Vs
Union of India and Another
S. N. Bhowmik and Another
Vs
Union of India and Another
S. S. Jain and Another
Vs
Union of India and Another
B.S. Dogra and Another
Vs
Union of India and Another
T. N. Krishnan and Another
Vs
Union of India and Another
Writ Petition Nos. 501, 643-644, 645, 649 and 1866 of 1981
(A.C. Gupta, R.S. Pathak, O. Chinnappa Reddy JJ)
28.12.1981
JUDGMENT
GUPTA, J. –
1. (for himself and Pathak, J.) - The validity of the provision of the Life Insurance Corporation (Amendment) Act, 1981 and the Life Insurance Corporation (Amendment) Ordinance, 1981 which preceded it is challenged in this batch of writ petitions. The writ petitions have a history behind them which can be conveniently divided into three chapters. However, it will be easier to follow this history if we referred to some of the provisions of the Life Insurance Corporation Act, 1956 first. The Life Insurance Corporation was constituted under the Life Insurance Corporation Act, 1956 to provide for the nationalisation of life insurance business in India by transferring all such business to the Life Insurance Corporation of India. Under Section 11(1) of the Act the services of the employees of insures whose business has vested in the Corporation are transferred to the Corporation. Sub-section (2) of Section 11 provides :
Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of remuneration and the other terms and conditions of service applicable to employees of insurers whose controlled business has been transferred to, and vested in, the Corporation, it is necessary so to do, or that, in the interests of the Corporation and its policy-holders, a reduction in the remuneration payable, or a revision of the other terms and conditions of service applicable, to employees or standing anything contained in sub-section (1), or in the Industrial Disputes Act, 1947, or in any other law for the time being in force, or in any award, settlement or agreement for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of service to such extent and in such manner as it thinks fit; and if the alteration is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months' remuneration unless the contract of service with such employee provides for a shorter notice of termination.
There is an explanation to this sub-section which is not relevant for the present purpose. Section 48 of the Act empowers the Central Government to make rules to carry out the purposes of the Act. Sub-section (2) of Section 48 in clauses (a) to (l) specifies some of the matters that the rules may provide for. Sub-section (3) of Section 48 states :
Every rule made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should no be made, the rule shall thereafter have effect only in such modified form or so be of no effect, a the case may be; however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule.
Section 49 (1) empowers the Life Insurance Corporation of India to make regulations to provide for all matters or which provisions is expedient for the purpose of giving effect to the provisions of the Act. Clauses (a) to (m) of sub-section (2) of Section 49 specify some of the matter the regulations may provide for. The matter referred to in clause (b) of sub-section (2) is "the method of recruitment of employees and agents of the Corporation and the terms and conditions of service of such employees or agents". Clause (bb) speaks of the terms and conditions of service of persons who have become employees of the Corporation under sub-section (1) of Section 11.
2. Turning now to the history of the litigation, the first chapter begins with two settlements reached on January 24, 1974 and February 6, 1974 between the Life Insurance Corporation and its Class III and Class IV employees. These were settlements under Section 18 read with Section 2(p) of the Industrial Disputes Act, 1947. The settlements were identical in terms; four of the five unions of workmen subscribed to the first settlement while the remaining union was a signatory to the second. The settlement cover a large ground including the claim for bonus. Clause 8 of each of the settlements was as follows :
Bonus :
(i) No profit-sharing bonus shall be paid. However, the Corporation may, subject to such directions as the Central Government may issue from time to time, grant any other kind of bonus to its Class III and IV employees. (ii) An annual cash bonus will be paid to all Class III and Class IV emp loyees at the rate of 15 per cent of the annual salary (i.e. basic pay inclusive of special pay, if any, and dearness allowances and additional dearness allowance actually drawn by an employees in respect of the financial year to which the bonus relates. (iii) Save as provided herein all other terms and conditions attached to the admissibility and payment of bonus shall be as laid down in the settlement on bonus dated June 26, 1972.
Clause 12 of the settlements inter alia provides : "This settlement shall be effective from April 1, 1973 and shall be for a period of four years, i.e. from April 1, 1973 to March 31, 1977". In 1975 an ordinance was promulgated called the Payment of Bonus (Amendment) Ordinance which was subsequently replaced by the Payment of Bonus (Amendment) Act, Act, 1976. The reference to this Ordinance and the Act would not have been relevant because Section 32 (i) of the original Payment of Bonus Act, 1965 made the said Act not applicable to the employees of the Life Insurance Corporation, but the Central Government appears to have decided also that the employees of establishments not covered by the Payment of Bonus Act would not be eligible to get bonus and ex gratia payment in lieu of bonus would be made. Accordingly payment of bonus for the year 1975-76 to the employees of the Corporation was stopped under instructions from the Central Government. On a writ petition filed by the employees of the Corporation in the Calcutta High Court, a single Judge of that court issued a writ of mandamus directing the Corporation to act in accordance with the terms of the settlement. Thereafter the Life Insurance Corporation (Modification of Settlement) Act, 1976 was passed. Some of the employees of the Corporation challenged the constitutional validity of the Act by filing writ petition in this Court. In Madan Mohan Pathak v. Union of India (1978) 3 SCR 334 : (1978) 2 SCC 50 : 1978 SCC (L & S) 103 : (1978) 1 LLJ 406, this Court held that the 1976 Act offered Article 31 (2) of the Constitution and was as such void and issued a writ of mandamus directing the Union of India and the Life Insurance Corporation to forbear from implementing or enforcing the provisions of the 1976 Act and to pay annual cash bonus for the years April 1, 1975 to March 31, 1976 and April 1, 1976 to March 31, 1977 to Class III and IV employees in accordance with the terms of the settlements.
3. The second chapter began on March 31, 1978 when the Corporation issued a notice under Section 19(2) of the Industrial Disputes Act declaring its intention to terminate the settlements on the expiry of the period of two months from the date the notice was served. On the same day another notice was issued by the Corporation under Section 9-A of the Industrial Disputes Act stating that it proposed to effect a change in the conditions of service applicable to the workmen. The change proposed was set out in the annexure to the notice which reads :
AND WHEREAS for economic and other reasons it would not be possible for the Life Insurance Corporation of India to continue to pay bonus on the aforesaid basis;
Now, therefore, it is out intention to pay bonus to the employees of the Corporation in terms reproduced hereunder :
No employee on the Corporation shall be entitled to profit sharing bonus. However, the Corporation may, having regard to the financial condition of the Corporation in respect of any year and subject to the previous approval of the Central Government, grant non-profit-sharing bonus to its employees in respect of that year at such rate as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility of such bonus.
These notices were followed by a notification issued by the Corporation under Section 49 of the Life Insurance Corporation Act on May 26, 1978 substituting a new regulation for the existing Regulation 58 of the Staff Regulations. Simultaneously the Life Insurance Corporation (Alteration of Remuneration and Other Terms and Conditions of Service of Employees) Order, 1957, called the Standardisation Order, made by the Central Government in exercise of the powers conferred on it by Section 11 (2) of the Life Insurance Corporation Act was amended with effect from June 1, 1978 substituting a new Clause 9 Order and Regulation 58 of the Staff Regulations after amendment read as follows :
No employee of the Corporation shall be entitled to profit-sharing bonus. However, the Corporation may, having regard to the financial conditions of the Corporation in respect of any year and subject to the previous approval of the Central Government grant non-profit-sharing bonus to its employees in respect of that year at such rate as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility for such bonus.
The validity of the said two notices and the notification issued for the purpose of nullifying any further claim of the workmen to annual cash bonus in term of the settlements of 1974 was challenged by the workmen by filing a writ petition in the Allahabad High Court. The High Court allowed the writ and petition and the Corporation preferred an appeal to this Court. Another writ petition which had been filed in the Calcutta High Court challenging the said notices and the notification was transferred to this Court, and the appeal and this writ petition were heard and disposed of by a common judgment. The two cases were Civil Appeal No. 2275 of 1978 (Life Insurance Corporation of India v. D. J. Bahadur, (1981) 1 SCR 1083 : (1981) 1 SCC 315 : 1981 SCC (L & S) 111 : (1981) 1 LLJ 1) and Transfer Case No. 1 of 1979 (Chandrasekhar Bose v. Union of India, (1981) 1 SCR 1083 : (1981) 1 SCC 315 : SCC (L & S) 111 : (1981) 1 LLJ 1). By a majority the appeal preferred by the Corporation was dismissed and the transfer petition was allowed and a writ was issued by this Court to the Life Insurance Corporation directing it (SCC p. 397) "to give effect to the terms of the settlements of 1974 relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation". The second chapter closed with this decision.
4. The third chapter begins with the promulgation of the Life Insurance Corporation (Amendment) Ordinance, 1981 on January 31, 1981. The following changes made in the principal Act by the ordinance are material. In sub-section (2) of Section 48 of the principal Act a new clause (cc) was inserted with retrospective effect from June 20, 1979. Clause (cc) relates to "the terms and conditions of service of the employees and agents of the Corporation, including those who became employees and agents of the Corporation on the appointed day under this Act". There new sub-sections (2-A), (2-B) and (2-C) were added to Section 48. Sub-section (2-A) says that the regulations and other provisions as in force immediately before the commencement of the Ordinance with respect to the terms and conditions of service of the employees and agents of the Corporation shall be deemed to be rules made under clause (cc) of sub-section (2). Sub-section (2-B) provides that the power to make rules under clause (cc) of sub-section (2) shall include (i) power to give retrospective effect to such rules, and (ii) the power to amend by way of addition, variation or repeal the regulations and other provisions referred to in sub-section (2-A) with retrospective effect, but not from a date earlier than June 20, 1979. Sub-section (2-C) reads as follows :
The provisions of clause (cc) of sub-section (2) and sub-section (2-B) and any rules made under the said clause (cc) shall have effect, and any such rule made with retrospective effect from any date shall also be deemed to have had effect from that date, notwithstanding any judgment, decree or order of any court, tribunal or other authority and notwithstanding anything contained, in the Industrial Disputes Act, 1947 or any other law or any agreement, settlement, award or other instrument for the time being in force.
Certain consequential changes were also made in Section 49 of the Act. In clause (b) of Section 49 (2) which has been quoted above, the words "and the terms and conditions of service of such employees or agents" were omitted. This was necessary because the terms and conditions of service of the employees and the agents with regard to which the Corporation was empowered to make regulations by Section 49 (1) of the principal At is now a matter included in clause (cc) of Section 48 (2) as one of the matters covered by the rule-making authority of the Central Government under Section 48 (1) of the Act. The Ordinance also omits clause (bb) from Section 49 (2). Clause (bb) also quoted earlier included the terms and conditions of the service of the persons who had become employees of the Corporation under Section 11 (1) of the Act. The terms and conditions of service of such persons are not included in the new clause (cc) of Section 48 (2).
5. By notification dated February 2, 1981 the Central Government in exercise of the powers conferred by Section 48 of the Life Insurance Corporation Act, 1956 made the rules called the Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 1981. The relevant rule is Rule 3 which has been given retrospective operation from July, 1, 1979. Sub-rule (1) of Rule 3 provides : "No Class III or Class IV employees of the Corporation shall be entitled to the payment of any profit sharing bonus or any other kind of cash bonus ". Sub-rule (2) of Rule 3 states that notwithstanding what sub-rule (1) provides every Class III and Class IV employee shall be entitled to a payment in lieu of bonus - (a) for the period commencing from July 1, 1979 and ending on March, 31, 1980 at the rate of 15 per cent of his salary; and (b) thereafter for every year commencing on April 1 and ending on the 31st day of March of the following year, at such rate and subject to such conditions as the Central Government may determine having regard to the wage level, the financial circumstances and other relevant factors. There is a proviso to this sub-rule which says that (i) no payment in lieu of bonus shall be made to any employee drawing a salary exceeding Rs. 1600 per month; and (ii) where the salary of an employee exceeds Rs. 750 per month but does not exceed Rs. 1600 per month, the maximum payment to him in lieu of bonus shall be calculated as if his salary were Rs. 750 per month. For the purposes of this sub-rule, "salary" was explained as meaning basis pay, special pay, if any, and dearness allowance. Sub-rule (3) of Rule 3 rescinds Regulation 58 of the Staff Regulations and all other provisions relating to the payment of bonus to the employee to the extent they are inconsistent with Rule 3.
6. Writ Petition No. 501 of 1981 under Article 32 of the Constitution filed in this Court on February 5, 1981 by Shri A. V. Nachane and the All India Life Insurance Corporation Employees Federation, Bombay, challenging the validity of the Ordinance and the aforesaid Rules. Similar writ petitions by other associations of the employees of the Corporation followed. In the meantime the Ordinance was repealed and replaced on March 17, 1981 by the Life Insurance Corporation (Amendment) Act, 1981 which received the assent of the President of India on the same day. the writ petitions were suitably amended after the Amendment Act came into force. The provisions of the Act are similar to those of the Ordinance except that the Amendment Act adds a new sub-section, sub-section (3), to Section 49 of the principal Act. The new sub-section (3) which provides that the regulations made under Section 49 shall be laid before each House of Parliament are similar in terms to sub-section (3 of Section 48 requiring the rule made by the Central Government under the Act to the be laid before each House of Parliament. Section 4 of the Amendment Act repeals the Ordinance but provides that "notwithstanding such repeal, anything done or any action taken under the principal Act as amended by the said Ordinance shall be deemed to have been done or taken under the principal Act as amended by this Act ".
7. The validity of the Amendment Act and the Life Insurance Corporation of India Class III and Employees (Bonus and Dearness Allowance) Rules, 1981 have been challenged on several grounds. It was argued that the Act and the Rules were violative of Articles 14, 19 (1) (g) and 21 of the Constitution. It was further contended that the said Act was invalid on the ground of excessive delegation of legislative functions. Another contention raised was that in any event sub-section (2-C) of Section 48 was invalid to the extent it permit retrospective operation to Rule 3 to override the order of this Court disposing of D. J. Bahadur case, (1981) 1 SCR 1083 : (1981) 1 SCC 315 : 1981 SCC (L & S) 111 : (1981) 1 LLJ 1. The challenge based on Article 19 (1) (g) and Article 21 does not appear to have any substance. Apart from anything else, a claim based on the 1974 settlements is certainly not a fundamental right hat could be enforced through this Court. As regards Article 21, the first promise of the arguments that the word 'life' in that Article included livelihood was considered and rejected in In re Sant Ram. (1960) 3 SCR 499 : AIR 1960 SC 932.
8. The condition that Article 14 is infringed arises on the provision of sub-section (2-C) of Section 48 that any rule made under clause (cc) of sub-section (2) of that section touching the terms and conditions of service of the employees of the Corporation shall have effect notwithstanding anything contained in the Industrial Disputes Act, 1947. It is true that after rules are made regarding the terms and conditions of service, the right to raise an industrial dispute in respect of matters dealt with by the rules will be taken away and to that extent the provisions of the Industrial Disputes Act will cease to be applicable. It was argued that there was no basis on which the employees of the Corporation could be said to form a separate class for denying to them the protection of the Industrial Disputes Act. The reply on behalf of the Union of India and the Life Insurance Corporation was that the remuneration that was being paid to Class III and Class IV employees of the Corporation was far in excess of what was paid to similarly situated employees in other establishments in the public sector. Some material was also furnished to support this claim though that were certainly not conclusive. The need for amending the Life Insurance Corporation Act, 1956 as appearing from the preamble of the Amendment Act and the Ordinance is as follows : "....... for securing the interests of the Life Insurance Corporation of India and its policy-holders and to control the cost of administration, it is necessary that revisition of the terms and conditions of service applicable to the employees and agents of the Corporation should be undertaken expeditiously" Referring to the preamble of the Act the Attorney-General appearing for the Union of India and the Corporation submitted that the problem of mounting cost of administration led to the making of the impugned law. He added that it was felt that no improvement in the situation was possibly by the process of adjudication and a policy decisions was taken that in the circumstances the proper course was legislation and that is why the Amendment Act was passed and the impugned Rules were framed. The learned Attorney-General submitted that it was for Parliament to decide whether the situation was remediable by adjudication or required legislation. According to him the Life Insurance Corporation Act as amended and the Rules made after amendment placed the Corporation in the same position as other undertakings, that the advantages being enjoyed by the employees of the Corporation which were not available to similarly situated employees of other undertaking have been taken away removing what he described as discrimination in favour of the employees of the Life Insurance Corporation. We have already said that the material produced on behalf of the Union of India and the Corporation to show that the terms and conditions of service of the employees in several other undertakings in the public sector compared unfavorably to those of the Corporation employees was not conclusive. But the burden of establishing Act and he Rules. It was for them to show that the employees of the Life Insurance Corporation and the employees of the other establishments to whom the provisions of the Industrial Disputes Act were applicable were similarly circumstance to justify the contention that be excluding the employees of the Corporation from the purview of the Industrial Disputes Act they had been discriminated against. There is no material before us no the basis of which we can hold that the Amendment Act of 1981 and the Rules made on February 2, 1981 infringe Article 14. We do no think that on the facts of this case Express Newspapers (Private) Ltd. v. Union of India, 1959 SCR 12 : AIR 1958 SC 578 : (1961) 1 LLJ 339, and Moti Ram Deka v. General Manager, (1964) 5 SCR 683 : AIR 1964 SC 600 : (1964) 2 LLJ 467, relied on by the petitioners, have any application.
9. It was contended that sub-section (2-C) added to Section 48 of the Life Insurance Corporation Act, 1956 by the Amendment Act of 1981 was invalid because of excessive delegation of legislative functions and that if sub-section (2-C) which is an integral part of the Amendment Act was ultra vires, the entire Amendment Act would be unconstitutional. The Amendment Act introduced clause (cc) in Section 48 (2) authorising the Central Government to make rules in respect of the terms and conditions of service of the employees and agents of the Corporation. Sub-section (2-C) of Section 48 provides inter alia that rules made under clause (cc) shall have effect notwithstanding anything contained in the Industrial Disputes Act, 1947 or any other law for the time being in force. The argument is that the rules made under Section 48 (2) (cc) can virtually repeal the Industrial Disputes Act and other laws to the extent they are inconsistent with these rules. Repealing a law, it was submitted on the authority of In re The Delhi Laws Act, 1912, 1951 SCR 747 : AIR 1951 SC 332, was an essential legislative function which had been delegated to the Central Government and that the delegation was therefor excessive. It is now well settled that it is competent for the legislature to delegate to other authorities the power to frame rules to carry out the purposes of the law made by it (see In re The Delhi Laws Act, 1951 SCR 747 : AIR 1951 SC 332, Rajnarain Singh v. Chairman, (1955) 1 SCR 290 : AIR 1954 SC 569 and D. S. Garewal v. State of Punjab, 1959 Supp 1 SCR 792 : AIR 1959 SC 512,) but the essential legislative functions cannot be delegated. What is essential legislative function has been explained by Mukherjee, J., in The Delhi Laws case 1951 SCR 747 : AIR 1951 SC 332 as follows :
The essential legislative function consists in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of conduct. It is open to the legislature to formulate the policy as broadly and with as little or as much details as it thinks proper and it may delegate the rest of the legislative work to a subordinate authority who will work out the details within the framework of that policy.
In Rajnarain Singh v. Chairman, (1955) 1 SCR 290 : AIR 1954 SC 569 a Bench of five Judges of this Court held that an executive authority can be empowered by a statute to modify either existing or future laws but not in any essential feature. In the instant case Section 48 (2-C) read with Section 48 (2) (cc) authorities the Central Government to make rules to carry out the purposes of the Act notwithstanding the Industrial Disputes Act or any other law. This means that in respect of the matter covered by the rules the provisions of the Industrial Disputes Act or any other law will not be operative. The argument is that sub-section (2-C) or any other provisions introduced in the principal Act by the Amendment Act does not lay down any legislative policy nor supply any guide-lines as to the extent to which the rule-making authority would be competent to override the provisions of the Industrial Disputes Act or other laws. Reference was made to Municipal Corporation of Delhi v. Birla Cotton Spinning and Weaving Mills, (1968) 3 SCR 251 : AIR 1968 SC 1232, and Gawlior Rayon Silk Manufacturing (Weaving) Company Limited v. Asstt. C. S. T. (1974) 2 SCR 879 : (1974) 4 SCC 98 : AIR 1974 SC 1660 for the proposition that unlimited right of delegation is not inherent in the legislative power itself.
10. The question therefore is, does the Amendment Act of 1981 lay down no legislative policy or furnish no guidance to indicate the nature and extent of the modification that the rules will be permitted to make in the existing laws to carry out the purposes of the Life Insurance Corporation Act, 1956 as amended in 1981 ? Learned Attorney-General relayed on the decision of this Court in Harishankar Bagla v. State of Madhya Pradesh, (1955) 1 SCR 380 : AIR 1954 SC 465. This was a case under the Essential Supplies (Temporary Powers) Act, 1946. Section 3(1) of that Act says that the Central Government for maintaining or increasing supplies of any essential commodity, or for securing their equitable distribution and availability at fair prices, may by order provide for regulation or prohibiting the production, supply and distribution thereof and trade and commerce therein. Sub-section (2) of Section 3 states that without prejudice to the generality of the powers conferred by sub-section (1), such an order may provide inter alia for regulating by licenses or permits or otherwise the production or manufacture and transport, distribution, disposal, acquisition, use or consumption of any essential commodity. Section 6 of that Act provides inter alias that any order made under Section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than that Act. In exercise of the powers conferred by Section 3 of that Act the Central Government made the Cotton Textiles (Control of Movement) Order, 1948. Clause 3 of the said Order requires a person to take a permit from the Textile Commissioner to enable him to transport cotton textiles. One of the questions that arose in Harishankar Bagla Case (1955) 1 SCR 380 : AIR 1954 SC 465, was whether Section 6 of the Essential Supplies (Temporary Powers) Act permitted rules to be made by the Central Government repealing by implication an existing law, which was an essential legislative function and could not validly be delegated. Mahajan, C.J., Speaking for the court said :
Section 6 does not either expressly or by implication repeal any of the provisions of pre-existing laws : neither does it abrogate them. Those laws remained untouched and unaffected so far as the statute-book is concerned. The repeal of a statute means as if the repealed statute was never on the statute - book. It is wiped out from the statute-book. The effect of Section 6 certainly is not to repeal any one of those laws or abrogate them. Its object in simply to bypass them here they are inconsistent with the provisions of the Essential Supplies (Temporary Powers) Act, 1946 or the orders made thereunder. In other words, the orders made under Section 3 would be operative in regard to the essential commodity covered by the Textile Control Order wherever there is repugnance in this Order with the existing laws and to that extent the existing laws with regard to those commodities will not operate. Bypassing certain law does not necessarily amount to repeal or abrogation of that law. That law remains unrepealed but during the continuance of the Order made under Section 3 it does not operate in that filed for the time being.
We think the Attorney-General was right in his submission that what has been said of Section 6 of the Essential Supplies (Temporary Powers) Act should hold good for sub-section (2-C) of Section 48 of the Life Insurance Corporation Act which is similar in terms insofar as it authorised the Central Government to make rules bypassing the existing laws. Mahajan, C.J., also holds that assuming that the rules framed under the Act had the effect of repealing the existing laws, the power to repeal is exercised not by the delegate but by the Act itself. This is what the he says on this point :
Conceding, however, for the ask of argument that to the extent of a repugnancy between an order made under Section 3 and the provisions of an existing law, to the extent of the repugnancy, the existing law stands repealed by implication, it seems to us that the repeal is not by any. Act of the delegate, but the repeal is by the legislative Act of the Parliament itself. By enacting Section 6 Parliament itself has declared that an order made under Section 3 shall have effect notwithstanding any inconsistency in this order with any enactment other than this Act. This is not a declaration made by the delegate but the legislature itself has declared its will that way in Section 6. The abrogation or the implied repeal is by force of the legislative declaration contained in Section 6 and is not by force of the order made by the delegate under Section 3. The power of the delegate is only to make an order under Section 3. Once the delegate has made that order its power is exhausted. Section 6 then steps in wherein the Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than this Act. Parliament being supreme, it certainly could make a law abrogating or repealing by implication provisions of any pre-existing law and no exception could be taken on the ground of exercise delegation to the Act of the Parliament itself.
The Attorney-General relied strongly on these observations in submitting that it is not really the rules framed by the Central Government in exercise of the delegated authority that override the Industrial Disputes Act or any other existing law but the power of abrogating the existing laws is in sub-section (2-C) of Section 48 enacted by Parliament itself. The observations quoted above from Harishankar Bagla case which was decided by a Bench of five Judges appear to support the Attorney-General's contention.
11. The question however remains to be answered : Does the Life Insurance Corporation Act, 1956 as amended in 1981 state any policy to guide the rule-making authority ? We have earlier referred to the observations of Mukherjea, J., in The Delhi Laws case that the legislature can formulate a policy as broadly and with as little or as much details as it thinks proper and may delegate the rest of the legislative work to a subordinate authority who will work out the details within the framework of the policy. In Harishankar Bagla case one of the questions for decision was whether Section 3 of the Essential Supplies (Temporary Powers) Act, 1946 amounts to delegation of legislative power outside the permissible limits. It was held that legislature had laid down a legislative principle which was "maintaining or increasing supplies of any essential commodity", and "securing their equitable distribution and availability at fair prices". That statement was held as offering sufficient guidance to the Central Government in exercising its powers under Section 3. In the instant case the policy as stated in the preamble of the Amendment Act is that "for securing the interests of the Life Insurance Corporation of India and its policy-holders and to control the cost of administration, it is necessary that revisions of the terms and conditions of service applicable to the employees and agents of the Corporation should be undertaken expeditiously". The policy stated here is at least as clear as the one held in Harishankar Bagla case (1955) 1 SCR 380 : AIR 1954 SC 465, offering sufficient guidance to the Central Government in exercising its powers under that Act. We have referred to Section 48 (3) of the Life Insurance Corporation Act which requires that every rule made by the Central Government under this Act shall be laid before each House of Parliament and that if both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be. This Court in D. S. Garewal v. State of Punjab 1959 Supp 1 SCR 792 : AIR 1959 SC 512, observed as follows in respect in respect of similar provision requiring the rules made by the delegated authority to be laid on the table of Parliament and making the rules subject to modification, whether by way of repeal or amendment on a motion made by Parliament : "This makes it perfectly clear that Parliament has in no way abdicated its authority, but is keeping strict vigilance and control over its delegate." In view of what has been held in Harishankar Bagla (1955) 1 SCR 380 : AIR 1954 SC 465, and D. S. Garewal, 1959 Supp 1 SCR 792 : AIR 1959 SC 512, both of which were decided by a larger Bench, we do not find it possible to accept the contention that the Act is invalid on the ground of excessive delegation of legislative functions.
12. It was contended on behalf of the petitioners that in any event the provisions of the Amendment Act of 1981 could not nullify the effect of the writ issued by this Court in D. J. Bahadur case. (1981) 1 SCR 1083 : (1981) 1 SCC 315 : 1981 SCC (L & S) 111 : (1981) 1 LLJ 1. In our opinion this contention has substance. Clause (cc) of Section 48 (2) empowers the Central Government to make rules with regard to the terms and conditions of service of the employees and agents of the Corporation. Sub-section (2-A) of Section 48 provides that the regulations made under Section 49 of the Act and "other provisions" as in force before the commencement of the Amendment Act with respect to the said terms and conditions are to be deemed as rules made under clause (cc) of Section 48 (2). Sub-section (2-B) of Section 48 says that the power to make rules conferred by clause (cc) of sub-section (2) shall include the power to add, vary or repeal the regulations and "other provisions" referred to in sub-section (2-A) with retrospective effect from a date not earlier than June 20, 1979. Clearly a writ issued issued by this court is not a regulation nor can it be described as 'other provisions' which expression possibly includes circulars and administrative directions. Sub-section (2-C) of Section 48 however provides inter alia that any rules made under clause (cc) with retrospective effect from any date shall be deemed to have had effect from that date notwithstanding any judgment, decree or order of any court, tribunal or other authority. The order disposing of D. J. Bahadur case, (1981) 1 SCR 1983 : (1981) 1 SCC 315 : 1981 SCC (L & S) 111 : (1981) 1 LLJ 1 made on November 10, 1980 reads : (SCC p. 397, para 161).
In view of the opinion expressed by the majority the appeal is dismissed with costs to the first, second and third respondents, and the Transfer Petition No. 1 of 1979 stands allowed insofar that a writ will issue to the Life Insurance Corporation directing it to give effect to the terms of the settlements of 1974 relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation. Costs in respect of the transfer petition will be paid to the petitioners by the second respondent.
The Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 1981 were made by the Central Government on February 2, 1981 in exercise of the powers conferred by Section 48 of the Life Insurance Corporation Act, 1956 as amended by the Life Insurance Corporation (Amendment) Ordinance, 1981. Rule 3 of these Rules relates to the subject of bonus concerning Class III and Class IV employees of the Corporation. The substance of this rule has been set out earlier in this judgment. Clearly Rule 3 seeks to supersede the terms of the 1974 settlement relating to bonus. By virtue of Rule 1 (2), Rule 3 "shall be deemed to have come into force on the 1st day of July, 1979 ". The question is, can Rule 3 read with Rule 1 (2) nullify the effect of the writ issued by this Court on November 10, 1980 in D. J. Bahadur case ? (1981) 1 SCR 1083 : (1981) 1 SCC 315 : 1981 SCC (L & S) 111 : (1981) 1 LLJ 1. It seems to us Rule 3 cannot make the writ issued by this Court nugatory in view of the decision of the majority in Madan Mohan Pathak v. Union of India, (1978) 3 SCR 334 : (1978) 2 SCC 50 : 1978 SCC (L & S) 103 : (1978) 1 LLJ 406, to which reference has been made earlier. In Madan Mohan Pathak case (1978) 3 SCR 334 : (1978) 2 SCC 50 : 1978 SCC (L &S) 103 : (1978) 1 LLJ 406 it was contended hat since the Calcutta High Court had by its judgment dated May 21, 1976 issued a writ of mandamus directing the Life Insurance Corporation to pay annual cash bonus to Class III and IV employees for the year April 1, 1975 to March 31, 1976 as provided by the 1974 settlement and this judgment had becomes final, the Life Insurance Corporation was bonus to obey the writ of mandamus and pay as ordered by the High Court. The court was dealing with the Life Insurance Corporation (Modification of Settlement) Act, 1976 in that case. Section 3 of that Act provided that the terms of the settlements insofar as they related to the payment of annual cash bonus to Class III and Case IV employees would not have any force or effect and be deemed not to have had any force or effect from April 1, 1975. Bhagwati, J., speaking also for Krishna Iyer and Desai, JJ., observed : (SCC p. 67, para 9)
Here, the judgment given by the Calcutta High Court, which is relied upon by the petitioners, is not a mere declaratory judgment holding an impost or tax to be invalid, so that a validation statute can remove the defect pointed out by the judgment amending the law with retrospective effect and validate such impost or tax. But it is a judgment giving effect to the right of the petitioners to annual cash bonus under the settlement by issuing a writ of mandamus directing the Life Insurance Corporation to pay the amount of such bonus. If by reason of retrospective alteration of the factual or legal situation, the judgment is rendered erroneous, the remedy may be by way of appeal or review, but so long as the judgment stands, it cannot be disregarded or ignored and it must be obeyed by the Life Insurance Corporation. We are, therefore, of the view that, in any event, irrespective of whether the impugned Act is constitutionally valid or not, the Life Insurance Corporation is bound to obey the writ of mandamus issued by the Calcutta High Court....
Beg, C.J., who delivered a separate but concurring judgment, after pointing out the "hurdle in the way" of the petitioner's claim based on Article 19 (1) (f) of the Constitution, which was that the Act [Life Insurance Corporation (Modification of Settlement) Act, 1976] was passed during the emergency, observed : (SCC pp. 85-86, paras 31-2)
The object of the Act was, in effect, to take way the force of the judgment of the Calcutta High Court recognising the settlements in favour of Class III and IV employees of the Corporation. Rights under the judgment could be said to arise independently of Article 19 of the Constitution. I find myself in complete agreement with my learned brother Bhagwati that to give effect to the judgment of the Calcutta High Court is not the same thing as enforcing a right under Article 19 of the Constitution. It may be that a right under Article 19 of the Constitution becomes linked up with the enforceability of the judgment. Nevertheless, the two could be views as separable sets of rights. If the right inferred by the judgment independently is sought to be set aside, Section 3 of the Act, would, in my opinion, be invalid for teaching upon the judicial power.
I may, however, observed that even thought the real object of the Act may be to set aside the result of the mandamus issued by the Calcutta High Court, yet, the section does not mention this object at all. Probably this was so because the jurisdiction of a High Court and the effectiveness of its orders derived their force from Article 226 of the Constitution itself. These could not be touched by an ordinary act of Parliament. Even if Section 3 of the Act seeks to take away the basis of the judgment of the Calcutta High Court, without mentioning it, by enacting what may appear to be a law, yet, I think that where the rights of the citizen against the State are concerned, we should adopt an interpretation which uphold those rights. Therefore, according to the interpretation I prefer to adopt the rights which had bassed into those embodied in a judgment and became the basis of a mandamus from the High Court could not be taken away in this indirect fashion.
The Attorney-General referred to a number of earlier decisions of this Court wanting us to infer that the observations quoted above from the judgment in Madan Mohan Pathak case did not state the correct law in view of the said decisions. But these observations expressed the majority view of a Bench of seven Judges bearing directly on the point that arises for decision in the instant case and are binding on us. We therefore hold that Rule 3 operating retrospectively cannot nullify the effect of the writ issued in D. J. Bahadur case which directed the Life Insurance Corporation to give effect to the terms of the 1974 settlements relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation. The Life Insurance Corporation (Amendment) Act, 1981 and the Life Insurance Corporation of India Class III and IV Employees (Bonus and Dearness Allowance) Rules, 1981 are relevant legislation. However in view of the decisions in Madan Mohan Pathak case, these Rules insofar as they seek to abrogate the terms of the 1974 settlements relating to bonus, can operate only prospectively, that is, from February 2, 1981, the date of publication of the Rules. The petitions are allowed to this extent only.
13. In the circumstances of the case we make no order as to costs.
CHIINNAPPA REDDY, J :- (concurring) -
I have had the advantage of preusing the opinion of my brother Gupta, J., I agree with his inclusion that the Life Insurance Corporation (Amendment) Act 1 of 1981 can operate but prospectively insofar as it seeks to nullify the terms of the 1974 settlements in regard to the payment of bonus. On some of the other questions I have certain reservations. I do not, however, desire to express any opinion on those questions as my brother Pathak, J., has indicated that he is inclined to agree with Gupta, J., on those questions. Perhaps I will do well to add a few words of may own on the question of retrospectively. I am spared the necessity of stating the facts as those that are necessary have been stated by my brother Gupta, J.
15. The 1974 settlements provided, among various other matters, for the payment of annual cash bonus (not a profit-sharing bonus) to their Class III and Class IV employees at the rate of 15 percent of the annual salary. The settlements were to be operative from April 1, 1973 to March 31, 1977. That the settlements were to be operative from April 1, 1973 to March 31, 1977 did not mean that the settlements would cease to be effective peremptorily from April 1, 1977 and, therefore, the annual cash bonus stipulated under the settlements would cease to be payable from that date onwards. The settlements would continue to be binding even after March 31, 1977 and would not be liable to be terminated by the issuance of a unilateral notice by the employer purporting to terminate the settlements. The settlements would cease to be effective only when they were replaced by 'a fresh settlement, an industrial award or relevant legislation. This is the law and this was what the law was pronounced to be in Life Insurance Corporation of India v. D. J. Bahadur on a consideration of the relevant provisions and precedents.
16. The attempt made to supersede the settlements, insofar as they related to the payment of bonus, by enacting the Life Insurance Corporation (Modification of Settlement) Act, 1976 failed firstly because the Act was held to avoilate the provisions of Article 31 (2) of the Constitution and secondly because the Act could not have retrospective effect so as to absolve the Life Insurance Corporation from obeying the writ of mandamus issued by the Calcutta High Court, which had become final and binding on the parties. This was the decision of this Court in Madan Mohan Pathak v. Union of India all the seven judges who constituted the Bench agreeing that the Act violated the provisions of Article 31 (2) and four out of the seven judges, namely, Beg, C.J. and Bhagwati, Krishan Iyer and Desai, JJ., taking the view that the Act did not have the effect of nullifying the writ of mandamus issued by the Calcutta High Court and the other three judges, Chandrachud, Fazal Ali and Shinghal, JJ., preferring not to express any view on that question.
17. The second attempt to nullify the 1974 settlements in regard to payment of bonus, by issuing notices under Section 19 (2) and Section 9-A of the Industrial Disputes Act and by amending the Standardisation Order and the Staff Regulations, was frustrated by the judgment of this Court in L. I. C. v. D. J. Bahadur, the court taking the view that the two settlements could only be superseded by 'a fresh settlement, an industrial award or relevant legislation. In this case, the court issued a writ to the Life Insurance Corporation "to give effect to the terms of the settlements of 1974 relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation".
18. The effect of the two judgments in Madan Mohan Pathak case and D. J. Bahadur case was clear : the settlements of 1974, insofar as they related to bonus, could only be superseded by a fresh settlement, an industrial award or relevant legislation. But any such supersession could only have future effect, but not retrospective effect so as to disentitle the Class III and Class IV employees of the Life Insurance Corporation from receiving the cash bonus which had been earned by them, day by day and which the Life Insurance Corporation of India was under an obligation to pay in terms of the writ issued in D. J. Bahadur case. The present attempt made by the 1981 amending Act and the Rules thereunder to scuttle the a payment of bonus with effect from a date anterior to the date of the enactment must, therefore, fail. The employees are entitled to be paid the bons earned by them before the date of publication of the Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 1981.