• SC orders LIC to pay Rs, 3,543 crore to staff sacked 25 years ago

    August 10, 2016

    The Supreme Court on Tuesday directed that the temporary and badli (substitute) workers of the Life Insurance Corporation (LIC) of India, who were sacked 25 years before to be paid half of their back wages from 1991 amounting to a whopping 3,543 crores.

    The Apex Court ordered to absorb about 8,000 such temporary workers across the country, including 350 from Nagpur, in its services, as per existing terms and conditions, as directed in its original judgment of March 18, 2015. The Court also directed LIC to comply with its directives in eight weeks while considering the fact that the petitioner workers have been fighting the legal battle for 25 years through All India National Life Insurance Employees Federation.

    "These temporary and badli workers, who are entitled for regularization as permanent workmen in terms of our March 18, 2015 judgment by applying the terms and conditions of the modified award of August 26, 1988, passed by Justice Jamdar, are held to be entitled to full back wages. However, keeping in mind the immense financial burden it would cause to LIC, we deem it fit to modify relief only with regard to back wages. Therefore, we award 50% of the back wages with consequential benefits," a division bench comprising Justice V Gopala Gowda and Justice C Nagappan ruled.

    The review petitions arose from March 18, 2015 verdict whereby the Supreme Court held that the award passed by Central Government Industrial Tribunal, New Delhi, in 1991, was legal and valid and it should be restored and implemented by the insurance behemoth by absorbing the petitioner workmen in permanent posts. It was also held that LIC would be liable to pay all consequential benefits, including monetary, taking into consideration the revised pay scale in cases of those workmen, who attained superannuation.

    Earlier, the SC directed LIC to submit a document containing pay scales indicating the basic pay and other emoluments payable to the petitioner workmen. Those were subject to periodic revisions in 1992, 1997, 2002, 2007 and 2012.

    "These revisions of pay of basic salary, along with other component figures comprising the gross salary including dearness allowance (DA) and house rent allowance (HRA), must be accounted for while computing the amount due to the workmen towards back wages," the judges ruled.
    "The computation must be made from the date of entitlement of workmen involved in these cases, that is, their absorption, till the age of superannuation, as per the LIC's regulations," the bench said.

    Earlier, Attorney General Mukul Rohatgi had pointed out that the financial liability on LIC for implementing SC's order would be approximately 7,087 crore with the annual liability at around 728 crore per year, which will put a huge financial burden on it. He contended that the court had failed to appreciate the effect of settlement of an award, in the light of many of its own decisions. He submitted the Centre did not allocate any fund for LIC and it solely depends on the premium income generated from its customers. About 95% of LIC's surplus is to be allocated to or reserved for its life insurance policyholders.

    Mr Rohatgi informed that LIC had 55,427 Class-III and 5,190 Class-IV employees. If the petitioner workmen were to be absorbed, the number of Class-III employees will increase 11.14% and Class-IV by 56.65%. It will affect employees' ratio in addition to financial burden and will be contrary to policyholders’ interests.


    This case is one apt example of the lengthy judicial trials in our country. It took over 25 years for the Supreme Court to decide over the matter of workers who have not received their salary since 1991. The judgement of the Court is commendable and justified, but the complications that are to arise while evaluating the financial liabilities on LIC on implementing SC’s order is sure to be thought provoking. A whopping 3,543 crore is a huge liability and without any clear specification over how this huge compensation is to be settled will create further confusion.

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