Supreme Court Resolves Long-Standing Dispute on Absorption of Temporary LIC Workers (27 April 2022)

Introduction

Date of the Judgment: 27 April 2022
The Supreme Court of India, in a recent judgment, addressed a long-standing dispute concerning the absorption of temporary, badli, and part-time workers by the Life Insurance Corporation of India (LIC). This case, Ranbir Singh vs. SK Roy, Chairman, Life Insurance Corp. of India & Anr., involved numerous miscellaneous applications and contempt petitions, all stemming from a core issue: the regularization of temporary employees. The court, presided over by a three-judge bench comprising Justices Dr. Dhananjaya Y Chandrachud, Surya Kant, and Vikram Nath, aimed to provide a final resolution to a complex legal battle that has spanned several decades. The judgment was authored by Justice Dr. Dhananjaya Y Chandrachud.

Case Background

The dispute began with claims for absorption of temporary, badli, and part-time workers engaged by LIC. Section 23(1) of the Life Insurance Corporation Act, 1956 allows LIC to employ necessary personnel. The Life Insurance Corporation of India (Staff Regulations) 1960, framed under Section 49(2), empowers LIC to appoint temporary staff in Class III and IV posts. Regulation 8, amended on 7 August 1971, allows temporary appointments but states that such appointments do not automatically entitle the worker to absorption or preference for regular posts.

On 13 August 1982, an industrial dispute was raised by the Western Zonal Insurance Employees Association, alleging unfair labor practices by LIC in employing temporary workers to avoid granting them permanent status. This dispute was referred for adjudication on 20 May 1985, to the National Industrial Tribunal (NIT) presided over by Justice R D Tulpule.

Timeline:

Legal Framework

The Life Insurance Corporation Act, 1956, particularly Sections 23(1) and 49(2), empowers LIC to employ staff and frame regulations. Section 48 of the LIC Act, as amended, grants statutory force to the Staff Regulations and stipulates that rules framed under Section 48(2)(cc) override the Industrial Disputes Act, 1947. Specifically, Section 48(2A) states that regulations in force before the 1981 amendment are deemed rules under Section 48(2)(cc). Section 48(2C) further clarifies that these rules override the ID Act.

Regulation 8 of the Staff Regulations allows LIC to employ temporary staff in Class III and IV posts. However, Regulation 8(2) specifies that such temporary appointments do not automatically entitle workers to absorption or preference for regular posts.

Arguments

LIC’s Submissions:

• 
  The CGIT was tasked with verification, not adjudication, and exceeded its mandate.
• 
  The CGIT should have only considered workers engaged between 20 May 1985 and 4 March 1991.
• 
  The Dogra Report failed to verify documents properly and included workers from the E Prabavathy group, who were specifically excluded by the Srivastav Award.
• 
  The Tulpule and Jamdar Awards were superseded by a compromise agreement.
• 
  The Srivastav Award, by directing the creation of supernumerary posts, was contrary to established legal principles.
• 
  Regulations under Section 48(2)(cc) of the LIC Act override the Industrial Disputes Act.
• 
  The Dogra Report ignored the compromise that substituted the Tulpule and Jamdar Awards.

Unions’ Submissions:

• 
  The Srivastav Award has attained finality, and the Dogra Report was prepared as per the Supreme Court’s mandate.
• 
  The Dogra Report correctly drew an adverse inference against LIC for not producing records.
• 
  The Srivastav Award was not limited to the CGIT certified list, and all workers should be granted absorption.
• 
  Workers employed after 4 March 1991 should also be covered by the Srivastav Award.
• 
  The orders in E Prabavathy and G Sudhakar cases should not be used to reopen the present proceedings.
• 
  The compromise was limited to workers employed between 1 January 1982 and 20 May 1985.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following key issues based on the arguments presented:

1. 
   Whether the CGIT’s role was limited to verification or extended to adjudication.
2. 
   Whether the CGIT was correct in not limiting its inquiry to the original certified list of workers.
3. 
   Whether the CGIT should have only considered workers engaged between 20 May 1985 and 4 March 1991.
4. 
   Whether the Dogra Report correctly verified the documents and included workers from the E Prabavathy group.
5. 
   Whether the Tulpule and Jamdar Awards were superseded by a compromise agreement.
6. 
   Whether the Srivastav Award, by directing the creation of supernumerary posts, was contrary to established legal principles.
7. 
   Whether the regulations framed under Section 48(2)(cc) of the LIC Act override the Industrial Disputes Act.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court:

• A V Nachane v. Union ofIndia, (1982) 1 SCC 205: The Supreme Court upheld the validity of the amendment to Sections 48 and 49 of the LIC Act, which was crucial in establishing the overriding effect of the rules framed under Section 48(2)(cc).
• M. Venugopal v. Divisional Manager, LIC, Machilipatnam, (1994) 2 SCC 323: This case was cited to support the argument that the rules framed under Section 48(2)(cc) of the LIC Act have an overriding effect over the Industrial Disputes Act.
• Life Insurance Corporation of India v. Raghavendra Seshagirirao Kulkarni, (1997) 8 SCC 461: This case was used to establish that LIC employees are governed by the parent enactment, i.e., the LIC Act, and the rules and regulations framed thereunder.
• LIC v. Their Workmen, Civil Appeal No 1790 of 1989 (1 March 1989): The court discussed this interim order in the context of the compromise reached between LIC and eight Unions, noting that it was an interim measure without prejudice to the rights of the other Union.
• LIC v. Their Workmen, Civil Appeal No 1790 of 1989 (7 February 1996): The court discussed the final order accepting the compromise, which was crucial in establishing that the Tulpule and Jamdar Awards were superseded by this compromise.
• E Prabavathy v. Life Insurance Corporation of India, SLP (Civil) No 10393 of 1992, order dated 23-10-1992: The court discussed the scheme for regularization of ad hoc employees formulated by LIC and accepted by the Court, highlighting its relevance to the present dispute.
• LIC of India v. G Sudhakar, Civil Appeal No 2104 of 2000, order dated 22-11-2001: This case was cited to establish that the scheme approved in E Prabavathy was applicable to all employees of LIC across India, which was relevant to the present dispute.
• Tamil Nadu Terminated Full Time Temporary LIC Employees Association v. Life Insurance Corporation of India, (2015) 9 SCC 62: The court discussed the restoration of the Srivastav Award and the issues arising from it, including the direction to create supernumerary posts.
• T N Terminated Full Time Temporary LIC Employees Assn. v. LIC, (2016) 9 SCC 366: The court discussed the review judgment and the modification of back wages, which was relevant to the claims for back wages in the present case.
• ONGC v. Krishan Gopal, 2020 SCC OnLine SC 150: This case was cited to establish that the creation of supernumerary posts is contrary to established principles, which was relevant to the court’s rejection of the Srivastav Award’s direction to create such posts.
• LIC v. D V Anil Kumar, Civil Appeal Nos 953-968 of 2005: This case was mentioned in the context of LIC’s efforts to regularize workers, showing the various measures taken by the corporation.
• Hashmuddin v. LIC, Civil Appeal No 2268 of 2011: This case was also mentioned in the context of LIC’s efforts to regularize workers with long service, providing a broader view of the regularization efforts.
• Secretary, State of Karnataka v. Umadevi, (2006) 4 SCC 1: This case was cited to emphasize the need for fair and open processes in public employment and to caution against back-door entries, which was relevant to the court’s decision on absorption.
• Section 23(1), Life Insurance Corporation Act, 1956: This section was discussed as the basis for LIC’s power to employ staff, which was relevant to the court’s understanding of LIC’s employment practices.
• Section 48, Life Insurance Corporation Act, 1956: The court discussed the amendments and their impact on the ID Act, particularly the overriding effect of the rules framed under Section 48(2)(cc).
• Section 49(2), Life Insurance Corporation Act, 1956: This section was discussed as the basis for the Staff Regulations, which governed the employment of temporary staff.
• Regulation 8, Life Insurance Corporation of India (Staff Regulations) 1960: The court discussed the conditions for employing temporary staff and the lack of automatic absorption, which was relevant to the claims for regularization.
• Section 2(oo), Industrial Disputes Act, 1947: This section was discussed in relation to the definition of retrenchment, particularly in the context of the termination of probationers.
• Section 18(3)(d), Industrial Disputes Act, 1947: This section was discussed in relation to the binding effect of settlements and awards, particularly the applicability of the Srivastav Award to subsequent employees.
• Section 25-D, Industrial Disputes Act, 1947: This section was discussed in the context of LIC’s obligation to maintain records, which was relevant to the court’s assessment of the Dogra Report.

Final Decision

The Supreme Court, after considering all the facts and legal provisions, delivered the following final decision:

• 
  The CGIT’s role was limited to verification, and it exceeded its mandate.
• 
  The CGIT should have only considered workers engaged between 20 May 1985 and 4 March 1991.
• 
  The Dogra Report was flawed and included ineligible workers.
• 
  The Tulpule and Jamdar Awards were superseded by a compromise agreement.
• 
  The Srivastav Award’s direction to create supernumerary posts was contrary to legal principles.
• 
  The regulations framed under Section 48(2)(cc) of the LIC Act override the Industrial Disputes Act.
• 
  LIC was directed to conduct a fresh verification of claims.
• 
  Workers not in the certified list but employed within the specified period and not part of E Prabavathy scheme could be considered.

Implications of the Judgment:

• 
  The judgment reinforces the primacy of the LIC Act.
• 
  The Industrial Disputes Act is subordinate to the LIC Act.
• 
  The judgment provides a final resolution but requires a fair verification process.
• 
  The judgment emphasizes adhering to legal principles and avoiding supernumerary posts.

Flowchart of Supreme Court’s Decision