LIC bound by Article 14; cannot substitute open recruitment with absorption of part-time workers: Supreme Court

The Supreme Court on Wednesday held that the Life Insurance Corporation of India (LIC) being a statutory body, is bound by the mandate of Articles 14 and 16 of the Constitution of India [Ranbir Singh v SK Roy, Chairman, Life Insurance Corporation of India & Anr.]..The three-judge bench of Justices DY Chandrachud, Surya Kant and Vikram Nath, therefore, ruled that recruitment to sanctioned posts, consistent with principles of equal opportunity recruitment, cannot be substituted by absorption of part-time workers."LIC as a statutory corporation is bound by the mandate of Articles 14 and 16 of the Constitution. As a public employer, the recruitment process of the corporation must meet the constitutional standard of a fair and open process. Allowing for back-door entries into service is an anathema to public service," the Court observed. The Court, therefore, declined to direct the LIC to absorb 11,000 part-time workers without an open and competitive process."LIC having been restrained by judicial orders from pursuing an open recruitment process, the situation which has now arisen is that unless a balance were to be drawn, absorption of part-time and badli workers would become a substitute for a recruitment process based on sanctioned posts, consistent with the principles of reservation and pursued on the basis of a structured recruitment which gives equal opportunities to all applicants. Such a consequence is a serious detriment to constitutional parameters and to the duty of LIC as a public employer to follow a process which is fair and in consonance with Articles 14 and 16 of the Constitution", the Supreme Court said in its judgement..LIC as a statutory corporation is bound by the mandate of Articles 14 and 16 of the Constitution.Supreme Court .The apex court was considering a dispute which pertained to the claim for absorption of persons who were engaged by the LIC as temporary/ badli/ part-time workers (temporary workers)..In 1982, an industrial dispute was raised alleging that the LIC was engaging in unfair practices by recruiting temporary workers and restricting their employment to short tenures to deprive them of their claim of permanency. In 1985, the Central government referred the dispute to the National Industrial Tribunal which was presided over by Justice Tulpule (Tulpule Tribunal). In 1986, the Tulpule Tribunal passedan award stipulating that those temporary workers who were in employment between January 1, 1982 and May 20, 1985 will be entitled for absorption..In 1987, the LIC issued circulars to implement the Tulpule Tribunal award, but these circulars were disputed by unions and associations representing the workers. This led the Central government to refer the dispute to another National Industrial Tribunal headed by Justice Jamdar (Jamdar Tribunal) to interpret the Tulpule award under Section 36A of the Industrial Disputes Act, 1947. The Jamdar Tribunal passed its awarded stating that it is held that the absorption contemplated in the Tulpule Award did not imply recruitment.This was challenged by the LIC before the Supreme Court. .During the pendency of the litigation before the apex court, the LIC and the unions (except one) made a compromise to substitute the Tulpule and Jamdar Awards in light of the terms and conditions of the compromise. A two-judge bench of the Supreme Court, in LIC v Their Workmen, passed a final order in 1996, accepting the contention of LIC that since eight unions had already accepted the compromise, the ninth union (Karamchari Sangh) should fall in line and act on the terms and conditions of the compromise in the interest of industrial peace..The dispute which relates to the present appeal arose in 1991 when the unions raised a demand pertaining to the claim for regularisation of those workers who were employed from 20 May 1985 till the date of reference on March 4, 1991. In the light of this demand, the Central government referred the dispute to the Srivastava Tribunal. In 2001, the Srivastava Tribunal passed an award directing the absorption of the temporary/badli workers who were employed from May 20, 1985 on the same terms as the Tulpule and Jamdar Awards, with some modifications. LIC was directed to publish a notice in the newspapers for inviting applications from individual workers for absorption. If no regular vacancy was available, the award directed supernumerary posts to be created..The LIC challenged the Srivastava award before the Delhi High Court. The High Court set aside the award holding that the decisions of the Supreme Court in E Prabhavathy v. the Life Insurance Corporation of India and G Sudhakar v LIC directing LIC to formulate a scheme for regularisation, were binding on the Central Government Industrial Tribunal. The decision of the Delhi High Court was challenged before the Supreme Court.In 2015, a two-judge bench of the top court, in Tamil Nadu Terminated Full Time Temporary LIC Employees Association v. Life Insurance Corporation of India, disposed of the appeals holding that that the Srivastava Award is binding and the Tulpule and Jamdar awards are to be followed. The judgment was reviewed and was upheld except that the court restricted the award of back-wages to 50%. The curative petition was also dismissed..In 2017, various divisions of LIC found 245 workmen to be eligible and they were offered absorption by the Zonal Offices. This led to the initiation of contempt proceedings by the Unions who sought the absorption of all temporary, part-time and badli workers and daily wagers who were engaged after May 20, 1985 till dateThe Supreme Court passed an order in 2018 in the contempt petition directing the Central Government Industrial Tribunal (Dogra Committee) to decide upon the claims of the Unions within 3 months but the Court found that there was no breach of the judgment in Tamil Nadu Employees.The order was revised to hold that the Dogra Committee shall limit its enquiry only to the claims between 1985 and 1991.The Dogra Committee noted that 6,998 claims had been filed, whereas the LIC contended that 3,592 claims were false and duplicate. The contention of the LIC was rejected by the committee. The Dogra Report also noted that workers who had started working beyond the cut-off date of March 4, 1991 would not be covered in the enquiry. .This led to the present appeal in which LIC raised several objections against the Dogra Report. .The apex court held that the judgment of the court in Tamil Nadu employees case failed to notice the final order in the case of LIC v. Their Workmen and "arrived at a palpably erroneous conclusion that the Jamdar and Tulpule Awards were still operative and binding." Therefore, the top court held that after the compromise struck between the LIC and the Unions, the Jamdar and Pulpule award were substituted by the terms and conditions of the compromise. Further, another three-judge bench in the case of E Prabhavathy had held that the LIC's scheme for regularisation of employees is valid and legal, therefore, the judgment in Tamil Nadu Employees cannot be sustained. .On the interplay between the Industrial Disputes Act, 1947 and Section 48 (Rule making power of the Central Government) of the LIC Act,1956, the Supreme Court held that the rule made under the LIC Act shall precede over the Industrial Disputes Act provisions."The provisions of Section 48(2C) postulate that a rule which is made under the clause shall have effect notwithstanding anything contained in the ID Act. Hence, the workers who have been recruited post 4 March 1991 cannot make a claim for absorption ipso jure under Section 18(3)(d) of the ID Act, as a result of the overriding provision which is contained in sub-Section (2C) of Section 48." Therefore, the workers recruited after the amendment of the LIC Act and inclusion of Section 48(2C) will not have a claim for absorption as neither the Industrial Disputes Act will apply nor the Tribunal Awards..Further, the top court held that the Dogra Report which was only confined to the process of verification is flawed because of the following reasons: It failed to carry out accurate verification;The lists which are appended to the report contain patent inconsistencies and errors as a consequence of a failure to carry out an adequate verification;andThe report has accepted the claims of those workmen who were covered by the judgment of E Prabhavathy. .Therefore, the Supreme Court held that the LIC cannot be directed to conduct a mass absorption of 11,000 part-time workers which would negate the principle of equal opportunity and fairness in public employment, which was specifically decried by the Court in Secretary, State of Karnataka v. Umadevi"A public employer such as LIC cannot be directed to carry out a mass absorption of over 11,000 workers on such flawed premises without following a recruitment process which is consistent with the principles of equality of opportunity governed by Articles 14 and 16 of the Constitution. Such an absorption would provide the very back-door entry, which negates the principle of equal opportunity and fairness in public employment," the judgment stated..The Supreme Court concluded that claims of verified workers who meet the threshold of eligibility should be resolved by full and final settlement of all the demands by an award of monetary compensation, instead of absorption. .Therefore, the court issued the following directions: A fresh verification of those workers who are employed for at least 70 days in Class IV posts over a period of three years or 85 days in Class III posts over a period of two years, independently of the Dogra Committee report;The verification shall be confined to persons who were working between 20 May 1985 and 4 March 1991;All persons who are found to be eligible on the above norm shall be entitled to compensation computed at the rate of Rs 50,000 for every year of service or part thereof;The committee which will be formed for the verification process shall the process all the claims of the workers who were engaged by the LIC between 1985 to 1991;LIC shall make all the records available for the careful perusal and even the workers can submit available documents for the process of verification; andThe payment of compensation shall be paid within three months from the date of receipt of the report of verification by the Committee. .The Court also formed a committee consisting of Justice P K S Baghel, former Judge of the Allahabad High Court and Rajiv Sharma, former District Judge for the purposes of verification of the workers. "LIC shall provide all logistical assistance to the Committee and bear all expenses, including secretarial expenses, travel and incidental expenses, as well as the fees payable to the members of the Committee. Justice P K S Baghel shall fix the terms of remuneration payable to the members of the Committee", the Court ordered. .On behalf of the LIC, Senior Advocate ANS Nadkarni appeared. On behalf of the unions/ associations/ workers, Senior Advocates Dr Manish Singhvi, Pallav Sishodia, R Singaravelan, V Prakash and Salman Khurshid appeared along with advocates Nandakumar, Rakesh Shukla and Shailesh Madiyal. .[Read Judgment]