M. L. KAMRA versus CHAIRMAN-CUM-MANAGING DIRECTOR, NEW INDIA ASSURANCE CO. LTD. AND ANR.

Citation: [1992] 1 S.C.R. 220 · Decided: 17-01-1992 · Supreme Court of India · Bench: A.M. AHMADI · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
M. L. KAMRA 
v. 
CHAIRMAN-CUM-MANAGING DIRECTOR, 
NEW INDIA ASSURANCE CO. LTD. AND ANR. 
JANUARY 17, 1992 
[A.M. AHMADI AND K. RAMASWAMY, JJ.) 
Orissa Insurance Co-operative Society Limited Service Rules. 
Rule 5-Whether arbitrary, unreasonable and vo~ec/ared to be 
recast. 
Statutory Interpretation. 
Presumption in favour of constitutionality of legislation-Interpreta-
tion favouring constitutionality to be accepted. 
While the appellant was working as Divisional Manager at Delhi, 
the general insurance business was nationalised and its management 
was taken over by the Central Government under General Insurance 
(Emergency Provisions) Ordinance, 1971 which was replaced by Act 57 
or 1972 and vested in the Custodian or the New India Assurance Co. 
Ltd., the management of Orissa Insurance Co-operative Society Ltd. 
By operation or Section 7 or the Act the services or the appellant 
and others stood transferred and vested with the custodian. 
The appellant was kept under suspension from August 9, 1973 
pending investigation into charges of embezzlement. Explanation was 
called for on October 16, 1973 and the appellant submitted his reply on 
December 7, 1974. While dropping the proceeding, the appellant was 
served with a termination order dated April 17, 1975 issued by the 
respondent. 
The appellant challenged the aforesaid termination order in a writ 
petition in Delhi High Court which was dismissed by a Single Judge on 
November 11, 1983 and this judgment was confirmed by the Division 
Bench in a Letter Patent Appeal. 
In the appeal to this Court it was contended on behalf of the 
220 
KAMRA v. ASSURANCE CO. 
221 
appellant placing reliance on the majority view in D.T.C. v. D.T.C. 
A 
Y 
Mazdoor Congress & Ors. Judgment Today 1990(3) SC 725 that Rule 5 
of the Orissa Insurance Co-operative Ltd. Services Rules is ultra vires 
of Article 14 of the Constitution. On behalf of the respondent it was 
contended that unlike Rule 9 involved in D.T.C.' s case, Rule 5 in the 
instant case provided guidelines, and that the Board of Directors had to 
take a decision, whether the need to continue the employee's service B 
subsists which would he based on relevant material and thus there 
would be objective consideration before taking a decision, not only 
regarding the need to continue the post but also the services of the 
Officer or the employee, and if so construed the rule is not ultra vires 
of Article 14. 
Allowing the appeal, this Court, 
HELD : Rule 5 of the Orissa Insurance Co·operative Society Ltd. 
is capable of the interpretation that the Board of Management may 
form an objective opinion, on the basis of material, that the post which 
c 
the officer or the employee is occupying is no longer in need and that , D 
the post would be abolished. This would be a policy decision depending 
on the exigencies. Once the Board reaches such a decision to abolish 
the post, in consequence the service of the officer/employee occupying 
the post could be terminated. Viewed in that light the said rule does not 
become arbitrary, unreasonable or void offending Article 14 and there· 
fore the rule is valid. [225G-226 BJ 
E 
There is a presumption in favour of constitutionality of a legisla· 
lion or statutory rule unless ex facie it violates the fundamental rights 
guaranteed under Part Ill of the constitution. If the provisions of a law 
or the rule is construed in such a way as would make it consistent with 
the Constitution and another interpretation would render the pro•ision 
F 
or the rule unconstitutional, the Court would lean in-favour of the 
former construction. [225 E] 
It is clear in the instant case, that the Board of Management did 
not abolish the post but put an end to the service of the appellant, 
G 
obviously due to loss of confidence as his honesty and integrity became 
suspicious and his continuance in service was felt inexpedient and not 
in the interest of the business of the respondents. But Rule 8 was 
available for taking action for misconduct but was not availed. There· 
fore, the order terminating the services of the appellant is illegal. 
~q 
H 
222 
SUPREME COURT REPORTS 
[1992] ! S.C.R. 
A 
Normally the apellant is entitled to reinstatement but the ends of 
B 
justice would be met by directing the respondents to pay him Rs. 
1,00,000 as compensation, instead of reinstatement and further continu-
ance in service. The compensation awarded would be staggered between 
the year 1973 

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