Constitution of India 1950, Articles 14, 19(1) (g), Article 31B & General Insurance Business (Nationalisation) Act 1972 Sec. 16, Right of Central Govern ment to frame schemes under the Act-Whether affects fundamental rights of employees of companies constituted under the Act. :

Inclusion of an Act in the Ninth Schedule does not protect order or notifications issued under the said Act.

Scheme notified under Sec. 16(1) whether protected.

Introduction of reform through legislation-Law, need not have universal application-Piecemeal method of introducing reforms-Whether permissible- Statutory provision whether could be struck down on vice of under inclusion:

Industrial Disputes Act 1947-Whether applicable to general insurance companies.

General Insurance Business (Nationalisation) Act 1972, Sec. 16(1)(g).

General Insurance (Rationalisation and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme of 1980--Scheme of 1980 relating to revision of pay scales andi other terms and conditions of service-Whether ultra vires Sec. 16(2) and invalid- Whether suffers from vice of excessive delegation of legislative power.

Administrative Law-Delegated legislation-Principles of Scope of subordinate legislation.

Interpretation of Statutes-Conflict between the statutes-One special other general-Whichito prevail Tests for determination of.

Interpretation of statutes-Not mere exercise in semantics-Provisions conferring or delegating power-Construction.

Prior to 1972, there were over 100 Insurance Coibpanies-Indian and foreign. The conditions of service of the employees of these companies were governed by the respective contracts of service between the companies and the employees. On 13th May 1971, the Government of India assumed management of these general insurance companies under the General Insurance (Emergency Provisions) Act, 1971. The General Insurance Business (Nationalisation) Act, 1972 nationalised general insurance business.

Four merger schemes were framed in 1973 by the Central Government in exercise of the powers contained in s. 16(1) of the Act and four companies; Oriental Fire and General Insurance Company, National Insurance Company New India Assurance Company and United India Insurance Company Ltd., were merged into and they alone were allowed to carry on the business of general insurance. These companies started functioning from Ist January, 1973 and the process of merger was completed by Ist January, 1974 when the afore- said four schemes came into force.

The Government of India by a notification dated 27th May, 1974, framed a 'scheme' called the General Insurance (Rationalisation and Revision of Pay Scales and Other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Scheme, 1974 in exercise of the powers conferred by s. 16(1)(g) of the Act. This scheme provided for the rationalisation and revision of pay scales and other terms and conditions of service of employees working in supervisory, clerical and subordinate positions and governed the pay scales, dearness allowance, other allowances and other terms and conditions of the general insurance employees. Paragraph 23 of the Scheme provided that the new 'scales of pay shall remain in force till December 31, 1976 and thereafter shall continue to be in force unless modified by the Central Government.

In 1976, the Board of Directors approved a policy for promotion. On 1st June, 1976 another scheme by which amendments were made with regard to Provident Fund, was introduced. On 30th July 1977, a Scheme amending pro- visions regarding sick leave was also introduced,

The employees submitted a memorandum objecting to the revision of pay scales and other conditions of service and wanted a reference to the Industrial Tribunal. The class III and IV employees however did not accept the revision of Service Conditions, pay scales dearness allowance, etc. and raised industrial dispute. There were conciliation proceedings and there was failure to bring about amicable settlement of disputes.

In 1980, the Government introduced the General Insurance (Rationalisation and Revision of Pay Scales and Other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme, 1980. This Scheme which was introduced by a notification dated September 30, 1980 made detailed provisions as to how the adjustment allowance is to be dealt with so far as, Dearness Allowance, Overtime Allowance, Contribution to Provident Fund and other retirement benefits Were concerned. Paragraph 7 which dealt with 'retirement' stipulated that an employee who was in service of the Corporation before the commencement of the Scheme of 1980 should retire from service when he attains the age of 60 years, but an employee, who joins the service of the Corporation after the commencement of the Scheme would retire on attaining the age of 58 years. The Fourth Schedule to the Scheme indicated the revised scales of pay.

The petitioners in their writ petitions to this Court contended that the terms and conditions of service enunciated in 1974 being a result of bilateral agreement could not be changed unilaterally to the detriment of the employees and that the notification.deprived the rights of the employees to receive dearness allowance etc. with the rise in the cost of Hving index, It was further contended that the Scheme was violate of s. 16(2) of the Act and ultra vires Articles 14, 19(1)(g) and Article 31(2) of the Constitution, and that the Constitution 44th amendment 'deleting Articles 31 and 19 cannot save the Scheme, since the amendment came inte force only 20th June, 1979, whereas the impugned notification affecting the rights of the employees to emoluments took effect from 1st January, 1979.

The respondents contested the writ petitions on the ground that s. 16(6) authorised the Central Government by notification, to add, to amend or to vary any scheme framed under s.16 and consequently rationalisation or revision of pay scales was permissible by the 1980 scheme. Moreover in comparison with other employees in governmental or public sectors, the employees of the general insurance companies were 'High-wage islanders' and it was consequently necessary to put a ceiling on their emoluments and other amenities in order to facilitate better functioning of the insurance companies as well as to subserve the object and purpose of the nationalisation policy.

Allowing the writ petitions,