Hon'ble Manoj Misra, J.
(Delivered By Hon'ble Manoj Misra, J)
1. These two petitions based on common facts by the same petitioner, with the consent of the learned counsel for the parties, are being decided by a common judgment.
2. We have heard Sri Ashok Khare, learned senior counsel assisted by Sri Siddharth Khare for the petitioner and Sri R.C. Shukla for the respondents. The matter was also re-heard on 20.7.2012.
3. The facts, in brief, are that the petitioner was initially appointed on 26.3.1996 as an Apprentice Development Officer in the Life Insurance Corporation of India at Dhaulpur branch, Rajasthan. Later his services were confirmed as a Development Officer. By an Office Order dated 27.02.2008, the petitioner was directed to assume charge by or before 10.3.2008 as Assistant Branch Manager (Sales) {hereinafter referred to as ABM (S)} at Branch Nimbahera, which was a promotional post. This promotion order was to be effective from the date of joining. It appears that the petitioner did not join the promotional post within the time provided. Rather he joined as a Development Officer at CBO-II, Allahabad on 16.4.2008, pursuant to an order of transfer dated 18.2.2008. As a result, by Office Order dated 19.06.2008, the promotion order dated 27.2.2008 was canceled. Thereafter when fresh exercise for promotion to the cadre of ABM (S) was undertaken, the petitioner participated in the interview, held on 06.01.2009. In the interview so held, the petitioner was not selected. The petitioner submitted a representation on 25.03.2009 claiming that if he was found eligible for promotion in the year 2008, there was no justification not to promote him in the year 2009. It seems that this representation of the petitioner was left unattended. Later, vide circular letter dated 21.10.2009, another exercise for promotion from the post of Development Officer to the cadre of ABM (S) was notified for the year 2009-10 and the cut off date / eligibility date for consideration was fixed as 30.09.2009. In response to the circular letter dated 21.10.2009, the petitioner applied for consideration and was invited for the interview. On 08.01.2010, he participated in the interview. By Office Order dated 14.01.2010 the select list was notified wherein 101 Development Officers were found fit for promotion as ABM (S). In that list the name of the petitioner figured at Serial No.97. This Office Order indicated that the petitioner would be posted as ABM (S), Varanasi Division, Varanasi. On 14.01.2010 itself, a final list of selected candidates, in the order of merit, was also notified wherein the name of the petitioner finds mention at Serial No. 50. At the bottom of the said merit-list, a note was put to the effect that if a candidate is found to have worked beyond the prescribed cost ratio applicable to him in the appraisal year falling due prior to the date of his joining as ABM (S), then the promotion of such candidate shall stand automatically canceled and he shall be reverted back as a Development Officer, without any notice. On 20.01.2010, a notice was issued to the petitioner by the Senior Divisional Manager thereby informing him about his performance for the appraisal year ending 31.12.2009, as also with regard to the basic pay and C.A. admissible to him with effect from 01.01.2010, with liberty to the petitioner to submit a representation, in writing, within 15 days from the date of receipt of the notice with respect to the figures relating to his performance in the relevant appraisal year, as indicated in the letter. The notice indicated that the cost ratio for the appraisal year ending 31.12.2009, on the basis of annual remuneration, was found to be 183.5 % as against the prescribed 23%. The petitioner represented against the notice and requested for relieving him to join the promotional post. It further transpires that pursuant to a query under the Right to Information Act the petitioner received a copy of the communication letter dated 30.03.2010, which disclosed that the Competent Authority had upheld the decision of the Zonal Manager canceling his promotion and that his representation was also rejected. The petitioner was also informed by the Zonal Manager, vide letter dated 31.05.2010, that his promotion was subject to the condition that if he had worked beyond the prescribed cost ratio applicable to him in the appraisal year falling due prior to the date of joining as ABM (S), then the promotion would stand automatically canceled and he shall be reverted back as a Development Officer, without notice. By the said letter, the petitioner was also informed that since the cost ratio in the appraisal year January, 2009 to December, 2009 was 183.51%, therefore, the promotion to the cadre of ABM (S) stood automatically canceled. The petitioner was further informed that the Competent Authority had upheld the decision of the Zonal Manager, whereby the promotion of the petitioner was canceled. By the letter dated 31.05.2010 the petitioner was informed of his right to appeal to the appellate authority within 30 days from the date of receipt of the letter. Consequently, the petitioner submitted his representation/ appeal to the Zonal Manager on 30.6.2010, but it transpires that no decision was taken. Challenging the communication dated 31.05.2010, as also the earlier communications dated 30.03.2010 and 04.05.2010, whereby the promotion of the petitioner was canceled, Civil Misc. Writ Petition No. 53292 of 2010 has been filed by the petitioner, with further prayer to quash the note appended to the promotion order dated 14.01.2010 which made the promotion subject to the prescribed cost ratio applicable to the candidate in the appraisal year falling due prior to the date of joining as ABM (S). The petitioner has also challenged the notice/order dated 20.01.2010, whereby it was found that the cost ratio for the appraisal year ending 31.12.2009, with respect to the petitioner, was 183.51 % as against the prescribed limit of 23%. A prayer has also been made to command the respondents to permit the petitioner to join as an ABM (S).
4. During the pendency of Writ Petition No. 53292 of 2010, the Senior Divisional Manager issued a notice dated 09.03.2011 to the petitioner mentioning therein that the cost-ratio applicable to the petitioner for the appraisal year ending 31.12.2010 came out to be 231.29% whereas it was 183.5% for the immediately preceding appraisal year ending 31.12.2009 and was 20.52% for the appraisal year ending 31.12.2008, therefore, the services of the petitioner were liable to be terminated under sub-rule (9) of Rule 6 read with Rule 7 of the Life Insurance Corporation of India (Revision of Certain Terms and Conditions of Service) Rules, 2009. By the said notice, the petitioner was required to show cause as to why his services be not terminated in terms of Rule 7 of the Life Insurance Corporation of India (Revision of certain Terms and Conditions of Service) Rules, 2009, with liberty to the petitioner to point out discrepancy, if any, in the figures relating to his performance as indicated in the notice.
5. The petitioner responded to the notice. On 18.04.2011, the Zonal Manager issued a show cause notice to the petitioner calling upon the petitioner to show cause as to why his services be not terminated on the basis of the same allegations as contained in the earlier notice dated 09.03.2011. The petitioner again submitted a reply. On 11.06.2011, the Zonal Manager issued a termination notice thereby stating that the services of the petitioner were liable to be terminated in accordance with the provisions of the Life Insurance Corporation of India (Revision of certain Terms and Conditions of Service) Rules, 2009 and that his services shall stand terminated on the expiry of three months from the date of receipt of notice. Thereafter, on 30.6.2011, a letter was issued to the petitioner thereby calling upon his option, within 30 days from the date of receipt of the termination order, for appointment to do administrative work in Class III as per Rule 15 of the Life Insurance Corporation of India Development Officers (Revision of Certain Terms and Conditions of Service) Rules, 2009.
6. Before expiry of the 30 days period provided for exercising the option, challenging the order dated 11.06.2011, Civil Misc. Writ Petition No. 40669 of 2011 has been filed by the petitioner. By this petition, the petitioner has also sought for declaration that the provisions of Life Insurance Corporation of India, Development Officers (Revision of Certain Terms and Conditions of Service) Rules, 2009 are ultra vires and inoperative.
Writ Petition No. 53292 of 2010
7. The submissions of the learned counsel for the petitioner, in Civil Misc. Writ Petition No. 53292 of 2010, are as follows:-
(a) that once the petitioner was granted promotion as ABM (S) by order dated 27.02.2008, there was no justification to deny him posting, as such, and that the order canceling his promotion was wholly unjustified and arbitrary;
(b) that the promotion order dated 14.01.2010 was not liable to be rescinded on the basis of cost ratio applicable to the petitioner for the appraisal year ending 31.12.2009 inasmuch as the circular letter dated 21.10.2009, on the basis of which the consideration for promotion was made, fixed the cut-off date for eligibility as 30.09.2009, accordingly, consideration of the cost ratio with respect to a period subsequent to the cut off date was not legally justified; and
(c) that no opportunity to offer explanation was provided to the petitioner before canceling his promotion to the post of ABM (S).
8. In reply to the aforesaid contentions, the learned counsel for the respondents submitted as follows:-
(a) that the promotion order dated 27.02.2008 was subject to the joining on the promotional post at Nimba Hera Branch in Udaipur Division by 10.03.2008 and since the petitioner had himself requested for transfer to the Allahabad Division and did not prefer to join as ABM (S) at Nimba Hera Branch Udaipur, the promotion order dated 27.02.2008 became inoperative and as the petitioner did not initially challenge the order canceling his promotion, and rather chose to join at Allahabad as also to participate in the subsequent promotion process, he stands precluded from challenging the validity of the order canceling his promotion order dated 27.02.2008;
(b) that in accordance with the proviso to sub Regulation (3) of Regulation 7 of Staff Regulations, 1960, the Corporation framed the criteria for determining suitability for promotion of Development Officers to the Cadre of ABM (S), which came to be known as Life Insurance Corporation of India Promotion of Development Officers' to the Cadre of ABM(S) Amendment Rules, 2009;
(c) that under Clause E of the said rules, conditions of suitability are provided as follows:-
"(E) CONDITIONS OF SUITABILITY:
1. All the Development Officers who have completed 8 years or more service in their cadre as on 30.09.2009 and who have worked within the prescribed cost ratio during each of the last three appraisal years.
OR
2. All the Development Officers who have completed 5 years or more service in their cadre but less than 8 years service as on 30.09.2009 and who have worked within the prescribed cost ratio during each of the last three appraisal years, provided that they have brought in an Average Scheduled First Year Premium Income of not less than Rs. 10,00,000/- and Average Number of lives of not less than 500 (For SC/ST candidates, Average Scheduled First Year Premium Income of not less than Rs. 9,00,000/- and Average Number of lives not less than 450) in that last three appraisal years. Further provided that the lapse ratio as determined as per Clause (1) below is less than 15 in each of those three appraisal years where a period of 12 months or more have elapsed from the date of completion of the appraisal year till 30.09.2009.
3. If any Development Officer has not worked within the prescribed cost ratio (expense limit) applicable to him in an appraisal year which has fallen due by the time his promotion is to be effected, such a Development Officer will not be considered for promotion.
4. The stipulation relating to fulfilling the prescribed cost ratio (Expenses Limit) shall apply even if non-performance in the relevant year stands condoned under Special Rules, 1989.
5. Development Officers against whom vigilance/disciplinary action has been initiated will not be eligible.
6. Annual Confidential Report for the last 3 years will be taken for consideration of promotion. Those Development Officers who obtain Average and Above rating in the 3 C.R.s shall be eligible."
(d) that as per condition no.3 under Clause E of the aforesaid rules, if any Development Officer has not worked within the prescribed cost ratio (expense limit) applicable to him in an appraisal year which has fallen due by the time his promotion is to be effected, such a Development Officer will not be considered for promotion;
(e) that final selection list for promotion under the Rules is as per Clause N. Condition no.7 of Clause N of the aforesaid Rules provides as follows:-
"7. If any Development Officer has not worked within the prescribed cost ratio (expense limit) applicable to him in an appraisal year which has fallen due by the time his promotion is to be effected (i.e. after 30.09.2009 but before the promotion is effected), such a Development Officer will not be considered as suitable for promotion (even if the non-performance stands condoned) and the appointing authority before issuing the orders for promotion shall have verified and issue the instructions on promotion accordingly."
(f) that in view of the aforesaid provisions, as the promotion order came into existence on 14.01.2010, the appraisal year ending 31.12.2009 had already fallen due, therefore, the prescribed cost ratio for the appraisal year ending 31.12.2009 was considered and the promotion of the petitioner to the post of ABM (S) stood automatically canceled in terms of the rules, for which no notice or opportunity was required, in terms of the promotion order dated 14.1.2010; and
(g) that there is no serious challenge to the conclusion drawn by the authorities that the petitioner had far exceeded the cost ratio applicable for the respective appraisal years, accordingly, the petitioner has no right to challenge the order canceling his promotion.
9. Before examining the weight of respective submissions, at this stage, it would be relevant to mention that after filing of the counter-affidavit on behalf of the Life Insurance Corporation of India an application was moved on behalf of the petitioner, in Civil Misc. Writ Petition No. 53292 of 2010, to amend the said writ petition so as to incorporate a prayer to quash the order dated 19.06.2008 by which the earlier promotion order dated 27.02.2008 was canceled.
10. A reply affidavit was submitted to the amendment application, wherein a plea was taken that this Court lacked territorial jurisdiction to adjudicate on the validity of the order dated 19.06.2008 inasmuch as the cause of action with respect to the said order arose while the petitioner was posted at Rajasthan and the said order was also issued from the Divisional Office of the Life Insurance Corporation of India at Udaipur (Rajasthan). In the reply affidavit, it was also stated that since the petitioner had not earlier challenged the cancellation order dated 19.6.2008 and had not only joined as a Development Officer at Allahabad but had also participated in the subsequent process of promotion, challenge to the order dated 19.6.2008 cannot be entertained, at this stage.
11. Considering the fact that the petitioner had admittedly joined at Allahabad as a Development Officer without challenging the order dated 19.6.2008, whereby his promotion was canceled, we are of the view that the validity of the said order cannot be assailed by the petitioner, at this stage, particularly when he participated in subsequent promotion process for the post of ABM (S).
12. The contention of the learned counsel for the petitioner that the authorities were not justified in taking the cost ratio applicable to the appraisal year ending 31.12.2009, for cancellation of the promotion order dated 14.1.2010, cannot be accepted for the reason that promotions were governed by the Life Insurance Corporation of India Promotion of Development Officers to the Cadre of ABM (S) Amendment Rules, 2009. As per condition no.3 of the conditions of suitability provided by Clause E of the aforesaid rules, it was specifically laid that if any Development Officer has not worked within the prescribed cost ratio (expense limit) applicable to him in an appraisal year, which has fallen due by the time his promotion is to be effected, such a Development Officer will not be considered for promotion. This clearly indicates that the cost ratio for the appraisal year ending 31.12.2009 was available for consideration inasmuch as the promotion was not made effective till 31.12.2009. Further, the promotion order dated 14.01.2010, which has been enclosed as Annexure No.9 to the writ petition No. 53292 of 2010, provides as follows:-
" The promotions are subject to the conditions that if a candidate is found to have worked beyond the prescribed cost ratio applicable to him in the appraisal year falling due prior to the date of his joining as ABM(S), then the promotion of such candidate shall stand automatically canceled and he shall be reverted back as a Development Officer without any notice."
In view of the clear stipulation in the promotion order as also in the Sevice Rules any stipulation in the circular letter that the eligibility as on 30.09.2009 would be considered cannot preclude the operation of the Service Rules which specifically provides that a Development Officer will not be considered for promotion if such Development Officer has not worked within the prescribed cost ratio (expense limit) applicable to him in an appraisal year which has fallen due by the time his promotion is to be effected. Further, there is no challenge to the validity of the Life Insurance Corporation of India Promotion of Development Officers' to the Cadre of ABM(S) Amendment Rules, 2009. Accordingly, we are of the view that the petitioner cannot succeed in assailing the cancellation of his promotion on the ground that the cost ratio in the appraisal year ending 31.12.2009 could not have been considered for denying him the benefit of promotion.
14. As there is no serious challenge in the writ petition to the fact that the petitioner exceeded the cost ratio applicable with respect to the appraisal year ending 31.12.2009, we are of the view that the cancellation of his promotion was legally justified. Accordingly, the Civil Misc. Writ Petition No. 53292 of 2010 is liable to be dismissed.
Writ Petition No.40669 of 2011
15. By writ petition No.40669 of 2011 the petitioner has assailed the validity of the termination order / notice dated 11.6.2011 whereby the Zonal Manager, LIC, as a follow up to the show cause notice dated 18.4.2011, after taking reply from the petitioner, exercising his power under Rule 7 of the Life Insurance Corporation of India Development Officers (Revision of Certain Terms & Conditions of Service) Rules, 2009 (hereinafter referred to as Rules, 2009), terminated the services of the petitioner with effect from expiry of three months from the date of receipt of notice. In addition to above, the petitioner has also sought for consequential benefits as well as a declaration to the effect that the provisions of Rules, 2009 are ultra vires and inoperative.
16. The termination notice /order dated 11.06.2011 makes a reference to the show cause notice that was issued to the petitioner on 18.04.2011. A perusal of the said show cause notice, which has been brought on record as Annexure No.9 to the writ petition, reveals that in the appraisal year ending 31.12.2010, the prescribed expense limit was 22% whereas with respect to the petitioner the cost ratio for the relevant appraisal year on the basis of the annual remuneration came to 231.29%. It was observed that as the annual remuneration for the appraisal year exceeded 50% of the eligible premium of the year and the cost ratio for the immediately preceding appraisal year ending 31.12.2009 and for the appraisal year ending 31.12.2009 were 183.51% and 20.52% respectively, therefore, the services of the petitioner were liable to be terminated under sub-rule (9) of Rule 6 read with Rule 7 of the Life Insurance Corporation of India (Revision of Certain Terms and Conditions of Service) Rules, 1989 (hereinafter referred to as 'Rules 1989') followed by Rules, 2009. Accordingly, the petitioner was required to show cause as to why his services should not be terminated pursuant to the aforesaid provisions.
17. The Central Government has framed Life Insurance Corporation of India Development Officers (Revision of Certain Terms and Conditions of Service) Rules, 2009 in exercise of power under sub-section (1) read with clause (cc) of sub-section (2) of Section 48 of the Life Insurance Corporation Act, 1956.
18. Section 48 of the Life Insurance Corporation Act, 1956 (hereinafter referred to as the Act) provides power to make rules. Sub-section (1) of Section 48 of the Act provides that the Central Government may, by notification in the Official Gazette, make rules to carry out the purposes of the Act. Sub-Section (2) of Section 48 provides: "In particular, and without prejudice, to the generality of the foregoing power, such rules may provide for or any of the following matters, namely,-- ....(cc) the terms and conditions of service of the employees and agents of the Corporation, including those who became employees or agents of the Corporation on the appointed day under this Act."
19. Sub-section (2C) of Section 48 provides as follows:-
" The provisions of Clause (cc) of sub-section (2) and sub-section (2B) and any rules made under the said clause (cc) shall have effect, and any such rule made with retrospective effect from any date shall also be deemed to have had effect from that date, notwithstanding any judgment, decree or order of any court, tribunal or other authority and notwithstanding anything contained in the Industrial Disputes Act, 1947 or any other law or any agreement, settlement, award or other instruments for the time being in force."
20. In exercise of the aforesaid power, the Rules, 2009 were notified by the Central Government vide Notification dated 12.11.2009. Rule 7 of the Rules, 2009 provides for termination of service in certain cases:-
"7. Termination of service in certain cases:
(1) Where a Development Officer has failed to conform to the expense limit and where no opportunity to conform to such limit could be given under the provisions of rule 6, the Zonal Manager may terminate his services after giving him three months notice or salary in lieu thereof:
Provided that the Development Officer shall be given an opportunity to show cause against such proposed termination of his service.
(2) An appeal against an order passed under sub-rule (1) shall lie to the Managing Director and the provisions of rules 41, 42, 43, 44 and 45 of the staff rules shall, so far as may be, apply to any such appeal.
(3) In the case of an appeal under sub-rule (2), the Managing Director shall consider the records of the case and pass orders on merits having regard to the circumstances of the case."
21. A perusal of Rule 7 indicates that once a Development Officer has failed to conform to the expense limit and where no opportunity to conform to such limit could be given under the provisions of rule 6, the Zonal Manager may terminate his services after giving him three months notice or salary in lieu thereof provided that the Development Officer shall be given an opportunity to show cause against such proposed termination of his service.
22. A perusal of the show cause notice dated 18.04.2011 goes to show that for terminating the services of the petitioner reliance was placed on sub-rule (9) of Rule 6 read with Rule 7 of the Rules, 2009. Sub-rule (9) of the Rule 6 of the Rules, 2009 provides as follows:-
"(9) In the case of a Development Officer who has been confirmed in the services of the Corporation on a date prior to the date of publication of these rules in the Official Gazette, the percentage mentioned in sub-rule (8) above shall be increased by the appropriate transitional concessions, and it shall be as under:
(a) The services of a Development Officer shall be liable for termination in accordance with rule 7, if his annual remuneration in the First appraisal year commencing after the date of publication of these rules in the Official Gazette (hereinafter referred to as the "first appraisal year") exceeds 50% of the eligible premium in that year and the aggregate of the annual remuneration in the first appraisal year and the two appraisal years immediately preceding the first appraisal year exceeds 50% of the aggregate of the eligible premium in those three years.
(b) The services of a Development Officer shall be liable for termination in accordance with rule 7, if his annual remuneration in the Second appraisal year commencing after the date of publication of these rules in the Official Gazette (hereinafter referred to as the "second appraisal year") exceeds 45% of the eligible premium in that year and the aggregate of the annual remuneration in the second appraisal year and the two appraisal years immediately preceding the second appraisal year exceeds 50% of the aggregate of the eligible premium in those three years.
(c) The services of a Development Officer shall be liable for termination in accordance with rule 7, if his annual remuneration in the Third appraisal year commencing after the date of publication of these rules in the Official Gazette (hereinafter referred to as the "third appraisal year") exceeds 40% of the eligible premium in that year and the aggregate of the annual remuneration in the third appraisal year and the two appraisal years immediately preceding the third appraisal year exceeds 47.50% of the aggregate of the eligible premium in those three years.
(d) The services of a Development Officer shall be liable for termination in accordance with rule 7, if his annual remuneration in the Fourth appraisal year commencing after the date of publication of these rules in the Official Gazette (hereinafter referred to as the "fourth appraisal year") exceeds 38% of the eligible premium in that year and the aggregate of the annual remuneration in the fourth appraisal year and the appraisal year immediately preceding the fourth appraisal year exceeds 38% of the aggregate of the eligible premium in those two years."
23. A perusal of clause (a) of sub-rule (9) of Rule 6 reveals that the services of a Development Officer shall be liable for termination in accordance with rule 7, if his annual remuneration in the First appraisal year commencing after the date of publication of these rules in the Official Gazette (hereinafter referred to as the "first appraisal year") exceeds 50% of the eligible premium in that year and the aggregate of the annual remuneration in the first appraisal year and the two appraisal years immediately preceding the first appraisal year exceeds 50% of the aggregate of the eligible premium in those three years.
24. The appraisal date has been defined in clause (c) of the Rule 2 of Rules, 2009 as follows:-
"Appraisal date means:-- (I) In relation to a Development Officer appointed prior to the date of publication of these rules in the Official Gazette, (a) in the first year of his service, the first day of the month following that in which he completes 12 months of service from the date of his appointment; and
(b) in every subsequent year of service, the first date of month following that in which he completes 12 months of service from the last appraisal date.
(II) In relation to a Development Officer appointed prior to the date of publication of these rules in the Official Gazette,
(a) in the first year of his service from the date of publication of these rules in the Official Gazette the 1st day of the month following that in which he completes a period of twelve months of service from the date on which his last annual increment accrued (whether released or not) in accordance with sub-rule (2) of rule 56 of the Life Insurance Corporation of India (Staff) Regulations, 1960, and
(b) in every subsequent year of service, the first day of the month following that in which he completes twelve months of service from the last appraisal date."
25. "Appraisal year" has been defined in clause (d) of Rule 2 of Rules, 2009 as the period between two consecutive appraisal dates and the period of 12 months of service preceding the appraisal date ascertained in accordance with Item (a) of sub-clause (I) of clause (c), and each period of the 12 months of service next preceding the appraisal date ascertained in accordance with Item (a) of sub-clause (II) of clause (c), shall also be an appraisal year.
26. A conspectus of the aforesaid provisions of Rules, 2009 would go to show that with respect to the petitioner, the first appraisal year would commence after the notification of Rules, 2009.
27. As per clause (a) of sub-rule (9) of Rule 6, a Development Officer, even if he had been in service since prior to the notification of the Rules, 2009, would be liable for termination, if his annual remuneration in the first appraisal year commencing after the date of publication of the Rules, 2009 exceeds 50% of the eligible premium in that year and the aggregate of the annual remuneration in the first appraisal year and the two appraisal years immediately preceding the first appraisal year exceeds 50% of the aggregate of the eligible premium in those three years.
28. In the instant case, it has been brought on record that in the first appraisal year, the annual remuneration came to 3,68,620.91 whereas the eligible premium was 1,59,375.70. In the preceding two appraisal years, the annual remuneration in the appraisal year ending 31.12.2008 came to 3,07,523.44 whereas the eligible premium was 14,98,111 and likewise in the appraisal year ending 31.12.2009 the annual remuneration was 2,99,699.72 whereas the eligible premium was 1,63,307.20. Since the annual remuneration in the first appraisal year commencing after the date of publication of the Rules, 2009 exceeded 50% of the eligible premium, the aggregate of the annual remuneration of the previous two appraisal years ending 31.12.2008 and 31.12.2009 together with the appraisal year ending 31.12.2010 was calculated and found to be exceeding 50% of the aggregate of the eligible premium in those three years. In paragraph 13 of the counter-affidavit, a chart has been provided which indicate as follows:-
Sl. No. Appr Year Ending Remuneration Eligible Premium 1 31.12.2008 307523.44 1498111.00 2 31.12.2009 299699.72 163307.20 3 31.12.2010 368620.91 159375.70 Ratio = 53.59%
29. As the cost ratio exceeds 50%, the services were liable to be terminated under the Rules, 2009.
30. The contention of the learned counsel for the petitioner is that the Rules, 2009 would be prospective in its operation, therefore, the three appraisal years that are to be taken into consideration for exercise of power under Rule 7 have to be since after the date of notification of the Rules. It has been contended that the Rules do not have retrospective effect as has been interpreted by the respondents. The other submission of the learned counsel for the petitioner is that for the appraisal years ending 31.12.2008 and 31.12.2009, the 1989 Rules would be applicable which provide for disincentives instead of termination. And further, since the petitioner had worked within the cost ratio for the appraisal year ending 31.12.2008, his services cannot be terminated. In the alternative, it was submitted that the Rules, 2009 are ultra vires inasmuch as they provide for termination of the services of Development Officers only, whereas no such provision has been made with respect to terminating the services of Assistant Branch Manager or Branch Manager for non-performance of the respective branch. It was contended that since the Development Officers have to develop insurance business with the help of Agents and they are not vested with any power to supervise their work, the penal action against them for the fault of the agents is not legally justified and, as such, is discriminatory.
31. Per contra, the learned counsel for the Life Insurance Corporation of India submitted that the rules have been framed by the Central Government, in exercise of its power conferred by Section 48 (1) read with sub-section 2 (cc) of the Life Insurance Corporation Act, 1956 and by virtue of sub-section (2C) of Section 48 of the Life Insurance Corporation Act, 1956, the Central Government has been provided with power to make rules with retrospective effect. It was pointed out that since sub-rule (9) of Rule 6 clearly indicated that for the purpose of termination of service of a Development Officer, it was open to consider the two preceding appraisal years ending before the first appraisal year, if the annual remuneration in the first appraisal year exceeded 50% of the eligible premium, therefore, it can safely be said that the rule had retrospective effect and since the Life Insurance Corporation Act, 1956 permits the Central Government to provide retrospective effect to its rules, it cannot be said that the action of the Corporation in terminating the service of the petitioner by taking into account the appraisal years ending 31.12.2008 and 31.12.2009 was in any way illegal or arbitrary. It was also submitted that the rules cannot be said to be ultra vires merely because the Development Officers have been treated differently with the Assistant Branch Manager Sales as they belong to different cadres. It was further submitted that the petitioner was appointed with the understanding that all the service rules would be made applicable to him, as amended from time to time. It was contended that since the service condition of the petitioner was amenable to the Rules, which could be amended from time to time, the petitioner cannot raise any grievance with regard to the specific provisions of the rules, particularly when those rules have statutory backing.
32. The learned counsel for the petitioner, in the alternative, also submitted that even if it is assumed that the Corporation had the power to terminate the services of the petitioner, but such power ought to be exercised in a reasonable manner. It was contended that in the instant case, the petitioner was not only found eligible but was also selected for promotion in the year 2008 as also in the year 2009, which clearly demonstrate that service performance had been good. It was contended that though rule 7 of the Rules, 2009 provided for termination of the services on certain conditions, but the power to terminate the service was at the discretion of the Zonal Manager and it was not mandatory to terminate the service even though it might be permissible to do so. It was contended that this discretion is to be exercised by the Zonal Manager after giving opportunity to the Development Officer to show cause against proposed termination. It was contended that in the instant case, the petitioner had given a reply to the show cause notice and had given a complete detail of his performance as also the reasons which explained his alleged under performance. It was contended that the Zonal Manager, at the time of passing the termination order, did not address to all the relevant aspects taken by the petitioner in his reply, therefore, the order of termination stood vitiated.
33. Having considered the rival submissions of the learned counsel for the parties, we are of the view that the service conditions of the employees of Life Insurance Corporation of India are governed by the rules and regulations framed in accordance with the provisions of Life Insurance Corporation Act, 1956. Sub-section (1) of Section 48 of the Life Insurance Act, 1956 provides that the Central Government may, by notification in the official Gazette, make rules to carry out the purposes of the Act. Clause (cc) of sub-section (2) of Section 48 enables the Central Government to provide for the terms and conditions of service of the employees and agents of the Corporation, including those who become employees and agents of the Corporation on the appointed date under the said Act. Sub-section (2C) of Section 48 enables the Central Government to frame rules with retrospective effect. The power to unilaterally frame rules with retrospective effect cannot be ignored. We are therefore of the view that the Central Government acted well within its domain while framing the Rules, 2009 and it also had the power to give retrospective effect to the rules. In the given circumstances, by virtue of clause (a) of sub rule (9) of rule 6 of the Rules, 2009, the Life Insurance Corporation was authorized to take into consideration the cost ratio for the appraisal years ending 31.12.2008 and 31.12.2009 in addition to the first appraisal year after the notification of these Rules inasmuch as the cost ratio for the first appraisal year ending 31.12.2010 had exceeded 50%.
34. The contention of the learned counsel for the petitioner that the rules were discriminatory, because they picked up only the Development Officers and left out the Assistant Branch Managers as well as Branch Managers, cannot be accepted. Admittedly, the post of Assistant Branch Manager is a promotion post and is a separate cadre, therefore, the plea of discrimination is unsustainable. Further, in the present day of competitive business environment, if the Central Government is of the view that the Development Officers can be removed for non-performance, it is a policy decision which cannot be lightly questioned without specifically disclosing violation of any constitutional provision or the provisions of the Life Insurance Corporation Act. Accordingly, we do not find any good ground to hold that the provisions of the Rules, 2009 are ultra vires.
35. However, we are of the view that the rule 7 of the Rules, 2009 is an enabling provision. It does not mandate that the services of a Development Officer must be terminated. It only provides that the services may be terminated in a given situation. Thus, the power to terminate the service is to be exercised with sound discretion. The Life Insurance Corporation is by no means mandated to terminate the services of the Development Officers who do not conform with the cost ratio as provided by sub-rule (9) of Rule 6 of Rules 2009. The Proviso to Rule 7 itself indicates that before terminating the services, the Zonal Manager has to take into consideration the explanation offered by the Development Officers to the show cause notice given to him.
36. In the instant case, we find that the petitioner in reply to the show cause notice gave various facts and figures as also the circumstances which could have been taken into account by the Zonal Manager concerned while taking a decision to terminate or not to terminate the services of the petitioner even though he had crossed the cost ratio applicable for the relevant appraisal years. The termination notice served on the petitioner does not indicate that the Zonal Manager addressed to the explanation offered by the petitioner to the show cause notice. Although it states that the reply has been condidered but it fails to record reasons as to why the explanation offered by the petitioner did not appeal to him. Thus, we find that the order terminating the services of the petitioner has been passed mechanically without properly addressing to the reply submitted by the petitioner to the show cause notice. Accordingly, we set aside the termination order dated 11.06.2011 with liberty to the Zonal Manager to pass a fresh order, after taking into consideration the various aspects addressed to by the petitioner in his reply. It shall also be open for the petitioner to submit an additional representation detailing the reasons as to why the power under rule 7 of the Rules 2009 should not be invoked against him.
37. For the reasons recorded herein above, the Writ Petition No. 53292 of 2010 is dismissed whereas Civil Misc. Writ Petition No. 40669 of 2011 is partly allowed. The order dated 11.06.2011 passed by the Zonal Manager, Life Insurance Corporation is quashed with liberty to the Zonal Manager, Life Insurance Corporation to pass a fresh order, in accordance with law, and in the light of the observations made herein above.
38. With the aforesaid directions both the writ petitions stand disposed of.
Order Date :- 06.12.2012 Sunil Kr Tiwari