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Judgment
Ramanujam, J.—The petitioner entered the field of General Insurance in December, 1941 as an Assistant in the Fire Department of the New
India Assurance Company Limited and continued in that employment till July, 1943. Thereafter, he worked in various Insurance Companies. At
the time of the nationalisation of General Insurance by the Government of India, in May. 1971 the petitioner was working as a Senior Branch
Secretary of the General Assurance Society Limit-ed at Madras, he having been appointed to that post on 8-9-1969. After the nationalisation of
the general insurance business the petitioner was asked to submit his bio-data for the purpose of fixation of his proper rank in the new set up. The
petitioner submitted his bio-data ; but the work of categorisation, however, was not completed by the Committee constituted for the purpose. In
the meanwhile, the Government of India thought out a new scheme under which four subsidiary companies were accorded the status of beginning
or acquiring companies of the General Insurance Corporation of India. They are; (1) the New India Assurance Company Limited, (2) Oriental Fire
and General Insurance Company Limited, (3) United India Fire and General Insurance Company Limited and (4) the National Insurance Company
Limited. 106 Companies in the country doing general insurance business at the time of the nationalisation were grouped in batch of not less than 24
companies and each batch merged with one acquiring company or other. Each of the acquiring companies was under the control of a Chairman-
cum-Managing Director. The General Assurance Society in which the petitioner was working became a unit of the National Insurance Company
Limited hereinafter referred as the company, and the petitioner continued to be the senior Branch Secretary of the National Insurance Society
Limited in the Southern Zone.
According to the petitioner, even though the nationalization was promulgated in May, 1971, there was no integration of the services and no rules
and regulations prescribing the service condition of the officers of all categories of the erstwhile companies had been framed. So much so,
notwithstanding the said regrouping and merger, the officers and other employers of the erstwhile private companies continued to be governed by
the rules and regulation obtained in their respective companies. In December, 1974, 24 officers were selected for appointment as Administrative
Officers by the Southern Regional Office of the National Insurance Company Limited and the petitioner was one among them. The petitioner had
received on 17-1-1975 a communication, dated 18-124974 from the Chairman-cum-Managing Director of National Insurance Company Limited
informing him that he has been provisionally selected for the appointment of Administrative Officer, and that he would hold the post on the same
terms and conditions of service by which the petitioner was then governed until those terms and conditions are duly altered by the company. The
petitioner was functioning as an administrative officer on the basis of the said order of appointment, dated 18-12-1974.
However, on 4-4-1975, the petitioner received a communication, dated 3-4-1975 from the Divisional Manager, Madras Divisional Office No.
3 of the National Insurance Company Limited stating that the petitioner has to retire from service on 30|-6-1975, he having attained the age of 60
on 4-6-1975. The petitioner immediately replied stating that the rules obtained in his erstwhile company, viz., the General Assurance Society which
alter regrouping has become a unit of the National Insurance Company Limited, does not provide an age of retirement from service, and asking for
a copy of the rules under which the retirement order was based. The petitioner, was not, however, furnished with a copy of the rules as requested
by him. In these circumstances the petitioner has filed this writ petition challenging the validity of the said retirement order, dated 3-4-1975.
According to the petitioner, so long as he is still governed by the terms and conditions of service laid down by the erstwhile company which
does not provide for retirement at a particular age, he is not liable to retire on the completion of 60 years of age. The petitioner states that there is
no rule fixing retirement age in the erstwhile company and that as a matter of fact, many of the officers of that company had continued in service
even upto the age of 72 years. What in effect, the petitioner contends is that since there is no rule prescribing the age of retirement, he is entitled to
continue in service of the said company for life and that as these conditions of service still continue to govern his service even now, he cannot be
asked to retire at the age of 60. The question is how far this contention of the petitioner is tenable ?
It is not in dispute that even after the nationalisation of the General Insurance business and the regroupings of 106 companies into four acquiring
companies, the officers are still governed by the same service conditions which are applicable to them before the nationalisation, though the service
conditions of supervisory, clerical and subordinate staff had since been altered by the Central Government in 1974 in exercising their power u/s
16(1) of the General Insurance Business (Nationalisation) Act, 1972.
Thus the question for consideration is whether there is a rule fixing the retirement age in the petitioner''s erstwhile company and even if there is no
such rule, whether the petitioner can claim to continue in service for life ?
The learned Counsel for the respondents raised a preliminary objection as to the maintainability of this writ petition. According to him, the
company which is registered under the Indian Companies Act, cannot be said to be a statutory body against which a writ can issue, and though the
company is a nationalised one, it cannot be said to be a statutory Corporation or a Government undertaking.
The learned Counsel for the petitioner, dealing with the said preliminary objection, refers to a decision in Sukhdev Singh, Oil and Natural Gas
Commission, Life Insurance Corporation, Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II.
Officers, Shyam Lal, Industrial Finance Corporation, , wherein the Supreme Court has held that the Oil and Natural Gas Commission, the Life
Insurance Corporation and the Industrial Finance Corporation are statutory bodies having statutory status and that they are, therefore, authorities
within the meaning of Article 12 of the Constitution, and contends that as per the said decision, the company in this case should also be treated as
the statutory authority under Article 12 of the Constitution of India and that, therefore, a writ could issue to that company from this Court, It is said
that substantially all the tests laid down by the Supreme Court in that case for determining whether a company or a corporation is a statutory
authority or not are satisfied, The Supreme Court has expressed in that case that merely because a corporation has a legal personality of its own, it
does not follow that it cannot be an agent or instrumentality of the State and that if it is subject to the control of the Government in all important
matters of policy it can be taken to be an agency of the Central Government. To what extent of control exercised by the Central Government, the
learned Counsel for the petitioner refers to Sections 16, 19, 21, 23 and 33 of the General Insurance Business (Nationalisation) Act, 1972. Section
16 of the said Act enables the Central Government to frame one or more schemes for the more efficient carrying on of general insurance business
in relation to various matters set out thereunder. Section 19 points out that the functions of the Corporation set out u/s 13 are to be subject to the
rules made by the Central Government. Section 21 contemplates the management of the Indian Insurance Companies being vested in the
Custodian who has to act under the directions of the Central Government. Section 23 points out that the Corporation and other acquiring
companies shall, in the discharge of their functions, be guided by such directions with regard to the matters of policy involving public interest as the
Central Government may give. Section 33 provides that no provision of law relating to the winding up of the companies shall apply to the
corporation or to an acquiring company, and neither the corporation nor any such company shall be placed in liquidation save by order of the
Central Government and in such manner as it may direct. All these provisions clearly indicate that the acquiring company cannot claim to function
independent of the Central Government and that whatever the acquiring company does is only under the general directions and control of the
Central Government. These provisions make it abundantly clear that the Central Government has got the ultimate control, over the affairs of all the
acquiring companies including the company in question. The said company should, therefore, be taken to be an authority to which a writ can issue
under Article 226 of the Constitution.
The learned Counsel for the respondent, on the other hand, refers to another decision of the Supreme Court (rendered on the same day) in
Sabhajit Tewary Vs. Union of India (UOI) and Others, . which held that the Council of Scientific and Industrial Research is not an authority within
the meaning of Article 32. According to the learned Counsel, this decision directly applies to the facts of this case and, therefore, the writ directed
against the company should be rejected as not maintainable. In the said case, it was contended that though the Council of Scientific and Industrial
Research is a society incorporated under the Registration of Societies Act, having regard to the fact that the Government appoint nominees on the
governing body and terminate their membership and that the Government takes special interest in the affairs of the Council, it should be held that
the Council is an agency of the Government and as such an authority within the meaning of Art 12. Rejecting this contention, the Supreme Court
held that the Council does not have a statutory character like the Oil and Natural Gas Commission or the Life Insurance Corporation or the
Industrial Finance Corporation, that it is a society incorporated in accordance with the provisions of Registration of Societies Act and that the other
features pointed out do not in any way make the Council an agency of the Central Government, functioning under its control,
On a due consideration of both the decisions of the Supreme Court, I am of the view the decision in Sukhdev Singh, Oil and Natural Gas
Commission, Life Insurance Corporation, Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II.
Officers, Shyam Lal, Industrial Finance Corporation, , alone is applicable to the facts of the present case. It is not as if the National Insurance
Company Limited, against which the writ petition is directed, has got independent existence apart from the Government. Though the company has
been registered under the Indian Companies Act, and as such cannot be held to be the Department of the Government, still the control and
supervision which the Government exercise over the affairs of the four acquiring companies under the provisions of Central Act 17 of 1971 and
Central Act LVII of 1972 make the companies agencies of the Central Government. I have to, therefore, hold that the writ petition directed against
the National Insurance Company Limited is maintainable.
Then we come to the merits of the petitioner''s case. He has filed three supporting affidavits from three different individuals in support of his
case that there was no rule fixing the age of retirement of the officers of the General Assurance Society. Deponents of those three supporting
affidavits are or were the employees of the erstwhile company and they clearly say that to their knowledge there was no rule as to retirement age of
officers and that in fact many people had continued even after they reached 70 years of age. However, the respondents have shown a typed copy
of the rules which does contain a clause fixing the age of retirement at 60. But it has not been explained by the respondents as to what happened to
the original of the rules. Unless the said copy of the rules is shown to be a true copy of the original, it cannot be taken to be authentic. At the same
time it cannot be assumed that without any service rules, the petitioner was recruited by the said company or that the respondents against whom no
ill-will or malice has been alleged, will stoop to concoct evidence with a view to retire the petitioner. If there was in fact no rule regarding the age of
retirement, the petitioner could have also produced a copy of the service rules to point out the omission. If the petitioner had produced a copy of
the service rules and if it was different from the one produced by the respondents, it is possible to say that the copy of the rules produced by the
respondents cannot be accepted to be genuine. Though no explanation is forth coming from the respondents as to what happened to the original of
the rules. I am not inclined to agree with the petitioner''s learned Counsel that the copy of the rules now shown by the learned Counsel for the
respondents should not be accepted as genuine. The copy of the rules now produced before the Court contains a clause providing 60 years of age
as the age of retirement. Therefore, as per the copy of the rules produced now, as having been maintained by the petitioner''s erstwhile company,
the order directing the petitioner to retire from service will be valid.
Even assuming that the copy of the service rules shown by the respondents, cannot be accepted as genuine, in the absence of the production of
the original, the further question for consideration is whether the petitioner can have a declaration from this Court, as it were, to continue in service
till his life time. It is common knowledge that in all services either under private managements or under the Government concerns, the age of
retirement does not in any case, exceed 60 years. The question is whether the petitioner can claim to be retained in service contrary to this well-
established practice or usage. In McClelland v. Northern Ireland General Health Services Board [1957] 2 All E.R. 129, while dealing with an
order of appointment without fixing any time limit Lord Goddard observed;
That an advertisement offers permanent employment does not, in my opinion, mean thereby that employment for life is offered.
In the same case, in more emphatic terms Lord Tucker said:
It is, in my view, impossible to hold that these words (permanent and pensionable) conferred on her a contractual right to a ""free-hold tenure of the
post of senior clerk or did anything more than indicate that the post available would have the degree of security of tenure which attaches to the
regular as distinct from the purely temporary staff.
In Halsbury''s Laws of England (Simonds Ed.) Vol. 25 page 490 it is said:
It seems that the fact that the employment offered to and accepted by an employee is described as permanent employment does not in itself
normally create a promise of life employment or disentitle the employers from terminating the employee''s contract of service on reasonable notice.
A contract for permanent employment will, however, be considered as a contract for employment for life if the terms of the contract are such as to
render inevitable the conclusion that a life-time employment was intended.
In Bimalacharan Batabyal Vs. Trustees for the Indian Museum, , while construing the words "" substantive "" and ,''"" permanent"" used in the service
book it was held that these words do not signify that it is an employment for life and that these words were more descriptive of the nature and
character of the appointment than indicative of the duration of that appointment. This case was followed by a Division Bench of the Patna High
Court in Giduyu Venkata Sitapati Vs. Sri Sri Sri Krishna Chandra Gajapati Narayana Deo, . A division Bench of this Court while construing the
word "" permanent"" in relation to an employment in an educational institution in Chilakamarri Lakshminarasimha-charyulu v. MeLaurin High School,
Coconada AIR 1949 Mad., 788, observed thus:
Though the contract merely says ''permanent'' and though the word '' permanent'' may in a proper case be taken to mean for life, nevertheless in
the matter of appointment of teachers in schools, it is the general usage, so to say, for the educational institutions not to continue to employ teachers
who have passed the age of 60 years the ordinary age of superannuation being 55, those who are over 55 being kept on till 60 in case the
management is of opinion that they are fit to perform their duties efficiently. This usage prevailing in the educational world must be deemed to be
part of the contract and it is impossible, in our opinion, to record the contract as being one for life, having regard to the conditions and usages
known to both the parties at the time of the contract.
It is not necessary to elaborate this aspect of the case because the plaintiff himself has not made the claim that the contract gives him an
appointment for life.
I entirely agree with the observations made in the last mentioned case that though a contract of employment does not provide age limit for
retirement, the usuage prevailing in similar establishments can be taken to be a part of the contract of service, that it is impossible, even in the
absence of a rule fixing the age of retirement, to construe the contract of service as one for life and that the normal practice, in such services should
be taken to be part of the service contract. On the question of practice and usage, it is significant to note in this connection that in respect of
supervisory, clerical and subordinate staff working in all the four acquiring companies, retirement age had been fixed statutorily at 60 years, vide
Paragraph 12 of the General Insurance (Nationalisation and revision of pay scales and other conditions of service of supervisory, clerical and
subordinate staff) Scheme, 1974. In this view of the matter, the petitioner''s contention that he is entitled to continue in service for life cannot be
accepted. This writ petition, therefore, fails and is dismissed. There will be no order as to costs.