2005 (9) TMI 650 - SC - Indian Laws

Constitutional validity of the amendment - Challenged the Judgment of a HC, holding that customary bonus was not payable by the State Bank of India ('Bank') after Banking Laws (Amendment) Act, 1984 ('Amendment Act') was enacted - Conflict between the provisions of General Law i.e. State Bank Act and the Industrial Act the latter Act must prevail - HELD THAT - There is no quarrel and in fact in our opinion rightly that legislature cannot by a mere declaration, without anything more, directly overrule, reverse or override a judicial decision. However, it may, at any time in exercise of the plenary powers conferred on it by the Constitution render a judicial decision ineffective by enacting a valid law on a topic within its legislative field, fundamentally altering or changing with retrospective, curative or neutralizing effect the condition on which such decision is based. As noted in Indira Nehru Gandhi v. Raj Narain 1975 (11) TMI 165 - SUPREME COURT rendering ineffective of judgments or orders of competent Courts or Tribunals by changing their basis by legislative enactment is a well known pattern of all validating Acts. Such validating legislation which removes the causes for ineffectiveness or invalidity of actions or proceedings is not an encroachment on judicial power. There is a distinction between encroachment on the judicial power and nullification of the effect of a judicial decision by changing the law retrospectively. As noted by this Court in M/s. Tirath Ram Rajindra Nath 1972 (12) TMI 65 - SUPREME COURT , the former is outside the competence of the legislature but the latter is within its permissible limits. The amendment made by the impugned enactments is to the State Bank Act and other statutes relating to some other Banks. The Bank undoubtedly has power in terms of Section 7(1) of the State Bank Act to change the conditions of service of those of its employees, who had earlier served with Imperial Bank of India. By enforcement of the Act, the undertaking of Imperial Bank of India was transferred to the Bank. Employees of erstwhile Imperial Bank of India cannot take the stand that they have an unalterable right in their terms and conditions of employment. So far as other employees are concerned, Section 43 of the Act empowers the Bank to determine terms and conditions of their service. The Parliament has power to legislate on the topic of bonus and it is not precluded from legislating on that topic, other than the Bonus Act. The mere fact that an award has been made under the Industrial Act cannot have the effect of preventing the Parliament for all times to come from amending the law on the foundation of which the award was made. This of course is subject to same being not inconsistent with provision of Part III of the Constitution; and also being within the legislative competence of the Parliament. As noted above, the impugned Act did not merely declare the Tribunal's award inoperative. There is nothing to show that the Parliament intended to exercise appellate powers over the Tribunal or the High Court by enacting the amending Act. The said Act in clear and unambiguous terms prohibits the grant of bonus to the employees of public Sector Banks, except in accordance with the Bonus Act, and also limits such payment only to those eligible under the Act. The amended provision operates notwithstanding anything contained in any other law, including the Industrial Act, and similarly notwithstanding anything contained in any judgment, decree or order of any Court or Tribunal. Thus, the conclusion is inevitable that the High Court's judgment does not suffer from any infirmity to warrant interference. The appeal is accordingly dismissed with no orders as to costs.

Summary

Issues Involved:
1. Constitutional validity of the Banking Laws (Amendment) Act, 1984.
2. Customary bonus entitlement post-amendment.
3. Legislative competence and retrospective legislation.
4. Effect of the amendment on judicial decisions and awards.

Detailed Analysis:

1. Constitutional Validity of the Banking Laws (Amendment) Act, 1984:
The appellant challenged the constitutional validity of the Banking Laws (Amendment) Act, 1984, which amended the State Bank of India Act, 1955, and related statutes, asserting that it aimed to nullify a judicial decision, which Parliament had no competence to do. The High Court dismissed the writ petition, upholding the amendment.

2. Customary Bonus Entitlement Post-Amendment:
The amendment introduced Section 43-A in the State Bank Act, which explicitly prohibited the payment of any bonus to employees other than those covered under the Payment of Bonus Act, 1965. The appellant argued that the customary bonus was a condition of service and could not be altered without following the provisions of Section 9A of the Industrial Disputes Act, 1947. The Court noted that the payment of customary bonus had been made over an unbroken series of years, even in years of loss, and at a uniform rate, thus qualifying as a customary bonus. However, the amendment effectively nullified this entitlement.

3. Legislative Competence and Retrospective Legislation:
The Court examined whether the Parliament had the competence to legislate on the topic of bonus and whether the retrospective effect of the amendment was valid. It was held that the Parliament has the power to legislate on the topic of bonus, and it is not precluded from doing so even if an award has been made under the Industrial Disputes Act. The Court cited precedents to affirm that the legislature can enact laws with retrospective effect to cure defects or change the basis of judicial decisions.

4. Effect of the Amendment on Judicial Decisions and Awards:
The amendment was challenged on the grounds that it intended to invalidate a judicial decision, specifically an award by the Central Government Industrial Tribunal. The Court clarified that the legislature can render a judicial decision ineffective by enacting a valid law within its legislative field, fundamentally altering the conditions on which the decision was based. The amendment did not merely declare the Tribunal's award inoperative but introduced a new provision that prohibited the payment of customary bonus, thereby changing the legal landscape.

Conclusion:
The Supreme Court upheld the High Court's judgment, confirming that the Banking Laws (Amendment) Act, 1984, was a valid piece of legislation. The amendment was within the legislative competence of the Parliament and did not usurp judicial power. The appeal was dismissed with no orders as to costs.