CHAIRMAN CUM MANAGING DIRECTOR UNITED INDIA FIRE AND GENERAL INSURANCE CO LIMITED CHAIRMAN CUM MANAGING DIRECTOR NEW INDIA ASSURANCE COMPANY LIMITED NEW INDIA ASSURANCE COMPANY LIMITED Vs. K S VISHWANATHAN:JOY J MANNUMMAL:HARBHAJAN SINGH

JUDGEMENT

(1.) These appeals and transferred cases arise out of problems connected with the integration of services consequent on the nationalisation of general insurance business. The management of the undertakings of all insurers carrying on general insurance business was vested in the Central Government, pending nationalisation, by the General Insurance (Emergency Provisions) Ordinance. The process of nationalisation was completed by the enactment of the General Insurance Business (Nationalisation) Act, 1972, providing for the acquisition and transfer of shares of Indian Insurance Companies and undertakings of other existing insurers. 'Existing insurer' was defined to mean 'every insurer the management of whose undertaking has vested in the Central Government under S. 3 of the General Insurance (Emergency Provisions) Act, 1971 and included 'the undertakings of the Life Insurance Corporation in so far as it related to the general insurance business carried on by it'. 'Indian insurance company' was defined to mean 'an existing insurer having a charge capital who is a company within the meaning of the Companies Act'. 'Corporation' was defined to mean 'the General Insurance Corporation of India to be formed under S. 9 of the Act.' S. 4(1) of the Act provided that 'on the appointed day, all the shares in the capital of every Indian insurance company shall, stand transferred to and vested in the Central Government'. S. 4(2) required the Central Government to transfer not less than ten shares of every such company to such persons as may be specified to enable the Indian insurance company to function as a Government company. S. 5(1), provided that on the appointed day, the undertaking of every existing insurer who was not an Indian insurance company shall stand transferred to and vested in the Central Government. S. 5(2) provided for the transfer of the undertaking to and vesting of it in more than one Indian insurance company in such manner as might be specified. S. 6 provided for the effect of transfer on undertaking. S. 7 provided for the transfer of service of existing employees in certain cases. Sub-sections (1)-and (2) of 8, 7 are important for the purpose of the present appeals and may, therefore, be usefully extracted :

(2.) Before nationalisation there were a large number of big and small insurance companies and undertakings which were carrying on the business of general insurance, in India. After the nationalisation Act was passed the Central Government framed a scheme under S. 16(1)(a) by which the existing insurance companies were so grouped together that only four companies . remained to carry on the business of general insurance. They were the Oriental Fire and General Insurance Company Ltd. The United India Fire and General Insurance Company Ltd., The India Assurance Company Ltd. and The National Insurance Company Ltd. The share capital of these four companies was vested in and controlled by the General Insurance Corporation. 'The insurance undertakings, other than Indian insurance companies were merged into one or other Indian insurance company.

(3.) Immediately thereafter the question of integration of the services of the employees of the former Indian insurance companies and other existing insurers arose.