, but equaily indubitably, is the'
inference, from a bare perusal of the subject, scheme and sections an!i
H understanding of the anatomy of the Act, that it has nothing to do with tho-
particular problem of disputes between employer and employees, and of
investigation and adjudication of_ labour dispute. [1126 G~H, 1127 A]
LIFE INSURANCE CORPORATION v. D. J. BAHADUR
·-
I 08.7

On the other hand, the Industrial Disputes Act is a special statute devoted A.
wholly to investigation and settlement of industrial disputes which provides
definitionally for the nature of industrial disputes coming within its ambit.
It creates an infra-structure for investigation into, solution of and adjudication
.+ upon industrial disputes. It also provides machinery for enforcement of
Awards and Settlements. From alpha to omega the I. D. Act has one special
mission-the resolution of industrial disputes through specialised agencies
according to specialised procedures and with special reference to the weaker B·
categories of employees coming within the definition of workmen. Therefore,
with reference to industrial disputes between employers and v orkmen, the
I. D. Act is a special statute, and the L. I. C. Act does not speak at all with
specific reference to workmen. On the other band, its powers relate to the
1
,,...__general aspects of nationalisation, of management when private businesses are
nationalised and a plurality of problems which, incidentally, involve transfer
of service of existing employees of insurers. The workmen qua workmen and c·
industrial disputes between workmen and the employer as such, are beyond
.- the orbit of and have no specific or special place in the scheme of the L.I.C.
Act. [1127 C-F]

(4) Thus, vis-a-vis 'industrial disputes' at the termination of the Settlement
as between the workmen and the Corporation, the I. D. Act is a special
legislation and the L. I. C. Act a general legislation. Like.wise, when D·
compensation on nationalisaiion is the question, the L. I. C. Act is the special
statute. An application of the generalia maxim makes it clear that the I. D.
Act being special law, prevails over L. I. C. Act which is a general law.
[1127 H, 1128 A-BJ
U. P. State Electricity Board v. H. S. Jain, [1979] l SCR 355, I. K. Cotton
Spinning and Weaving Mills Co. Ltd. v. State of Uttar Pradesh, AIR 1'161
SC 1170 at 1174, followed.
(5) Section II of the Life Insuranee Corporation Act, 1956 does not repel
E
_, the Industrial Disputes Act, 1947. The provisions of the L. l. C. Act which
contained provisions regarding conditions of service of employees would not
become redundant, if the I. D. Act was held to prevail. For one thing, the
provisions of .sections 11 and 49. are the usual general provisions giving a
statutory corporation power to recruit and prescribe conditions of service of
its total staff-not anything special regarding 'workmen'. Secondly, no case
of redundant words arose because the Corporation, like a University, employed F
not only workmen but others also and to regulate their conditions of service
power was needed. Again, institutions where no dispute arose. power in the
employer to fix the terms of employment had to be vested. [1129 F·H, 1130
A-BJ
Bangalore Water Supply and Sewarage Board v. Rajappa, [1978] 2 SCC
813; D. N. Banerji v. P. R. Mukhe,rjee & Ors. [1953] SCR 302, followed. G
--4 (6) Whatever be the powers of regulation of conditions of service, including
payment or non-payment of bonus e,njoyed by the employees of the Corporation
under the L. I. C. Act subject to the directives of the Central Government,
they stem from a general Act and cannot supplant, subvert or substitute the
special legislation which specifically deals with industrial disputes between
workmen and their employees. [1131 F-Hl
rThe Court directed the Corporation to fulfil its obligations in terms of H
the 1974 settlements and start negotiations like a model employer, for a fair
settlement of the conditions of ·ser~~e between itself and its employees having
--
1088 SUPREME COURT REPORTS [1981] 1 S.C.R.

A realistic and ,equitable regard to the pre,vailing conditions of life, principles of
industrial justice and the directives underlying Part IV of the Constitution.]

Per Pathak J. (Concurring with Iyer, J.) (I) Both the limbs of sub-section
(2) of section 11 of the L. I. C. Act, 1956 are intended to constitute a
+
composite process of rationalising the scales of remuneration and othe.r terms
and conditions of service of transferred employees with a view not only to
B effecting a standardisation between the transferred employees but also to
revising their scales of remuneration, and terms and conditions of service to
a pattern, which will enable the newly established Corporation to become a
viable and commercially successful enterprise. For that reason, it is open
to the Central Government under the sub-section to ignore the guarantee
contained in sub-·section (1) of section 11 in favour of the employees or ~1
anything contained in the Industrial Disputes Act, 1947 or any other law tur
c the time being in force or any award, sr.ttlement or agreement for the lime
being in force. [1135 D-G]

The second limb of sub-section (2) of section 11 is not related to employees
generally, that is to say, both transferred and newly recruited employees, of
the Corporation. It is confined to transferred employees; There is no danger
of an order made by the Central Government under the second limb of sub-
D 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.
So long as such order is confined to what is necessitated by the process nf
transfer and integration, the transferred employees constitute a reasonably
defined class in themselves and form no common basis with newly recruited
employees. [1136 C-E]
E
The power under the second limb of sub-section (2) of section 11 can
be exercised more than once. To effectuate the transfer appropriately and
completely it may be, necessary to pass through different stages, and at ench
stage to make a definite order. So' Jong as the complex of orders so made
is necessarily linked with the process of transfer and integration, it is
immaterial that a succession of orders is made. The deletion of the words
F "from time to time" found in the Bill, is of no consequence. [1136 E-G]

(2) The notification dated 26th May, 1980 purporting to amend the
Standardisation Order is invalid. It has no effect on the right to bonus by
the workmen. The notification was intended to apply to transferred employees
only. It declares explicitly that the Central Government is satisfied that a
revision of the terms and conditiorni of service of the transferred employees
G is considered necessary. This is made explicit by the circumstance that
identical provisions have been made by the Corporation, with the prior
approval of the Central Government, in the new Regulation 58 of a notification
issued under both clauses (b) and (bb). [1137 A-C]

(3) A settlement under the Industrial Disputes Act, in essence, is a contract
between the employer and the workmen prescribing new terms and conditions.
H As soon as the settlement is concluded and becomes operative, the contract
embodied in it takes effect and the existing terms and conditions of the
workmen are modified accordingly. Unless there is somethin2 to the contrary"
in a particular term or condition of the Settlement the embodied contract
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1089'

endures indefinitely, continuing to govern the relation between the parties in A.
future, subject of course to subsequent alteration through a fresh settlement,
award or valid legislation. Settlement is not only a contract but something
more. Conceptually, it is a "settlement". It concludes or "settles" a dispute.
~ In order the new contract be afforded a chance of being effectively worked
out a mandate obliging the parties to unreservedly comply with it for a period
of time is desirable. It was made "binding" by the statute for such period.
On the expiry of such period, the baln lifts, and the parti~s are at liberty B;
tu seek an alteration of the contract. (1138 E-H-1139 A-C]

The law laid down in South Indian Bank Ltd. v. A. R. Chacko (1964]
5 SCR 825 and Md. Quasim Larry, Factory Manager, Sasamusa Sugar Works
v. Md. Shamsuddin & Anr., [1964] 7 SCR 419 in respect of an Award applies
I,.~ equally in relation to a settlement. [l 140B]

(4) The Industrial Disputes Act is a ·special law and must prevail over
c
the Corporation Act, a general law, for the purpose of protecting the sanctity
t of transactions concluded under the former enactment. Regulation 58, a
product of the Corporation Act, cannot supersede the contract respecting bonus
betwe1en the parties resulting from the settlement of 1974. (1142 B-D]
Plainly, if a settlement- resolves an industrial dispute under the Industrial
Disputes Act, it pertains to the central purpose of that Act. This constitutes ]).
a special law in respect of a settlement reached under the auspices between
an employer and his "workmen" employees. The consequences of such
,ettlement are the product of the special law. [1141 E-F]
The Corporation Act was enacted primarily for effecting the nationalisation
of Life Insurance business by transferring all such business to a Corporation
established for that purpose. Clearly, the object behind section II (1), section E
Z3 and clauses (b) and (bb) of section 49(2) of the L. I. C. Act is to provide
staff and Jabour for the purpose of the proper management of the nationalised
i life Insurance business. The Corporation Act ·does not possess the features
found in the Industrial Disputes Act. No special provision exists in regard to
industrial disputes and their resolution and the, consequences of that resolution.
The special jurisdiction created for the purpose under the Industrial Dispute>;_
)--·· Act is not the subject matter of the Corporation Act at all. No corresponding F
provision in the Corporation Act, a subsequent enactment, deals with the
.subject matter enacted in the Industrial Disputes Act. (1140 F, 1141 A, F-G]

Yet Parliament intended to provide for the. Corporation's "workmen"
employees the same opportWlities as are available under the Industrial Disputes
Act to the, workmen of other employers, as demonstrated by section 2(a)(I)
of the Corporation Act. The expression "appropriate Government" is G.
specifically defined by it in relation to an industrial dispute .ooncerning t~e Life
Insurance Corporation. Both the Central Government and the Corporation
~- understood the Industrial Disputes Act in that light, for, Regulation 51(2)
of the (Staff) Regulations made bv the Corporation under clauses (b) and (bb)
of section 49(2) of the Corporation Act, with the previous approval of the
Central Government, speaks of giving effect to a revision of scales of pay,
dearness allowance, or other allowances "in pursuance of any award, H.
agreement or settlement." [1141 G-H, 1142A-C]
Life Insurance Corporation of India v. Sunil Kumar Mukherjee, [1964] 5
SCR 528; Sukhder Singh v. Bhagat Ram, [1975] 3 SCR 619, referred to.
1090 SUPREME COURT REPORTS [1981] 1 S.C.R.

A U. P. State Electricity Board & Ors. v. Bari Shanker lain &: Ors., [1979]
SCR 355; J. K. Cotton Spinning and Weaving MJls Co. Ltd., v. State of
Uttar Pradesh, AIR 1961 SC 1170, followed.
Mary Sawards v. The Owner of the "Vera Cruz", (1884] IO A. C 59 _,._
(ii) 68, quoted with approval.
(5) In construing the scope of the Corporatio~'s powers under section 11
(I) of the Corporation Act, appropriate importanee should be attached to the
B qualifying word "duly". When the Corporation seeks to alter the term; ar.d
conditions of transferred employees, it must do so in accordance with l~w,
and that requires it to pay proper regard to ihe sac:ctity of rights-acquired
by the "workmen" employees under settlements or awards under the I'ldustrial
Disputes Act. [1142H, 1143 A-BJ _{
The provision in section 11(2) has been made for the purpose o(-~
·C protecting the interests of the Corporation and its policy holders. The policy
holders constitute an important and significant sector of public illte1est. Indeed,
the avowed object of the entire Corporation Act is to provide absolute security i
to the policy holders in the matter of their life insurance protection. That is
assured by a wise management of the Corporation's business, and by ensuring
that when settlements are negotiated between the Corporation and its workmen
or when industrial adjudication is initiated in Labour Court and industrial
D tribunals, the protection of the policy holders will find appropriately significant
emphasis in the deliberations. (1143 D-E]
(6) In the view that the notification dated 26th May, 1978 purporting to
amend the Standardisation Order by substituting clause (a) is invaJid and
the newly enacted Regulation 58 does not effect the contract in respect of
bonus embodied in the Settlements of 1974 between the Life Insurance
Corporation and its "workmen" employees, effect must be given to that contract.
E If the terms and conditions of service created by the contract need to be
reconsidered, recourse must be had to the modes ·recognised by law-negotiated
settlement, industrial adjudication or appropriate legislation. (1143 F-G]
Per Koshal, J. (Contra) (I) The Industrial Disputes ·Act deals with
the adjudication or settlement of disputes between an employer and his
workmen and would, therefore., be a special law vis-a-vis another statute
F which covers a larger field and may thus be considered "general" as compared
to it. It cannot, however, be regarded as a special law in· relation. to all
other laws irrespective of the subject matter dealt with by them. In fact a
law may be spe:cial when considered in relation to another piece of legislation
but only a general one vis-a-vis ·still another. "Special" and "general" are
relative terms and it is the content of one statute as compared to the other
. that will determine which of the two is to be regarded as special in relation
to the other. Viewed in this light the proposition, namely, "the Industrial
Disputes Act is a special law because it deals with adjudication and settlement
of matters in dispute between an employer and his workmen while the Life
Insurance Corporation Act is a general law" cannot stand scrntiny. The
Industrial Disputes Act would no doubt be a special Act in relation to a law
which makes provisions for matters wider than but inclusive of those· covered
by it, such as the Indian Contract Act as that is a law relating to contracts
H generally (including those between an industrial employer and his workmen}
but it would lose that categorisation. and must be regarded as a general law
when its rival is shown to operate in a field narrower than its own and such
a rival is that part of the Life Insurance Oorporation Act whi~h deals with
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1091

'Ci>nditions of service of the employees of the Life Insurance Corporation-a A
single industrial un<lertak::,g of a special type) as oppo,ed to all others of
its kind which fall within the ambit of the Indust!ial D'sputes Act. Where
the competition is between these two Acts, therefore. the Life Insurance
Corporation Act must be regarded as a special law and (in ~ompari,on thereto)
the Industrial Disputes Act as a general law. [1153 E-F, H, 1154 A-Cl
(IA) Section 11 and clauses (b) and Clib} of sub-section 2 of section 49 of
the Life Insurance, Corporation Act were intended to be and do constitute B
an exhaustive and cvcrriding law governing the condition of service of all
employees of the Corporation ir,cJuding transferred employees. The
proposition, namely, that the Industrial Disputes Act being a special law.
would override a general law like the Life lnsnrance Corporation Act, is
incorrect. Even if the Industrial Disputes Act is regarded as a special law
in comparison to, the Lifu Insurance Corporation Act, the result would he
the same. [1162 E-F, 1153 E]
c
(I B} The general rule to be followed in the case of a conflict between two
statutes is that the later abrogates the earlier one (Leges posteriores priores
contrarias abrogant). To this general rule there is a well known exception,
namely, generalia specialibus non derogant (general things do not derogate
from special things). In other words, a prior special law would yield to a
later general law, if either of the following two conditions is satisfied: (i) The D
two are inconsistent with each other. (ii) There is some express reference in
the later to the earlier enactment. If either of these conditions is fulfilled the
later law, even though general, will prevail. Further four tests deductible from
the several texts on interpretation of statutes are : (i) The legislature has the
undoubted right to alter a law already promulgated by it through subsequent
legislation. (ii) A special law may be altered, abrogated or repealed by a
later general law through an express provision. (iii) A later general law will E
override a prior special law if the two are so repugnant to each other that
they cannot co-exist even though no express provision in that behalf is found
in the general law. (iv) It is only in the absence of a provision to the
contrary and of a clear inconsistency that a special law will remain wholly
unaffected by a later general law. [1154 E, G-H, 1156 C-D]

(2) The proposition that the Industrial Dispute Act being a special Jaw F
would override a general law like the Life Insurance Corporation Act is equally
insupportable even if the Industrial Disputes Act is regarded as a special law
in connection with the Life Insurance Corporation Act. The word "duly",
in section 11(1) of the Life Insurance Corporation Act means properly, regularly
or in due manner. In the contexf in which it is used it may legitimately be
given a more restricted meaning, namely, in accordance with bw. If reference
to the provisions of the Industrial Disputes Act alone was contemplated and G
the alterations envisaged were merely such as could be achieved by a
settlement or award resulting from a compliance thereof, not only would the
expression "by the Corporation" become redundant (which would not be a
situation conforming to the well-known principle of interpretation of statutes
that a construction which leaves without effect any part of the language of a
statute will normally be rejected) but the express provisions of clause !bb)
of sub-section (2) of section 49 of the Li~e Insuranee Corporation Act, which H
invest the Corporation with power to make regulations (albeit with the approval
of the Central Govemment) laying down the terms and conditions of service
-Of the transferred employees would also be rendered otiose. ::ro th~ extent,
1092 SUPREME COURT REPORTS [1981] 1 S.C.R.

A therefore, that section 11(1) read with that clause confers on the Corporatio~
the power to alter the terms and conditions in question-a power not enjoye4
by it under the provisions of the Tndustrial Disputes Act-it is inconsistent
with the Industrial Disputes Act and being a later law, would override that
Act despite the absence of the non-obstante clause, the inconsistency having
arisen from express language and not from mere implication. In other words,
sub-section (2) of section 11 not only gives to the Central Government the
B power to alter the terms and colnditions of service of the employee,s of the
Corporation in certain situations, and to alter them even to the detriment
of such employees to snch extent and in ·such manner as it thinks fit, but
also states in >.o many words that such power shall be exercisable
"notwithstanding anything contained in sub-section (l) or the Industrial
Disputes Act 1947 or in any other law for the time being in force, or in any
Award, settlement or agreement for the time being in force."' The mandate
c of the Legislature has been expr~scd in clear and unambiguous terms in this
non-obstante clause and is to the effect that the power of the Central Government
to alter conditions of service of the employees of the Corporation shall be
wholly unfettered and that any provisions to the contrary contained in the
Industrial Di·sputes Act or for that matter, in any other law for the time
being in force, or in any award, settlement, or agreement for the lime being
in force, would not stand in the way of the exercise of that power even if
D such exercise is to the detriment of the employees of the Corporation. The
conferment of the power is thus in express supersession of the Industrial
Disputes Act and of any settlement made thereunder. The provisions of
that Act and the two settlements of 1974 must, therefore, yield to the dictates
of section 11(2) and to the exercise of the power conferred thereby on the
Central Government. Further, in the, face of an expre•s provision, namely,
sub-section (4) of section 11 it is r.ot open to the employees to contend that
E the law laid down in the Il)dustrial Disputes Act and not sub-section (2) of
section 11 would govern them. [1154C, 1157 C-H, 1159 A-E, F-G]
(3) The rule making power conferred on the Corporation by section 49
ot the Life lnsuranee Corporation Act is exercisable notwithstanding the
provisions of the Industrial Disputes: Act. This power is expressly conferred
on the Corporation i'n addition to that with which it is invested under clause.
(bb) of the same sub-section (2) 0£ section 49. If clauses (b) and (bb} of that
F sub-section were not meant to override the provisions of the Industrial Disputes
Act on· the same subject they would be completely meaningless, and that is a
situation running directly counter to one of the accepted principles of
interpretation of statutes. Besides, these two clause• are not to be read in
isolation from section 11. The subject matter of the clauses and the sectio!1
is overlapping and together they form an integrated. whole. The clauses must.
therefore, be read in the light of section 11. When the two clauses say that th"
G Corporation shall have the power to frame regulations. in regard to the terms
and conditions of its employees including transferred employees subject, of
course, to previous approval of the Central Government, the power may well
be exercised in conformity with the provisions of section 11. And if it SI!>
exercised the resultant regulations cannot be said to go beyond the limits
specified in the statute. [1159 G-H, 1160 A-DJ
Life Insurance Corporation of lndia v. Sunil Kumar Mukherjee & Ors.
H [1964] 5 SCR 528, followed.
Hukam Chand etc. v. Union of India and others, AIR 1972 SC 2427;
B. E. Vadera ,v. Union of India & Ors. [1968] 3 SCR 575, held inapplicable.
LIFE INSURANCE CORPORATION v. D. J', BAHADUR 1093

U. P. State Electricity Board and Ors. v, Hari Shanker lain and Ors.,
[1975] I SCR 355; Bangalore Water Supply & Sewerage Board etc. v. R.
Rajappa & Ors. [1978] 3 SCR 207, explained and distinguished.
(4) Section 23 of the L. I. C. Act, which envisages employment of
persons by the Corporation no doubt implies settlement cf ccmditrnns of
service and that does not mean that once a settlement is arrived at, the same
is not liable to be altered except by another settlement reached under section
B
18 of the I. D. Act. The provisions of sub-sections (1), (2) and (4) of section
1I of the L. I. C. Act and clauses (b)1 and (bb) of ·sub-section (2) of section 49
thereof have overriding effect and the terms and conditions of service of the
employees of the Corporation forming part of a settlement under the I. D.
Act cannot last after they have be.en altered in exercise of the powers conferred
on the Corporation or the Central Government by these povisions, as was
done when the new Regulation 58 was framed under 'Section 49 by the
Corporation and the, new clause 9 was inserted in the 1957 order by the c
Central Government. Nor can any action taken under section 19(2) and 9A
of the I. D. Act have any relevance to the exercise of these powers so long
as such exercise conform to the provisions of the L. I. C. Act. [1162 G-H,
1163 A-BJ
(5) The reliance of the High Court on Madan Mohan Pathak v. Union of D
India, [1978] 3 SCR 334, for support to the proposition that "the new
Regulation 58 framed under section 49 of the L. I. C. Act and the notification
issued under sub-section (2) of section 11 thereof substituting a new clause 9
in the 1957 Order are wholly ineffective against the operation of the 1974
settlements which were arrived at in pursuance of the provisions cf the I. D.
Act and which therefore continue to govern the parties thereto", i~ wholly
misplaced because: E
(a) The judgment limited itself to the duration of the settlements as
appearing in clause 12 thereof and therefore does not cover any period subse-
quent to 21st March, 1977.
(b) No finding at all was given nor was any observation made to the
effect that section~ II and 49 of the L. I. C, Act or the, action taken thereunder
(the promulgation of new Regulation 58 and the new clause 9 of the 1957
Order) was ineffective against the operation of the provi'sions of the I. D. F
Act or of the 1974 settlements. On the other hand the judgment very
specifically proceeded on the ground that the two settlements had to and did
conform to the provisions of Regulation 58 inasmuch as the Central
Government had accorded its approval to them, (c) Although it was held
clearly, rather quite correctly that sub-clause (ii) of clause 8 of the 1974
settlements stood independently of sub-clause (J) thereof, the judgment
contains no finding whatsoe.ver to the effect that the conditions of service G
'laid down in those settlement could be varied only by a fresh settl.ement or
award made under the provisions of the I. D. Act and that till then sub·
+ c:Iause (ii) afore1;aid would remain in full force. [1165 C-H, 1166 A-BJ
(6) The observations .in Chako's case must be taken to mean that the
expired award would continue to govern the parties till it is displaced by
another contract, or by a relationship otherwise substituted for it in accordanc~
with law. Jn the present case, there is a special mandate by Parliament to
fill the void of the 3rd period following the expiry of 1974 settlements which H
did not obtain in Chako's case. [1170 A-CJ
South Indian Bank Ltd. v. A. R. Chacko, [1964] 5 SCR 625, Indian Link
Chain Manufacturers Ltd. v. Their Workmen, [1972] 1 SCR 790, Shukla
9-'6 S C India/ND/81
1094 ·SUPREME COURT REPORTS [1981] 1 S.C.R.

A Ma11seta Industries Pvt. Ltd. v. The Workmen Employed under it. [1978] 1
SCR 249; Haribhau Shinde and another v. F. H. Lala Industrial Tribunal,
Bombay and another, AIR 1970 Born. 213, distinguished.
. Sukhdev Singh & Ors. v. Bhagatram Sardar Singh Raghuvanghi and anr.,
[1975] 3 SCR 619, followed.
(7) 1. Section 11(2) of the Corporation Act suffers from no ambiguity
B either by reason of the omission therefrom of the expression "from time to
time" or otherwise and it is, therefore, not permissible for a reference to be
made to the speech of the then Finance Minister in the matter of interpretation
<lf the sections. [1180 B-C]
4nandji Haridas & Co. (P) Ltd. v. Engineering Mazdoor Sangh ~-
& Anr., [1975] 3 SCR 542, applied.
(7) 2. The power to alter the terms and conditions of service of the
Corporation's employees which the Central Government is authorised to
exercise in the interests of the Corporation and its policy-holders must of
necessity be a power which can be exercised as and when occasion so requires.
A contrary view would lead to absurd results in certain given situations.
[1179 A-BJ
Himangsu Chakraborty and others v. Life Insurance Corporation of India
D and others, 1977 Lab. I. C. 622; K. S. Ramaswamy and anr. v. Union of India
and ors. [1977] I LU 211; Harivadan K. Desai and others v. Life Insurance
Corporation of India and others, (1977) Lab. I. C. 1072 (Gui), approved.
Mazagaon Dock Ltd. v. Commissioner of Income Tax and Excess Profits
Tax. [1959] SCR 848; Babu Manmohan Das Shah & Ors., v. Bish'.m Das, [1967]
1 SCR 836; Vasantlal Maganbhai Sanjanwala v. The State of Bombay and
others, [1961] 1 SCR 341, applied.
E (8) There being no challenge to the vires of section 11(2) of th'! Corporation
Act by either side and so long as the section itself is good the exercise of the
power conferred by it cannot be attacked unless such exercise goes beyond
the limits of the section, either in its content or manner. If the legislature
was competent to confer a power on the Central Government to alter the
conditions of service of the employees of the Corporation to their d~triment
or otherwise, the fact that the power was exercised only to cut down bonus
F would furnish no reason for striking down clause 9 of the 1957 Order or
Regulation 58 as being isolative of Article 14 or 19. [1181 E-F]
(9) Clause 9 of the 1957 Order is not violative of Article 14 or 16 of the
Constitution of India. That clause no doubt takes within its sweep only
transferred employee~; because clause 2 of the 1957 Order specifically states
that the Order is restricted in its operation to employees of that category;
G but then no question of any discrimination whatsoever is involved inasmuch
as the transferred employees have not only been treated differently from other
employees of the Corporation but by reason of Regulation 58 they have been
placed fully at par with the latter. [1181 G-H, 1182A]
,....
(10} Clause 9 of the Order of 1957 does not suffer from the maxim
"Delegatus non-po test delegare". Clause 9 itself states in unmistakable terms
that the Corporation may grant non-profit sharing bonus to its employees in
\
H respect of any particular year subiect to the previous approval of the Central
Government, and so the real bonus-granting authority remains the Central
Government. There is thus no delegation of any real power to the Corporation
.through the promulgation of clause 9. [1182 B-D]
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1095

(11) New contentions, not raised before the High Court, like "necessity A
for revising the terms and conditions of service through promulgation of
dause 9" will not be permitted to be raised at the Supreme Court level. Again
in the absence of any evidence to the contrary, it is permissible to presume
that official acts have been regularly performed and that the preamble to the
notification therefore, is in accord with facts. [1182 E-G]
12. When Regulation 2 of 1960 says that it shall apply to every whole-
B
time employee of the Corporation "unless otherwise provided by the terms of
any contract, agreement or letter of appointment'', all that it means is that
if a contract, agreement or letter of appointment contains :i term stating that
the cancerned employe,e or employees shall not be. governed by the Regula-
tions, then such employee or employe;:s shall not be so governed. Regulation 2
is definitely not susceptible of the interpretation that if a settlement has been
reached between the Corporation and its employees, the regulations shall not
apply to them even though the settlement makes no provision in that behalf.
c
Tt is nobody's case that the 1974 settlements contain any such provision and
Regulation 2, therefore, does not come into play at all. [1183 C-E]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2275 of ,
1978.
Appeal by Special Leave from the Judgment and Order dated D
11-8-1978 of the High Court of Judicature at Lucknow in Writ Peti-
tion No. 1186/78.
WITH
Transfer Case No. 1 of 1979.
S. V. Gupte, G. B. Pai, K. J. JohJi and D. N. Mishra for the E
Appellant in C.A. 2275/78.
R. K. Garg, Madan Mohan, V. J. Francis and D. K. Garg for
Respondents 1-3, in CA 2275/78.
M. K. Banerjee, Addl. Sol. Genl. R. N. Sachthey, R. B. Datar
and Miss A. Subhashini for Respondent No. 4. in C.A. 2275/78.
F
P. K. Chatterjee, and Rathin Das for the Petitioner in Transfer
Case No. 1/79.
M. K. Banerjee, Addl. Sol. Genl., R. B. Datar, R. N. Sachthey
and Miss A. Subhashini for Respondent No. l in Transfer Case .
N:o. l/79.
· S. V. Gupte, G. B. Pai and K. J. John for Respondent No. 6 , G
in Transfer Case No. 1/79.
For the Interveners
P. K. Chatterjee and Rathin Das for All India Employees Assn.
Adarsh Goel, Janardan and Sarwa MiMer for National Organisa-
tion of Insurance Workers. H
P. R. Kumaramanglam, Mukul Mudgal and K. Vasdev for G.
Meenakshi Sundaram and K. Ramakrishnan.
1096 SUPREME COURT REPORTS [1981] 1 S.C.R.

A R. K. Garg, Madan Mohan, V. l. Francis and D. K. Garg for
C. N. Sharma and Rajendra Nath Misra.

D. L. Sengupta, S. K. Nandy and P. S. Khera for All India Life
Insurance Employees Assn. and L.I.C. of India through its Chair-
man Bombay.
B
The following Judgments were delivered,

KRISHNA lYER, J.

A Word of Explanation.-A preliminary divagation has become
c necessary since application and enquiries had been made more than
once about the postponement of the judgment. The first anniversary
of the closure of oral submissions in the above case is just over; and
t.his unusual delay between argument and judgment calls from me,
the presiding judge of the bench which heard the case, a word of
explanation and clarification so that misunderstanding about the
D judges may melt away in the light. A better appreciation of this
court's functional adversities and lack of research facilities will pro-
mote more compassion than criticism and in that hope I add this note.

The judicature, like other constitutional instrumentalities, has a
culture of national accountability. Two factors must be highlighted
E in this context. A court is more than a judge; a collegium has a
personality which exceeds its members. The price a collective pro-
cess (free from personality cult, has to pay is long patience, free
exchange and final decision in conformity with the democracy of
judicial functionality. Sometimes, when divergent strands of
thought haunt the mentations of the members, we pause, ponder
F and reconsider because we follow the words of Oliver Cromwell
commended for courts by Judge Learned Hand: "My brethren, r
beseech you, in the bowels of Christ, think it possible that you may
be mistaken." Utter incompatibility exists between judicial demo-
cracy and dogmatic infallibility; and so, in this case, we have
taken time, more time and repeated extension of time to evolve a
G broad consensus out of our initial dissensus. Not procrastination but
plural toil, is the hidden truth behind the considerable interval.
Secondly, when important issues demand the court's collective·
judgment an informed meeting of instructed minds, in many ways, is a
sine qua non. But the torrent of litigation flooding the court drowns
H the judges in the daily drudgery of accumulated dockets. To gain
leisure for fundamental reflections with some respite from paper-logged
existence and supportive research from trained law clerks is a
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1097
(Krishna Iyer, J.)
; 'consummation devoutly to be wished' if the final court is to fulfil A
its tryst with the Constitution and country. The Indian judicial pro-
•cess, sui generis in some respects, has its problems, Himalayan in
-dimension but hardly appreciated in perspective and in true propor-
, tions two of which have been mentioned by me in extension of the
great gap between closure for judgment and its actual pronouncement.
Having said this, I must proceed to deal with the merits of the case B
and the conclusions we have reached in our diverse opinions. By
majority, any way, we dismiss the appeal and find no merit in the
contentions of the appellant.

The fundamental differences in approach
c
My learned brother Kasha!, J. has, after long reflection on the
issues in this appeal, expressed his conclusion with which I respect-
fully disagree. Our difference stems from basic divergence in legal
interpretation and judicial perspective.

Law is no cold-blooded craft bound by traditional techniques and D
fonnal forceps handed down to us from the Inda-Anglican era but
a warm-blooded art, with a break from the past and a tryst with the
present, deriving its soul force from the Constitution enacted by the
People of India. Law, as Vice President G. S. Pathak used to
emphasise in several lectures, is a tool to engineer a peaceful 'civil
revolution' one of the components of which is a fair deal to the E
weaker human sector like the working class. The striking social
justice values of the Constitution impact on the interpretation of.
Indian laws and to forget this essential postulate while relying on
foreign erudition is to weaken the vital flame of the Democratic,
Socialist Republic of India. Chief Justice Earl Warren of the United
States has spelt out with clarity and felicity the correct judicial ap- F
proach to the issues at stake in this case :
Our judges are not monks or scientists, but participants
in the living stream of our national life, steering the law between
the dangers of rigidity on the one hand and of formlessness
on the other. Our system faces no theoretical dilemma but a G
single continuous problems how to apply ever-changing condi-
tions the never-changing principles of freedom. (1)
For the Indian judicial process, the nidus of these never-changing
principles is the Constitution. The b~aring of this broad observation
·on statutory construction will become evident as we get down to the
discussion. H

(1) Earl Warren: Fortune, November 1955.
1098 SUPREME COURT REPORTS [1981] 1 S.C.R.

A Now let me proceed to the merits, but, at the outset, underscore
the constitutional bias towards social justice to the weaker sections.
including the working class, in the Directive Principles of State
Polrcy-a factor which must enliven judicial consciousness while
decoding the meaning of legislation. Victorian-vintage rules of
construction cannot override this value-laden guide book.
B
The flawless flow of facts, so far as I am able to remember,
aided by our notes, finds expression in the stream of 1~arration in our
learned brother's judgment and that frees me from a like exercise.
But our consensus on the facts is no less than our dissensus on the
law. In the pages that follow I adopt, for CO!J.Venience, the same
c acronyms and abbreviations as have been used by brother Kosh al, J.
in his judgment.

To begin with, I have to stress three key circumstances which
colour the vision of social justice: (a) the factum of payment of
bonus, without break, since 1959 by the Corporation(1) to its emplo-
D yees, (b) the consciom;ness that the Management in this case is no
asocial, purely profit-oriented private enterprise but a model employer,
a statutory corporation, created by nationalisation legislation inspired
by socialistic objectives; and ( c) the importance of industrial peace
for securing which a special legislation viz. the Industrial Dispute~
Act, 1947 (the ID Act, for short) has been in operation for 3 3 years.
E The Corporation is itself a limb of the State as defined in Art. 12
and Arts. 38, 39 and 43 which deal with workers' weal have, there-
fore, particular significance.

The Corporation, to begin with, had to take over the staff of
F
the private insurers lest they should be thrown out of employment,
on nationalisation. These private companies had no homogenous
policy regarding conditions of service for their personnel, but when
these heterogenous crowds under the same management (the Corpo-
ration) divergent emoluments and other terms of service could not
survive and broad uniformity became a necessity. Thus, the statutory
G
transfer of service from former employers and standardization of
scales of remuneration and other conditions of employment had to
be and were taken care of by s. 11 of the Life Insurance Corporation
Act, 1956 (for short, the LIC Act). The obvious purpose of this f

'
provision was to enable the Corporation initially to absorb the motley
H 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 employment or industrial settle-
(!) Life Insuran1:e Corporation of India.
LIFE INSURANCE CORPORATION V. D. J. llAHADUR 1099
(Krishna Iyer; !.)
ments or awards. It was elementary that the Corporation could not A
perpetuate incongruous features 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, unifom1
treatment of the transferred staff. Unless there be unmistakable
expression of such intention, the ID Act will continue to apply to
the Corporation employees. The office of s. 11 of the LIC Act was B
to provide for a smooth take-over and to promote some common
conditions of service in a situation where a jungle of divergent con-
tracts of employment and industrial awards or settlements confronted
the State. Unless such rationalisation and 5tandardization were
evolved the ensuing chaos would itself have spelt confusion, conflicts
and difficulties. This functional focus of s.11 of the LIC Act will
c
dispel scope for interpretative exercises unrelated to the natural setting
in which the problem ~ccurs. The inference is clear that s.11 does
not repel the ID Acr as that is not its purpose .. Fiirewell to the
context and fanatical adherence to the text may lead to the tyranny
of literality-a hazardous road which misses the meaning or reaches D.
a sense which the author never meant. Lord Denning has observed :
"A judge should not be a servant of the words used. He should not
be a mere mechanic in the power-house of semantics." Reed Dicker-
son has in his "The Interpretation. and Application of Statutes"
warned against 'the disintegration of statutory construction' and
quoted Fuller to say : ( 1 ) E.

. . . . (W)e do not proceed simply by placing the word in
some general context. . . . Rather, we ask ourselves, What can
this rule be for? What evil does it seek to avert?
.... Surely the judicial process is something more than a
cataloguing procedure .

. . . . a rule or statute bas a s!ructural or systematic quality
that reflects itself in some measure into the meaning of every
principal term in it.
I lay so much emphasis on the guidelines to statutory G.
inierpretation as this case turns solely on the seeming meaning of
certain provisions (for e.g. s. 11) of the LIC Act as capable of perpe-
tual use, not only initial exercise, as the Minister in Parliament indi-
cated. But, as we will presently see, the decisive aspect of the case
turns on ano'.her point, viz. the competing claims for dominance as
between the ID Act and the LIC Act in areas. of conflict. Of course, H
(i) L. Fuller, Positivism and Fidelity to Law - A reply to Prof. Hart,
71 Harv. L. Rev. 665, 666, 669.
1100 SUPREME COURT REPORTS [1981] 1 S.C.R.

the problem of decoding the legislative intent is fraught with perils
A and pitfalls, as the learned author has noted : (')
To do bis cognitive job well, a judge must be unbiased, -
sensitive to Janguage usages and shared :acit assumptions, percep-
tive in combining relevant elements affecting meaning, capable of
reasoning deductively, and generously endowed with good
B judgment. In view of '.hese formidable <lemands, it is hardly
surprising that judges often disagree on the trne meaning o;' a
statute.
Even so, legal engineering, in the province of deciphering meaning,
cannot abandon the essay in despair and I shall try to unlock the
legislative intent in the light of the text and as reflecting the context.
c
A capsulated. presentation of the conspectus of facts will aid the
di~cussion. ·--~
The battle is about current bonus, the employer is the Life
Insurance Corporation and the employees belong to Classes III and IV
in the service of the Corporation. The LIC Act brought into being
D
a statutory corporation, i.e. the Life Insurance Corporation and life
was breathed into it as from September 1, 1956. Since there was
nationalisation of life insurance business under the LIC Act private
insurers' assets and liabilities of employees were transferred to . the
Corporation. We are concerned only with the employees and their
E services and s.11 of the LIC Act covers this field. I may extract the
said provision to make it clear that it deals with the remunera'.ion,
terms and conditions and other rights and privileges of transferred
employees : .
11. ( 1) Every whole-time employee of an insurer whose
controlled business has been transferred to and vested in the
F Corporation and who was employed by the insurer 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 Corporation, and shall hold his office
therein by the same tenure, at the same remuneration and upon
the same terms and conditions and with the same rights and
G privileges as to pension and graturny 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 employme:nt in :be Corporation is terminated or until his
remuneration, terms and conditions are duly altered by the
Corporation :
H
(1) The Interpretation and Application of Statutes, Reed Dickerson, 1975
Edn. pp. 236-7.
LIFE INSURANCE CORPORATION V. D. ,T, BAHADUR 1101
(Krishna Iyer, J.)
Provided that nothing con'.ained in this sub-section shall A
apply to any such employee who has, by notice in writing given
to the Central Government prior to the appointed day, intimated
his in'.ention of not becoming an employee of the Corporation;
(2) Where the Central Government is satisfied ~hat for
the purpose of securing uniformity in the scales of remuneration
B
and the other terms and conditions· of service applicable to
employees of insurers whose con'.rolled business has been trans-
ferred to, and vested in, the Corporation, it is necessary so to
do, or that, in the interests of the Corporation and its policy-
holders, a reduction in the remuneration payable, or a revision
of the terms and conditions of service applicable, to employees c
or any class of them is called for, the Central Government may,
notwithstanding anything contained in sub-section ( 1), · or in the
Industrial Disputes Act, 1947, or in any other law for the
time being in force, or in any award, settlement or agreement
for the time being in force, alter (whether by way of reduction
or otherwise) the remuneration and the other terms and condi- D
tions 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 terminate his employment by giving him com-
pensation equivalent to three months' remuneration unless the
contract of service with such employee provides for a shorter
notice of termination. E

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 mon,ey 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 a~ to whether any employee
was employed wholly or mainly in connection with the controlled
business of an insurer immediately before the appointed day the
question shall be referred to thi: Central Government whose
G
decision shall be final.
( 4) Notwithstanding anything contained in the Industrial
Disputes Act, 1947, or in any other law for the time being
in force, the transfer of the service of any employee of an insurer
to the Corporation shall not entitle any such employee to any H ·
,compensation under that Act or other law, and no such claim
shall be entertained by any court, tribunal or other authority.
· 1102 SUPREME COURT REPORTS [1981] 1 S.C.R.

A Recruitment of fresh employees is provided for by s.23. And s.49
empowers the Corporation to make regulations in a general way for
an· \he purposes of the Act, including the terms and conditions of
service of the employees of the Corporation. Pursuant to its powers >
the Central Government promulgated the Life Insurance Corporation
(Alteration of Remuneration and other Terms and Conditions of
B Service of Employees) Order, 1957 (the 1957 Order, for short). This
related to the conditions of service of the transferees and was not
confined only to Class III and Class IV employees among them. It
was a general Order, not one limited to workmen as defined in s.2(s)
·of the ID Act. Clause 9 of the 1957 Order states that no bonus
will be paid but certain other benefits of insurance, medical care etc.,
c are mentioned t!Jerein. Clause 9 was later amended providing for
non-profit sharing bonus to certain classes of employees.

Be that as it may, the Corporation, with the clear approval of
the Central Government, reached a settlement with its employees on
July 2, 1959 providing for payment of cash bonus from September
D 1, 1956 to December 31, 1961. Obviously, this was under the
ID Act and not under the LIC Act and proceeded on the clear assump-
tion that the ID Act provisions regarding claims of bonus applied to
workmen in the employment of the Corporation.
In 1960, the Life Insurance Corporation of India (Staff}
E Regulations, 1960 (the 1960 Regulations) were framed. Regula'.ion
58 states :
The Corporation may, subject to such directions as the
Central Government may issue, grant non-profit sharing bonus
to its employees and the payment thereof, including conditions
of eligibility for the bonus, shall be regulated by instructions
issued by the Chairman from time lo time.
Here again, it must be noted that '.he provision is general and covers
·the entlre gamut of employees of the Corporation and is not a specific
stipulation regarding that class of employees who are workmen under
the ID Act and whose industrial disputes will be governed ordinarily
G by the ID Act.

Consistently with '.he good relations between the Corporation
and its workmen, the settlement of 1959 was followed by those of
1963, 1970 and 1972 providing for bonus for workmen in the service
of the Corporation. Rocketing cost of living, rising aspirations and
H frustrations of socio-economic life and the general expectations from
model employers like the public sector enterprises, have led work-
men in this country to make esca.\ating demands for better emoluments,
LIFE INSURANCE CORPORATION V. D. J. BAHADUR iIO:J.
(Krishna Iyer, !.)
including bonus. Naturally, the workmen under the Corporation 'A
raised disputes for bonus and other improved conditions. The
employer, consistently with the long course of conduct by both sides
as if the ID Act did govern their relations, entered into settle-
ments dated January 24, 1974 and February 6, 1974, pursuant to
·the provisions of s.18 read with s.2(p) of the ID Act. Clause 8 of
. B·
these settlements specificated the scale of bonus and clause 12 thereof
is more general and may be read here :
Clause 8. Bonus :
(i) No profit sharing bonus shall be paid. However, the
corporation may, subject to such directions as the Central Gov-
ernment issue from time to time, grant any other kind of bonus to
its Class III and IV employees. ·
(ii) An annual cash bonus will be paid to Class III and
Class IV employees at the rate of 15 % of the annual salary
(i.e. basic pay inclusive of special pay, if any, and dearness
allowance and additional dearness allowance) actually drawn by D·
an employee in respect of the financial year to which the
bonus relates.
(iii) Save as provided herein all other terms and conditions
attached to the admissibility and payment of bonus shall be as
laid down in the Settlement on bonus dated the 26th June 1972.
E
Clause 12:
(1) This settlement shall be effective from 1st April 1973,
and shall be for a period of four years, i.e., from 1st April, 1973
to 31st March, 1977.
(2) The terms of the settlement shall be subject to the
approval of the Board of the Corporation and the Central
Government.
( 3) This Settlement disposes of a\.l the demands raised by
the workmen for revision of terms and conditions of their service.
( 4) Except as otherwise . provided or modified by this
Settlement, the workme~ shall continue to be governed by all the G
terms and condi'.ions of service as set forth and regulated by
•. ·~
the Life Insurance Corporation of India (Sta a' Regulations),
\ 1960 as also the administrative instructions issued from time to
i·
.I
time and they shall, subject to the provisions thereof including any
period of operation specified therein, be entitled to the benefits I

thereunder. II
It is important and, indeed, is an impressive feature that these
two settlements cover a wide ground of which bonus is but one item.
1104 SUPREME COURT REPORTS [1981] 1 S.C.R.

A Equally significant is the fact that the Board of the Corporation and
the Central Government, which presumably knew the scope of the
LIC Act and the ID Act, did approve of these settlements.
The thought of terminating the payment of bonus to the
employees covered by the 1974 settlements apparently occurred to
B the Central Government a year later and the Payment of Bonus
(Amendment) Ordinance, 1975, (replaced by the Payment of Bonus
(Amendment) Act, 1976), was brought into force to extinguish
the effect of the 197 4 settlements and the claims for bonus put forward
by the workers thereunder. This Act was successfully challenged and
this court struck clown the said legis.Jation in Madan Mohan Pathak v.
Union of India(1) and directed the Corporation to pay to its Class III
and IV employees bonus for the years 1-4-1975 to 31-3-1977.
Thereupon, the Corporation issued to its workmen certain notices
under s.19(2) of the ID Act and s.9A of the same Act. Likewise,
the Central Government, on May 26, 1978, issued a notification
D under s.49 of the LIC Act substituting a new Regulation for the
old Regulation 58. All these three steps were taken to stop payment
of bonus to the workmen under the two settlements and Jed to a
challenge of their validity in the Allahabad High Court under Art.
226 of the Cons'.itution. If the two notices and the changed Regula-
tion were good they did deprive the workmen of their benefits of
E bonus pursuant to the settlements reached under the ID Act. But the
workmen contended that the proceedings under the UC Act could not
prevail against the continued flow of bonus benefits under the ID Act.
·The High Court (Lucknow Bench) struck down the appellant's
actions as of no consequence and void and sustained the claim for
bonus based on the settlements of 1974. The Corporation has come up
F in appeal to this Court assailing the findings of the High Court.

The Corporation is clearly an 'industry', and the 'workmen'
raised demand5 for bonus, the management responded constructively
and for long years settlements, as envisioned by the ID Act, were
entered into and the stream of industrial peace flowed smooth.
G Industrial settlements marked their relations the last of which were in
1974 but a later legislation marred this situation and led to a litiga-

~(
tion. In 197 6, the Life Insurance Corporation (Modification of
Settlement) Act, 1976 (for short, the 1976 Act) was enacted to
abolish the efficacy of the right to bonus under the two settlements of I
1974 but the challenge to its constitutionality was upheld. When the
H parliamentary burial of bonus was stultified by judicial resurrection,
other measures to effectuate the same purpose were resorted to, both

(I) [19781 3 SCR 334.
LIFE lNSURANCE CORPORATION V. D. .r. BAHADUR 1105
(Krishna Iyer, J.)
under the LIC Act and the ID Act. These moves proved to be A
essays in futility because t,he High Court held that bonus was still
payable, that the ID Act prevailed over the LIC Act in the area of
industrial relations, the former being a special law, and that the
steps taken both by the Corporation and the Central Government
under the LIC Act and Regulations as well as under the ID Act, were
of legal inconsequence. Against this judgment the Corporation has B
come up in appeal and the questions raised are of great moment and
of serious portent. If law allows administrative negation of bonus,
judges are not to reason why; but whether law does allow nullifi.s,etion
of an industrial settlement is for judges to decide, not for the
Administration to say, why not? That is Montesquieu functionalism
of sorts. So, against this backdrop, I will analyse the submissions, c
scan their substance and pronounce upon their validity.

I may as well formulate, in more particularised form, the various
contentions urged on either side-not exhaustively though, because
that has been done by my learned brothers. I propose to confine the
D
discussion to the decisive issues. First of all, we have to investigate
whether the two settlements of January 24, 1974 and February 6,
1974, arrived at in pursuance of the provisions of s. 18 read with
s. 2(p) of the ID Act, have current validity, having regard to the
notice given by the Management under s. 19(2) of the ID Act termi·-
nating the settlements and under s. 9A of its intention to vary the
conditions of service bearing on bonus. In case the settlements do
not survive the notices, the claim to bonus perishes and nothing more
remains to be decided. But in case I hold that despite the intention
to change the service conditions under s. 9A and determination under
s. 19(2), the terms of the settlements continue to operate un:til substi-
tuted by a new contract arrived at by mutual settlement or by an .F'
award, the further issue opens as to whether a settlement under the
ID Act cannot be operative since the LIC Act contains provisions
vesting power in the Corporation and the Central Government to fix
the terms and conditions of service of the Corporation employees and
that power has been exercised to extinguish the bonus claim. The
question will throw open for consideration which statute prevails - G
the ID Act or the LIC Act - when there 1s an apparent conflict
between the two. The problem of the prevalence of a special statute at
against a general statu~e and the determination of which, in a given
situation, is the special statute will engage my attention at the appro·
priate stage. In the event of my holding that the ID Act prevails,
as against the LIC Act, in the given situation, the fate of the steps H
taken by the Corporation and the Central Government under the LIC
Act and the Regulations framed thereunder will be sea.Jed. Of course,
1·106 SUPREME COURT REPORTS [1981] 1 S.C.R.
A if the holding is that the ID Act cannot operate as against the LIC
Act and the Regulations framed thereunder, when dealing with the
terms and conditions of service of the employees of the Corporation, I
may have to venture into the controversy about how effectual are
the. measures taken by the two statutory authorities, i.e. the Corpo-·
ration and the Central Government, under the provisions of the LIC
B Act and the Regulations. Every point has been emphatically con-
tested and argued by both sides with erudite niceties. However, the
judicial perspective will be the decisive factor in the ultimate analysis.
For,~ Brennan, J. has observed :(1)

"The law is not an end in itself, nor does it provide ends.
c It is preeminently a means to serve what we think is right."
"Law is here to serve ! To serve what ? To serve, insofar
as law can properly do so, within limits that I have already
stressed, the realization of man's ends, ultimate and mediate.
Law cannot stand aside from the social changes around it."
D
Judicial acceptance of social dynamics, as projected by the
Constitution, is the crucial factor in this case, if I may anticipate
myself.

The ID Act is a benign measure which seeks to pre-empt
are extant even after the notice under s.9A and the formal termina-
E'
tion under s. 19(2) of the ID Act, Let me go to the basics. Before
that, a glance at the nature of the two settlements, their ambit and
ambience and their longevity, actual and potential, may be desirable,
after sketching the broad basics of the ID Act and its means and ends.

The ID Act is a benign measure which seeks to pre-empt
industrial tensions, provides the mechanics of dispute resolutions
and set up the necessary infra-structure so that the energies of partners·
in production may not be dissipated in counter-productive battles
and assurance of industrial justice may create a climate of goodwill.
Industrial peace is a national need and, absent law, order in any
field will be absent. Chaos is the enemy of creativity sans which
production will suffer. Thus, the great goal to which the ID Act is
geared is legal mechanism for canalising conflicts along conciliatory
or adjudicatory processes. The objective of this legislation and th\!
component of social justice it embodies were underscored in the
Bangalore Wa!'er Supply and Sewerage Board v. Rajappa ( 2 ) thus :

(1) William J. Brennan Jr. Opinion Roth v. United States 354 U.S. 476
.
[1958].
(2) [1978] 2 sec 213 at 232.
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1107
(Krishna Iyer, J.)
To sum up, the personality of the whole statute, be it A
remembered, has a welfare basis, it being a beneficial legislation
which protects labour, promotes their contentment and regulates
situations of crisis and tension where production may be imperil-
led by untenable strikts and blackmail lock-outs. The mecha-
nism of the Act is geared to conferment of .regulated benefits to
workmen and resolution, according to a sympathetic rule of
law, of the conflicts, actual or potential, between managements B
and workmen. Its goal is amelioration of the conditions of
workers, tempered by a practical sense of peaceful co-existence,
to the benefit of both-not a neutral position but restraints on
laissez faire and concern for the welfare of the weaker lot
Empathy with the statute is necessary to understand not merely c
its spirit, but also its sense.
The ID Act deals with industrial disputes, provides for concilia-
tion, adjudication and settlements and regulates the rights of parties
and the enforcement of awards and settlements. When a reference D
is made of a dispute under s.10 or s.lOA, the legal process springs into
action. Under s.11 and award is made after a regular hearing if a
.conciliation under s.12 does not ripen into a settlement and a failure .
report is received. The award is published under s.17 (1) and acquires
finality by virtue of s.17(2) unless under s.17A(l) the appropriate
government declares that the award shall not be enforceable. Section
17A ( 4) which is of significance reads thus : E
( 4) Subject to the provisions of sub-section (1) and sub-
section (3) regarding the enforceability of an award, the· award
shall come into operation with effect from such date as may
be specified therein, but where no date is so specified, it shall
come into operation on the date when the award becomes
enforceable under sub-section· (1) or sub-section (3), as · the
case may be.
It is obvious from s. 18 that a settlement, like an award, is also
binding. What I emphasise is that an award, adjudicatory or arbitral,
i(nd a settlement during conciliation or by agreement shall be binding G
because of statutory sanction. Section 19 relates to ithe period of
operation of settlements and awards and here also it is clear that both
) settlements and awards, as is evident from a reading of s. 19(2) and
! ( 6), stand on the same footing.
Section 19 has a key role to play in the life and death of awards
and settlements and so we may read the text here to enable closer H
comment. Particular attention must be riveted on s. 19(2), (3)
and (6) :
1108 SUPREME COURT REPORTS [1981] l S.C.R.

19. (1) A settlement shall come into operation on snclr
date as is agreed upon by the parties to the dispute, and if no
date is agreed upon, on the date on which the memorandum of
the settlement is signed by the parties to the dispu,te.

(2) Such settlement shall be binding for such period as i.~
B agreed upon by the parties, and if no such period is agreed upon,
for a period of six months (from the date on which the memo-
randum or settlement is signed by the parties to the dispute, and
shall continue to be binding on the parties after the expiry of the
period aforesaid, until the expiry of two months from the da:e on
which a notice1 in writing of an intention t0 termindte t'he settle-
c ment is given by one of the parties to the other party or parties to
the settlement.

(3) An award shall, subject to the provisions of this section,
remain in operation for a period of one year (from the date on
which the award becomes enforceable under section 17A).
D
Provided that the appropriate Government may reduce the
said period and fix such period as it thinks fit;

Provided further ,that the appropriate Government may,
before the expi'fy of the said period, extend the period of opera-
}<; tion by any period not exceeding one year at a time as it thinks
fit so, however, that the total period of operntion of any award
does not exceed three years from the date on which it came into
operat10n.

( 4) Where the appropriate Government, whether of its own
F motion or on the application of any party bound by the award,
considers that since the award was made, there has been a mate-
rial change in the circumstances on which it was based, the ap·
propriate Government may refer the award or a part of it to a
Labour Court, .if the award was that of a Labour Court or to a
Tribunal, if the award was that of a Tribunal or of a Na1ional
G
Tribunal, for a decision whether the period of operation shouid
not, by reasons ofl such change, be shortened and the decision of
Labour Court, or the Tribunal, as the case may be, on such refer-
ence shall be final.

(5) Nothing contained in sub-section (3) shall apply to any
H award which by its nature, terms or other circumstances dite9
not impose, after it has been given effect to any continuing obli·
gation on the parties bound by the award.
Lll'E INSURANCE CORPORATION V. D. J. BAHADUR l l 09
(Krishna Iyer, J.)
(6) Notwithstanding the expiry of the period of operation
under sub-section (3), the award shall continue to be binding on
the parties until a period of 1two months has elapsod from the
date on which notice is given by any party bound by the award
·to the other party or parties intimating its intention to termmate
the award.
(7) No notice given under sub-section (2) or sub-section
( 6) shall have effect, unless it is given to a party representing
the majority of persons bound by the settlement or award, as the
case may be.
Section 9A fetters the Management's right to change 1the conch-
tions of service or workmen in respect of certain matters including
wages and allowances. We_ had better read h here :
c
9A. No employer who proposes to effect any change in the
conditions of service applicable to any workman in respect of
any matter specified in the Fourth Schedule, ihall effect such
change,-
(a) without giving to the workmen likely to be affected by
such change a notice in the prescribed manner of the
nature of the change proposed to bt1 effecied; or
(b) within twenty-one days of giving such notice :
lt will be apparent that the JD Act substantially equates an
award with a set!Jement, from the point of view of their legal force.
No distinction in regard to the nature and period of their effect can
be discerned, especially when we reads. 19(2) and (6). I highlight
).- this virtual identity of effect to bring home the fact 1that judicial pro-
/ nouncements on this aspect, whether rendered in a case of award or j'

settlement, will .be a guideline for us and nothing turns on whether
the particular is one of an award or· settlement. Indeed, there are
reported cases on both.

The statutory regulation of indus>trial disputes is comprehensive,
as is manifest from the rest of the Act. Chapter V prohibits strikes G
and lock-outs; Chapter VA deals with lay-off and retrenchment and
Chapter VI puts teeth into the provisions by enacting penalties.
Importantly, s. 29, which proceeds on the footing of equal sanctity
for awards and settlements, punishes, breaches :
29. Any person who commits a breach of any term of any .H.
settlement or award, which is binding on him under this Act shall
be punishable with imprisonment for a term wh.ich may extend
10-6 S. C. India/ND/SJ
SUPREME COURT REPORTS [1981] 1 S.C.R.

A to slx months, or with fine, or with both, and where the breach
is a continuing one, with a further fine which may extend to two
hundred rupees for every day during which the breach continues
after the conviction for the first, and the Court trying the offence,
if it fines the offender, may direct that the whole or any part
of the fine realised from him shall be paid, by way of compen-
B sation, to any person who, in its opinion has ·been injured by
such breach. -

There are miscellaneous prov1s10ns to take care of other resi-
duary matters and we get picture of a parliamentary project designed
c to deal, not piecemeal but wholesale, with a special subject of strategic
c.oncern to the nation, viz., 'the investigation and settlement of indus-
trial disputes'. Let us be perspicacious about the purpose and sensi-
tive about the social focus of the ID Act in a developmental perspec-
tive. Parliament has picked out the specific subject of industrial
disputes for particularised treatment, whether the industry be in the
D private: or public sector or otherwise. Our country, with so much
leeway to make up, cannot afford paralysing processes in production
of goods and services and whoever be the employer-Government,
quasi-public, charitable or profit-making private enterprise-both sides
viz., workmen and management shall abide by the discipline adopting
the mechanics and using the machinery under the ID Act. The
E Bangalore Water Supply and Sewerage Board case(!) has highlighted
''
this core truth. To lose sight of the spinal nature of the legislation,
viz., industrial disputes and their setl'lement through law, and to regard
it as a mere enactment bearing on terms and conditions of service in
enterprises is to miss the distinctive genre, particular flavour and
legislative quintessence of the ID Act.
F

.... (lnterpretation) involves far more than picking out diction-
ary defini.t_ions of words or expressions used. Consideration of
the context and the setting is indispensable properly to ascertain
a meaning. In saying that a verbal expression is plain or un-
G ambiguous, we mean little more than 'that we are convinced
that virtually anyone competent to understand it, and desiring
fairly and impartially to ascertain its signification, would attribute
to the expression in its context a meaning such as the one we
derive rather than any other; and would consider any different
meaning, by comparison, strained, or far-fetched, or unusual, or
H
uniikely.
(I) [1978J 2 sec 213.
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1111
(Krishna Iyer, J.)
.... Implicit in the finding of a plain, clear meaning of an expres- A
sion in its context, is a finding that such meaning is rational and
"makes sense" in that context.(1)

Interpretative insight will suffer, even as the judicial focus will
blur, if the legislative target is not sharply perceived. Indeed, I lay
-so much stress on this f1acet because brother Koshal's otherwise fault-
less logic has, if I may say so with great deference, failed '10 convince
me because of this fundamental mis-focus. To repeat for emphasis,
the meat of the statute is industrial dispute, not conditions of employ-
ment or contract of service as !Yueh. The line of distinction may be
.fine but is real. c
Be that as it may, a bird's eye view of the ID Act reveals the
1
.statutory structi.Jre and legal engineering centering round dispute settle-
ment in industries according to the rule of law and away .from fight
with fists or economic blackmail. This large canvas once illumined,
may illustrate the sweep, of awards and settlements by reference to D
the very agreement of 1974 we have before us. It goes far beyond
bonus and embraces a wide range of disputes and rainbow of settlements
in a spirit of give and take. One may visualise the bargaining process.
Give in a little on bonus and get a better deal on salary scale or
promotion prospects; relent a wee-bi<t on hours of work but bargain
better on housing facilities, and so on. The soul of the statute is not E
~ontract of employment, uniformvty of service conditions or recruit-
ment rules, but conscionable negotiations, conciliations and adjudica-
tions of disputes and differences animated by industrial justice, to
avoid a collision· which may spell chaos and imperil national effort at
increasing the tempo of production.
F
If there is no dispute, the ID Act is out of bounds, while the
LIC Act applies generally to all employees from the fattest executive
to the frailest manual worker and has no concern with industrial ·
. <disputes. The former is a 'war measure' as it were; the latter is a
routine power when swords are not drawn if we may put it meta- G
phorically. When disputes break out or are brewing, a special, sensi-
tive situation fraught with frayed tempers and fighting postures springs
into existence, calling for special rules of control, conciliatory machi-
nery, demilitarising strategies and methods of investigation, interim
arrangements and final solutions, governed by special criteria for pro-
moting industrial peace and justice. The LIC Act is not a law for H
0) Hutton v. Phillips 45 Del. 156, 160, 70 A. 2d 15, 17 (1949). Also /llfer-
pretation and Application of Statutes by Reed Dickerson, p. 231.
1112 SUPREME COURT REPORTS [1981] 1 S.C.R.

A employment or disputes arising therefrom, but a nationalisation mea ..
sure which incidentally, like in any general take-over legislation, pro-
vides for recruitment, transfers, promotions and the like. It is special
vis-a-vis nationalisation of life insurance but general regarding contracts
of employment or acquiring office buildings. Emergency measures
are special, for sure. Regular nationalisation statutes are general even
B if they ~ncidentally refer to conditions of service.
The anatomy of the 1974 settlements is no more confined to
bonus than the physiology of man is limited to bones. It is an integral,
holistic and delicately balanced ensemble of clauses, with cute calcu-
lations and hard bargaining on many matters. To dissect is to murder, --f
c in the art of true poetry as in the craft of settlement in industry; and,
therefore, it is impermissible to single out a clause and extinguish
it as the totality is a living entity which does not permit of dismem-
berment, limb by limb, without doing violence to the wholeness and
identity of the settlement. Here, the 197 4 settlements have brought
about a conflict-resolution on a variety of items including (a) scales
D of pay, (b) method of fixation in the new scales, (c) dearness
allowance, ( d) house rent allowance, ( e) city compensatory allow-
ance, etc. Thus bonus is but one component of a multi-point agree-
ment. Para 12 of the Settlement has some significance :
12. Period of Sett/ement.-(1) This Settlement shall be
E effective from 1st April, 1973 and shall be for a period of four
years, i.e., from 1st April, 1973 to 31st March, 1977.
(2) The terms of the settlement shall be subject to the
approval of the Board of the Corporation and.the Central Gov-
ernment.
( 3) This Settlement disposes of all the deinands raised by ,-
F the workmen for revision of terms and conditions of their
service.
( 4) Except as otherwise provided or modified by this
Settlement, the workmen shall continfue to be governed by all
the terms and conditions of service as set forth and regulated by
the Lif:e Insurance Corporation of India (Staff) Regulations, ·
G 1960 as also the administrative instructions issued from time
to time and they shall, subject to the provisions thereof including
any period of operation specified therein, be entitled to the
benefits thereunder.
Likewise, the preamble has a purpose :
H WHEREAS the parties representing the worf-Jnen, namely :
1. All India Insurance Employees Association ;
2. All India LIC Employees Federation ;
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1113
(Krishna Iyer, J.)
3. All India Life Insurance Employees Association and A
4. National Organisation of Insurance Workers.
(hereinafter called the said Associations) submitted their
Charter of Demands to the Life Ins. Corpn. of India (herein-
after called the Corporation) for revision of the scales of pay,
allowances and other terms and conditions of service after the B
expiry of the award of the National Industrial Tribunal New
Delhi on 31st March, 1973 :
AND WHEREAS the Corpn. has carried on negotiations
with the said Associations between the period July 1973 and
January 1974 at which there has been free and frank exchange
of views iE( regard to various matters including the obligations
of the Corpn. to the policy-holders and the community ;
AND WHEREAS the said Associations solemnly agree to
cooperate with the management in maintaining discipline and in
its endeavour to effect utmost economy in· administration and to
iEnprove efficiency and productivity so as to· ensure that the D
growth in profitability is maintained which alone will enable the
Corpn. (i) to safeguard and (ii) to meet the legitimate demands
of the employees for wage revision.
AND WHEREAS the said Associations further agree that
the management may issue administrative instructions in the E
interest of maintaining discipline and peaceful atmosphere in the
office.
NOW THEREFORE it i~ hereby agreed by and between the
parties hereto is a·s follows :
What stand out prominently in this Memorandum of Settlement F
are:
(a) There was a previous settlement and new negotiations were
started in the light of new demands for a substitutions of the
earlier settlement by a new settlement without leaving an
interragnum of vacuum.
G
(b) There was a plurality oii items unconnected with bonus as
such and the overall settlement is a composite fabric ; and
(c) There is specific reference to the LIC (Staff) Regulations,
1960, and, so far as the Settlement provided, it prevailed
over the Regulations and so far as the Settlement did not
cover a topic the Regulationb governed, thus making it clear H
that the Settlements did not become subordinate to the
Regulations.
1114 SUPREME COURT REPORTS [1981] 1 S.C.R.

A The core question that first falls for consideration is as to whether
the Settlements of 1974 are still in force. There are three stages or
phases with different legal effects in the life of an award or setrlement.
There is a specific period contractually or statutorily fixed as the
period of operation. Thereafter, the award or settlement does not
become non est but continues to be binding. This is the second chapter
B of legal efficacy but qualitatively different as we will presently show.
Then comes the last phase. U notice of intention to terminate is
given under s. 19(2) or 19(6) then the third stage opens where the
award or the settlement does survive and is in force between the
parties as a contract which has superseded the earlier contract and
subsists until a new award or negotiated settlement takes its placl?.
c Like Nature, Law abhors a vacuum and even on the notice of termi-
nation under s. 19 ( 2) or ( 6) the sequence and consequence cannot
be just void but a continuance of the earlier terms, but with liberty
to both sides to raise disputes negotiate settlements or seek a reference
and award. Until such a new contract or award replaces the previous
D one, the former settlement or award will regulate the relations between
the parties. Such is the understanding of industrial law atleast for
30 years as precedents of the High Courts and of this court bear
testimony. To hold to the conltrary is to invite industrial chaos by an
interpretation of the ID Act whose primary purpose is to obviate
such a situation and to provide for industrial peace. To distil from
E the provisions of s. 19 a conclusion diametrically opposite of the
objective, intendment and effect of the Section is an interpretative
stultification of the !>tatutory ethos and purpose. Industrial law frown!
upon\ a lawless void and under general law the contract of service
created by an award or settlement lives so long as a new lawful
contract is brought into being. To argue otherwise is to frustrate the
F · rule of law. If law is a means to an end-order in society--can it
commit functional harakiri by leaving a conflict situation to lawless
void?
Now we will move on to the precedents on the poin1t which bve
been summed up by Malhotra thus : ( 1 )
G
(3) Effect of termination of award under s .. 19(6) on rights
and obligations of parties.-Termination of an award by either
party under s. 19(6) does not have the effect of extinguishing the
rights flowing therefrom. The effect of termination of an award
is only to prevent thereafter the enforcement of the obligation
H under it in the mann~r prescribed, but the rights and obligations
which flow from it are not wiped out. Evidently, by the termination
(1) Malhotra, The Law of Industrial Disputes, 2nd Edn. Vol. I p. 656.
LIFE INSURANCE CORPORATION v. D. J. BAHADUR 1115
(Krishna Iyer, J.)
of an award, the contract of employment is not terminated, A
the obligations created by the award or contract could be altered
by a fresh adjudication or fresh contract. (1).

In Judhisthir Chandra v. Mukherjee(2) the position as stated
above was accepted as correct by the High Court. A Division Bench
of the Bombay High Court in Mangaldas Narandas v. Payment of
Wages Authority etc.( 3) (Shah and Gokhale, JJ) came to the same
conclusion and neatly summed up the sequence of triple stages and
the difference in legal consequences, and upholding the contention that
even after termination of an award under s. 19(6) the terms incorpo-
rated in the award continued as a contract between the parties. So
much so, no reversion to the pre-award position was permissible on
. the part ol' the employer. The head-note which is sufficiently lucid
and luminous, sums up the ratiO thus :

Where an award is delivered by the industrial tribunal it has
the effed of imposing a statutory contract governing the relations D
of the employer and the employee. It is true that statutory con-
tract may be terminated in the manner prescribed bys. 19(6) of
the Industrial Disputes Act. Aft.er the statutory contract is termi-
nated by notice, the employer by failing to abide by the terms of
the award does not incur the penalties provided by the Industrial
Disputes Act, nor could the award be enforced in the manner E
prescribed bys. 20 of the Industrial Disputes (Appellate Tribunal)
Act, 1950. But the termination of the award has not the effect
1)f extinguishing the rights flowing therefrom. Evidently by the
termination of .the award the conitract of employment is not termi-
nated. The employer and the employee remain master and servant
in .the industry in which they are employed, unless by notice the
employer has also simultaneously with the termination of the
award tern1inated the employment or the employee. If the
employment is not termin;ated, it is difficult to hold that the
rights which had been granted under the award automatically
cease to be effective from the date on which notice of termination G
of the award becomes effective. The effect of termination of the
award is only to prevent enforcement of the obHgations under
(1) Workmen of New Elphinstone Theatre v. New Elphimtonc Theatre
[1961] 1 LU 105 (119) (Mad); Ma11galdas Narandas v. Payment of Wages
Authority [1957] II LLJ 256 (Bombay); Yamuna Mills Co. Ltd. v. Majdoor
Mahajan Manda! [1957] I LLJ 620 (Born). H.
(2) AIR 1.9 50 Cal. 577.
(3) [1957] II LLJ 256.
016 SUPREME COURT REPORTS [1981] 1 S.C.R.

A the award in the manner prescribed, but the rights and obligations
which flow from the award are rtot wiped out. Termination of
the award or lapsing of the award has not the effect of wiping
out the liabilities flowing under the award.

An award has the effecc of imposing fresh tenns upon the
B contract of employment between the employer and tlw employee
to which they have been assented. The termination of such award
does not terminate ~Ihe contract. Even after the award is termi-
nated in the manner provided bys. 19(6) of the Industrial Dis-
putes Act, the obligation created by the award <>ould be altered
by a fresh contract or a fresh adjudication under the Industrial
Disputes Act and not otherwise.

The Industrial Disputes Act has been enacted with the object
of securing harmonious relations in the working of the industry
between the employer and the employees by providing a machi-
nery for adjudica~ion of disputes between them ; and the object
D:
of the legislature would be frustrated if after every few months
by unilateral action the employer or the employees mav be
entitled 110 reopen the dispute and ignore the obligations declared
to be binding by the process of adjudication.
(emphasis added)

There is a remarkable con1inuity in the Bombay High Co:irt (a
jurisdiction where industrial unrest is a sensitive issue) because we
find that another Division Bench interpreting similar provisions in the
Bombay Industrial Relat.ions Act has been persqaded by the same
reasoning, well brought out in the Head Note which we excerpt :(1)
F·
The re~ult of the award ceasing to have effect on notice of
termination being given under s. 116(1) of the Bombay Industrial
Relations Act is that 1he award ceases to exist. The result of
the award ceasing to have effect i~ that it is open to either party
to give a notice of change under s. 42 of the Act and attempt to
bring about a change. Further it i~ open to the employer in
cases in W"hich he could bring a change without a notice of change
such as matters enumerated in Sch. III to 'the Act to bring about
a change, because the impedhnent placed in his way by s. 46(3)
is removed. But until a change is brought about by the act eiihcr
-of employer or the employee af'ter following relevant provisions in
(l) Yomuna Mills Co. Ltd. v. Majdoor Mahajan Manda/, Baroda & Ors.
f957 I LU 620.
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1117
(Krishna Iyer, J.)
the Bombay Industrial Relations Act, 1946, tVie award that exists, A
shall continue to regulate the relations between -the employer and
the employees. The effect of termination of an award is not that
the rights which flow from that award cease to be available to the
employees, but the effect of termination is that the award con-
tinues to govern the relations· between the employer and the
employees until such time as a change is effected in accordance B
with the provisions of the Bombay Industrial Relations Act, 1946.
(emphasis added)
.A.- Indeed, the precise submission that upon termina1don by notice, the
award ceased to have effect for all purposes and the employees were
not enti'led to benefit thereunder !ff.as raised and examined as a matter C
,. .of great importance to industrial relations. The court, in our view
rightly rejected the contention of the employer and with forceful preci-
sion argued to reach the conclusion which '.he only sensible solution :(1 )

What this sub-section in effect provides is that if a notice of
termination is given by eiiher party to the award, then on the D
expiry of two months from the date of such notice the registered
agreement, settlement or award shall cease to have effect. ..... .
But the question thar we have been called upon to determine
goes a little furiher than that and the question is by what is the
relationship between the employers and the employees regulated
E
after an_award is terminated? .Does termination of the award
create a vacuum and leave the employees to the tender mercy of
the employer ? Does it, by providing that the award shall cease
to have effect, get rid of the award so as to bring about the result
'>-- that any agreement that governed .the relations of the parties
/
prior to the date of the award is thereby revived ; or does it F
preserve such rights as the employees have, prior to the date of
termination, already enjoyed under the award or does it preserve
1

t·h~ whole of the award until it is· changed by the procedure
prescribed by the Bombay Industrial Relations Act fqr a change?
Now, quite obviously 111 would not be possible for any court to
take the view that the terminarion of the award creates a vacuum G
in which the employees are at the tender mercy of the employer;
nor does it appear to us to be possible to hold that by termina-
nation of the award the contract or agreement that governed the
relations of the employer and the employees prior to the award is
in some manner revived. Initially that contract or agreement had
binding effect ; but it ceased to have such effect on the award H

(1) 1957 I LLJ 620 at 623-624.
1118 SUPREME COURT REPORTS [1981] 1 S.C.R'.

A .taking effect and the moment the award became binding on the·
parties, :the antecedent contract or agreement was superseded by
the award. It is not a case of an antecedent contract or agree-
ment being suspended, because there is no provision for suspen-
sion which can even be spelt out from any of the sections of the
Bombay Industrial Relations Act. The award, or as the case
B may be, a registered agreement or a seNlement under the
Bombay Indus-trial Relations Acit has obviousiy the effect of
superseding the contract or agreement that existed and that regu-
lated the relations between the employer and the employees prior
{'P the registered agreement, settlement or award taking effect'
under the provisions of the Act. Then we come to the next
c possibility : Is only so much of the award preserved as relates to
the rights already enjoyed by the employees before the termina-
tion of the award? We find it difficult so to hold. There is no·
principle or logic in dealing with an award in this piecemeal'
manner and preserving rights that have already been actually
D enjoyed and destroying those which, although they may have:
accrued, have to be enjoyed in future in terms of tlie award.
Mr. Patel for the petitioners has argued that on the termination
of the award the effect or rather the )'esult that is brought about
is that the rights of parties are frozen as of that date. Assuming
such a concept of freezing the rights was adopted, even the ,
E freezing would be in respect of rights that have already accrued
and it is not quite easy to conceive of rights which would not
accrue to an employee under an industrial award and which can·
only be contingent. In any event, if the original contracl' or agree-
ment has been superseded by the award, holding that the award· (

is no longer what governs the relations between the employer and ---{
the employees would necessarily create a vacuum. Trying to save
the creation of a vacuum by splitting up the award into two
parts, the award under which benefits have already been enjoyed
and that part of the award under which benefits have not been
enjoyed; is dissecting the award in a manner not just;ified in law
G or logic. There appears to be on the scene after the termination
of the award only one thing that; can govern the relations between
the employer and the employees and that undoubtedly can be
nothing else than the award itself. The result of t'he award
ceasing to have efject is not that the award ceases to exist ; the
. result of the award ceasing to have effect is, as I have already
H pointed ow', that it is open to either party to give a notice of
change and to attempt to bring about a change.
(emphasis added)
LIFE INSURANCE CORPORATION V. D. J, BAHADUR 1119'
(Krishna Iyer, J.)
In the Madras jurisdiction the same view has prevailed as is A
apparent from 1961 I LLJ 105, 1971 I LLJ 310 and 1978 I LLJ 227.
A Division Bench of that Court in Sathya 3.tudlos case(1) stressed the
purpose of the ID Act and the preference for that interpretation which
will advance that purpose. The Head Note brings out the holding
correctly:
B
...... a combined reading of s. 18(3), sub-ss. (1) to (3)
and ( 6) of s. 19, s. 23 and s. 29 leave no doubt that, bring about,
conserve and promote industrial peace, the termination of an
award under s. 19(6) does not mean that the terms and condi-
tions evolved by it and applied to the industrial relations con-
cerned would be set at large. AU that the termination under c
s. 19(6) would mean is that, thereafter, the parties will be at
liberty to raise a fresh industrial dispute if there is a basis therefor.
Bwt, so long as the award terminated under s. 19 ( 6) has not been
substituted by an award, the industry concerned has to proceed on
the basis that the terms and conditions of 'the award would
continue to govern the terms of employment. D

(emphasis added)
We need not labour the point further because we are bound,
precedentially speaking, by three decisions of this Court. Chacko's
case, ( 2 ) in a clinching passage, settles the proposition and the Indian
Oil Corporaiion case( 3 ) adopt:s a reasoning compelling the same con- E
clusion even like Mohd. Quasim Larry( 4 ) has done. Das Gupta, J.
speaking for a Bench of three judges studies the statutory scheme
bearing on the triple periods after an award came into being and indi-
cated, by purposive interpretation of the relevant provisions, the legal
stages of the life of an award. After quoting s. 19 ( 6) of the ID Act,
tlile Court observed( 5 ) :
This makes it clear that after the period of operation of an
award has expired, the award does not cease to be effective. For,
it continues to be binding thereafter on 1,he parties until notice
has been given by one of the parties of the intention to terminate
it1 and two months have elapsed from the date of such notice.

(1) Sathya Studios v. Labour Court 1978 I LLJ 227
(2) South Indian Bank Ltd. v. A. R. Chacko [1964] 4 SCR 625
(3) Management of Indian Oil Corpn. Ltd. v. Its Workmen [1976] 1 SCR
110
(4), Md. Qasim Larry, Factory Manager, Sasamusa Sugar Works v. Md. H
Samsuddin & Anr. [1964] 7 SCR 419
(5) [1964] 4 SCR 625 at 630-3_1
1120 SUPREME COURT REPORTS [1981] 1 S.C.R.

A The effect of s. 4 of the Industrial Disputes (Ba.nking Companies)
Decision Act is that the award ceased to be in force after March
31, 1959. That however has nothing to do with question as to
the period for which it will remain binding on the parties thereafter.
The provision in s. 19(6) as regards the period for which the
award shall continue to be binding on tihe parties is not in any
way affected by s. 4 of the Industrial Disputes (Banking Com-
panies) Decision Act, 1955.

Quite. apart from this, however, it appears to us that even
if an award has ceased to be in operation or in force and has
ceased to be binding on the parties under 1:he provisions of
1

c s. 19(6) i( will continue to have its effect ns a contract between
the parties that has been made by industrial adjudication in place
of the old contract. So long as the award remains in operation
under s. 19(3), s. 23(c) !Jtands in the way of any strike by the
workmen and lock-out by the employer in respect of .any matter
covered by the award. Again, so long as the award is binding
D on a party, breach of any of its terms will make the party liable
to penalty under s. 29 of 'the Act, to imprisonment which may
extend to six months or with fine or with both. After the period
of its operation and also the period for which the award is binding
have elapsed s. 23 and s. 29 can have no operation. We cmi
however see nothing in the scheme of Industrial Disputes Act to
justify a conclusion that merely becauS<e these special provisions as
regards prohibition of strikes and lock-outs and of venalties
for breach of award ceaS<e to be efJective the new
contract as embodied in the award should also cease to be
effective. On the contrary, the very purpose for which industriai
adjudication has been given 'the peculiar authority and right of
making new contracts between employers ahd· workmen makes i{
reasonable to think that even though the period of operation of
the award and 1he period for which it remains binding on the
1

parties may elapse-in respect of both c-[ which special provi-
sions have been made under ss. 23 and 29 re~pectrv.ely
·G- the new contract would conNnue to govern the relations 1

between the partiu till it is displaced by another contract. The
objection that no such benefit as claimed accrue to the respon-
dent after March 31, 1959 must therefore be rejected.
(emphasis added) .

H · The power of reasoning, the purpose of industrial jurisprudence
and the logic of the law presented with terse force in this pronounce-
ment cannot be missed. The new contract which is created by an
LIFE INSURANCE CORPORATION ·V. D. J·. BAHADUR 112 i
(Krishna Iyer, J.)
award continued to govern the relations bmween the parties "till it is A
displaced by another contract."

,,_ Another Bench of three judges, speaking through Chief J ustic"
Gajendragadkar, in Md. Quasim Larrys case(l) has ratiocinated on
similar lines :

When an award is made and it prescribes a new wage struc-
ture, in law die old contractual wage structure becomes inopera-
tive and its place is taken by the wage structure prescribed by l'he
award. In a sense, the latter wage structure musit be deemell
to be a contract between the parties because that, in substance, c
is the effect of industrial adjudication. The true legal positi1m
is that when industrial disputes are decided by industrial adjudica-
tion and awards are made, the said awards supplant contractual
terms in respect of matters covered by them and are substituted
for them . ... In this connection, we may incidentally refer to the
decision of this Court in the South Indian Bank Ltd. v. A. R. D
Chacko( 2 ) where it has been observed by ti.his Court that the
very purpose for which industrial adjudication has been given the
peculiar authority and right of making new contracts between
employers and workmen makes it reasonable to think tihat even
though the period of operation of the award and the period for
which it remains binding on the parties may elapse-in re.spec!
of both of which special provisions have been made under
sections 23 and 29 respectively-the new contract would continue
to govern the relittions between the parties till it is replaced by
another contract. This observation clearly and emphatically

>-- brings out1 that the terms prescribed by an award, in law, and in
substance, constitute a fresh contract between the pitrties.
(emphasis added)

Again, a Bench of four Judges in the Indian Oil Corporation
case( 3 ) reiterated the same principle in the context of s. 9A of the
lb Ac't although the court did not specifically advert to Chacko's case G
(supra). In the Indian Oil Corporation cas" (supra) the question
~ turned on ilhe ma11agement seeking to effect changes in the service
(1) Md. Qasim Larry, Facto1y Manager, Sasamusa Sugar Works v. Md.
Samsuddin & Anr [1964] 7 SCR 419 at 422
(2) South Indian Bank Ltd. v. A. R. Chacko [1964] 4 SCR 625. H
(3) Man(lgement of Indian Oil Corporation Ltd. v. Its workmen [1976] l
SCR 110
1122 SUPREME COURT REPORTS [1981] 1 S.C.R.

A conditions of the workmen. The Court made observations which have
pertinence to the non-extinguishment of the contract of service until
a negotiated or adjudicated substitution comes into being. Fazal Ali,
J. speaking for the bench observed : (1)
In the circumstances, therefore, s. 9A of the Act was clearly
applicable and the non-compliance with the provisions of this
section would m1doubtedly raise a serious dispute between the
parties so as to give jurisdiction to the tribunal to give the award.
If the appellant wanted to withdraw the Compensatory Allowance
it should have given notice to the workmen, negotiated the matter
with them and arrived at some settlement instead of withdrawing ~j
C the compensatory allowance overnight.
(emphasis added)

This ruling shows (a) that unilateral variation by the management is
an exercise in futili,try, and (b) an award or settlement must take the
place of the ·contract sought to be varied. We have a similar situation
D in the present case vis-a-vis the notice under s. 9A and the ruling in
tihe Indian Oil case (supra) is a helpful guide.

A passing reference was made to a possible difference between
an award and a: settlement when it comes to termination of the terms.
We have indicated already that: a closer study of the scheme of the
E ID Act shows the distinction, if any, to be no more than between
Tweedledum and Tweedledee. A Division Bench of the Bombay High
Court had occasion to examine the effect of a notice under s. 19(2)
of the ID Act in terminating a selitlement and that ruling deserves
special mention because it deals with the the survival beyond the two-
months notice of termination of a settlement (not an award).
F
Tarkunde J, spealdng for the Bench and following Chqcko's case
(supra) observed in the context of notice to terminate the set1lement
under s. 19.(2) : ( 2 )

Even if a notice of its intent~on to terminate the settlement
was given by either party, the settlement did not automatically
cease to be operative on the expiry of two months from the
date of the notice. The legal position is that the terms of a
settlement continue ~o govern the relations between the parties
after the notice of termination and the expiry of two months there-
after, until the settlement is replaced by a valid contract or Liward
H (I) [1976] 1 SCR 110 at 117
(2) Maruti Mahipati Mullick & Anr. v. M / s Polson Ltd. & Anr. 1970 Lab.
1. C. 308 at 310
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1123
(Krishna Iyer, J.)
between the parties. This was laid down by the Supreme Court A
in South Indian Bank 'Ltd. v. Chacko [1964] 1 LLJ 19-AIR
1964 SC 1522, while dealing with the binding effect of an award
under the provisions contained in sub-section ( 6) of section 19
of the Industrial Disputes Act. The Authority in the present
case was, therefore, not justified in rejecting the workmen's appli-
cation on the ground that the settlement on which the workmen B
relied had ceased to be operative.
(emphasis added)

..____ A precedent, as Disraeli said, embalms a principle. We have
-pointed out the principle and cited the precedents. There is more to C
it than mere wealth of precedents or what Burke called 'the deep
..,... ·slumber of a decided opinion'. It enlivens industrial peace, avoids
labour discontent and helps to set the stage for next negotiations for
!better terms for workers. Economic freedom of the weaker sections
:is behind these precedents, almost reminding us of Tennyson :
A land of settled government, D
A land cif just and old renown,
Where freedom slowly broadens down,
From precedent to precedent.

'The Jaw is lucid and the justice manifest on termination notice or notice
'{)f change the award or settlement does not perish but survives to bind
until reincarnation, in any modified form, in a fresh regulation of condi-
tions of service by a settlement or award. Precedent& often broadly
guide but when on the same point willy-nilly bind. So here, even if
I would,· I could not and even if I could, I would not depart from the
·wisdom in Chacko's case (supra) with consistent case-flow-before and
·after. An aching void, an abhorrent vacuum, a legicidal situation of
industrial clash cannot be a judicial bonus when the constitutional
·~ommand is social justice.

The catena of cases we have briefly catalogued discloses an un-
1broken stream of case-law binding on this court, the ratio whereof, G
even otherwise, commends its.elf to us. The award or settlement under
the ID Act replaces the earlier contract of service and is given plenary
effect as between the parties. It is not a. case of the earlier contract
being kept under suspended animation but suffering supersession. Once
the earlier contract is extinguished and fresh conditions of service are
created by the award or the settlement, the inevitable consequence is H
that even though the period of operation and the span of binding force
expire, on the notice to terminate the contract being given, the said
1124 SUPREME COURT REPORTS [1981] 1 S.C.R

A contract continues to govern the relations between the parties until
a new agreement by way of settlement or statutory contract
by the force of an award takes its place. If notice had not been
given, the door for raising an industrial dispute and fresh conditions
of service, would not have been legally open. With action under
s. 9A, s. 19(2) or (6), the door is ajar for disputes being raised and
B resolved. This, in short, is the legal effect not the lethal effect of
invitation to industrial trial of strength with no conttract of service or
reversion to an obsolete and long ago 'dead' contract of service.
It is inconceivable that any other alternative subsists. For
instance, imagine a case where for 30 years an award or settlement
c might have given various benefits to employees and at the
end of 30 years a notice terminating the settlement were given by the
employer. Does industrial law absurdly condemn ,ihe parties to a
reversion to what prevailed between them 30 years ago? If the emp-
loyees were given Rs. 100 as salary in 1947 and, thereafter, by awards
and settlements the salary scale was raised to Rs. 1000 could it be the
D Management might, by unilateral yet disastrous action give notice
under s. 19(2) or (6) terminating ·the set.tlement or a:.vard, tell the
workers 1ha1 they would be paid Rs. 100 which was the original contract
although in law that contract had been extinguished totally by a later
, contract of settlement or by force of an award? The horrendous
consequences or such an interpretation may best be Ieft to imagina-tion.
E Moreover, if industrial peace is the signature tiUne of industrial law,
industrial violence would be the vicious shower of consequences if
parties were relegated either to an ancient and obsolete contract or a
state of lawless hratus. No canon of interpretation of statutes can
compel the court to construe a statutory provision in this manner. We
have, no doubt, that the precedents on tlhe point, the principles of indu-
F strial law, the constitutional sympathy of Part IV and the sound rules
of statutory construction converge to the same point that when a notice
intimating termination of an award or settlement is issued the legal
import is mere! y that the stage is set for fresh negotiations or industrial
adjudication and until either effort ripens into a fresh set of conditions
G of service the previous award or settlement does regulate the relations
between the employer and the employees. The court never holds
justice as hostage with law as janitor! Law, if at all, liberates justice
through tff1e judicial process. Fundamental error can be avoided only
by remembering fundamental values.
At this stage I may record my firm conclusion that for the reasons
H already given the settlement under the ID Act does not suffer death
merely because of t1he notice issned under s. 19(2). 'All that is done
is a notice "intimating its intention to terminate the award". The
LIFE INSURANCE CORPORATION v. D. J. BAHADUR 1125
(Krishna Iyer, !.)
award even if it ceases to ·be operative qua award, continues qua A
contract. Therefore, if the ID Act regulates the jural relations between
the LIC and its employees-an 'if' we will present[y scan-then the
rights under the settlements of 1974 remain until replaced by a later
award or settlement.
In my view, to reverse tlhe High Court's holding will be to dis-
B
regard the consistent current of case-law-a step I hesitate to take in
the sensitive area of labour relations under a Constitution with social
justice slant. Lord Herscheli in Russell v. Russell [1897] AC 395
observed : ( 1 )
I have no inclination towards a blind adherence to preced-
ents. I am conscious that the law must be moulded by adapting · c
it on established principles to the changing conditions which
social development involves.
The next logical question then is as to whether the ID Act is
a general legislation pushed out of its province because of the LIC
Act, a special legislation in relation to the Corporation employees.
D
Immediately, we are confronted with the question as to whether the
LIC Act is a special ligislation or a general legislation because the
legal maxim generalia specialibus non derogant is ordinarily attracted
where there is a conflict between a special and a general statute
and an argument of implied repeal is raised. Craise states the law
correctly : ( 2 )
The general rule, that prior statutes are held to be repealed
by implication by subsequent statutes if the two are repugnant,
is said not to apply if the prior enactment is special and the
subsequent enactment is general, · the rule of law being, as
stated by Lord Selbourne in Mary Seward v. Veera Cruz( 3 )
"that where there are general words in a later Act capable of F
reasonable and sensible application without extending them to
subjects specially dealt with by earlier legislation, you are not to
hold that earlier and special legislation indirectly repealed,
altered, or derogated from merely by force of such general words,
without any indication of a pal'ticular intention to do so." "There
is a well-known rule which has application to this case, which G
is that a subsequent general Aot does not affect a prior special
Act by implication. That this is the law cannot be doubted, and
the cases on the subject will be found collected in the third edition
of Maxwell is generalia specialibus IWn derogant-i.e. general
(!) Robert Stevens, Law and Politics, p. 92, f.n. 83. H
(2) Craise on Statute Law, 1963 Edn. pp. 376-7.
(3) [1884] 10 AC 59, 68.
11---6 S. C. lndia/ND/81
1126 SUPREME COURT REPORTS [1981] 1 S.C.R.

A provisions will not abrogate special provisions. "When the
legislature has given its attention to a separate subject and made
provision for it, the presumption is that a subsequent general
enactment is not intended to interfere with the special provision
unless it manifests that intention very clearly. Each enactment
must: be construed in that respect according to its own subject-
B matter and its own terms.
The crucial question which demands an answer before we settle
the issue is as to whether the LIC Act is a special statute and the ID
Act a general statute so that the latiter pro t'anio repeals or prevails
over the eariier one. What do we mean by a special statute and, in
c the scheme of the two enactments in question, which can we regard
as the special Act and which the general ? An implied repeal is the
last judicial refuge and unless driven to that conclusion, is rarely
restored to. The decisive point is as to whether the ID Act can be
displaced or dismissed as a general statute. If it can be and if the
LIC Act is a sp1xial statute the proposition contended for by the
D appellant that the settlement depending for its sustenance on the ID
Act cannot hold good against s. 11 and s. 49 of the LIC Act, read
with Reg. 58 thereunder. This exercise constrains me to study the
scheme of the two statutes in the context of the specific controversy
I am dealing with.
There is no doubt that the LIC Act, as its long title suggests,
E
is an Act to provide for the nationalisa1tion of life insurance business
in India by transferring all such business to a Corporation established
for the purpose and to provide for the regulation and control of the
business of the Corporation and for matters connected therewith or
incidental thereto. Its primary purpose was to nationalise private
F insurance business and to establish the Life Insurance Corporation
of India. Inevitably, the enactment spelt out the functions of the
Corporation, provided for the transfer of existing life insurance busi-
ness oo the Corporation and set out in detail how the management,
finance, accounts and audit of the Corporation should be conducted.
Incidentally, there was provision for transfer of service of existing
G employees of the insurers to the Corpoartion and, sub-incidentally,
their conditions of service also had to be provided for. The power
to make regulations covering all matters of management was also
vested in appropriate authorities. It is plain and beyond dispute
that so far as nationalisation of insurance business is concerned, the
LIC Act: is a special legislation, but equally indubitably, is the infe-
rence, from a bare perusal of the subject, scheme and sections and
understanding of the anatomy of the Act that it has nothing to do
with the particular problem of disputes b'etween employer and
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1127
(Krishna Iyer, J.)
employees, or investigation and ·adjudication of such disputes. It A
does not deal with workmen and disputes between workmen and
employers or with industrial disputes. The Corporation has an army
of employees who are not workmen at all. For instance, the higher
echelons and other types of employees do not fall within the scope
of workmen as defined in s. 2(s) of the ID Act. Nor is the Corpo-
ration's main business investigation and adjudication of labour disputes B
any more than a motor manufacturer's chief busine~s is spraying
paints!
In determining whether a SJtatute is a special or a general one,
the focus must be on the principal subject matter plus the particular
perspective. For certain purposes, an Act may be general and for c
certain other purposes it may be special and we cannot blur distinc-
tions' when dealing with finer points of law. In law, we have a
cosmos of relativity, not absolutes-so too in life. The ID Act is
a special statute -devoted wholly to investigation and settlement of
industrial disputes which provides. definitionally for the nature of
industrial disputes coming within its amb~t. It creates an infra- D
structure for investigation into, solution of and adjudication upon
industrial disputes. It also provides the necessary machinery for
enforcement of awards and settlements•. From alpha to oinega the ID
Act has one special mission-the resolution of industrial disputes
through specialised agencies according to specialised procedures and
with special reference to the weaker categories of employees coming E
within the definition of workmen. Therefore, with reference to industrial
disputes between employers and workmen, the ID Act is a special
statute, and the LIC Act does not speak at all with specific reference
to workmen. On the other hand, its powers relate to the general
aspects of nationalisation, of management when private businesses
F
are nationalised and a plurality of problems which, incidentally,
involve transfer of service of existing employees 6f insurers. The
workmen qua workmen and industrial disputes between workmen and
the employer as such, are beyond the orbit of and have no specific
-or special place in the scheme of the LIC Aot. And whenever there
was a dispute between workmen and management the ID Act G
mechanism was resorted to.
What are we confronted with in the present case, so that I may
<let.ermine as between the two enactments which is the special ? The
only subject which has led to this litigation and which is the bone of
contention between the parties is an indu:>trial dispute between ·the
Corporation and its workmen qua workmen. If we refuse to be H
obfuscated by legal abracadabra and see plainly what is so obvious,
the conclusion that flows, in the wake of study I have made, is that
1128 SUPREME COURT REPORTS Ll981] 1 S.C.R.
A vis a vis 'industri:~l disputes' at 1he termination of the settlement as
between the workmen and the Corporation 'the ID Act is a special
legislation and the LIC Act a general legislation. Likewise, when
compensation on naitionalisation is the question, the LIC Act is the
special statute. An application of the generalia maxim as expounded
by English text-books and decisions leaves us in no doubt that the ID
B Act being speciail law, prevails over the LIC Aot which is but general
law.
I am satisfied in this conclusion by citations but I content myself
with a recent case where this Court tackling a closely allied question
came to the identical conclusion. (1) The problem that arose there
C was as to whether the standing orders under the Industrial Employ- _...._
ment (Standing Orders) Act, 1946, prevailed as against Regulations
regarding the age of superannuation made by the Electricity Board
under the specific power vested bys. 79(c) of the Electricity (Supply) .,
Act, 1948 which was contended to be a special law as against the
Industrial Employment (St_anding Orders) Act. This court (a bench
D of three judges) speaking through Chinnappa Reddy, J. observed : (2)
The maxim "Generalia specialibus non derogant" is quite
well known. The rule .flowing from the maxim has been exp-
lained in Mary Seward v. The owner of the Veera Cruz ( 3 ~ as
follows:
E "Now if anything be certain it is this, that where there are
general words in a later Act capable of reasonable antl
sensible application without extending them to subjects
specially dealt with by earlier legislation, you are not
to hold that earlier and special legislation indirectly
repealed, altered, or derogated from merely by force
F of such general words, w1thout any indication of a
particular intention to do so."
In J. K. Cotton Spinning & Weaving MiNs Co. Ltd. v. State of
Uttar Pradesh this Court observed (at page 1174) ( 4 )
"The rule that general provisions should yield to specific
provisions is not an arbitrary principle made by lawyers and
G judges but springs from the common understanding of men and
women that when the same person gives two directions one
covering large number of matters in general and another to only
some of them his intention is that these latter directions should
(I) UP State Electricity Board v. H. S. Jain (1979] 1 SCR 355.
H (2) Ibid at 365-66.
(3) [1884] I 0 AC 59 at 68.
(4) AIR 1961 SO 1170 at 1174.
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1129 ...
(Krishna Iyer, J.)
A
prevail as regards these while as regards all the rest the earlie~
direction should have effect."
We have already shown that the Industrial Employment
(Standing Orders) Act is a special Act dealing with a specific
subject, namely with conditions o.f service, enumerated in the
Schedule, of workmen in industrial establishments. It is impos- B
sible to conceive that Parliament sought to abrogate the provi-
sions of the Industrial Employment (Standing Orders) Act
embodying as they do hardwon and precious rights of workmen
and prescribing as they do an elaborate procedure, including a
quasi-judicial determination, by a general, incidental provision
like sec. 79 (c) of the Electricity (Supply) Act. It is obvious
c
that Parliament did not have before it the Standing Orders Act
when it passed the Electricity (Supply) Act and Parliament
never meant that the Standing Orders Act should stand pro tanto
of the view that the provisions of the Standing Orders Act
repealed by Sec. 79(c) of the Electricity Supply Act. We are D
clearly of the view that the provisions of the Standing Orders
Act must prevail over s. 79 (c) of the Electriciity Supply Act,
in regard to matters to which the Standing Orders Act applies.
I respectfully agree and apply the reasoning and !the conclusion to
the near-identical situation before me and liold that the ID Act
E
relates specially and specifically to industrial dispUJtes between work-
men and employers and the LIC Act, like the Electricity (Supply)
Act, 1948, ·is a general statute which is silent on workmen's disputes,
even though it may be a special legislation regulating the take-over of
private insurance business.
A plausible submission was made by the appellants, which was F
repelled by the High Court~ that the LIC AcD contained provisions
regarding conditions of service of employees and they would be
redundant if the ID Act was held to prevail. This is doubly falla-
cious. For one thing, the provisions of ss. 11 and 49 are the usual
general provisions giving a statutory corporation (like a municipality
or university) power to recruit and prescribe conditions of service G
of its total staff-not anything special regarding 'workmen'. This
Cour!' in Bangalore Water Supply and Sewerage case (7 judges'
bench) (1) and long ago in D. N. Banerji v. P.R. Mukherjee & Ors (5
judges' bench) (2) has held that the ID Act applied. to workmen

(!) Bangalore Water Supply and Sewerage Board v. Bajappa [1978] 2 SCC
H
213.
(2) [1953] SCR 302.
,. 1130 SUPREME COURT REPORTS [1981] 1 S.C.R.

A employed by those bodies when disputes arose. The general provi-
sion would still apply to other echelons and even to workmen if no
industrial dispute was raised. Secondly, no case of redundant words
arose because the Corporation, like a University, employed not only
workmen but others also and to regulate their conditions of service,
power was needed. Again, in situations where no dispute arose, power
B in the employer to fix the terms of employment had to be vested.
This is a common provision of a genernl sort, not a particularised
pro..-ision to canalise an industrial dispute.
What is special or general is wholly a creature of the subject and
context and may vary with situation, circumstances and angle of vision.
c Law is no abstraction but realises itself in the living setting of actua-
lities. Which i~ a special provision and which general, depends on the
specific problem, the topic for decision, not the broad rubric nor any
rule of thumb. The peaceful co-existence of both legislations is best
achieved, if that be feasible, by allowing to each its allotted field for
play. Sense and sensibility, not mechanical rigidity gives the flexible
D solution. It is difficult for me to think that when the entire indus-
trial field, even covering municipalities, universities, research councils
and the like, is regulated in the critical area of industrial disputes by
the ID Act, Parliament would have provided as oasis for ·the Corpo-
rntion where labour demands can be unilaterally ignored. The gene-
ral words in ss. 11 and 49 must be read contextually as not covering
E industrial disputes between the workmen and the Corporation. Lord
Haldane had, for instance, in 1915 AC 885 (891) observed that (1) :
"general words may in certain cases properly be interpreted
as having a meaning or scope other .than the literal or usuaJ
meaning. They may be so interpreted where the scheme
F appearing from the language of the Legislature, read in its
entirety, points to consistency as requiring modification of what
would be the meaning apart from any context, or apart from
the general law."
To avoid absurdity and injustice by judicial servitude to interpreta-
~ive literality is a function or the court and this leaves me no option
G
but to hold that the ID Act holds where disputes erupt and the LIC
Act guides where other matters are concerned. In the field of
statutory interpretation there are no inflexible formulae or fool-proof
mechanisms. The sense and sensibility, •the setting and the scheme,
the perspective and the purpose---these help the judge navigate
H towards the harbour of •true intendment and meaning. The legal.
dynamics of social justice also guide the court in statutes of the type
(1) The Political Tradition: The Lord Chancellors, 1912-1940 p. 221.
LIFE INSURANCE CORPORATION V. D. J, BAHADUR 1131
(Krishna Iyer, /.)
we are interpreting. Th~e plural considerations led me to the A
conclusion that the ID Act is a special statute when industrial disputes,
awards and settlements are the topic of controversy, . as here.
There may be other matters where the LIC Act vis a vis the other
statutes will be a special law. I am not concerned with such hypotheti-
cal situations now.
B
I have set out, right at the outset, that iny perspective must be
benign in tune with Part IV of the Constitution. In the UP State
Electricity Board case( 1 ) this Court underscored the same approach :
Before examining the rival contentions, we remind ourselves
that the Constitution has expressed a deep concern for, the c
welfare of workers and has provided in Art. 42 that the State
shall make provision for securing just and humane conditions
of work and in Art. 43 that the State shall endeavour 10 secure,
by suitable legislation or economic organisation or in any other
way, to all workers, agricultural, industrial or otherwise, work,
a living wage, conditions of work ensuring a decent standard of D
life and full enjoyment of leisure etc. These are among the
'Directive Principles of State Policy'. The mandate of A11ticle 37
of the Constitution is that while the Directive Principles of
Sta·~e Policy shall not be enforceable by any Court, the principles
are 'nevertheless fundamental in the governance of the country'
E
and 'it shall be the duty of the State to apply rthese Principles
in making Jaws'. Addre~sed ito Courts, what the injunction
means is that while courts are not free to direct the making of
legislation, courts are bound to evolve, affirm and adopt princi-
ples of interpretation which will further and not hinder the goals
set out in the Director Principles of State Policy. This com- F
mand of the Constitution must be ever present in the minds
of judges when interpreting statutes which concern them-
selves directly or indirectly with matters set out in the Directive
Principles of State Policy.
Whatever be the powers of regulation of conditions of service,
G
including payment or non-payment of bonus enjoyed by the emplo--
yees1 of the Corporation under the LIC Act, subject to the direc-
tives of the Central Government, they stem from a general Act and
cannot supplant, subvert or substitute the special legislation which
specifically deals with indu3trial disputes between workmen and their
employers. In this view, other questions, which have been argued
H
at length and considered'by my learned brother, do not dem.and my
(!) [1979] 1 SCR 355 at 362.
1132 SUPREME COURT REPORTS [1981] 1 S.C.R.

A discussion. The High Court was right in its conclusion and I affirm
iits judgment. I, therefore, direct the Corporation to fulfill its obliga-
tions in terms of the 1974 settlements and start negotiations, like a
model employer, for a fair settlement o~ the conditions of service
between itself and its employees having realistic and equitable regard
to the prevailing conditions of life, principles of industrial justice and
B the directives underlyi~g Part IV of the Constitution.

Judicral review of administrative action and judicial interpreta-
tion of legislative provisions have serious limitations. Nevertheless,
that power is a constitutional fundamental which must be exercised
circumspectly but without being scared by statutory omnipotence or
c executive finality. The words of Prof. Wade come to one's mind :

The law is still developing, but the important thing is that
the courts once again accept, as they had always done except
in their period of amnesia, that part of! their duty was to require
· public authorities to respect certain basic rules of fairness in
D
exercising power over the citizen.

I dismiss the appeal with costs. This disposes of Transfor
Case No. 1 of 1979 also in which the order has to be that a writ will
issue to the Corporation compelling it to carry out the terms of the
Settlements of 1974 and injuncting it from acting upon or giving
E
effect to the impugned notices, circulars and the said amended
Government Order the said amended Staff Regulations being Anne-
xures F, H, J, K and L thereto.

PATHAK, J.--1 have read with great respect the separate judg-
ments of my brother Krishna Iyer and my brother Koshal but in view
F
of ithe importance of the questions raised I propose to deliver a
separate judgment.

The facts of the case have already been set out in the judgments
prepared by my learned brothers. I need mention again a few only.
G Clause (8) of the two settlements of 24th January, 1974 and 6th
February, 1974 made the following provisions respecting bonus :
"(i) No profit sharing bonus shall be paid. However, the Corpo-
ration may, subject to such directions as the Central
Government may issue from time to time, grant any other
kind of bonus to its class III and IV employees.
H
" to all · class III and
(ii) An annual c;ash bonus will be paid
class TV employees at the rate of 15% of the annual
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1133
(Pathak, !.)
salary. . . . . . actually drawn by an employee in respect of A
the financial year to which the bonus relates.

(iii) Save as provided herein all other terms and conditions
attached to the admissibility and payment of bonus shall
be as laid down in the settlement on bonus dated the
B
26th June, 1972."

The settlements were operative from 1st April, 1973 to 31st
March, 1977. On 3rd March, 1978 the Life Insurance Corporation
-(the "Corporation") issued a notice, purportedly under s. 19(2),
Industrial Disputes Act, 1947, of its intention to terminate the settle- c
ments on the expiry of two months because of economic and other
reasons. The notice, however, recited rthe reservation that the
material provisions of the Industrial Disputes Act did not apply to
the Corporation and that the notice was not necessary. Another
time
notice, this under s. 9A, Industrial Disputes Act and issued on
D
the same date, st::1ted ,that it was intended to effect a change in the
·conditions of service of the workmen with effect from 1st June, 1978.
The change notified related to the existing provision for bonus. A
.new clause ·was proposed.

The Life Insurance Corporation (Alteration of Remuneration E
and o~her Terms and Conditions ofl Service of Employees) Order,
1957 (the "Standardisation Order") was amended under s. 11(2),
Life Insurance Corporation Act (the "Corporation Act") on 26th
May, 1978 with effect from bt June, 1978 substituting a new
clause (9) for the original clause in respect of bonus. On the same
date, the Corporation acting under clauses (b). and (bb) of s. 49(2) F
of the same Act amended the Life Insurance Corporation (Staff)
Regulatfons, also with effect from 1st June, 1978 and substituted for
the existing provision a new Regulation 58 along the same lines.
Clause (9) of the Standardisation Order and Regulation 58 of the
{Staff Regulations) now read as follows :
G
"No employee of the Corporation shall be entitled to profit-
sharing bonus. However, the Corporation may, having regard
to the financial condition of the Corporation, in respect of any
year and subject to the previous approval of the Central
Government, grant non-profit-sharing bonus to its employees
in respect of that year at such rates as the Corporntion may H
think fit and on such terms and cond_itions as it· may specify
as regards the eligibility of such bonus."
1134 SUPREME COURT REPORTS [1981] 1 S.C.R.

A The amendmen~s made in the Standardisation Order and the
Staff Regulations, in their application to the workmen of the Corpora-
tion, were made for the purpose of nullifying any further claim to
annual cash bonm; in terms of the settlements of 1974. The workmen
challenged the validity of the amendments in so far as it affected
their claim to the bonus, and the Allahabad High Court having
B found in 1their favour, the Corporation has appealed to this Court.
An identical controversy is the subject-matter of a writ petition filed
in the Calcutta High Court and transferred 1to his Court.
The first question is whether the new clause (9) of the Standardi-:
sation Order succeeds in defeating ithe claim of the workmen. To·
c determine that, s. 11 of the Corporation Act must be examined.
Sub-s. ( 1) guarantees to the transferred employee ithe same tenure,
at the ilame remuneration and upon the same terms and conditions
on the transfer to the Corporation as he enjoyed on the appointed·
day under the insurer, and he is entitled to then until they are duly
altered by the Corporation or his employment in the Corporation
D is terminated. The sub-section envisages alteration by the·
Corporation.

Sub-s. (2) of s. 11, by its first limb, confers power or the Central
Government to alter the scales of remuneration and other terms and
conditions of service applicable to transferred employees. Predictably,
E when the transferred employee~ of different insurers were brought
together in common employment under the Corporation they would.
have been enjoying different scalCIJ of remuneration and other terms
end conditions of service. The power under this part of sub-s. (2)
is intended for the purpose or 8ecuring uniformity among them. The
F second limb of sub-s. (2) is the source of controversy before us. It
empowers the Central Government to reduce the remuneration paya-
ble 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 reduc-
tion or revision. The question is whether ~he provision is confined
G to transferred employees only or extends to all employees generally.
In my opinion, it is confined to transferred employees. The provi-
sion is a part of the scheme enacted in Chapter IV providing for
.the transfer o~ 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
H the business, of provident funds, superannuation and other like funds,
of the services of existing employees of insurers to the Corporation
and also of tho services of existing employees of chief agents of the:
LIFE INSURANCE CORPORATION V. D. J, BAHADUR 1135
(Pathak, J.)
insurers to the Corporation, and finally for the payment of compen- A
sation to the insurers for the transfer of the business to the Corpo-
ration. . They are all provisions relating to the process of transfer.
Sub-s. (2) of s. 11 is a part of that process, involving as it does the
ill'tegration of the Corporation's staff and labour .force. While the
first limb of the sub-section provides for securing uniformity among
B
the transferred employees in regard to the scales of remunerntion and
other terms and conditions of service, the second limb provides that if
after such uniformity has been secured, or even in the process of secur-
ing such uniformity, the Central Government finds that the interests
of the Corporation and its policy .holders require a reduction in the
remuneration payable or revision of the other terms and conditions c
of service applicable .to those employees, it may make an order
accordingly. It is true that the words "employees or any class of
them" in the second limb are not prefaced by the qualifying word
"transferred" or "such". But that was hardly necessary when regard
is had to the mosaic of sections in which the provision is located.
Admittedly, the first limb of sub-s. (2) relates to transferred emplo- D
yees only, and it must be held that so does the second limb. Both
provisions are intended to constitute a composite process for rationa-
lising the scales of remuneration and other terms and conditions of
service of transferred employees with a view not only to effecting
a standardisation between the transferred employees but also to
E
revising their scales of remuneration, and terms and conditions of
service to a pattern which will enable the newly established Corpo-
ration to become a viable and commercially successful enterprise.
The standpoint of 1he second limit of the sub-section, as its language
plainly indicates, is provided by the interests of the Corporation and
its policy holders. For that reason, it is open to the Central
Government under the sub-section to ignore the guarantee contained
in sub-section ( 1) of s. 11 in favour of the employees, or anything
contairu.:d in the Industrial Disputes Act, 1947, or any other law for
the time being in force or any award, settlement or agreement for
the time being in force. Benefits conferred thereunder on the emplo-
yees must yield to the need for ensuring that the Corporation and G
its policy 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 Corporntion 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 H
successful working of the Corporation from its inception as a busi-
ness organisation. It is a situation to be distinguished from what
1136 SUPREME COURT REPORTS [1981] 1 S.C.R.
A :happens when the Corporation, launched on its normal course,
voluntarily assumes·, in the course of its working, obligations in
respect of its employees or becomes subject to such obl!gations by
reason of subs1~quent industrial adjudication. Like any other
employer, the Corporation is then open to the normal pla.y
of industrial relations in contemporary or future time. That
B
the two provisions of sub-s. (2) are linked with the process
of transfer and integration is further indicated by the circumstance
iliat the power thereunder is vested in the Central Government. The
scheme of the sections in Chapter IV indicates generally that
Parliament has appointed .the Central Government as the effective
·C and direct instrumentality for bringing about the transfer and integra-
tion in the different sectors of that process.

There is no danger of an order made by the Central Govern-
ment under the second lrmb of sub-s. (2) in respect of transferred
employees being struck down on the ground that it violates the
D 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 and integration, the transferred employees consti-
tute a reasonably defined class in themselves and form no common
basis with newly recruited employees.

I am unable to subscribe to the view that the second limb lo
sub-s. (2) of s. 11 is related to employees generally, that is to say,
both transferred and newly recruited employees, of the Corporation.
-{
F Another point is whether the power under the second limb of
sub-s. (2) of s. 11 can be exercised more than once. Clearly, the
answer must be in the affirmative. To effectuate the transfer appro-
priately and completely it may be necessary to pass through different
stages, and at each stage to make a definite order. So long as the com-
plex of orders so made is necessarily linked with the process of transfer
G and integration, it is immaterial that a succession of orders is made.
I am not impressr,d by the circumstance that the original Bill moved
in Parliament for amending sub-s. (2) of s. 11 contained the words
"from time to time" and that those words were subsequently deleted
when enactment took place. The intent of the legislative provis.ion
must be discovered primarily from the legislation itself.
H
Now turning to the notification dated 26th May, 1978 which
inserted the new clause ( 9) in the standardisation Order, it is
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1137
(Pathak, !.)
evident from the recital with which it opens that it is intended A
to apply to ,transferred employees only. It declares expli-
citly that the Central Government is satisfied that a revision of the
terms and conditions of service of the transferred employees is
considered necessary. However, there is nothing to show that the
amendment is related to the process of transfer and mtegration. On
B
the contrary, the circumstance that an identical provision has been
made by the Corporation, with the prior approval of the Central
Government, in the new Regulation 58 by a notification issued
under both clauses (b) and (bb) of the s. 49(2), that is to say, in
respect of both newly recruited as well as transferred employees, demon-
strates that the provision has no particular relationship with that c
process. Accordingly, I am of opinion that the notification dated
26th May, 1978 purporting to amend the Standardisation Order is
invalid. It has no effect on the right to bonus· claimed by the
workmen.

That takes us to question whether the new Regulation 58 D
inserted in the (Staff) Regulations by the Life Insurance Corporation
of India (Staff) Second Amendment Regulations, 1978 can be invoked
against the workmen of the Corporation.

The workmen contend that the Industrial Disputes Act consti-
tutes special legislation for the resolution ofl industrial disputes and
inasmuch as it has been specially enacted for fae promotion of
harmonious relations between an employer and his workmen all
matters concerning the .workmen must be regarded as falling within
the scope of the Industrial Disputes Act. The Corporation Act, it
is said, has a different orientation. It is concerned primarily with
F
the nationalisation of life insurance business ; and the employment
of a staff, and ,their terms and conditions of service as well as disputes
concerning them, are subsidiary to the main purpose of nationalisa-
tion. The workmen, it is urged, are a special category of the total
staff employed by the Corporation, and as regards ·them it is the
Industrial Disputes Act and not the Corporation Act which governs. G
Accordingly, the argument goes, a settlement effected under s. 18
of the Industrial Disputes Act must continue to have florce as
determined by s. 19(2) of the Act and even .thereafter, and nothing
contained in the Corporation Act or the Regulations made there-
under can be permitted to affect the operation of its terms. It is
urged that Regulation 58 cannot be applied in 1the case of those H
employees of the Corporation who are "workmen" within the m~aning
of the Industrial Disputes Act.
1138 SUPREME COURT REPORTS [1981] 1 S.C.R.

A The case of the Corporation and 1the Union of India is that
Regulation 58 was framed when the settlement~ had ceased to be
operative and binding under s. 19(2), Industrial Disputes Act, that
even if 1t be assumed that a contract existed between the parties at
the time it must yield to Regulation 58, which had the force of law.
It was contended that as regards the workmen of the Corporation,
B the Corporation Act, is a special law and the Industrial Disputes Act
is the general law and, therefore, Regulation 58 must preva!l over any
transaction under the Industrial Disputes Act.

Before any thing more, it is necessary to ascertain the true
relationship of the parties in respect of the settlements of 1974 at
c <the time when Regulation 58 was framed. The settlements were to
remain in operation for a period of four years ending 31st March,
1977. Admittedly, they were settlements reached under the Industrial
Disputes Act. There is no dispute that they were settlements governed
by s. 19, Industrial Disputes Act. Therefore, by virtue of s. 19(2)
D they were binding upto 31st March, 1977, the period agreed upon
by the parties and 'Ibey continued to be billding on the parties there-
after until the expiry of two months from the date on which written
notice of the intention to terminate the settlement was given by one of
the parties to th<~ other.

E It is desirable to appreciate what is a settlement as understood
in the Industrial Disputes Act. In essence, it is a contract between
the employer and the workmen prescribing new terms and condi--
tions of service. These constitute a variation of existing terms and
conditions. As soon as the settlement is concluded and becomes
operative, the contract embodied in it takes effect and the existing
F terms and conditions of the workmen are modified accordingly.
Unless there is some thing to the contrary in a particular term or
condition of the seNlement the embodied contract endures indefinitely,
wntinuing to govern the relation between the parties in the future,
subject of course to subsequent alteration through a fresh settlement,
award or valid legislation. I have said that the transaction is a
contract. But it is also something more. Conceptually, it is a
"settlement". It concludes or "settles" a dispute. Differences which
had arisen and were threatening indus trial peace and harmony stand
1

resolved in terms of a new contract. In order that :the new contract
be afforded a chance of being effectively worked out, a mandate
JI obliging the parties to unreservedly comply with it for a period
of time is desirable. It was made "binding" by the statute for such
period. Section 19(2) was enacted. The spirit of conciliation, the
LIFE INSURANCE CORPORATION V. D. J. BAHADUR 1139
(Pathak, 1.)
foundation of the settlement, was required by law to bind the parties A
for the time pi:escribed. Immediate reagitation in respect of matters
covered by the settlement was banned. Section 23 (c) prohibited
strikes by the workmen in breach of the contract and _lockouts by
the employer in respect of iiuch matters. A breach of any term was
made punishable by s. 29. Ceritainty in industrial relations is
essential to industry, and a periqd of such certainty is ensured by B
.s. 19(2). On the expiry of the period prescribed in ithe sub-section,
the conceptual quality of the transaction as a "settlement" comes to
I
an end. The ban li!ts. The parties are no longer bound to main-
>-- tain the industrial status quo in respect of lJ!atters covered by the
settlement. They are at liberty to seek an alteration"-of 1the contract.
But until altered, the contract c9ntinues to govern the relationsi
c
between the parties in respect of the terms and conditions of
service.

The position seems comparable with what happens in the case
of an award. Section 19(3) and s. 19(6) contain similar provi- D
sions. In the case of an award this Court has laid down in South
Indian Bank Limited v. A. R. Chacko(1) that after the period of
operation of an award has expired, the award does not cease to be
effective. It continues to be binding on the parties, by virtue of
s. 19(6), until notice has been given by one of the parties of the
intention to terminate it and two months have elapsed from the date E
-0f such notice. Thereafter, "it will continue to have its effect as a
contract between the pa1Ct ies that has been made by industrial adjudi-
1

c<l'tion in place of the old contract. .... ., the very purpose for which
industrial adjudication has been given the peculiar authority and right
of making new contracts between employers and workmen makes it
reasonable to think that even though th·e period of operation of the F
award and the period fur which it remains binding on the parties
may elapse-in respect of both of which special provisions have been
made under ss. 23 and 29 respectively-may expire, the new contract
would continue to govern the relations between the parties till it is
<lisplaced by another contract." Later in Md. Qasim Larry, Factory
Manager, Sasamusa Sugar Works v. Muhammad Samsuddin And G
Another,( 2 ) the court held that when an award was made and it
prescribed a new wage structure, in law the old contractual wage
structure became inoperative and its place was taken by the wage
:structure prescribed by the award. The court said :
H
(!) [1964] 5 S.C.R. 625.
(2) [1964] 7 S.C.R. 419.
114! 0 SUPREME COURT REPORTS [1981] 1 S.C.R.

A "In a sense, the latter wage structure must be deemed to be a
contract between the parties, because that, . in substance, is the
effect of industrial adjudication. The true legal position is that
when industrial disputes are decided by industrial adjudication
and awards are made, the said awards supplant contractual terms
in respect of matters covered by them and are substituted for
B them."

Learned counsel for the Corporation and the Union of India
submit that .the law declared by this Court in respect of an award
does rlpt hold true in the case of a settlement. I am unable to agree.
Not only are the statutory provisions pertaining to a settlement and
c an award comparable in this regard· but, if anything, the observa-
tions il' read in respect of a settlement, which after all is a voluntary
agreement between the parties, would seem to hold more strongly.

The contract between the parties embodied in the settlements
of 1974 set forth the terms and conditions of service when Regula-
D
tion 58 was substituted in the (Staff) Regulations under clauses (b)
and (bb) of s. 49(2) of the Corporation Act. The question is
whether Regulation 58 will prevail over the "settlement" contract.
For that purpose, it is necessary to examine the controversy whether
the Corporntion Act is the general law and the Industrial Disputes
Act the special law -or vice-versa.
E
It will be noticed that the Corporation Act was enacted pri-
marily for effecting the nationalisation of life insurance business by
transferring all such business to a Corporation established for the
purpose. The principal provision in the Corporation Act is s. 7, which
F provides for the transfer to, and vesting in, the Corporation of all the
assets and liabilities appertaining to the controlled business of the
insurers. The central purpose being assured, the con!comitant pro-
visions followed. These included making available to tlie insurers'
employees, under s. 11 ( 1 ) , a continuous and unbroken tenure of
employment on terms and conditions to which they would have been
G e~tiled on the "appointed day" as if the Corporation Act had not
been passed. It was evidently intended that in running the business
the Corporation should broadly .take off where the insurers had
ceased. For the purpose of enabling it 'to discharge its functions
under the Act, the Corporation hall been empowered by s. 23 to employ
such number of persons as it thinks fit. The power conferred in
H clauses (b) and (bb) of s. 2{2) to make regulations prescribing the
terms and conditions of service oli newly recruited as well as trans-
ferred employees has been conferred for the same purpose, that is
LIFE INSURANCE CORPORATION V. D. J. BAH'ADUR TN 1
(Pathak, J.)
to say, the purpose, specifically mentioned in s. 49( 1), of giving
effect to the provisions of the Act. Clearly, the objecn behind
s. 11(1), s. 23 and clauses (b) and (bb) of s. 49(2) is to provide
staff and labom for the purpose of the proper management of the
nationalised life insurance business. On 1the other hand, the Indus-
trinl Disputes. Act deals specifically with a special subject matter,
the investigation and settlement or indust'rial disputes between an
employer and his workmen. An "industrial dispute" as defined by
s. 2 (k) is. a colledive dispute. It is a special kinld of dispute.
Except for a case under s. 2A, the entire body of workmen or a
substantial number of them constitutes a party to the dispute. And
all the employees of an employer are not "workmen". Those c
employees are "workmen" who satisfy rthe definition contained in
s. 2(s). A restricted category of employees is contemplated, and in
an) industrial dispute that category alone of all the employees can be
interested. The resolution of industrial disputes under the Act is
envisaged through the particular machinery and processes detailed
therein. A special jurisdiction is created for the purpose. Industrial
disputes, according to the Act, can be resolved by settlement or
award. There are provisions seHing forth the consequences of a
settlement or an award, and there are also provisions indicating how
a change can be initiated in the resulting industrial relations. Other
chapters in the Industrial Disputes Act lay down the law in respect
or strikes and Jock-outs, lay off, retrenchment and closure and penal- E
ties for breach of its provisionls. Plainly, if. a settlement resolves an
industrial dispute under the Industrial Disputes Act, it pertains to
the central purpose of that Act. The Act constitutes special law
in respect of a settlement reached under its auspices between an
employer and his "workmen" employees. The consequences of •
such settlement are the product of the special law. The Corporatie>n F
Act does not possess the features outlined above. It deals otily
gerbrally in regard to a staff and labour force. They are referred
to compendiously as "employees". No special provision exists in
regard to industrial disputes ·and their resolution and the consequences
of that resolution. The special jurisdiction created for the purpose
G
under the Industrial Disputes Act is not .the subject-matter of the
Corporation Act at all. It would be correct to say ,that no corres-
ponding provision in the Corporation, Act, subsequent enactment,
deals with the subject matter enacted in the Industrial Disputes Act.
Yet Parliament intended to provide for the Corporation's "workmen"
employees the same opportunities as are available under the Indus- H
trial Disputes Act to the workmen of other employers. That is
demonstrated by s. 2(a)(i) of that Act. The ·expression "appropriate
t2-·-6 S.C. India/ND/81
SUPREME COURT REPORTS 11981] 1 S.C.R.

A Government" is specifically defined by it in relation to an industrial
drspute concerning the Life Insurance Corporation. Both the
Central Government and the Corporation understood the Industrial
Disputes Act in that light, for one finds that Regulation 51 (2) of
. the (Staff) Regulations made by the Corporation! under clauses (b)
and (bb) of s. 49(2) of the Corporatfon Act, with the previous
B approval of the Central Government, speaks of giving effect to a
revision of scales of pay, dearness allowances or o.ther allowances
"in pursuance of any award, agreement or settlement" .
..
,. In my opinion, it is difficult 1~0 resist the conlplusion that the
. Industrial Disputes Act is a special law and must prevail over the
c Corporation Act, a general law, for . the purpose of protecting the
, sanctity of ·transactions concluded· under the former enactment. It
.'is true that as laid down. in Life Insurance ·Corporatio1i of India v.
; Sunil Kumar Mukherjee(1) and reiterated in Sukhadev Singh v. Bhagat
: Ram,(2) .the Regulations framed under the Corporation Act have the
. force of law. But that is of little moment if no reference is permis-
sible to the Regulations when considering the validity and operation,
of the "settlement" contract. Accordingly, Regulation 58, a product.
of the Corporation Act cannot supersede the contract respecting
1
,
1

bonus between the parties resu1ting from the settlements of 197 4.
Support is derived for this conclusion from U. P. State Electricity
E Board & Ors. v. Hari Shanker Jain & Ors.( 3 ) where reference has
been made to Mary Sewards v. The Owner of the Vera Cruze') and
J. K. Cotton Spinning & Weaving Mills Ltd. v. State of Uttar
,Pradesh(").

• .F
At the saJme 1time, it is pertinent to note .that the "workmen"
employees of the. Corporation continue to be governed in matters
. not covered by .the settlements .by the (Staff) Regulations, and that
--11I
position'. is expressly recognised in clause 12 ( 4) of the settlernents ' -~.

of 1974. Clause 12( 4) declares :
"Except as otherwise provided· or modified by this settlement,
the workmen shall continue to be governed by all the terms
and conditions of service as set forth and regulated by the Life
Insurance Corporation of India (Staff) Regulations, 1960 ..... .
as also the administrative instructions ...... "
(l) [1964 ] 5 S.C.R. 528.
(2) [1975] 3 S.C.R. 619 .
.H (3) [1979] 1 S.C.R. 355.
(4) [1884] 10 A.C. 59 at 68.
· (5) A.I.R. 1961 S.C. 1170.
LIFE INSURANCE CORPORATION V. D. J, BAHADUR 114 3
(Pathak, J.)
Our attention has been drawn to s. 11 ( 1), Corporation Act A
which empowers the Corporation to duly alter the terms and condi-
tions of service of transferred employees. In construing the scope
of the Corporation's powers in that behalf, it seems to ,IIlY that appro-
priate importance should be attached to the qualifYml'word "duly".
When the Corporation seeks to alter the terms and conditions of B
tra:rnsferred employees, it must do so in accordance with law, and
that requires it to pay proper regard to the sanctity of rights acquirr.d
by the "workmen" employee& under settlements or awards made
under the Industrial Disputes Act. The only provision, so far as I
can see, where the Corporation Act permits disregard of the Tndus-
ocial Disputes Act and awards, setdements or agreements is the
c
second limb of s. 11(2). And the scope of that provision, as I
have explained, is confined to the peculiar circumstan:ce in which
tlie Corporation, immediately on coming into existence, finds itself
saddled with a recurring financial burden, by virtue of' the service
of the transferred employees, too heavy for its own viabHity as a D
business organisation. No such provision is ,to be found elsewhere
iri the Corporation Act. It is conspicuous by its absence in clauses
(b) and (bb) of s. 49(2). The provision ins. 11(2) has been
made for the purpose of protecting the interests of the Corporation
and its policyholders. The policyholders constitute an important and
significant sector of pu_blic interest. Indeed, the avowed object of E
the entire _C:orporation Act is to provide absolute security to the
policyholders in the matter of their life insuran;ce protection. That
is assured by a wise management of the Corporation's business, and
by ensuring that when settlements are negotiated between the Corpo-
ration and its workmen or when industrial adjudication is initiated
in labour courts and industrial tribunals, the protection of the policy- F
holders will find appropriately significant emphasis in the delibera-
tions.

In the view that the notification dated 26th May, 1978
purporting to amend the Standardisation Order by substituting clause
G
(9) is invalid and the newly enacted Regulation 58 does not effect
the contract in' respect of bonus embodied in the settlements of 1974
between the Life Insurance Corpor;ition and its "workmen" · em-
ployees, effect niust. be given to that contract and this appeal must
fail and the writ petition, transferred from the Calcutta High Court,
must succeed. If the terms and conditions ·of service created by the H
contract need to be reconsidered, recourse must be had to the modes
recongn,ised by Jaw- negotiated settlement, industrial adjudicat!on
or appropriate legislation.
1144 SUPREME COURT REPORTS 11981] 1 S.C.R.

A In the' result, Civil Appeal No. 2275 of 1978 is dismissed with
costs to the first, second and third respondents. The fourth respon-
dent shall bear its own costs. The Transfer Petition No. 16 of 1979'
is allowed in the terms set out above, cos,ts to be paid to the peti··
tioners by the second respondent

B KosHAL, J.-By this judgment I shall dispose of Civil Appeal
No. 2275 of 1978 which has been instituted by special leave gralllted
by this Court against a judgment dated August 11, 1978 of a Division
Bench of the Allahabad High Court allowing a petition under artii::le
226 of the Constitntioll of India and issuing a writ of mandamus to
the Life Insurance Corporation of India (hereinafter referred to as
c the Corporatiool) directing it not to give effect ro a notice dated the
6th May, 1978, issued by it under section 9A of the Industrial Dis-
putes Act (I. D. Act for short) as also to a notification dated the
26th May, 1978 issued under sub-section (2) of section 11 of the
Life Insurance Corporation Act, 1956 (hereinafter called the L. I. C.
Act). This judgment shall also cover Transfer Case No. 1 of 1979
D in which another petition under article 226 aforesaid instituted before
the High Court of Calcutta and raisimjg the same questions which falt
for decision in the said appeal is awaiting disposal by us as that peti-
tion was transferred. to this Court by its order dated the 10th Sep-
tember. 1979.
E 2. The petition decided by the Allahabad High Com1l was filed
by the Class IU and Class IV employees of the Corporation challeng-
ing the right of the employe.r and the Union of India to change to
the detriment of the said employees a condition of service regarding
the paymecr1)t to them of bonus to which they had earlier become
entitled through a settlement with the Corporation m&de under ~ection
F 18 of the I. D. Act.
3. The petition last mentioned arose in circumstances whicll may
be set out in some detail. The Corporation came into existence on the
1st September, 1956, as a statutory authority established under the
L. I. C. Act. As from the said date all institutions carrying on life
G in/surance business in India were nationalised to the extent of such
business and their corresponding assets and liabilities were transferred
to the Corporation. Section 11 of the L. I. C. Act provided for the'
transfer of service of those employees of such institutions who were
connected with life insurance business (described in the Act as "con-
trolled business") immediately before the said date to the Corporation·
H and for some other malteds. As it is the interpretation of that section
which is mainly in controversy before us, it may be set out here in
extenso:
LIFE INSURANCE CORPORATION v. D. J; BAHADUR 1145
(Koshal, i.)
"l L . ( 1) Every whole-time employee of an insurer whose A
controlled business has been transferred to and vested in the
Corporation and who was employed by the insurer 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 Corporation, and shall hold his office
therein by the same tenure, at the same remuneration and upon B
the same terms and conditions a,r,d with the same rights and
privileges as to pension and gratuity and other matters as he
would have held the same on the appointed day if this Act had
no•c been passed, and shall continue to do so unless and until his
employment in the Corporation is termirn)ated or until his remu-
neration, terms and conditions are duly altered by the Corpora-
c
tion:

"Provided ihat nothing contained in ·this sub-section shall
apply to any such employee who has, by notice in writing given
to the Ce!t:itral Government prior to the appointed day, intima,ted
D
his in:ention of not becoming an employee of the Corporation.

"(2) Where the Central Government is satisfied that fo~
the purpose of securing uniformity in the sc~les of remuneration
and the other terms and conditions of service applicable to em~ .
ployees of insurers whose mmtrolled business has been transfer-
E
red to, and vested in, the Corporation, it is necessary so to do,
or that, in the interests of the Corporation and its policy-holders,
a reduction in the remuneration payable, or a revision of the other
terms and conditions of service applicable, to employees or any
class of them is called for, the Cen:iral Governme·1~t may, not-
withstanding anything contained in sub-section (1), or in the
F
Industrial Disputes Act, 194 7, or in any other law for the time
heing in force, or in any award, settlement or agreement for the
time being in force, alter (whether by way of reduction or other-
wise) the remuneration and the other terms and conditions of
service to such extent and in such manner as it thinks fit; and
if the alterat'ion is not acceptable to any emp.Joyee, the Corpora- G
tion may terminate his employment by giving him compemsation
equivalent to three months' remuneration unless the contra;;t of
service with such employee provides for a shorter notice of
termination.

"Explanation.-The compensation payable to an employee H
under this sub-_section shall be in addition to, and shall not
affect, any pension, gratuity, provident fund money or any other
1146 SUPREME .COURT REPORTS [1981] 1 S.C.R.

A benefit to which the employee may be entitled under his contract
of service.
"(3) If any q'uestion arises as to whether any person was
a whole-time employee of an insurance or as to whether an:y
employee was employed wholly or mainly in connection with
B the controlled business of an insurer immediately before the
appointed day the question shall be referred to the Central Gov-
ernment whose decision shall be final.
"( 4) Notwithsmll!Ciing anything contained in the Industrial
Disputes Act, 1947, or in any other law for the time being in
force, the transfer of the services of any employee of an insurer
c to the Corporation shaII not entit~e any such employee to any
compensation under that Act or other law, and no such claim
shall be entertained by a1w court', tribunal or other authority."

Section 23 of the L. I. C. Act gave to the Corporation the power
to employ such number of persons as it thought fit for the purpose of
D
enabling it to discharge its functions under the Act and declared
that every person so employed or whose services stood transferred to
the Corporation under section 11 would be liable to serve anywhere
in India. Section\ 49 conferred on the Corporation the power to make
regulaitions for tlie purpose of giving effect to the provisions of the
E Aot with the previous approval of the Central Government. Sub-
section (2) of that section enumerated various matters in relation to
which such power was particularly conrerred. Clauses (b) and (bb)
of sub-section ( 2) read thus :
"(b) the method of recruitment of employees and agents of the
Corporation anid the terms and condi:ions of service of such
F
employees or agents;
"(bb) the terms and conditions of service of persons who have
become employees of the Corporn'.ion under sub-section ( 1)
· of section 11 ;"

G On 'the 1st June, 1957, the Central Government, in exercise of
the powers conferred on it by sub-section (2) of section 11 of the
L. I. C. Act, promulgated the Life Insurance Corporation (Altera-
tion of Remuneration and other Terms and Conditions of Service of
Employees) Order, 1957 (for short "the 1957 Order") altering the
remuneration and other terms and conditions of service of those
H employees o.f the Corporation whose services had been transferred to
it under sub-section (1) of that section (referred to herein1after as
the transferred employee>). Clause 9 of the 1957 Order declared that
LIFE INSURANCE: CORPORAT-iON V.. ti; .'J. BAHADUR
(Koshal, !.)
·\
no· bonus would be paid but directed that the Corporation would set A:
aside an ainoi.mt every year for expenditure on schemes of general
benefit scheme and on other amenities to them. ·On the 26th June
1959, the Central Government amended clause 9 of the 1957 Order
so as to provide that non-profit sharing bonus would be paid t.o those
employees of the Corporation whose salary did not exceed Rs. 500/
per month.

On .the 2nd July, 1959 there was a settlement between the Corpo-
ratfon and its employees providing for payment to them of cash
bonus at the rate of 1! months' basic salary for the period from the
1st September, -1956 to the 31st December, 1961. ·

In ·the year 1960 were framed, under sectfon 49 of L.. I. C. Act,
the Life Insurance Corporation of India (Staff) Regulations, 1960
(the 1960 regulations, for brevity), whereof regulation 58 ran thus:
D.
"The Corporation may, subject !o such directions !IS the Central
Government may issue, grant non0 xofii sharing bonus to its
employees and the payment thereof, including conditirms of
eligibility for the bonus, shall be regulated by instructions issued
by the Chairman from time to time."
E:
Orders were again passed on 14th April, 1962 and 3rd August,
1963, the effect of which was -to remove the Hmit of Rs. 500/.- on
the basic salary as a condition of eligibility for payment of bonus.

The settlement.dated the 2nd. July, 1959 was followed by .three
others which were arrived at on the 29th January, 1963, the 20th F
June, 1970 and the 26th June, 1972, respectively and each one of
which provided for payment of bonus at a particular rate.

Disputes between the Corporation and its workmen in regard to
the latter's conditions of service persisted nevertheless, but were
resolved by .two settlements dated the 24th January, 1974 and
the 6th February, 1974, arrived at in pursuance of the provisions
of ·section 18 read with section 2(p) of the I. D. Act.
The Corporation was a party to both the settlements which were
identical in terms. However, while four of the five Unions
of workmen subscribed to the first settlement, the fifth Union was a
sign11tory ·to the second. The i>ettlements provided for revised scales
of pay, the method of their fixation and dearness and other allowances
as well as bonus. Clause 8 of each of 1the settlements was to the
following effect :
1'148 SUPREME COURT REPORTS [19811 1 S.C.R.

A "Bonus
"(i) No profit sharing· bonus shall be paid. However, the Corpo-
ration may, subject to such directions as the Central Govern-
ment may issue from time to time, grant any other kind of
bonus to its Class III & IV employees.
B (ii) An annual cash bonus will be paid to all Class ill and
Class IV employees at the rate of 15 % of the annual salary
(i.e. basic pay inclusive of special pay, if any, and dearness
allowance and additional dearness · allowance) actually
drawn by an employee in respect of the financial year to
which the bonus relates.
c (iii) Save as provided herein all other terms and conditions
attached to the admissibility and payment of bonus shall
be as laid down in the Settlement on bonu8 dated the 26th
June 1972."
Clause 12 of each settlement provided :
D "(l) This settlement shall be effective from 1st April, 1973, and
shall be for a period of1 four years, i.e., from 1st April,
1973 to 31.st March, 1977.
(2) The terms of the settlement shall be subject to the approval
of the Board of the Corporation and the Central Govern-
E ment
(3) This Settlement disposes of all the demands raised by the
workmen !'or revision of terms and cond]tions of their ·
service.
(4) Except as otherwise provided or modified by this Settle-
ment, itbe workmen shall continue to be governed by all the
F
terms and conditions of service as, set forth and regulated
by the Life Insurance Corporation of India (Staff Regula-
tions), 1960 as also the administrative instructions issued
from time to time and they shall, subject to the provisions
thereof including any period of operation specified therem,
G be entitled to the benefits thereunder."
It is not disputed .that the settlements were approved by the
Board or the Corporation as also by the Central Governmem.
Under clause 11 of each settlement every employee of the Corpo-
ration had the optJon to elec.t to be governed either by the new scale
H of pay applicable to him or the scale which he had been enjoying
hitherto. It is common ground between the parties that all the
employees of the Corporation opted for the new scales of pay and
LIFE INSURANCE CORPORATION v. n. J. RAHADUR (Koshal, J.) 114 £i

that bonus was paid in accordance therewitih for the years 1973~74 A
.and 1974-75 in April 1974 and April 1975 respectively.
Onj 25th September 1975, the Payment of Bonus (Amendment)
Ordinance, 1975 was promulgated by the President of India and was
i>Ubsequently replaced by the Payment of Bonus (Amendment) Act,.
1976 which was brought into force with effect from the date last B
mentioned. This· amending law considerably curtailed the rights of
employees of industrial undertakings to bonus, but was inapplicable
to the Corporation by virtue of the provisions of section 32 of the
Payment of Bonus Act. -However, the payment of bonus for the year
1975-76 to the employees of the Corporation was stopped under
instructions from the Central Government, whose action in that behalf C
was challenged by the employees through a petition under article 226
of tihe Constitution of India in the High Court of Calcutta, a single
Judge of which issued a writ of mandamus directing the Corporation
to act in accordance with the terms of the settlement dated the 24th
January, 1974. The Corporation preferred a Letters Patent appeal
again&t the decision of ·the learned single Judge and that appeal was D
pending disposal when :the Central legislature promulgated the Life
Insurance Corporation (Modification of Settlement) Act, 1976 (for
·short, the 1976 Act) section 3 of which laid down :
"Notwithstanding anything contained in the Industrial Disputes
Act~. 1947, the provisions of each of the settlements, in so far as E
they relate to the payment of an annual cash bonus to every Class
III and Class IV employee of the Corporation at the rate of
fifteen per cent of his annual salary, shall not have any force or
effect and shall not be deemed to have any force or effect on and
from 1st day of April, 1975."
The 1976 Act was enacted on 29th May, 1976 and was challenged F
by the workmen in this Court which, on the 21st of February, 1978,
·declared it to be void as offending article 31(2) of the Constitu!ion
of India through a judgment which is reported as Madan Mohan
Pathak v. Union of India, [1978] 3 S. C. R. 134, and directed the
Corporation to forbear from implementing the 1976 Act· and to pay
to its Class III and Class IV employees bonus for the years 1-4-1975 G
to 31-3-1976 and 1-4-1976 to 31-3-1977 in accordance with the terms
of sub-clause (ii) oil clause 8 of each settlement.
On the 3rd March, 1978, the Corporation issued to its workmen
a notice under sub-section (2) of section 19 of the I. D. Act declar-
ing its intention to terffiinate the settlements on the expiry of a period H
of two months from the da'.ie the notice was served. The notice, how-
·ever, mentioned in express terms that according to the Corporation
1150 SUPREME COURT REPORTS [1981] 1 S.C.R.

A no such notice was really necessary for 11ermination of the set!llements..
On the same date, another notice was issued by the Corporation under
section 9A of the I. D. Act stating that it intended to effect a change-
in accordance with the contents of the annexure to the notice, as from
t~e 1st June, 1978, in the conditions of service of its workmen. The-
said annexure contained the following clause :
B
"AND WHEREAS for economic and other reasons it would not
be possible for the Life Insurance Corporation of India to continue
to pay bonus on the aforesaid basis; .
."NOW, therefore, it rs our intention to pay bonus to the em-
ployees of the Corporation in terms reproduced hereunder;
c "No employee of.the Corporation shall be entitled to profit
sharing bonus. However, the Corporation may, having regard
to the financial condit,ion of the Corporation in respect of
any year and subject to the previous approval of the Central
Governmen~, grant non-profit sharing bonus to itis employees

D in respect of that year at such rate as the Corporation may
think fit and on such terms and conditions as it may specify
as regards the e:igibility o~ such bonus'."
The workmen sent a reply to the two notices just above mentioned'
and took the stand that the Corporation had no right to render
inoperative the clause regarding bonus contained in the two settle-
E ments.
On 26th May, 1978, the Corporation issued a notification-
under section 49 of the L. I. C. Act substituting a new regulation for
the then existing regulation bearing serial number 58. The new regu-
lation was to come into force from the 1st June, 1978, and stated:
F "58. No employee of the Corporation shall be entitled to
. profit sharing bonus. . However, 1.he Corporation may, h!-lving
regard to the financial condition of the Corporation in respect of
any year and subject to. the previous approval of the Central Gov-
ernment grant non-profit sharing bonus to its employees in respect
of that year at such rate as the Corporation may think fo and on-
G
such terms and conditions as it may specify as regards the eligi-
bility for such bonus."
Simultaneously an amendment on the same lines was made in the
1957 Order (which, as already stated, was restricted in its application
to transferred employees only) by the subs'itution of a new clause for
H the then existing clause 9 in pursuance of uhe provisions of sub-section·
(2) of section 11 of the L. I. C. Act. The new clause is in the
following terms :
tlFE INSURANCE CORPORATION v. D. J. BAHADUR (Koshal, J.)

"9. No employee of the Corporation shall be entWed to A:.
profit sharing bonus. However, t;he Corporation may, having
regard to the financial condition of the Corporation in respect of
any year and subject to the previous approval of the Central
Government, grant non-profit sharing bonus to its employees in
respect of that year at such rate as the Corporation may think fit
' and on such terms and conditions as it may specify as regards the
·eligibility for such bonus."

It was the issuance of the two notices by the Corporation on the
3rd March, 1978, under section 19(2) and 9A of the I. D. Act
respectively and the action taken by the Central Governmem on the
26th May, 1978, by making new provisions in regard to the payment
of bonus to the Corporation's employees that furnished the cause of
action for the latter to . petition to the Allahabad High Court under
article 226 of the Constitution of India.
4. After consideration of rthe various contentions raised before. it
the Allahabad High Court arrived at the following conclusions : D

I. The I. D. Act is an 'independent Act' which deals with.
adjudication and settlement of mat1ters in dispute between an
. employer and bis workmen. It is" thus, a special law which would
override the provisions of a general law like the L. I. C. Act.
E
II. Three corollaries follow from conclusion I :
(a) Section 23 of the L. I. C. Act which envisages employ-
ment of persons by the Corporation implies settlement
of conditions of service which may legally be superseded
(only) by another settlement arrived at under section
18 of the I. D. Act. F
(b) The new regulation 58 framed under section 49 of the
L. I. C. Act and the notification issued under sllb-
section (2) of section 11 thereof substituting a new
clause 9 in the 1957 Order are whoUy ineffective against
the operation of the 1974 settlements which were arriv- G
ed at in pursuance of the provisions of the I. D. Act
.-; and which therefore, continue to govern the parties ..
~hereto.

(c) Arter the issuance of the notices under sections 19(2)
and 9A of the l.D. Act, the Corporation had no power
to aiter the condition of service of its employees in re- H' ·
gard to bonus by a unilateral act as neither of the two
sections confers such power on an employer.
1152 SUPREME COURT REPORTS [1981] 1 $.C.R.
A. Ill. Corollary (b) in conclusion II is in full accord with
the view expressed in Madan Mohan Pathak's case (supra) by
the Supreme Court in as much as it upheld the two settlements
even though it did not advert to regulation 58 and further ruled
that t:he conditions of service laid down in those settlements could
be varied only by a fresh settlement or award made under the
B provisions of the I. D. Act and that till ,then sub-clause (ii) of
clause 8 of each settlement (which is independent of clause (i)
thereof) would n~main in full force. None of the authorities
reported as C. Sa.nkararskavanon v. The State of Kerala(I)
Roshan Lal v. Union,( 2 ) Sukhdev v. Bhagatram,( 3 ) Kalvammal
Bhandari v. State of Rajasthan,( 4 ) State of U.P. v. Babu Ram
c Upadhya,( 5 ) l.T.O. v. M. C. Ponnoose(a) and cited on behalf
of the Coi'poration lays down any rule to the contrary.

IV. In spite of clause 12 of the two se'.tlements they did not
cease to be binding on the parties there.to even after the expiry of the
D period of 4 years mentioned in that clause and the no:Jce under section
19(2) of the I. D. Act issued by the Corporation would not ter:nmate
the set1tJements but: would have the effect merely of paving the way
for fresh negotiations. This proposition follows from South Indian
Bank Ltd. v. A. R. Chacko,( 1 ) and Indian Link Chain Ltd. v. Work-
men,(8) and is not negatived by the decision jn Premier Au:ip v. K. S.
E Wadke(9). Although Chacko's case dealt in terms with an award and
not a settlement, no distinction exists be~ween the two and they stand
on the same foo'iing for the purpose of judging the effect of a notice
under section 19 ( 2) of the I. D. Act.

V. There is no dispute that no petition under article 226 of
F the Constitution of India would lie merely for the enforcement of a
contract or for the recovery of an amount payable by the Corporation
to its employees where the bt'.:r had an alternative remedy under
section 10 or 33-C of the I. D. Act. However, the relief sought by
the workmen in the present case is directed only against t;he action
taken by the Corporation and the Union of India under sections 19
G · and 9A of the I. D. Act and sections 11 (2) and 49 of the L. I. C.
Aot,--a relief s'imilar to that granted by this Court in Madan Mohan
Pathak's case (supra). The contention raised on behalf of the Corpo- t

(I) A.LR. 1971 S.C. 1997. (2) [1968] 1 S.C.R. 185.
(3) [1975] 3 S.C.R. 619. (4) [1975] 2 S.C.R. 36.
H. (5) [1961] 2 S.C.R. 679. (6) [1970] 1 S.C.R. 678.
(7) [1964] 5 S.C.R. 625. (8) [1972] 1 S.C.R. 790.
(9) (1976] I S.C.R. 427.
'LlF.E INSURANCE CORPORATION v. D • .r. BAHADUR (Koshal, J.) · 1f53

ration ab6ut the non-maintainability of the petition is therefore with- I A
out force.
It was on the basic or these cooclusions that the writ of mandamm
mentioned in the opening p~ragraph of this judgment was issued by
the High Court to >the Corporation on whose behalf the first four of B·
those conclusions have been impugned before ·us and I proceed to
examine the same in the light ~f arguments advanced at length by
learned counsel for the parties· and fo.r the Class II employees of ·!he
Corporation who were permitted to inten1ene in the appeal before
·).._~ us.
5. ·As conelusion II consists merely of corollaries derived directly
c
from conclusion. I and it is the correctness or o:tiherwise of the latter
thar·would determine the sustainability of the former, the two may
legitimately be dealt with together, although it is conclusion I on
··which I would primarily concentrate.
6. For convenience of examination, conclusion I may be split up
into two propositions :
(a) The I. D. Act is a special law because it deals with adjudica-
tion and settlement of matters in dispute between an employer
and his workmen while the L. I. C. Act is a general law.
(b) The I. D. Act, being a special law, would override a general
Jaw like the L. I. C. ·Act.
7. Now in relation to proposition (a) it cannot be gain-said that
the I. D. Act deals with the adjudication. or settlement of disputes
between· an employer and his workmen. and would, therefore, ·be· a
gpecial law vis-a-vis another statute which covers a larger field and
may thus be considered "general" as compared to it. It cannot, how-
ever, be regarded as a special law in relation to all ot.her laws irrespec-
tive of the subject-matter dealt with'by them. In fact a law may be
special when considered in relation to another piece of legislation but
only a general one vis-a-vis still another. An example will help
illustrate the point. A law governing matters pertaining to medical
education would be a special law in relation to a statute embracing
education of all kinds but must be regarded as a general law when
preference over it is claimed ~or what I may call a more special Jaw,
such as an Act dealing with only one aspeot of medical education,
say, instruction in the field of surgery. And even this "more speci~d"
la:w may become general if there is a conflict between it and another
operating in a still narrower field, e.g., thoracic surgery. "Special"
and "general"· used in this conteit;t1 are relative terms and it is the
content of. one stat~te as compared to the other that will determine
. 1154 .SUPREME COURT REPORTS [1981] 1 S.C.R.

A which of the two· is to. be regarded as special in relation to the other.
Viewed in this light proposition (a) cannot stand scrutiny. The I. D.
Act would no doubt be a special Act in relation to a law which makes
provision for matters wider than but inclusive of those cover¢ by it,
such as the Indian Contract Act as that is a law relating to contracts
generally (including those beiween an industrial employer and his
B workmen), but it would lose that categorisation and must be regarded
as a general law when its rival is shown to operate in a field narrower
than its own. And such a rival is that part of the L. I. C. Act which
deals with conditions of service of the employees of the L.l.C.-a
single industrial undertaking (of a special type) as opposed to all
others of its kind which fall within the ambit of ,the l.D. Act.
c Where the competition is between these two Acts, therefore, the
L. I. C. Act must be regarded as a special law and (in comparison
thereto) the I. D. Act as a general law.
8. Proposition (b) is equally insupportable even if the I. D. Act
is regarded as a special law in comparison to the L. I. C. Act. The
P High Court appears to have somehow tried to apply the maximum
generalia specialibus non derogant to the situation with which it was
concerned. But does that maxim lead to the proposition under dis-
cussion?
The general rule to be followed in. the case of a conflict between
E two statutes is that the later abrogates the earlier one (Leges poste-
riores priores contrarias abrogant). To this general rule there is
a well known exception, namely, generalia specialibus non derogant
(general 1hings do not derogate from special things), the implications
of which are thus stated succinctly by Warl Jowitt in 'The Dictionary
of English Law' :
F
"Thus a specific enactment is not affected by a subsequent gene-
ral enactment unless· the earlier enactment is inconsistent with
the later enactment, or unless there is some express reference in
the later enactment to the earlier enactmeni~, in either of which
cases the maxim leges posteriores priores contrarias abrogam
,G applies."
In other words a prior special Jaw would yield to a later general Jaw,
,if erther of the following two conditions is satisfied :
(i) The two are inconsistent with each other.
(ii) There is some express reference in the later to the earlier
enactment.
If either of these conditions is fulfilled the later law, even though
general, will prevail. '

•
LIFE INSURANCE CORPORATION v. D. J. BAHADUR (Koshal, J.) 1155

The principles enunciated in Chapter 9 of 'Maxwell on the A
Interpretation of Statutes' are to the same effect ;
"A later statute may. repeal an earlier one either expressly or by
inmlication. But repeal by implication is not favoured by the
courts .......... If, therefore, earlier and later statutes can
reasonably be construed in such. a way that both can be given B
effect to, this must be done. . . . . . . . . . If, however, the provi-
sions of a later enactment are so inconsistent with or repugnant
IO the provisions of an earlier one that the two cannot stand
together, the earlier is abrogated by 1the iater ............... .
Wherever Parliament in an earlier statute has directed its attention
IO an individual case and has made provision £or it unambiguously, c
there arises a presumption that if in a subsequent statute the
Legislature lays down a general principle, that general principle
is not ,to be taken as meant to rip up what the Legislature had
before provided for individually, unless an intention to do so is
specially declared." (emphasis supplied)
D
-The same principles have been thus reiterated in Chapter 15 of
· 'Craies on Statute Law :
"Parliament, in the exercise of its supreme legislative capacity,
can extend, modify, vary, or repeal Acts pa~d in the same or
previous ses&ions ............ The provisions of an earlier Act
E
may be revoked or abrogated in particular cases by a subsequent
Act, either from the express language used being addressed to the
particular point, or from implication- or inference from the
language used .......... -.. Where two Acts are inconsistent or
repugnaI11t the latter will be read as having impliedly repealed
1
,

)- ·the earlier. The court leans against implying a repeal; unlt<sS two .F
Acts are so plainly repugnant to each other that effect cannot _be
given to bo;th at the same time, a repeal will not be implied.
Special Acts are not repealed by general Acts unless there .is a
necessary inconsistency in the two Acts standing together. The
latest expression of the will of Parliament must always prevail. It
does not matter whether the earlier or the latter enactment · is G
public, local and personal, or pr.ivate, or is penal or deals with
civil rights only, and the rule is equally applicable to Orders in
Council or Rules of Courts if they have statutory force and are
made under .authority empowering. the rule-makers to supersede
prior enactments as to procedure. Before coming to 1the conclu-
sion that there is a repeal by· implication the court must be satis- H
fied that the two enactments are so 'inconsistent or repugnant th at
they cannqt stand together before they can, from the Language of
1156 SUPR'E.ME COURT REPORTS [1981] 1 S.C.R.

the later, imply the repeal of an express prior enactmellj:-i.e.,
the repeal must, if not express, flow from necessary implication ..
. . . . . . . . . . . . But the rule must not be pressed too far, for, as
Bramwell L. J. said in Pe/las v. Neptune Marine Insurance Co.,
(1880) 5 C. P. D. 34 (40), 'a general statute may repeal a
particular statute.' And if a special enactment, whether it be in
a public or a private Act, and a subsequent general Act are
absolutely repugnant and inconsistent with one another, the courts
have no alternative but to declare the prior special enac.tment
repealed by the subsequent general Act."

The criteria deducible from the texts of the three. standard work!!
c just above quoted are state<l below :
. (i) The legislature has the undoub'.ed right to alter a law already
promulgated by it through subsequent legislation.
(ii) A special law may be altered, abrogated or repe~led by a
later general Jaw through an express provision.
])
(iii) A later general law will override a prior special law if the
tiwo are so repugnant to each other that they cannot co-exist
even though no express provision .in that behalf is found in
the general law.
~
{iv) It is only in the absence of an express provision to the. con-
E trary and of a clear inconsistency a special law will remain
wholly unaffected by a later general law.
So Jet us see whether proposition (b) forming part of conclusion
I arrived at by the High Court conform to these criteria. As already
noticed section 11 is one of the provisions of the L. I. C. Act which
F deal· witll >terms and conditions of servioe of the, employees of the
· Corporation. Sub-section ( 1) of .that section declares that in so far as
a transferred employee is concerned, he shall "hold his office therein
by the same tenure, at the same remunerntion and upon the same terms
and conditions ............ as he would have held the same ..... .
. . . . . . if this Act had not been passed ...... ". This provision does
G
certainly not exclude the application of the I. D. Act and on the other
hand, preserves it in so far as it finds expression in the condition~
· of service of the concerned transferred employee prior to his absorp-
.,
tion in the Corporation. But the sub-section does not stop there
and specifically qualifies and limits the provision thus :
H .......... , . unless and until his employment in the Corporation
is terminated or until .his remunerative terms and conditions are
duly altered by the Corporation."
LIFE INSURANCE CORPORATION v. D. J. BAHADUR (Koshal, J.) 1157

This qualification gives power to the Corporation to "duly alter the A
terms and conditions of service of the transferred employees - and'
obviously means that once such power is exercised, 'the duly altered'
terms and conditions of service shall replace those hither.tofore govern-
ing such employees. That this is what sub-section ( 1) clearly means
was thus stated by Gajendragadkar, J., (as he then was) in Life
Insurance Corporation of India v. Sunil Kumar Mukherjee & Ors,(1) B'

"The scheme of section 11 ( 1) is thus clear. With the transfer of
the controlled business from the insurer to the Corporation, the
employees of the former became the employees of the latter, but
they were governed by ~he s::1me terms and conditions until they c
were altered by the latter." (emphasis supplied)

Now the word 'duly' means properly, regularly or in due manner.
In the context in which it is used it may legitimately ·be given even a
more restricted meaning, namely, in accordance with law. The case D
put forward on behaif of. the employees is that the only law contem-
plated here is the I. D. Act specially because the non-.obstante clause
occurring in sub-section (2) does not govern, and is conspicuous by
its absence from, sub-section ( 1) and that the expression "by the
Corporation" does not mean "by the Corporation unilaterally". This
contell/lion is devoid of force for ,tJhe simple reason that if reJJerence to E
the provisions of the I. D. Act · alone was contemplated and the
alterations envisaged were merely such as could be achieved by a
settlement or award resulting from a compliance thereof, not only
wou~d the expression "by 1the Corporation" become redundant (which
would not be a situation conforming to the well-known principle of
interpretation of statutes. that a construction which leaves without F
effect any part of the language of a statute will normally be rejected)
but the express provisions of clause (bb) o~ sub-section (2) of section
49 of the L. I. C. Act, which invest 1the Corppratioq. with power. to
make regulations (albeit with the approval of the Central Government)
laying down ·the terms and conditions of service of .the transferred
employees, would also be rendered otiose. To the extent, therefore,
that section 11 ( 1) read with that clause confers on the Corporation
the power to alter the terms and conditions in question-a power not
enjoyed by it under the provisions of the I. D. Act-rt is inconsistent
with the I. D. Act and being a later law, would override that Act
despite the absence of the non-obstante clause, the inconsistency h.av- H
. ing arisen from express '1anguage and not from mere implication.
(1) [1964] 5 S.C.R. 528.
13-6-S C India/ND/81
1158 SUPREME COURT REPORTS [1981] 1 S.C.R.

A But the matter does not end here as sub-sections ( 2) and ( 4)
of section 11 and clause (b) of sub-section (2) of section 49 of the
L. I. C. Act pose other insurmountable hurdles in the way of the
acceptance of proposition (b). The scope of sub-section (2) of
section 11 was stated in Life Insurance Corporation of India v. Sunil
B Kumar Mukherjee & Ors (supra) by Gajendragadkar, J., in the
following, terms :
"Section 11 (2) as it originally stood was substantially modified
in 1957, and the plain effect of ,the provisions contained in the __ ),'
said sub-section as modified is that the Central Government is
c given the power to alter (whether by way of reduction or other-
wise) the remuneration and the other terms and conditions of
service to such extent and in such manner as it thinks fit. It
is significant th~ this power can be exercised by the Centrat
Government notwithstanding anything contained in sub-section
tl) or in the lndust:rial Disputes Act, 1947, or in any other law,
D ur in any award, settlement or agreement for tfie time being in
. force. It was thought that for a proper functioning of the Cor-
poration it was essential to confer upon the Central Government
an overriding power to change the terms and conditions of
employees who were wholly or mainly employed by the insurers
prior to the appointed day. Having conferred such wide power
E on the Central Government, section 11 ( 2) further provides that
if the alternation made by the Central Government in the terms
and conditions of his service is not acceptable to any employee,
the Corporation may terminate his employment by giving him
compensation equivalent to three months' remuneration unless
F the contract of service with such employee provides for a shorter -~-
notice of termination. lit is --thus clear that in regard to cases
fall under section 11(2), if as a result of the alteration made by
the Central Government any employee does not want to work
with the Corporation, he is given the option to leave its employ-
ment on payment of compensation provided by the last part of
G section 11 ( 2) . Thus, the scheme of the two sub-sections of
section 11 is clear. The employees of the insurers whose con-
trolled business has been taken over, become the employees of
the Corporation, ,then their terms and conditions of service
continue until they are altered by the Central Government, and
if ,the alteration made by the Central Government is not accept-
H able to them, they are entitled to leave the employment of the
Corporaition on payment of compensation as provided by section ·
11(2)." (emphasis supplie.d) , _, =i
LIFE INSURANCE CORPORATION v. D. J. BAHADUR (Koshal; J.) i'l 59

In other words sub-section (2) of section 11 not only given to A
the Central Government the power to alter the terms and cond1tions
of service of the employees of the Corporation in certain situations,
. and to alter them even to the detriment of such employees, to such
·extent and in such manner as it thinks fit, but also states in so many
words that such power shall be exercisable--
B
"Notwithstanding anything contained in sub-section ( 1) or in
the Industrial Disputes Act, 1947 or in any Other law for the
time being in force, or in any award, settlement or agreement for
the time being in force." ·
The mandate of the legisla:ture has been expressed in clear and
unambiguous terms in this non-obs.fanre clause and is to the effect that c
the power of the Central GovernmeDlt to alter conditions of service
of the employees of the Corporation shall be wholly unfettered and
that any provisions to the contrary contained in the I. D. Act or for
that matter, jn any other law for the time being in force, or in any
award, settlement, or agreement for the time being in force, would
not stand in the way of the exercise of that power even if such D
exercise is to the detriment of the employees of the Corporation .. The
conferment of the power in thus 1n express supersession of the I. D.
Act and of any settlement made thereunder. The provisions of that
Act and the two settlements of 197 4 must, it~erefore, yield to the
. dictates ofl section 11 ( 2) and to the exercise of the power conferred
E
thereby on the C.entral Government.
Sub-section ( 4) of section 11 is again illuminating as in the
matter of compensation to be paid to a transferred employee It pro-
vides specifically that 1the provisions of sub-section (2) of that section
shall override those of the I. D. Act and of any other law for the
time being in force and tilrnt no claim to· the contrary shall be enter- F
tained by any court, .tribunal or other authority. In the face of an
ellipress provision like this it is not open t:o the employees to contend
that the law laid down in the I. D. Act and not sub-section (2) of
.section 11 would govern them.
The rule-making power conferred on the Corporation by section
49 of the L. I. C. Act must also ·be· held to be exercisable notwith-
standing the provisions. of the I. D. Act. In clause (b) of sub-section
'( 2) ~hereof tlhe method of recruitment of employees anti agents of
the Corporation and the terms and conditions of their service are
stated to be matters which the Corporation may deal witlh through
regulations subject, however, to the previous approval of the Central H
Government. This power is expressly conferred on the Corp.o-
ration in addition to that with which it is invested under clause (bb)
l l'.60 SUPREME COURT REPORTS [1981] 1 S.C.R.

A of the same sub-section. If these two clauses were not meant
to override the provisions of the I. D. Act on the same subject
they would be comp.letely meaningless, .and that is a situation, as
already pointed out, running directly counter to one of the accepted
principles of interpretation of statutes. Besides, these ,two clauses are
not to be read in isolation from section 11. The subject matter of
B tihe clauses and the section is ove1lapping and together they form an
integrated whole. The clauses must, therefore, be read in the light
of section 11. Sub-section (1) of ~hat section confers power on the
Corporation to alter tihe terms and conditions of service of the trans-
ferred employees and by necessary implicatio~ gives a go-bye to the
I. D. Act which is again expressly superseded by sub-section (2) of
c ·that section in so far as the Central Government; has been invested
with the power in Ct~rtain circumstances to vary the terms and condi-
tions of service of tihe Corporation's employees. When the two
clauses, therefore, say that the Corporation shall have the power to
frame regulations in regard to the terms aind conditions of its employees
D ' inclu,ding transferred employees, subject, of course, to previous
approval of the Central Government, the ·power may well be exercised
in conformity with the provisions of section 11. And if it is so
exercised the resultant regulations cannot be said to go beyond the
limits specified in the statute. In ~his view of the matter Hukam
Chand etc. v. Union of India and others,( 1 ) and B. S. Vadera. v.
E Union of India & Ors;( 2 ) which lay d_own that the authority vested
with the power of malting subordinate legislation must act within the
limits of and cannot transgress its power, are of l).O help to the case
of the employees on whose behalf they have been cited.
Another proposition put forward by learned counsel for the
employees may be: noticed here. It was contended that section 49
F
conforms on the Corporation "ordinary" powers of framing &ubordi-
nate legislation and that the Corporation has not been invested with ·
any right to unilaterally promulgate a regu:!ation altering tlle condi-
tions of service of its employees to their detriment and that such
regulations cannot override the provisions of the 'I. D. Act and the
G settlements reached the'teunder. Reliance for the proposition was
placed on U. P. State Electricty Board and Ors. v: Hari Shanker Jain
and Ors.( 3 ) and Bangalore Water-Supply & Sewerage Board, etc. v.
R. Rajappa & Others,( 4 ). In the former the case of the employees
was that they were governed by the Industrial Employment (Standing
H Orders) Act which, according to them, was a speci1:1l Act laying down
-(1) A.1.R.-:-!972 S.C. 2427.
(2) [1968] 3 S.C.R. 575.
(3) [1979] 1 S.C.R. 355.
(4) [1978] 3 S.C.R. 207.
LIFE INSURANCE CORPORATION' v. D..J. BAHADUR (Kasha/, J.) 1161

provision in relation: to their conditions of service and which could A
no~, therefore, be superseded by section 79 of the Electricity Supply
Act, 1948. In holding .that the section last mentioned was a general
.> law which did not ove~ride the provisions 0£ the Industrial Employment
(Standing Order) Ac!', this court observed :

"Chapter VII (from section 70 to section 83) which is headed B
"Miscellaneous" contains various rnisce_llaneous. provisions
amongst which are section 78 which empowers the Government
1
to make rules and section 79 which empowers the Board .to make
regulations in respect of matters specified in clauses (a) to (k)
of that section. Clause ( c) of section 79 is 'the duties of Officers
and servants of the Board, ~nd their salaries;, allowances and c
other conditions o1' servic~'. This, of c~mse is no more tha,n the
ordinary general power, with. which every employer is invested in
the first instance, to regu,late the conditions of service of his
employees. · It is an ancillary or incidental power of every em-
ployer. The Electricity Supply Act d~es nou presume to be D
an Act to regulate the conditions of service of the employees of
State Electricity Boards. It is an Act to regulate the coordi-
nation Development of electricity. It is a special Act in
regard to the subject of development of electricity, even as the
Industrial Employment (Standing Orders) Act is a speda! Act
in regard to the subject of conditions of service of workmen m E
industJrlal establishments. If section 79 ( c) of the Electricity
Supply Act generally provides for the making of regulations pro-
viding for the conditions of service of the employees of the Board,
it can only be regarded as a general provision whith must yield
)._ to the special provisions of the Industrial Employment (Standing
/ F
Orders) Act in respect of matters covered by the latter Act."

Quite clearly there was no provision in the Electricity Supply Act
-such· as we find in section 11 of the L. I. C. Act which, as already
shown, is a special law in relation to the terms and conditions of
service of ·the employees of the Corporation very much in derogation
.of what the I. D. Act Jays .down and the case cited, therefore, presents G
~o parallel to th~ case in hand.

Jn Bangalore Water-Supply & Sewerage Board, etc. v. R. Rajappa'
&. Others (supra) the question was whether.the employees of a·statu-
fory Corporation would or would not be ·governed by the provisions H
of the I. D. Act. The question was answered in· the affirmative by
.this Court and Beg, C.J ., while concurring wi~h Bhagwati, Krishna
Jyer and Desai, JJ., on that point, observed :
1162 SUPREME COURT REPORTS [1981] 1 S.C.R.

A "I am impressed by the argument that certain public utility ser-
\_ vices which are c:arried out by governmental agencies or corpora-
tions are treated by the Act! itself as within the sphere of industry.
If express rules under other enactmenes govern tne relationship '°'
between the State as an employer and iM servants as employees
it may be contended; on ·the s~ren~th of such provisions, that a
B particular set of employees are ouMide the scope of the Industrial
Disputes Act for that reason. The special excludes the applicabi-
lity of the general. We cannot forget that we have to determine
the meaning of the term 'industry' in the context of and for the
purposes of matters provided for in the Industrial Disputes. Act ___,.(
only .................. Hence, no artificially exclude State-run
c industries from the sphere of the Act, unless statutory provisions,
expressly or by a necessary implication, have that effect, . would ~
not be correct." (emphasis supplied)

Far from assisting the case of the employees these observations
only support the conclusion arrived at by me above in as much as.
D
they specificitlly state that if express provision has been made under a
particular enactment governing the relationship. of an employer and
his employees, such special provision would govern those employees in
supers·ession of the dictates of the I. D. Act.
9. I thu~ hold that section 11 and clauses (b) and (bb)' of sub-.
E . section (2) of section 49 of the L. I. C. Act were inl!ended to be and
do constitute an exhaustive and overriding law governing the condi-
tions of service of all employees of the Corporation including transfer-
red employees. Proposition (b) forming part of conclusion I is
consequently found to be incorrect.
F 10. Conclusion I reached by the High Court being faulty in both
its material aspects, the three corollaries flowing from it and set out
above as part of conclusion II must also be held to be unsustainable.
Section 23 of the L. I. C. Act, envisages employment of persons
by the Corporation no doubt implies settlement of conditions of >"ervice
G but that does not mean that once a settlement is arrived at the same
is not liable to be altered except by another settlement reached under
section 18 of the I.. D. Act. As already pointed out the provisions of
sub-sections ( 1), ( 2) and ( 4) of section 11 of the L. I. C. Act and
clauses (b) & (bb) of sub-section (2) of section 49 thereof have
overriding effect and the terms and conditions of service of the em-
H ployees of the Corporation forming part of a settlement under the
I. D. Act cannot last after they have been 'altered in exercise :Jf the
powers conferred on the 'corporation or the Central Government by
i::-: - ;...;'

LIFE INSURANCE CORPORATION v. D. J. BAHADUR (Koshal,.J.) 116~

those provisions, as was done when the new regulation 58 was framed A
under section 49 by the Corporation and the new clause 9 was
inserted in the 1957 Order .by the Central Government. Nor can any
acti'on taken under sections 19(2) and 9A of the I. D. Act have any
relevance to the exercise of those powers so long as such exercise
. conforms to the provisions of the L. I. C. Act. B

Conclusion II is, therefore, held to be erroneous in its entirety.
11. Conclusion III als9 does not stand scrutiny as the reliance
of the High Court on Madan Mohan Pathak's case (supra) for
support to proposition (b) stated above is wholly misplaced. c
That case was decided by a Bench of seven judges of .this Court
before whom were canvassed two main points which were thus
crystallized by Bhagwati, J., who delivered the judgment on behalf
of himself, Iyer and Desai, JJ. :
"A. The right of class III and Class IV employees to
annual cash bonus for the years 1st April, 1975 to 31st March, D
1976 and 1st April, 1976 to 31st March, 1977, under clause
8(ii) ofthe Settleme0:t was property and since the impugned
Act provided for compulsory acquisition of this property without
payment of compensation, the impugned Act was violative of
1
Article 31(2) of the Constitutron and was hence null and void."
E
"3. The impugned Act deprived Class III and Class IV
employees of the right to annual cash bonus for the years 1st
April, 1975 to 31st March, 1976 and 1st April 1976 to 31st
March, 1977, which was vested in them under clause 8(ii) of
the Settlement and there was, therefore, clear infringement of
~. their fundamental right under Article 19 (1 )( f) and since this F
/ deprivation of the right to annual cash bonus, which was
secured under a Settlement arrived at as a result of collective ·
bargaining and .with full and mature deliberation on the part
of the Life Insurance Corporation and the Central Government
after taking into account the interests of the policy-holders and
G
the community and with a view to approximating towards the
goal of a Irving wage as envisaged in Article 4 of the Consti-
tution, amounted to an unreasonable restriction, the impuged
Act was not saved by Article 19(5) and hence it was liable
to be struck down as invalid."
In relation to point A the argument raised on behalf of the
Corporation was that under the then existing regul~tion 58 the grant H
of annual cash bonus was subject to such directions as the. Central ./ .
Government might issue and that the right of Class III and Class IV
1164 SUPREME COURT REPORTS [1981] 1 S.C.R.

A employees to receive such bonus could not therefore be said to be
an absolute right which was not liable to be set at naught by any
direction that might be issued by the Central Government. Bhagwati,
J., appreciated the force of regulation 58 and remarked :

"Regulation 58 undoubtedly says that non-profit sharing bonus
B
may be granted by the Life Insurance Corporation to its em-
ployees, subject to such directions as the Central Government
may issue and, therefore, if the Central Government issues a
direction to the contrary, non-profit sharing bonus cannot be
granted by the Life Insurance Corporation to any class of .J
c .~ employees."

He further observed, however :

"But here, in the present case, grant of annual cash bonus by
the Life Insµrance Corporation' to Class III and Class IV
D ·employees undecr Cl. 8(ii) of the Settlement was approved by
the Central Government as provided in Cl. 12 and the 'direction'
contemplated by Regulation 58 was given by the Central
Government that annual cash bonus may be granted as provided
in Cl. 8 (ii) of the Settlement. It was not competent to the
· Central Government thereafter tO' issue another contrary direction
E which would have the effect of compelling the Life Insurance
Corporation to commit a breach of its obligation under S. 18,
sub-s. ( 1) of the Industrial Dispute~ Act, 1947 to pay annual
cash bonus in terms of Cl. 8(ii) of the Settlement."

F It was further held by Bhagwati, J., that clause 8 (ii) was a clause
independent of clause 8 (i) and was subject only to the approval
mentioned in clause 12(2) which, as already pointed out, had been
accorded by the Central Government He went on to hold that
the right to bonus for the two years (1st April, 1975 to 31st
March, 1976 and 1st April, 1976 to 31st March, 1977) was property
'G of which the· concerned employees · could not be deprived without·
adequate compensation. Repelling another argument advanced on
behalf of the Corporation, Bhagwati, J., held that the extinguishment
of the right to bonus really meant a transfer of ownership to the
Corporation of the debt available to the employees under that right
and that such extinguishment amounted to acquisition of property
H without compensation so that it was hit by article 31(2) of the
Constitution of ·Tndia. In view of this conclusion Bhagwati, J.,
considered it unnecessary to consider point B.
\
LIFE INSURANCE CORPORATION v .•)j, / BAHADUR (Koshal, 1.) 116 5

. 1Chandrachud, Fazal Ali and Shinghal, JJ., agreed with the conclu-- A
sion arrived at by Bhagwati, J., on point A. Beg, C.J., however,
delivered a separate judgment seriously doubting the correctness of
the proposition enunciated by Bhagwati, J., that the extinguishment
of the right to bonus amounted to acquisition of property, and
deciding point B in favour of the employees with a finding that in
view of the provisions of article 43 of the Constitution the 1976 :Act B
was vitiated by the provisions of artic)e 19 (1) ( f) of the Constitution
and was not saved by clause (6) of that article. Beg, C.J., was
further of the opinion that the 1976 Act was violative of article 14
of the Constitution.
c.

Three factors are no!eworthy :

(a) Points A and B detailed above were specifically limited to
the duration of the s'ettlements as appearing ;in clause 12
thereof and the judgment, therefore, . does not cover any D
period subsequent to 31st March, 1977, as has been rightly
contended by learned counsel for the Corporation.

(b) No finding at all was given nor was any observation made
by Bhagwati, J., to the effect that sections 11 and 49 6.f the
L.I.C. Act or the action taken thereunder (the promulgation E
of the new regulation 58 and the new clause 9 of the 1957
Order) was ineffective against the operation of the. provisions
of the I.D. Act or of the 1974 settlements. On the other
hand, his judgment very spe~ifi~~lly proceeded ori the ground
that the two settlements had to and did fully conform to the
proviS.ions of regulaJ.'ion 58 in as much as the Central Gov- F
ernment had accorded its approval to.them. The High Court
thus not only erred in observing that those settlements had
been upheld by this Court "even though it did not advert
to regulation 58", but also failed to take notice of the clearly
expressed opinion of Bhagwati, J., that bonus under the two
G
settlements could not have been paid if they had run counter
to the reqwirements of regulation 58. Far from supporting
corollary (b) of conclusion II, therefore, Madan Mohan
Pathak's case rules to an opposite effect.

( c) Although Bhagwati, J., did hold clearly (and, if I may H
say so with all respect, quite correctly) that sub-clause
(ii) of clause 8 of the 1974 settlements stood independently
of sub-clause (i) thereof, his judgment contains no finding

/ ...
'··"""·
1166 SUPREME COURT REPORTS [1981] 1 S.C.R.

A whatsoever to the effect that the conditions of service laid
down in those settlements could be varied only by a fresh
settlc~ment or award made under the provisions of the
I.D. Act and that till then sub-clause (ii) aforesaid would
remain in full force. The High Court clearly erred in
observing that such a finding formed part of the majority
B judgment in Madan Mohan Pathak's case.
Conclusion III also, therefore, is negatived.
12. We now take up for consideration the High Court's con-
clusion IV which is based on the interpretation of section 19 of the .J
I.D. Act by this Court in South Indian Bank Ltd. v. A. R. Chacko
c (supra). That section may with advantage be extracted here in
extenso for facility of reference : -r
"19 (1 ) A settlement shall come into operation on such
date as is agreed upon by the parties to the dispute, and if no
date is agreed upon, on the date on which the memorandum
D of the settlement is signed by the parties to the dispute.
" ( 2) Such settlement shall be binding for such period as
is agre.;:d upon by the partie!>, and if no such period is agreed
upof!., for a period of six months from the date on which the
memorandum of settlement is signed by !he parties to the dispute,
E and shall continue to be binding on the parties after the expiry
of the period aforesaid, until the expiry of two months from the
date on which a notice in writing of an intention to terminate ~
the settlement is given by one of the parties to the other party
or parties to the settlement. · ,

F
" ( 3) An award shall, subject to the provisions of this ---<
section, remain in operation for a period of one year. from the
date on which the award becomes enforceable under section 17A :
"Provided that the appropriate Government may reduce
the said period and fix such period as it thinks fit :
"Provided further that the appropriate Government may,
G
before the ·~xpiry of the said period, extend the period of
operation by any period not exceeding op.e year at a time as
it thinks fit so, however, that the total period of operation of any
award does not exceed three years from the date on which it
came into operation.
H "(4) 'Vhere the appropriate Government, whether of its
own motion or on thb application of any party bound by the
award, considers that since the aw~rd was made, there has been
LIFE INSURANCE CORPORATION v. D. J. BAH'ADUR (Kasha/,!.) 1167

a material change in the circumstances on which it was based, A
the appropriate Government may refer the award or a part of
it to a Labour Court, if the award was that of a Labour Court
or to a Tribunal, if the award was that of a· Tribunal or of
a National Tribunal for decision whether the period of opera-
tion should not, by reason of such change, be shortened and
the decision of Labour Court .or the Tribunal, as the case may B
be, on such reference shall be final.
"(5) Nothing contained in sub-section (3) shall apply to
any award which by its nature, terms or other circumstances
does not impose, after 'it has been given effect to, any continuing
obligation on the parties bound ltJy the award. c
"(6) Notwithstanding the expiry of the period of opera-
tion under sub-section ( 3), the award shall continue to be
binding on the parties until a period of two months has elapsed
from the date on which notice is given by any party bound
by the award to the other party or parties intimating its intention
to terminate the .award. D
"(7) No notice given under sub-section (2) or sub-
section ( 6) shall have effect unless it is given by a party repre-
senting the majority of ·persons bound by the settlement or
award, as the case may be."
Sub-section (2) of the section makes it dear that a settlement E
reached under the I.D. Act shall be binding on the parties thereto-.
(a) for the period agreed upon"and if no such period is agreed
upon for a period of six months from the date on which
the memorandum of settlement is signed by the parties;
and F
(b) for a further period ending with a span of two months
reckoned from the date on which a notice in writing of an
intention to terminate the settlement is given by one of
the parties thereto to the others.
Sub-sections ( 3), ( 4) and ( 5) provide for the period of ope- G
ration of .an award and its extension and reduction, while sub-
section ( 6) lays down that after such period has expired the award
shall continue to be binding on the parties to it for a further period
ending with a span of two months reckoned in the same manner as
the span mentioned earlier.
In so far as the explicit language of the section is concerned
there is no ambiguity involved. The difficulty arises regarding the
period (hereinafter called the 3rd period) subsequent to the date
1168 · SUPREME COURT REPORTS [1981] 1 S.C.R.

A on which the said span of two months expires in either case, because
the I.D. Act is silent about it and it is that difficulty which this
Court resolnd in Chacko's case. The parties before the Court in
that case were the South Indian Bank Ltd. and one of its clerks
named A. R. Chacko who had been promoted as an accountant with
effect from the 13th July 1959 and claimed certain allowances for
B
periods subS<!quent to that date in terms of what' is called the Sastry
awa,rd. On behalf of the Bank reliance was placed on section 4 o{
the Industrial Disputes (Banking Companies) Decision Act, 1955
which runs thus :
"Notwithstanding anything contained in the Industrial
c 0

Disputes Act, 1947, or the Industrial Disputes (Appellate Tribu-
1 nal) Ac:t, 1950 the award as now modified by the decision of
the Labour Appellate Tribunal in the manner referred .to in
section 3 shall remain in force until March 31, 1959."
and a contention was raised that the non-obstante clause contained
D in this section made the provisions of sec'.ion i 9 ( 6) of the I.D. Act
inapplicable to the Sastry award which therefore, became dead for
all purposes after the 31st March, 1959. Repelling the contention
this Court observed :
"The effect of section 4 of the Industrial Disputes (Banking
E
Companies) Decision Act is that the award ceased to be in
· force after March 31, 1959. That however has nothing to do
with the quef.tion as to the period for which it will remain
binding on thl:: parties thereafter. The provision in section 19 ( 6)
as regards th(~ period for which the award shall continue to be
binding on the parties is not in any way affected by section 4
F of the Industrial Disputes (Banking Companies) Deeision Act,
1955."

The Court then proceeded to consider specifically the situation
that would ()btain in the 3rd period in relation to an award and held :
"Quite apart from this, however, it appears to us that
G even if an award has ceased to be in operation or in force and
has ceased to be binding on the parties under the prov1s1ons
of sect10n 19 ( 6) it will continue to have its effect as a contract
between the parties that has been made by industrial adjudica-
tion in place of the old contract. So long as the award remains
in operation under section 19(3), section 23(c) stands in the
way of any strike by the workmen and lock-out by the employer
H in respect of any matter covered by the l!_Ward. Again so long
as the award is binding on a party, breach of any of its terms'
0LIFE INSURANCE CORPORATION v. D. J, BAHADUR (Koshal, J.) 1169

will make the party liable to penalty under section 29 of the A
A:ct, to imprisonment which may ext~d to six months or
with fine or with both. After the period of its operation and
also the period for which the award is binding have elapsed
section 23 and section 29 can have no operation. We can
however see nothing in the scheme of the Industrial Disputes .
Act to justify a conclusion that merely because these special
provisions as regards prohibition of strikes and lock-outs and
of penalties for breach of award cease to be effectrve the new
contract as embodied in the 'award should also cease to be
·~. effective. On the contrary, the very purpose for which industrial
adjudication has been given the peculiar authority and right of
mak!ng new contracts between employers and workillen makes c
it reasonable to think .that even though the period of operation
of the award and !he period for which it remains binding on
the parties-in respect of both of which special provisions
have been made under sections 23 and 29 respectively.:._may
expire, the new contract would continue to govern the relations
D
between !he parties till tt is displaced by another contract. The
objection that no such benefit as claimed could accrue to the
respondent after March 31, 1959 must therefore be rejected."
(emphasis supplied)

It is the underlined portion of this paragraph which impelled , E
the High Court to come to the conclusion that even a notice under
section 19(6) of the I.D. Act would not terminate a settlement
(which, according to the High Court, stands on t.he same footing
as an award and, in fact is indistinguishable therefrom for the pur-
pose of section 19) but would have the effect of merely paving the
way for fresh negotiations resulting ultimately in a new settlement- F
a conclusion which has been seriously challenged on behalf of the
Corporation with the submission that Chacko's case has no applica-
tion whatsoever to the present controversy in as much as the special
law comprised of section 11 and 49 of the L.l.C. Act fully covers
the situation in the 3rd period following the expiry of the 1974
settlements. The submission is well based. In Chacko's case this G
Court was dealing with the provisions of the l.D. Act alone when
it made the observations 'last extracted and was not concerned with
a situation which would cover the 3rd period in relation to an
award (or for that matter a settlement) in accordance with a
specific mandate from Parliament. The only available course for
filling the void created by the Sastry award was a continuation of its H
terms till they were replaced by something else legally enforceable
which, in the circumstances before the Court, could only be another
,
1170 SUPREME COURT REPORTS [1981] 1 S.C.R.

A contract (in the shape of an award or a settlement)' there being no
legal provision requiring the void to be filled otherwise. In the
present case the law intervenes to indicate how the void which
obtains in (he 3rd period shall be filled and, if it h~s b~n so filled,
there is no question of i~,s being filled in the manner indicated in
Chacko's case wherein, as already pointed out, no such law was
B available. The observations in that case must thus be taken to
mean that the expired award would continue to govern the parties
till it is displaced by another contract or by a relationship otherwise
subs1'ituted for it in accordance with law.

13. Indian Unk Chain Manufacturers Ltd. v. Their Work- ___/
c men ( 1 ) which also the High Court pressed into service in arriving •
at conclusion IV is really not relevant for the present discussion as
it deals only with the two periods expressly covered by sub-sections -~

(2) and (6) of section 19 of the I.D. Act and not at all with the
3rd period. The same is true of Shukla Manseta Industries Pvt. Ltd.
v. The Workmen Employed under it (2) in which the only questfon
D canvassed before the Court and answered by it was whether the
law required that notice of termination under section 19(2) had to
be given only after the date of expiry of a settlement. However, it
may be pointed out that in both those cases as also in Haribhau
Shinde and another v. F. H. Lala lndusi'rial Tribunal, Bombay and
another,( 3 ) which has been relied upon by learned counsel for the
E employees, this Court was not concerned with any special law as
I find in a 1;ombined reading of sections 11 and 49 of the L.I.C.
'Act; and for that reason also none of these three decisions is of any
assistance for the determination of .the point in controversy before us.

14. Some arguments were addressed to us on a proposition
F advanced by .learned counsel for the Corporation to the effect that
a settlement could not be treated at par with an award for the
purpose of the I.D. Act and that Chacko's ca~e, therefore, could
furnish no proper basis for the High Court's conclusion IV. I do
not propose to deal wit:h that proposition which is merely of academic
interest in view of the material distinction already pointed out,
G namely, that in the present case there is a special _mandate by
Parliament to fill the void of the 3rd period which did not obtain
in Chacko's .;ase. However, I may briefly dwell on another aspect
of the same distinction and. that consists of the circumstance that
while in Chacko's ease the employer was the South Indian Bank
H (I) [1972] 1 S.C.R. 790.
(2) [1978] I S.C.R.. 249.
(3) A.I.R. 1970 Bom. 215.
LIFE INSURANCE CORPORATION v. D. J. BAlIADUR (Koshal, J.) 1171

Ltd.-a non-statutory banking company-the employer before us A
now is the creation of the L.I.C. Act itself and therefore a statutory
corporation. This circumstance coupled with the contents of the
L.I.C. Act leads to the following deductions, as laid down in Suchdev
Singh & Ors v. "Bhagatarm Sardar Singh Raghuvanshi and anr.(1 ).
(a) The Corporation carries on .the exclusive business of life
insurance as an agency of the Government by which it is B
managed and which alone can dissolve i!. It is, therefore,
an authority within the meaning of article 12 of the Consti-
tution of India. The status of persons serving the Corpora-
tion thus carries with it the element of public e~ployment.
(b) The · L.l.C. Act enables the Corporation io make· regula- c
tions which may provide, inter alia for the terms and condi-
tions of service of its employees. Such regulations cannot
be equated with those framed by a company incorporated
under the Companies Act and, on the other hand, have
the force of law which must be followed both by the Corpo-
ration and those who deal with it. D
. It is obvious that an application of these deductions to the situa-
tion prevailing in the present case would rule out the relevance of
Chacko's case because regulation 58 framed under section 49 of
the L.l.C. Act specifically governs the 3rd period following the
expiry of the 1974 settlements. E
15. I need not go into the correctness or otherwise of conclusion
V reached by the High Court as no arguments in relation thereto
were addressed to us. I shall now proceed, however, to discuss
certain other contentions raised before us on behalf of tihe employees
although the same were not canvassed before the High Court.
F
16. Jt was argued that both sub-sect;ions (1) and (2) of
section 11 of the L.I.C. Act relate exclusively to the case of
employees. and that sub-section (2) does not embrace the case of
, employees recruited under section 23. In this connection an
analysis of section 11 would be helpful. In so far as sub-section
( 1) is concerned it is quite clear that it cannot b<,: extended to cover G
employees recruited under section 23, and that it is restricted in its
operation only to the transferred employees. This follows from the
clear language used. Sub-section (2) howe-:er, is differently worded.
It may be split up as follows :
(a) The Central Government may alter (whether by way of H
reduction or otherwise) the remunera!ion and the other
(!) [1975] 3 S.C.R. 619.
. 1172 SUPREME COURT REPORTS [1981] 1 S.C.R.

A terms and conditions of service (of .............. ) to
such extent and in such manner as it thinks fit.
(b) The Central Government may take the action detailed in
(a) above notwithstanding anything contained in sub-
section (1) or the I.D. Act, or in any other law for the
time being in force or in any award, settlement or agreement
B
for the time being in force.
( c) The action detailed in (a) can be taken only if the Central
Government is satisfied -
(i) that fQr the purpose of securing uniformity in the
scales of remuneration and the other terms and condi-
c tions of service applicable to transferred employees, it
is necessary so to do;
or -'!'

(ii) that, in the interests of the Corporation and its policy-
holders a reduction in the remuneration payable or a
D revision of the other terms and conditions of service
applicabl1~, to employees or any class of them is
called for.
According to learned counsel for the employees the expression
"employees or any clru:s of them" occurring in sub-clause (i) of the
E above analysis must be interpreted to mean transferred employees or
any class thereof and the expression does not cover the employees
recruited under section 23. Support for the contention is sought
from the circumstance that the section is not only a part of Chapter
IV of the L.I.C. Act, which _is headed "Transfer of existing Life
Insurance Business to the Corporation" but also carries the marginal
F note -"Transfer of service of existing employees of insurers to the
Corporation". This circumstance is wholly immaterial not only for
the reason that headings of chapters and marginal notes cannot be
looked into for the purpose of ascertaining the intention of the
Legislature unless the language employed by it i§ ambiguous but also·
because the absorption of the transferred employees into the Corpo-
G ration may itself necessitate a change in the conditions of service of
the employees recruited under section 23. It is not disputed that
transferred employees, amongst .themselves, were governed by widely
different conditions of oervice and that was so for the simple reason
that they had come from different companies, each having its own
scales of pay applicabk -to its servants. Then the 1Corporation came
H into existence, recruitment under section 23 need not have waited
for action under section 11(2) and the process of examination of
different scales of pay of the transferred employees as compared to
LIFE INSURANCE CORPORATION v. D. J. BAHADUR (Koshal, !.) '1173

those pertaining to hands recruited under section 23, as also the appro- iA
priate action which .should have been taken as a result of such
examination, was bound to be time-consuming; and the result may
well have entailed a decision to equalise the scales of pay not only
by raising or reducing those of the transferred employees but also ·
those of the employees recruited under section 23. And that appears
to be only reason why the legislature chose the comprehensive B
expression "employees or any class of them" in sub-section (2) in
spice of the fact that not only in sub-sections (1) and ( 4) but also
in sub-section (2) itself the detailed description "employee of an
insurer whose controlled .business has been transferred to and vested
in the Corporation" or words to that effect have been used to denote
a transferred employee. Again, wherev~r a transferred employee
was meant but a detailed description in relation to him was n~t
given, the expression "such employee" was used with reference
to that description. Examples in point are the proviso to sub-
section ( 1) and the latter part of sub-section, ( 4). If .the expression
"employees or any class of ·them" was intended to be restricted to
n
transferred employees, it would certainly have been preceded by the
word 'such' so that it could be referable to the detailed description
of employees of that kind occurring in an earlier part of the sub-
section. From the circumstance that no such device was pressed
into service the conclusion is irresistible that the expression last
mentioned was intended to convey a meaning different from that E
which was deducible from the detailed description otherwise em-
ployed in the section- a conclusion based . on the well-known
principle of interpretation of statutes thus stated by Maxwell in
Ch9pter 12 of his celebrated work earlier cited :
"From the general presumption that the same expression
F
is presumed to be used in the same sense throughout an Act
or a series of cognate Acts, there follows the further presump-
tion that a change of working denotes a change in meaning."
17. The matter may also be looked at from another angle. As
stated in clause ( c) of the above analysis the Central Government
is empowered to take action under sub-section (2) of section U if G
it is satisfied about the existence ·Of either of two conditions. It may
take such action if it is satisfied that for the purpose of securing
uniformity in the scales of remuneration, etc., applicable to trans-
ferred employees it is necessary to do so. But then if no action
is intended to be taken for that purpose it may still be taken provided
the Central Government is satisfied that it is in the interests of the .H
Corporation and its policy-holders to make a· reduction in the
remuneration payable or a revision of the other terms and conditions
14-6 S. C. India/ND/81
1174 SUPREME COURT REPORTS [1981] 1 S.C.R.

A applicable to its employees. Now the first condition which envisa<>es
the securing of uniformity in the scales of remuneration clearly "'
applies to transferred employees only but the sapie is not true of
the second condition. At a particular jun~ture in the life of the
Corporation it may become necessary ·to make a reduction in the
remuneration payable to its employees or a revision of the other
B terms and conditions of service applicable to them. But then this
must follow from the satisfaction of the Government that it is in
the interest of the Corporation and its policy-holders to do so. It is
obvious that this condition envisages the change in conditions of
service, etc., of all the employees of the Corporation and not only
transferred employees. If it were otherwise the §Ub-sectio1,1 may well
c lead to discrimination and render the provision unconstitutional. Even
if, therefore, the expression "employees or any class of them" occurring
- "
in sub-section (2) was capable of being regarded as ambiguous, ,the·
Court would choose !hat interpretation which would conform to the
constitutionality of the provision. This well known principle of
D satutory construction was made use of· by a learned single Judge
of the Calcutta High Court in Himrangsu Chakraborty and others v.
Life Insurance Corporatfon of India and others(1) wherein he dealt
·with sub-section 11(2) thus:

"According to Mr. Chatterjee section 11 (2) of the Act contains
E two limbs. The first limb confers power on the Central Gov-
ernment to revise the terms and conditions of service of the
employees of the Corporation. Its power is, however, confined
only to those employees whose services have been transferred
to and vested in the Corporation by reason of the commence-
ment of the Act. The second limb confers power 011 the
F Central Government to alter the terms and conditions of the
service applicable to all employees of the Corporation irres-
pective of whether they are transferred employees or are directly
recruited after the im;eption of the Corporation. Strong emphasis
is placed on the expression 'terms and conditions of service
applicable to employees of insurers whose controlled business
G has been transferred to and vested in the Corporation' and
'terms and conditions of service applicable to ·employees or any --
class of !hem'. Mr. Chatterjee submits that the latter clause
does not contain the expression 'such employees' and therefore
should be construed to confer a power on the Central Govern-
H ment to alter the conditions of service of .all employees . . . . In
my view, this contention of Mr. Chatterjee i§ sound and should
(1) [1977] Lab. I.C. 622.
LIFE INSURANCE CORPORATION v. D. J. BAHADUR (Koshal, !.) 1175

be accepted. On a plain reading of section 11 (2) of the Act ,A
jt seems to contain two distinct and separate powers. The first
part relates to the power of the Central Government in relation
to "transferred employees" whereas the second part appears to
apply to all employees of the C6fporation irrespective· of whether
they are transferred or directly recruited." '
B
I find myself in complete agreement with this view for the
reasons already stated.
18. In order to steer dear of the above interpretation of
, 'Section 11 (2) learned counsel for the employees put forward · the
:argument that the word 'for' occurring in the section should not be '
read as a disjunctive and should be given the meaning. 'and' so that c
·the two clauses forming the .condi.tions about which the Central
Government has to be satisfied before it can act under the section
:are taken to be one single whole; but we .do not see any reason why
.the plain meaning of the word should be distorted to suit the conve-
nience 'Or the cause of the employees. It is no doubt true that the
word 'or' may be ,interpreted as ,'and' in certain extraordinary D
circumstances such as in a situation where its use as a disjunctive
could obviously not have been intended. (see Maz~gaon Dock' Ltd.
v. The Commis~ioner of lncome~tax and Excess Profits Tax. (1)
Where no compelling reason for Ole adoption of such a course is,
'however, available, the word 'or' must be given its ordinary meaning, E
that is" as a disjunctive, This rule was ,thus applied to the interpre-
. ~·
tation of clause (c) of section 3(1) of the U.P. (Temporary)
iControl of Rent and Eviction Act, 1947 in Babu Manahan Das Shah
,& Ors. v. Bishun Das,( 2 ) by Shelat, J. :

"The clause is couched .in simple and unambiguous language
F
and in its plain meaning provided that it would be a good ground
enabling a ·1andlord to sue for eviction without the permission
of the district Magistrate ,if the ,tenant .has .made or has permitted .
·to be made without the landlord's consent in writing such
construction which materially alters the accommodation or is
likely substantially to diminish it~ value. The language of the G'
clause makes it clear that the legislature wanted to lay down two
alternatives which would furnish a ground to the landlord to
sue without the District Magistrate's permission, that is, where
the tenant has made such construction which would materially
alter the accommodation or wh!ch would be likely to substan-
tially diminish its value. ·The ordinary rule of cpnstruction is H
(1) [1959] S.C.R. 848.
1(2) [1967] 1 s;c.R. 816.
1176 SUPRE~IE COURT REPORTS !"198'1] t S.C.R.
I

A provision of a statut1~ must be construed in accordance with
the language used therein unless there are compelling reasons,
such as where a liter:il construction would reduce the provision
to absurdity or prevent the manifest intention of the legislature
frorri being carried out. There is no reason why the word 'or'
should be construed otherwise than in its ordinary meaning."
B
In my view this reasoning is fully applicable to the case in
hand and .there is every reason why the word 'or' should be given
its ordinary meaning. This was also the view taken by a learned
single Judge of the Madras High Court in K. S. Ramaswamy and·
anr. v. Union· of India and ors.( 1 ), of which I fully approve,
c
19. Still another argument calculated to mould the interpreta-
tion of section 11 (2) in favour of the employees was that the
power conferred on the Central Government by it was intended
to be used only once ancI that too for one purpose, namely, to
achieve uniformity in the scales of pay, etc. In this connection our
D attention was drawn to t\vo factors, namely, that the words 'from
time to time' forming part of the section as it originally stood were
deleted therefrom when it was amended in 1957 and that while the
amendment of the section at that time was under consideration of
Parliament the then Finance Minister had given an assurance in that
E behalf. The argument is wholly unacceptable to me. One good
reason is available in the provisions of section 14 of the General
Clauses Act which runs thus :

"14(1) Where, by any Central Act or Regulation made after
the commencement of this Act, any power is conferred, then ·~
F unless a different intention appears, that power may be exercised
from time to time as occasion requires.

" ( 2) This section applies also to all Central Acts and
Regulations made on or after the fourteenth day of January,
1887~ .
·G In view of the clear language of the· section, no Central law, while
conferring a power, need say in so many words that such power
may be exercised from time to time; and if a, law does make use
of such an expression that would not change the position. The
deletion of such an expression by. the legislature at a given point
of time may, therefore, follow the detection of the superfluity and
H that would not mean, all by itself, that the legislature intended to
(I) [1977] I L.L.J. 21l.
LIFE .INSURANCE CORPORATION v. D. J. BAHADUR (Koshal, !.) 1171

limit the exercise of such power to a single occasion. This i.s precisely A
the view that was taken by this Court in a similar situation in
V asantlal Maganbhai Sanjanwala v. The Stare of ( Bombay. arnf
01'hers(1). In that case the Court was dealing with secion 6(2)
~f the Bombay Tenancy and Agricultural Lands Act, 1948, which
ran thus :
B
"The Provincial Government may, by notification in the Official
Gazette, fix a lower rate of the maximum rent payable by the
tenants of lands situate in any particular area or may fix such
rate on any other suitable basis as it thinks fit."

It was pointed out to the Court that in this section the words 'from C
time to time' which found a ,place in the corresponding section of
the earlier tenancy legislation were missing although the expression
'from time to time' was retained in section 8 (1) of the Act. The
contention raised was that the power delegated under section 6(2) ·
was intended to be used only once but was rejected as fallacious
with the following observations : · · D.

"Why the Legislature did not use the words 'from time to time'
iri section 6(2) when it used them in section 8 (1) it is difficult ·
to understand; but in construing section 6(2) it is obviously
necessary to apply the provisions of section 14 of the Bombay
General Clanses Act, 1904 (I of 1904). Section 14 provides E
that where by any Bombay Act made after the commencement
of this Act any power is conferred on any Government then
that power .may be exercised from time. to time as occasion
requires. Quite clearly if section 6(2) i~ read in the light
of section 14 of the Bombay General Clauses Act it must follow
that the power to "issue a notification can be .exercised from F
time to time as occasion requires. It is true that section 14
of the General Clauses Act, 1897 (X of 1897), provides that
where any power is conferred by any Central Act or Regulation
then, unless a different intention. appears, that · power may be
exercised from time to time as occasion requires. Since there
is a specific provision of the Bombay General Clauses Act
relevant on the point it is unnecessary to take recourse to
section 14 of the Central General Clauses Act; but even if we
were to assume that the power in question can be exercised from
time to time unless a different intention appears we would feel no
difficulty in holding that no such different intention can be ff:
attributed to the Legislature when it enacted section 6 (2): It
(I) [1961] l S.C.R. 341.
1178 SUPREME COURT REPORTS [1981] 1 S.C.R.

A is obvious that having prescribed for a maximum by section 6(1)
the Legislature has deliberately provided for a modification of
the said maxfmum rent and that itself shows that the fixation of
any maximum rent was not treated as immutable. If it was
necessary to issue orn~ notification under section 6 ( i) it would
follow by force of the same logic that circumstances may
B require the issue of a further notification. The. fixation of
agricultural rent depe1ids upon so many uncertain factors which
may vary fr9m time to· time and from place to place that it
would be idle to contend that the Legislatu're wanted to fix
the maximum only once, or, as Mr. Limaye concedes, twice.
Therefore the argummt that the power to issue a notification
c has been exhausted c:annot be sustained."

The language of section 14 of the General Clauses Act being
identical with that of the Bombay General Clauses Act this reason-
ing is fully applicable to the interpretation of section U (2) of the
D L.I.C. Act. The same view was taken by a Division Bench of the
Gujarat High Court in Harivadan K. Desiai and others v. Life Insur-
ance Corporation of India and others-(1), in the following words :

"Whiie construing a statutory provision, it is not permissible
E to traverse beyond the language of the provision unless the
legislative intent cannot be gathered from the clear and definite
language of the provision. It is true that often Courts do look
into the debates in the Legislature and also the marginal notes
to ascertain the scope of a particular provision of the statute. But
that is only in exceptional cases. The language of section 11 (2)
F is very clear. There is nothing to indicate or suggest even
remotely that the powers vested in the Central Government
under section 11 (2) get exhausted when once the Central
Government exercises that power. Section 14 of the General
Clauses Act, 1897 further strengthens our view. Section 14 lays
down that where by an Central Act or Regulation made after
G the commencement of 1 the Act, any power is conferred, then
unless a different intention appears, that power may be exercised
from time to time as occasion requires. We are unable to
gather any different intention from section 11 (2) so as to
injunct the Government from exercising their power after the
issuance of the Blue Order; in other words, after they once
H
exercised that power . ·"
(1) [1977] Lab. I.C. 1072.
LIFE INS,URANCE c.ORPORATION v. D. J. BAHADUR (Koshal, J.) 1179

20. I may further point out that that- part of the power to alter A
the terms and conditions of service of the Corporation's employees
which the Central Government is authorised to exercise in the
interests• of the Corporation and its policy-holders must of neces-
sity be a power which can be exercised as and when occasion so
requires. A contrary view would lead· to absurd results in certain
given situations. Let us assume that the affairs of the Corporation B
did not present a rosy picture to begin with and that therefore, a
drastic reduction in the scales of pay of its employees was called
for and was achieved by an order made by the Central Government
in exercise of its power under section 11 ( 2). Does that mean tha~
if later on the Corporation develops its business and makes sizeable
progress in the way of earning profits, the power conferred on the c
Central Government would not be exerciseable to give better pay
scales to the· employees ? An answer to this question in the negative
would obviously not meet the exigencies of the situation and in
my opinion leads to an absurdity. Again, if the scales of remu-
neration of the transferred employees are adjusted by the Central
D
Government so as to smooth out anomalies and discrepancies, would
that put an end' to the exercise of the power so that it cannot be
used subsequently for the amelioration of the service conditions of
the employees when the affairs of the Corporation so warrant ? To
put such a restricted meaning on the language used does not appear
to be warranted for any rcasoa \i;n'.~c~·.·::·. E
21. In so for as the proceedings of Parliament and speeches
made during the course thereof are concerned,. they are not admissi-
ble for the purpose of interpretation of the resultant statute unless
the language used therein is ambiguous and impels the Court to
resort to factors outside the statute for the purpose of ascertaining F
the intention of the law-makers. This is what was clearly held by
this Court in Anandji Haridas & Co. Pvt. Ltd. v. Engineering Mazdoor
Sangh & Anr.,( 1 ) by Sarkaria, J., who delivered the judgment on
behalf of himself and Alagiriswami, J., and the observations made
therein are worth repetition :
"As a general principle of interpretation, where the words G
of a statute are plain, precise .and unambiguous, the intention of
the Legislature is to be gathered from the language of the
statute itself and no external evidence such as Parliamentary
Debates, Reports of the Committees of the Legislatures or even
the statement made by the Minister on the introduction of a H
measure or by !he framers of the Act is admissible to construe

(I) [1975] 3 S.C.R. 542.
USO SUPREME COURT REPORTS [1981] 1 S.C.R.

those words. It is only where a statute is not exhaustive or
':here its language is ambiguous, uncertain, clouded or suscep-
tibl.e · of more than one meaning or shades of meaning, that
external evidence as· to the evils, if any, which the statute was
intended to remedy, or of the circumstances which led to the
pasing of the statute may be looked into for the purpose of
ascertaining the object which the Legislature had in view in
using the words in question."

These .observations amply cover the situa'.ion in hand. Section 11 (2)
suffers from no ambiguity either by reason of the omission therefrom
of the expression "from time to time" or otherwise and it is, there-
fore, not permissible for a reference to be made to the speech 1of the
then Finance Minister in the matter of interpretation of the section.

22. The next contention for the employees which raises a
question of the vires of clause 9 of the 1957 Order and of regulation
58 is based on the following passage in the judgment of Beg, C.J.,
D' in M. M. Pathak's case (supra) :
"He submits that article 43 casts an obligation on the
State to secure a living wage for the workers and is part of
the principles "declared fundamental in the governance of the
countiy". In other words, he would have us ·use article 43 as
conferring practically a fundamental right which can be
enforced. I do not chink tha~ we can go so far as that because,
even though the directive principles .of State policy, including
the very important general ones contained in article 38 and
39 of the Constitution, give the direction in which the funda-
mental policies of the State must be oriented, yet, we cannot
'' direct. either the Central Government or Parliament to proceed
F
in that direction. · Article 37 says that they 'shall no'. be
enforceable by any court, but the principles therein laid down
are nevertheless fundamental in the governance of the country
and it shall be the duly of the State to apply these principles
in making laws.' Thus, even if they are not directly enforceable
by a court they cannot be declared ineffective. Tl1ey have
the life and force of' fundamentals. The best way in which
they can be, without being directly enforced, given vitality and
effect in Courts of law is to use them ·as criteria of reasonable-
ness, and therefore, of validity, as we have been doing. Thus,
if progress towards goals found in articles 38 and 39 and 43
R is desired, there should not be any curtailment of wage rates
arbitrarily without disclosing any valid reason for it as is the
case here. It ·is quite reasonable, in my opinion, to submit that
LIFE INSURANCE coiPORATION v. D. J. BAHADUR (Koshal, J.) 1181

the measure which seeks to deprive workers of the benefits of A
a settlement arrived at and assented to by the Central Govern-
ment, under the provisions 'Of the Industrial Disputes Act,
should not be set at naught by an Act designed to defeat a
particular settlement. If this be the purpose of the Act, as it
evidently is, it could very well be said to be contrary to public
interest, and therefore, not protected by article 19 ( 6) of · the B
Constitution."
'J'.hese observations are of no help to the case of the employees as
they were made in relation to the change of conditions of service
~,_ of emhploye.es in an ~ndustrdial hestabflishment undder a sehttlemfient wh~chd
was t en m operatwn an t ere ore, coverc on1y t e rst per10 c
mentioned in section 19(2) of the I.D. Ac:- a period with which
we ,are not concerned. As pointed out by Bhagwati, J., in his
separate judgment, the bonus for the period up to the 31st March
1977 had actually vested in the employees and had become a debt
due to them and that was why the majority of six held that the
_ 197 6 Act was violative of article 31, a view which Beg, C. J ., doubted. D
Besides, the, opinion expressed in the observations just above extra-
cted, was perhaps not shared by the other six judges who chose not
to decide the question as to whether the 1976 Act wa5 or was not hit
by articles 14 and 19 of the Constitution of India. In these premises
the employees cannot draw any benefit from Beg, C. J.'s observations.
On the other hand, no challenge to the vires of section 11 (2) was E
made from either side and so long as the section itself is good the
exercise of the power conferred by it cannot be attacked unless such
exercise goes beyond the limits of the section, either in its content or
manner. If the legislature was competent to confer a power on the
Central Government to alter the conditions of service of the employees
.~- of the Corporatior1 to their detriment or .otherwise, the fact that the F
power was exercised only to cut down bonus would furnish no reason
for striking down clause 9 of the 1957 order or reguiation 58 as being
violative of article 14 or 19.
, 23. Clause 9 of the 1957 Order was also attacked as contra-
vening articles 14 and 16 of the Constitution of India for the reason G
that it applied only to transferred employees who were discriminated
against in the. matter of equality .before the law and of opportunity
of employment. That clause no doubt takes within its sweep only
transferred employees because clause 2 of the 1957 Order specifically
states that the Order is restricted iil its operation to employees of
that category; but then no question of any discrimination whatsoever H
is involved in as much as the transferred employees have not only
not been treated differently from other employees of the Corporation
1182 SUPREME COURT REPORTS [1981] 1 S.C.R.

A but by reason of regulation 58 they have· been placed fully at par
with the latter. The argument would have had plausibility only in
the absence of regulation 58 (which applies to all the employees of
the Corporation) and is wholly devoid of force.
24. Another att'ack levelled against clause 9 was that it suffered
B from a contravention of the well-known maxim delegatus non potest
delegare. It was urged that the Central Government having been·
invested with the power of altering the terms and , conditions of
service of the employees of the Corporation, it was bound in law
to exercise that power itself and that it yould not delegate that
power to the Corporation as it has done in clause 9. This argu-
c ment is again without substance. The clause itself states in unmis- --~
takable terms that the Corporation may grant non-profit sharing
·bonus to its employees in respect of any particular year subject tO'
the. previous approval of the Central Government, and so the reat
bonus-granting authority remains the Central Government and'
not the Corporation. There is thus no delegation of any real ·power
D to the Corporation through the promulgation of clause 9.
25. Clause 9 was also challenged on the ground that although
the notification promulgating it began with the preamble "whereas:
the Central Government is satisfied that in the interests of the·
Corporation and its policy-holders it is necessary to revise the terms.
and conditions of service: ...... " there is nothing to show that the
E Central Government was actually so satisfied. This is a stand which·
cannot be allowed .to be raised at this .Jate stage in as much as it
involves questions of fac;~ which cannot be determined wi1hout the·
Central Government' being given a full opportunity to rebut it.
Had the contention been raised before the High Court, documentary
evidence could have been produced to establish that the requirement:
F
of the section had been fully met in regard to the relevant satisfac-·
tion of the Central Government. Again, in the absence of any
evidence to the contrary,. it is permissible to presume that officiaE
acts have been regularly performed and that the preamble to the·
notification, therefore, is i~ accord with facts.
G 26. Another contention raised on behalf of the employees was
that the new clause 9 and the new regulation 58 were both hit by
the provisions of articles 14 and 19 of the Constitution of India in
as much as they singled out the employees of only one statutory
corporation for a special rule regarding bonus in derogation of the
terms hithertofore prevailing, no other Corporation in the public
H sector having been so touched. The contention cannot prevail in
the absence of evidence that the total emoluments of any employee
to be affected by the new clause and the new regulation (regardless
LIFE INSURANCE CORPORATION v, D. J. BAHADUR (Koshal, J.) 1183'

of bonus) would be less than those of his counterpart in any other A
statutory corporation. In this connection also we may point out
that the contention was not raised before the High Court and no
foundation was laid for it at any stage.
27. The only other contention raised on behalf of the employee
was that regulation 58 could not operate to make in-applicable the
197 4 settlements to the 3rd period in as much as all settlements B
reached under the I.D. Act were protected by the provisions of regu-
lation· 2 which thus specifies the employees of Corporation to wh.om
the 1960 regulations .apply :
"2. They shall apply to every wholetime salaried em;:iloyee
of the Corporation in India unless otherwise provided ]Jy the
terms of any contract, agreement or letter of appointment."
c
It is impossible to accept the argument under examination in view
of the language of regulaition 2 which merely signifies the persons
to whom the regulations are to apply. When it says that it shall
apply to every wholetime employee of the Corporation "unless
otherwise provided by the terms of any contract, agreement or letter D
of appointment", all that it means is that if a contract, agreement
or letter of appointment contains a term slating ·that the concerned
employee or employees shall not be governed by the regulations, then
such employee or employees shall not be so governed. Regulation
2 is definitely not susceptible of the interpretation that if a settle-
ment has been reached between the Corporation and its employees, E
the regulations shall not apply to them even though the settlement
makes no provision in that behalf. It is nobody's case that the 197 4
settlements contain any such provision and regulation 2, therefore,
does not come into play at all.
28. In the result appeal No. 2275 of 1978 succeeds and is
accepted. The impugned judgment is set '.!Side and the petition F
under article 226. of 1he Constitution of India decided thereby is
dismissed along with transfer case No. 1 of 1979. Jn the circumst-
ances of the case, however, the parties are left to bear their own costs.
ORDER
In view of the opinion expressed by the majority, the appeal ifl G
dismi:ssed with costs to the first, second and third respondents, and
the Transfer Petition No. 1 of 1979 stands allowed insofar that a
writ will issue to the Life Insurance Corporation directing it to give
effect to the terms of the settlements of 197 4 relating to bonus until
superseded by a fresh settlement, an industrial award or relevant
Iegi:slation. Costs in respect of the Transfer Petition will be paid to H
the pctitioners •by the second· respondent.
V:D.K. Appeal dismissed.