High Court
Case Details
WP(C) 4975/2012 BEFORE THE HONBLE JUSTICE MR. B.K.SHARMA JUDGMENT AND ORDER (CAV) The petitioners working as Development Officers, under the respondents, Oriental Insurance Co. Pvt. Ltd., are aggrieved by the Annexure -1 series, commu nications dated 12.06.2012, made to each one of the petitioners on the subject o f review of business performance since 2002-2003, and 2011-2012. By the said com munications it was conveyed that each of the petitioners had exceeded the stipul ated cost limit in their business performance during the period from 2002-2003, 2011-2012, and consequently became liable for refund of the amount indicated in each one of the communications. For a ready reference one such communications ad dressed to the petitioners No. 1 is quoted below:
Legal Reasoning
(cid:28)Deptt. CRM Sectt. Dear .Mr. Roy, Re : Review of your Business Performance since 2002-2003 to 2011-201 2 and action on higher cost within the stipulated cost limit of Development Offi cer (M). This is with reference to the discussions held in a meeting at RTC, Guwahiti on 08/06/2012 in the captioned subject. During the meeting you were explained about the details of the norms regarding r equirement of your performance as per the stipulated cost limit and the action t o be taken in case of any Dev. Officer (M) operating above the stipulated cost l imit. Accordingly we have reviewed your performance since 2002-2003 till 2011-20 12 applying the steps mentioned in the relevant Para of the Dev. Officers servic e rule in view of the premium procured vis-à-vis incurred cost against stipulate d limit and the required action thereof. We are to inform you that a total of Rs. 1327499.00 is worked out as recoverable amount as a result of withdrawal of Non - Core Benefit (NCB) and decrements due to excess cost incurred during the period of review. You are also aware that there had been wage revision in 2008 and 2010, the arrea r of which payable to you was not paid during that time as the recoverable amoun t was not confirmed at that time. The total payable amount due to two wage revis ions are worked out at Rs. 172690.00 excluding PF and I. Tax. Now after taking i nto account this payable amount, the net recoverable from you stands at Rs. 1154 809.00. We therefore, request you to arrange to refund the above amount at the earliest. Further to above, we would like to inform you that you are required to perform w ithin the stipulated cost limit not only in the current financial year but also in every year to avoid action in the form of recovery of non core bene (NCB) and also decrement leading to termination. Please note after application of the action as mentioned above, your basic salar y as on 31.03.2012 stands at Rs. 8820.00 (B. Basumatary) Chief Regional Manager. To. Mr. Dinesh Chandra .Roy, Dev. Offider, Shillong DO. Copy to concerned DO/BO for information and needful action. d/b (cid:29)
Decision
2. The relevant facts are not disputed. As stated in Para 2 of the writ pet ition, the petitioners had been appointed, during the period from 1984-1987. The ir duties and functions are as enumerated in Para 3 of the writ petition. Accord ing to the petitioners, the impugned action on the part of the respondents is ar bitrarily and designed with ulterior motive. They have contended that ever since their appointment as Development Officer, they have been working with dedicatio n and sincerity and there was no occasion to issue any warning letters to them i n respect of their performance. 3. Referring to the particular procedure for Cost Control as laid down in t he General Insurance (Nationalization of Pay scale and other conditions of servi ce of development staff) scheme, 1976, the petitioners have contended that even if they had exceeded the stipulated cost limit, the impugned communications are bad in law as the procedure envisaged under Clause-11 of the scheme has not been followed. For a ready reference, Clause -11 of this Scheme (relevant portion) i Every person of the Development Staff shall after his categorization in s quoted below. (cid:28)I. accordance with the provisions of this Scheme work with such cost as t maintain his cost ratio within the limits stipulated in sub-clause (b) of Clause (17) of paragraph 3. II. If the cost ratio for a particular year in respect of member of the Deve lopment Staff exceeds the stipulated limits, the non-core allowances payable to him in the year immediately following the year under review shall be reduced to the extent of the amount by which his cost ratio exceeds the stipulated limits d uring the year under review. Provided that if the Non-Core Allowances payable to the concerned member of the Development Staff during the year immediately following the year under review ar e less than the reduction to be effected in terms of this paragraph, no Non-Core Allowances shall be paid to the concerned member of the Development Staff durin g the year immediately following the year under review. Provided further that no such reduction shall be effected, if no Non-Core Allowa nces were payable to the concerned member of Development Staff during the year i mmediately following the year under review. III. If in respect of a member of the Development Staff the Cost Ratio is in excess of the stipulated limit for the second year in secession, he should be is sued a letter of warning to the effect that in the event of his Cost Ratio excee ding the stipulated limit for the third year is succession, his services shall b e liable to be terminated. Where a person of the Development Staff is operating for three years in IV. succession on a Cost Ratio which exceeds the stipulated limits his services shal l be liable to be terminated after the appraisal of his performance for the thir d year. Where the Non-Core Allowances of a person of the Development Staff are V. reduced under sub-paragraph (II), or his services are terminated under sub-parag raph (IV), such reduction of Non-Core Allowances or termination of services shal l be deemed to be a penalty. (cid:29) According to the petitioners, the procedure envisaged in Clause - 11 hav 4. ing not been followed the petitioners are not liable to make the refund even if it is admitted that they had exceeded the stipulated Cost Limit attracting the c onsequences. In Para 10 to 13 of the writ petition it has been stated thus : (cid:28) 10. That, the petitioners beg to state that the petitioners , as Development Officers are required to maintain a stipulated cost limit within a particular y ear in order to be in the category of performers. It is pertinent to state herei n that in order to excel as Development Officers; a person must be in a centre p lace or must be in his own local area. On perusal of the list of the performing Development Officers prepared for the purpose of the meeting dated 06.07.2012, c learly reveals that most of the officers who are categorized as performers are a ll placed at centre places which provides them with a sufficient opportunity to perform better than the petitioners within the stipulated cost limit. It is pert inent to state herein that some of the petitioners were also subjected to freque nt transfers which also jeopardized their chances of performing well within the stipulated cost limit. That, the petitioners beg to state and submit that the impugned letters 11. issued by the Chief Regional Manager, Oriental Insurance Co. Ltd. G.S.Road,Uluba ri, Guwahati, are bad in law and are liable to be interfered with by this Hon’bl e Court. 12. That, the petitioners beg to state and submit that the action of the Res pondent Authorities in imposing penalty upon the petitioners on the ground that the petitioners were operating about the stipulated cost limits since the year 2 002-2003 till 2011-2012 is wholly arbitrary, erroneous and contrary to the provi sions of the prescribed (cid:28)Procedure for Cost Control (cid:28)and as such the impugned le tters issued by the Chief Regional Manager Oriental Insurance Co. Ltd. G.S.Road, Ulubari, Guwahati, is liable to be set aside and quashed and the Respondent Auth orities are liable to be directed not to make any deductions from the salary of the petitioners. 13. That, the petitioners beg to state and submit that a perusal of the proc edure for cost control would reveal that, if the petitioners were operating abov e the stipulated cost limits from the period from 2002-2003 till 2011-2012, then the Respondent Authorities ought to have at the outset reduced the non-core all owance payable to him in the following year to the extent of the amount by which his cost ratio exceeds the stipulated limit and where he exceeds the cost ratio n in the 2nd year also, he is to be issued a letter of warning that if his cost ratio continues to exceed for the 3rd year also, in addition to the continuity o f reduction of his non-core allowances, he may be liable to decrements in basic pay also (if there are no non-core allowance to be reduced). It is pertinent to mention herein that the Respondent Authorities have never issued any letters of warning or reduced the non-core allowances paid to the petitioners and as such t he Respondent Authorities cannot be allowed to impose penalty upon the petitione rs in the form of recovery of amounts ass a result to withdrawal of non-core ben efits (NCB) and decrements due to excess cost incurred during the period of revi ew and as such in this view of the matter the impugned letters issued by the Chi ef Regional Manager, Oriental Insurance Co. Ltd. G.S.Road,Ulubari, Guwahati, are liable to be set aside and quashed. (cid:29) 5. In the counter affidavit filed by the respondents, the aforesaid stand o f the writ petitioners has been denied. It has been stated that in the scheme of work of the Development Officers their performance are required to be review ev ery year as per the provisions of the aforesaid schemes of 1976. It has been con tended that since the petitioners failed to perform as per stipulated cost norms under the scheme, the action under challenge had to be taken. It has also been contended that the action on review performance was taken in view of requirement s under the stipulated cost norms and also pursuant to audit instruction. 6. In Para 11 of the counter affidavit, dealing with the purported delay in respect of the impugned action, the respondents have referred to the pending pr oceeding before the Apex Court in the Civil Appeal No. 8115/2003, in which certa in provisions of the scheme as amended in 2003 were put to challenge. In the pro ceeding before the Apex Court, stay order was operative and eventually vide judg ment and order dated 03.04.2008, the appeal was disposed of, upholding the impug ned provisions. The interim order was also vacated. It was pursuant to the judgm ent of the Apex Court and the report of the audit, the respondents had taken the impugned action. 7. I have heard G. N. Sahewalla, learned senior counsel assisted by M.S. Ba wria, learned counsel for the petitioners; I have also heard Mr. S. Dutta, learn ed counsel representing the respondent Insurance Company. Mr. Sahewalla, learned counsel for the petitioners referring to the aforesaid provisions of Clause -11 of the scheme submitted that the particular procedure laid down therein having not been followed, the respondents company was wrong in issuing the impugned co mmunications. As regards the plea of the respondents that no action could be ta ken immediately because of the pending proceeding before the Apex Court, he subm itted that since Clause -11 of the Scheme was not under challenge and was not st ay under, the respondents carry as fall back on the proceeding before the Apex Court so as to justify the delay in the impugned action. According to him, as pe r a stipulation envisaged in Clause 11 of the Scheme, although the respondents m ight entitle to take some other action, but certainly not the action of proposed recovery of the amount which exceeded the cost limit. 8. Countering the above arguments, of Mr. S. Dutta, learned counsel represe nting the respondent Insurance Company submitted that the petitioners themselves having admitted that they exceeded cost limit in their business performance are liable to make the refund. Supporting the impugned communications, he also subm itted that if no action was possible in view of the ongoing litigation before th e Apex Court, the same cannot cloth the petitioners with any kind of right which would debar the respondent company from realizing the amount exceeding the cost limits. He also submitted that the Development Officers are governed by Cost No rms and have to perform within the stipulated Cost Ratio. Referring to the busin ess in which the respondents company is involved, he submitted that their cannot be any leniency in the matter. Referring to the appointment order of the petiti oners stipulating that they would be governed by the aforesaid Scheme of 1976 cl early mentioning therein about the cost norms, he submitted that the petitioners being aware of the limit of the cost norms, ought not to have exceeded the same . 9. I have given by anxious considerations to the submission made by the lea rned counsel for the parties and I have also perused the entire materials on rec ord. On perusal of the judgment of the Apex Court dated 03.04.2008 in case No. A ppeal (Civil) 2438/2008, arising out of SLP' No. 8115/2003, it is found that the issue relating to cost norms in reference to the other provisions of the Genera l Insurance (Nationalizing of Pay Scales and other Conditions of Service of Deve lopment Staff) Amended Scheme 2003 (in short 2003 Scheme), was also involved. It appears that the Principal Scheme of 1976 was challenged in an earlier round of litigation but the same was turned down and the legality of the scheme was uphe ld by the Apex Court. The Amendment was challenged by the Development Officers q uestioning the same on the ground that there was unilateral change on service co nditions of the Development Officers. In the judgment dated 03.04.2008, the Apex Court noticed that the Development Officers are governed by cost norms and they are required to perform within the stipulated cost ratio. By bringing the Amend ment of 2003 a single cost system was introduced. Cost ratio is the ratio expres sed as percentage of cost incurred on a person of the Development Staff to the s cheduled premium procured through him during the concerned year. It was also not iced that normally the Development Officer who functions within the cost ratio w ill not be transferred. The concluding Para 28 preceded by the observations in p ara 6 and 8 the Apex Court observed thus: (cid:28)6. Cost relaxation was done from time to time by amending the schem e. The 2003 amendment brought down the cost ratio by 1% in all centers thereby i ncreasing the cost ratio beyond stipulated limits. This resulted in monetary los s by way of decrement. This would not only lead to reduction in salary but would ultimately result in termination of service. 8. The above illustration shows how a de development officer put on constra in to maintain his cost in revised norms he has to procure an additional premium of Rs. 12,27,000/- in this competitive market scenario or other wise he will di rectly loss the monetary benefits proportionate to his premium income. (cid:29) (cid:28)28. it was held that there was no need for any consultation with the employees. When the changes introduced by the scheme are considered in the background of t he position in law and the decision of this court by a Constitution Bench in Pra kash Sharma’s case (supra) there is no scope for interference in these appeals. However, it would be in the interests of the officers and the insurance companie s if the Development Officers who works within the cost ratio are not transferre d unless the transfer is required to be done in public interest. So far as the p romotional prospects and the wage revision are concerned, a draft policy stated to have been formulated for the latter is finalized within a period of three mon ths. The writ petitions filed in different High Court stand dismissed because of this judgment. Consequentially, the interim orders passed which form the subjec t matter of challenge in the appeals are vacated subject to the directions given supra. (cid:28) 10. From the above judgment of the Apex Court, it cannot be said that the is sue relating to cost ratio and for that matter, cost control was not within the scope and ambit of the Apex Court proceeding. Having regard to the nature of the controversy involved and the issue raised in the proceeding before the Apex Cou rt, coupled with the stay order granted, if the respondent company decided not t o take any action against the petitioners during the pendency of the said procee ding, no fault can be attributed to it. On conclusion of the proceeding and on the basis of the audit report, the authority of the Insurance Company passed the impugned communications. 11. As noted above, there is absolutely no whisper in the writ petition that the petitioners did not exceeded the cost limit fixed by the scheme. As to what the stand of the petitioners in the writ petition has been noted above. As the impugned communications would reveal, the petitioners were explained about the d etails of the norms regarding their performance as per stipulated cost limit and the action to be taken in case of the Development Officers operative above the stipulated cost limit. When it was found that their performance since 2002-2003 till 2011-2012, had exceeded the cost limit with the resultant requirements to r ecover the amounts indicated in each one of the impugned communications, the pet itioners were informed of the same. It is pertinent to mention here that althoug h by interim order dated 06.06.2013, the recovery of the amounts as indicated in the impugned communications dated 12.06.2012, has been stayed, but the order fi xing the basic pay of the petitioners in the lower stage in terms of the aforesa id scheme, has not been stayed. 12. The petitioners without urging any point in respect of inadmissibility o f any recovery and more particularly, there being no whisper at all that they di d exceeded the cost limit cannot harp upon the alleged procedural irregularity as envisaged in Clause -11 of the scheme. As per the requirements of the scheme (Clause -11) in case of exceeding the cost ratio for a particular order, non-cor e allowances payable to the Development Officers in the year immediately followi ng the year under review shall be reduced to the extent of the amount by which t he cost ratio exceeds the stipulated limits during the year of the review. 13. The aforesaid matter being subjudiced before the Apex Court, if no promp ted action could be taken against the petitioners, that does not mean that the r espondent company is precluded from taking any action against them for all times to come, who admittedly exceeded the cost limit. The respondent company being e ngaged in finance under various schemes through the Development Officers, cannot afford to incur loss at the hands of the same very Development Officers who adm ittedly exceeded the cost limit. 14. For all the aforesaid reasons, I do not find any infirmity in the impugn ed communications dated 12.06.2012, (Annexure -1 series). Consequently no relief can be granted to the petitioners and the writ petition stands dismissed withou t, however, any order as to costs.