Case: A.V. Nachane and Another Vs. Union of India and Another

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 A are binding on us. We therefore hold that r ule 3 operating retrospectively cannot nullify the effect of the writ issued in D. J. Bahadurs 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directed the Life Insurance Corporation to give effect to the terms of the 1974 settlements relating to bonus until superseded by a fresh s ettlement, an industrial award or relevant legislation. The Life insurance Corporation (Amendment) Act, 1981 and the Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 1981 are relevant legis lation. However in view of the decision in Madan Mohan Pathaks case, these rules, in so far as they seek to abrogate the terms of the 1974 settlements relating to bonus, can operate only prospectively, that is, from Februa ry 2, 1981, the date of publication of the rules. The petitions are allowed to this extent only.In the circumstances of the case we make no order as to costs. CHINNAPPA REDDY, J. 20. I have had the advantage of perusing the opinion of my brother Gupta J., I agree with his conclusion that the Life Insurance Corporation (Amendment) Act I of 1981 can operate but prospectively in so far as it seeks to nullify the terms of the 1974 settlements in regard to the payment o f 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 my own on the question of retrospectivity. I am spared the necessity of stating the facts as those that are necessary have been stated by my brother Gupta J. 21. The 1974 settlements provided, among various other matters, for the payment of annual cash bonus (not a profit sharing bonus) to their Class Ill and Class IV employees at the rate of 15 per cent of the annual salary. The settlements were to be operative from 1st April 1973 to 31st March 1977. That the settlements were to be operative from 1st April 1973 to 31st March 1977 did not mean that the settlements would cease to be effective peremptorily from 1- 4-1977 and, therefore, the a nnual cash bonus stipulated under the settlements would cease to be payable from that date onwards. The settlements would continue to be binding even after 31-3.1977 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(1) on a consideration of the relevant provisions and precedents.The attempt made to supersede the settlements, in so far as they related to the payment of bonus, by enacting the Life In surance Corporation (Modification of Settlement) Act 1976 failed, firstly because the Act was held to violate 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 In surance 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(a), all the seven judge s who constituted the Bench agreeing that the Act violated the provisions of Article 31(21 and four out of the seven judges, namely, Beg C. J., Bhagwati, Krishna Iyer and Desai JJ., taking the view that the Act did not have the effect of nulli fying 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. 22. The second attempt to nullify the 1974 settlements in re gard to payment of bonus, by issuing notices under section 19(2) and Section 9-A of the Industrial Disputes Act and by amending the Standardization order and the Staff Regulations, was frustrated by the judgment of this Court in Life Insurance Corporation of India v. D.A.. Bandar, 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 Co rporation "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". 23. The effect of the two judgments in Madan Mohan Pathaks case and D. J, Bahadhurs case was clear: the settlements of 1974, in so far 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 dissentient 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 Insuran ce Corporation of India was under an obligation to pay in terms of the writ issued in D. J. Bahadurs case. The present attempt made by the 1981 amending Act and the rules thereunder to scuttle the 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 bonus 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.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]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 unfavourably to those of the Corporation employees was not conclusive. But the burden of establishing hostile discrimination was on the petition ers who challenged the Amendment Act and the rules. It was for them to show that the employees of the Life Insurance Corporation and the employees of the other establishment to whom the provisions of the Industrial Disputes Act were appl icable were similarly circumstanced to justify the contention that by 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 on 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 not think that on the facts of this Case Express Newspapers (Private) Limited and another v. Union of India, (1) Moti Ram Deka etc. v. General Manager N.E.F. Railways, Maligaon, Pandu etc., (2) relied on by the petitioners, have any application.It was contended thatn (2C) added to section 48 of the Life Insurance Corporation Act, 1956 by the Amendm ent Act of 1981 was invalid because of excessive delegation of legislative functions and that ifn (2C) which is an integral part of the Amendment Act was ultra vires, the entire Amendment Act would be unconstitutional T he 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.n (2C) of section 48 provides in ter 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 vi rtually 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 Delhi Laws Act, (l) was an essential legislative function which had been del egated to the Central Government and that the delegation was therefore 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 purpo ses of the law made by it (see In re the Delhi Laws Act, (l) Raj Narain Singh v. The Chairman, Patna Administration Committee, Patna and another, (2) and D.S. Garewal v. State of Punjab and another(3) but the essential legislative funct ions cannot be delegated. What is essential legislative function has been explained by Mukerjee., J. in the Delhi Laws case as follows:e essential legislative function consists in the determination or choosing of the legislative poli cy 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 thatn Raj Narain Singh v. The Chairman, Patna Administration Committee, Patna, and another(2) 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(2C) read with section 48(2) (cc) authorises the Cen tral 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 matters covered by the rules the provisions of the Industrial Disputes Act or any other law will not be operative. The argument is thatn (2C) or any other provision introduced in the principal Act by the Amendment Act does not lay down any legislative policy nor supply any guidelines as to the exten t to which theg authority would be competent to override the provisions of the Industrial Disputes Act or other laws. Reference was made to Municipal Corporation af Delhi v. Birla Cotton Spinning and Weaving Mills, Delhi and another, (l) Gwal ior Rayon Silk Manufacturing (Weaving) Company Limited v. Assistant Commissioner ofx and others, (2) for the proposition that unlimited right of delegation is not inherent in the legislative power itself14. We think thel was right in his submission that what has been said of section 6 of the Essential Supplies (Tempo rary Powers) Act should hold good for subsection (2C) of section 48 of the Life Insurance Corporation Act which is similar in terms in so far as it authorises the Central Government to make rules bypassing the existing laws. Mahajan C.J., also h olds that assuming that the rules framed under the Act had the effect of repealing the l l existing laws, the power to repeal is exercised not by the delegate but by the Act itself. This is what he says on this point:"Conceding, howeve r, for the sake 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 sh all 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 unde r 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 i nconsistency 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 anyg law and no exception could be t aken on the ground of excessive delegation to the Act of the Parliamente Attorney General relied strongly on these observations in submitting that it is not really the rules framed by the Central Government in exercise of t he delegated authority that override the Industrial Disputes Act or any other existing law but the power of abrogating the existing laws is inn (2C) of section 48 enacted by Parliament itself. The observations quoted above from Harishankar Baglas case which was decided by a bench of five Judges appear to support the Attorney Generals contention15. The question however remains to be answered,does the Life Insurance Corporation Act, 1956 as amended in 1981 state an y policy to guide theg authority ?We have earlier referred to the observations of Mukerjea 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 Iegislative work to a subordinate authority who will work out the details within the framework of the policy. In Harishanker Baglas case one of the questions for decision was whether section 3 of the A 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 itss and to control the cost of administration, it is necessary that revision of the terms a nd 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 Harishanker Baglas case offering sufficient guidance to the Central Government in exercising its powers under that Acts 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 o f 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. Grewal v. State of Punjab and another(supra) observed as follows in respect of a similar provision requiring the rules made by the delegated authority to be laid on the table of Parliament and making the rules subject to modificat ion, whether by way of repeal or amendment on a motion made bys makes it perfectly clear that Parliament has in no way abdicated its authority, but is keeping strict vigilance and control over its delegate."16. In view of what has been held in Harishanker Bagla and D. S. Grewal, 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 functionsIn our opinion this contention has substa nce. 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.n (2A) of section 48 provides that the regulations made u nder 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).n (2B) of section 48 says that the power to make rules conferred by clause (cc) ofn (2) shall include the power to add, vary or repeal the regulations and "other provisions" referred to in sub section (2A) with retrospective effect from a date not e arlier than June 20, 1979. Clearly a writ issued by this Court is not a regulation nor can it be described as other provision which expression possibly includes circulars and administrative directions.n (2C) of section 48 however provi des 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 disp osing of D. J. Bahadurs case, made on November 10, 1980n 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 1 979 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."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 A are binding on us. We therefore hold that r ule 3 operating retrospectively cannot nullify the effect of the writ issued in D. J. Bahadurs 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 s ettlement, an industrial award or relevant legislation. The Life insurance Corporation (Amendment) Act, 1981 and the Life Insurance Corporation of India Class III and Class IV Employees (Bonus and Dearness Allowance) Rules, 1981 are relevant legis lation. However in view of the decision in Madan Mohan Pathaks case, these rules, in so far as they seek to abrogate the terms of the 1974 settlements relating to bonus, can operate only prospectively, that is, from Februa ry 2, 1981, the date of publication of the rules. The petitions are allowed to this extent only.In the circumstances of the case we make no order as to costs.