Holding

Section 3 of the 1988 Act and the schemes framed under it, including their retrospective operation and classifications, are a valid exercise of legislative power and do not violate Article 14.

Summary

The Supreme Court examined the constitutional validity of the Bharat Petroleum Corporation Ltd. (Determination of Conditions of Service of Employees) Act, 1988 and the schemes framed under it in 1989 and 1996. The appellant union argued that Section 3 of the Act gave the Central Government unguided power, that the retrospective operation of the schemes violated Article 14, and that distinctions between pre‑nationalisation and post‑nationalisation employees, as well as wage differentials between refinery and marketing divisions, were discriminatory. The Court held that Section 3 provides sufficient guidelines, that retrospective effect is a statutory power expressly conferred, and that the classifications are based on historical facts and serve a legitimate public‑sector wage‑parity policy, thus not breaching Article 14. It also found that employees covered by settlement agreements constitute a separate class and cannot claim discrimination against those governed by the statutory scheme. Consequently, both the 1989 and 1996 schemes, as well as the 1988 Act, were upheld as constitutionally valid. The appeal was dismissed with costs.

Issues considered

The constitutionality of Section 3 of the Bharat Petroleum Corporation Ltd. (Determination of Conditions of Service of Employees) Act, 1988
Whether the power to frame schemes under Section 3 is unguided or arbitrary
Validity of the retrospective operation of the 1989 and 1996 schemes under Article 14
Whether the distinction between pre‑nationalisation and post‑nationalisation employees is discriminatory
Whether wage differentials between refinery and marketing divisions amount to discrimination
Whether the 1996 amendment scheme excluding employees who entered settlements is discriminatory

Legislation cited

Subjects

Article 14Retrospective legislationPublic sector wage policyDiscriminationService conditionsBharat PetroleumLabour lawUnionStatutory scheme

Judgment

A PROCESS TECHNICIANS AND ANALYSTS' UNION
v.
UNION OF INDIA AND ORS.
'i

MARCH 10, 1997

B [AM. AHMADI, 0. AND SUJATA V. MANOHAR, J.]
,,'
Labour Law:

Bharat Petroleum Corporation Ltd. (Determination of Conditions of
C Service of Employees) Act, 1988: Section 3.
Powel'-Confe"ed on Central Government-To frame Scheme-Held:
Not unguided-Constitution of India, Article 14--Administrative Law.

Section 3(1) & (2)-Provision enabled Central Government to protect
D wages of pie-nationalisation employees of Corporation while framing Sr;heme
under S.3( 1)-Constitutionality of-Held: Not violative of Art. 14--Historical
background of creation of Corporation and the fact that the group of pre·
nationalisation emp~oyees was a dwindling group taken into considera-
tion-Burmah Shell (Acquisition of Undertaking in India) Act, 1976, S. 9.

E Statement of Objects and Reasons-Paragraphs 3 and 4--Public Sector
wage policy-Held : Contention that there was no such policy and, therefore,
basis of Act unfounded, rejected. ·

Section 3(4)--f'owel'-Confmed 011 Central Government-To frame
Scheme-Retrospectively-Validity of-Held : Such power valid:
F
Section 3(1)-Validity of-Held: Such legislation was within the legis-
lative competence of Parliament-Contention that retrospective operation of
Act aimed at setting aside earlier judgment of Industrial Court rejected.

Bharat Petroleum Corporation Ltd. (Determination of Condition of
G Service of Post-Nationalisation Refinery Employees) Scheme, 1989.
Pre-nationalisation . and post-nationalisation employees--Distinction
between-In matter of wages-Held : Not discriminatory.

Retrospective operation of-From a date prior to coming into force of
H par~nt Act-Validity of-Held : Such Scheme was valid.
798
PROCESS TECHNICIANS AND ANALYSTS' UNION v. U.O.I. 799

Retrospective operation of-<:ontention that Scheme aimed at setting A
aside earlier judgment of Industrial Court, rejected.

Wages-Difference between wages of refinery employees of Bharat
Petroleum Corporation under Scheme of 1989 and wages of employees of
Marketing Division of the same Corporatio1t-Validity of-Held : Not dis-
criminatory as the latter were receiving their wages under a settlement with the B
Corporation, while the f onner could not reach any such settlement and were,
consequently, governed by the Scheme-Hence each of them constituted a
distinct clasr-Bharat Petroleum Corporation Ltd. (Detennination of Condi-

. tions of Service of Employees) Act, 1989.

Bharat Petroleum Corporation Ltd. (Detennination of Conditions of
c
Service of Post-Nationalisation Refinery Employees) Amendment Scheme,
1996.

Clause 3-Employees who entered into settlement with Corpora-
tion--£xclusion of-From ambit of-Union refu,sed to enter into such settle.- D
ment-Such exclusion not discriminatory-Such union was governed by
Scheme and, therefore, could not complain of discrimination-Further, con-
siderations which go into finalising settlements on part of employer were very
different from considerations governing framing of statutory Scheme by
Central Government.
E
Clause 3-Most of the employees of Corporation stood excluded
from the Scheme because they entered into settlement with Corporatio1t-A
single Union which did not enter into such settlement, covered by
Scheme-<:omplaint of such Union being singled out-Validity of-Held : In
such circumstances, members of such Union could not complain of being F
singled out-<:onstitution of India, 1950, Arts. 14 and 16.

, The entire share capital of Burmah Shell Refineries Ltd. was pur-
chased by the Government of India and Burmah Sell Refineries Ltd.
became a Government Company, and later a Public Sector Undertaking.
The Burmah Shell Oil Storage Iand Distributing Company which I was a G
foreign company was acquired by the Central Government by enacting the
Burmah Shell (Acquisition of Undertakings in India) Act, 1976. After the
acquisition of the Burmah Sfie~I Oil Storage and Distributing C9mpa'9';
both these compllnies was merged and a notification was issued under
Section 7 of the Said Act, vesting the undertakings of the Burmah Shell H
800 SUPREME COURT REPORTS [1997] 2 S.C.R.

A Oil Storage and Distributing Company in Burmah Shell Refineries Ltd.
The name of the said company was changed to Bharat Petroleum Corpora-
tion Ltd. Upto the date of acquisition there were approximately 220 Bur-
mah Shell workmen who were working in the Refinery Company. ..
Subsequently, some of these employees continued with the Government
Company. Fresh workmen were employed thereafter by the Govern-
B ment/Public Sector Company on a temporary basis on consolidated
salaries.

The Petroleum Employees' Union filed a petition under the
Maharashtra Recognition of Trade Unions and Prevention of Unfair
C Labour Practices Act, 1971, claiming on behalf of post- nationalisation
-
workmen in the refinery of Bharat Petroleum Corporation Ltd. benefits of
pre-nationalisation wage settlements signed by the then unions with Bur-
mah Sell Refineries Ltd. The Industrial Court allowed the petition. The
Industrial Court held that the settlement continued to apply to employees
--
recruited after nationalisation (post-nationalisation employees). The In-
D dustrial Court further held that legislation was required if it was intended
that the same service conditions would not apply to post-nationalisation
employees. However, the High Court set aside the judgment of the In-
dustrial Court.

E Thereafter, the Bharat Petroleum Corporation Ltd. (Determination
of Conditions of Service of Employees) Act, 1988 was. enacted. Under
Section 3 of the Act, the Central Government framed by a notification, the
Bharat Petroleum Corporation Ltd. (Determination of Conditidns ·of Ser-
vice of Post-Nationalisation Refinery Employees) Scheme, 1989. The said
Scheme was amended by the Bharat Petroleum Corporation Ltd. (Deter-
F mination of Conditions of Service of Post-Nationalisation Refinery
Employees) Amendment Scheme, 1996. It was deemed to have come into
force on and from 1.1.1992.

The appellant, a union of employees in the refinery division of the
G Corporation, filed a writ petition before the High Court challenging the
Constitutional validity of the Act, which was dismissed. Hence this Appeal,

On behalf of the appellant it wiis' contended that Section 3 of the Act
conferred unguided and arbitrary powers on the Central Government to
frame Schemes; that Section 3(2) of the Act and the Scheme of 1989, which
H permitted the Central Government to provide for continuance of the
PROCESS TECHNICIANS AND ANALYSTS' UNION v. U.O.I. 801

pre-Nationalisation emoluments of the employees of the former companies A
who had become employees of the Corporation as a result of nationalisa-
tion, was discriminatory; that the entire basis of the Act was unfounded
because there was no such thing as public sector wage policy, as the wage
structure in different public sector undertakings was different as was
evident from Paragraph 3 anil <t of the Statement of Objects and Reasons B
of the Act, that the power given· under Section 3 of the Act to fraine a
Scheme retrospectively from 24.1.1976 was invalid; that the Act and the
Scheme of 1989 were designed to overcome the judgment of the Industrial
Court and such legislation was invalid; that the wages given to the refinery
employees under the 1989 Scheme were different from the wages received
by the employees of the Marketing Division of the Corporation constituted C
discrimination; that the distinction made by the Scheme of 1996 between
the employees who had entered into a settlement with the employer and
.
the employees who have not entered into a settlement was .
discriminatory;
and that since the Scheme of 1996 covered only the employees of the Union,
the appellants had been singled out.
D
Dismissing the appeal, this Court

HELD : 1. The power conferred by Section 3 of the Bharat Petroleum
Corporation Limited (Determination of Conditions of Sevice of
Employees) Act, 1988 on the Central Government to frame a Scheme can E
be exercised for the purpose of making the service ,conditions of the
employees of Bharat Petroleum· Corporation comparable with those of
other public sector companies. This is not unguided power. The guidelines
are contained within Section 3 itself. (810-D-F]
F
Z.l':·The appellant's contention that Section 3(2) of the Act which
permitted the Central Government to provide for continuance of the
pre-nationalisation emoluments of the employers of the former companies
who had become the employees of the Corporation as a result of
nationalisation ignores the entire historical background of creatio~ of the
Corporation. Prior to 1976 the employees of Burmah Shell Refineries as G
well as Burmah Shell Oil Storage and Distributing Company of India
Limited enjoyed salaries and emoluments and had the benefit of a wage
structure which was very different from that of other public sector under-
takings. When Burmah Shell Refineries became a Government Company,
and when the' Burmah Shell Oil Storage and Distributing Company of H
802 SUPREME COURT REPORTS [1997] 2 S.C.R.

A India Limited was taken over under the Burmah Shell (Acquisition of
Undertakings in India) Act, 1976, the employees of these two companies
who became the employees of the Corporation, were given protection of
their wages. Moreover, by its very nature this group of pre-natio_nalisation
employees was a dwindling group. Originally, there were abut 200
B employees who were entitled to their pre-nationalisation service benefits.
By the time the instant appeals came to be filed their numbers had
dwindled to 10. At present there is only one employee now left who is
entitled to pre-nationalisation emoluments. In this context, it cannot be
said that the provision of Section 3(2) violate Article 14 of the Constitu-
tion. [811-A-H]
c
LIC & Ors. v. S.S. Srivastava & Ors., [1988) Supp. SCC 1; B.S. Yadav
& Ors. v. Chief Manager, Central Bank of India & Ors., [1987) 3 SCC 120
and Imperial Bank of India Pensioners' Association & Ors., [1989) Supp. 1
sec 236, relied on.
D Maninder Chandra Sen v. Union of India & Ors., AIR (1973) Cal. 385,
approved.

2.2. The
\
distinction
.,_. made by the Bharat Petroleum Corporation Ltd.
(Determination of Conditions of Service of Post- Nationalisation Refinery
Hl.-
E Employees) Scheme, 1989 between pre- nationalisation and post-
nationalisation employees of the refinery does not violate Article 14 for the
same reasons as stated above in connection with the provisions of the 1988
Act. [813-A-B]

3.1. · The contention of the appellant that the figures in different
-
F public sector unions do not tally is correct. But what one has to see is not
the actual figure but the pattern on the structure of the wage, or what
respondents describe as the public sector wage p:ittern. [814-H, 815-A]

3.2. The Scheme of1989, which has been framed under the Act of
1988, is for the purpose of introducing the public sector wage pattern in
G the Corporation for post-nationalisation employees. It would not, there-

--
fore, be correct to say that there is no such thing as a public sector wage
pattern. The variations pointed out by the appellant are a result of
revisions being made in different public sector enterprises at differe_nt
times and under different settlements. Such differences cannot nullify the
•
H basic intention of the Corporation to bring about parity in the wage
PROCESS TECHNICIANS AND ANALYSTS' UNION v. U.O.I. 803

pattern of their employees with the wages pattern in other public sector A
undertakings especially in the oil sector, which is the relevant sector.
[816-B, E]
4. Under Section 3(4) of the 1988 Act an express power is given to the
Central Government to give retrospective effect to any Scheme framed
under Section 3(1) or (3). The retrospective operation, which is given to the B
Scheme of 1989, · is, therefore, under a statutory power so given to the
Central Government. Since the Scheme regulates the conditions of service
of post-nationalisation refinery employees, it must necessarily ~over the
post- nationalisation period, which began from 24.1.1976. It is open to the
legislature to make retrospective laws. Therefore, the statutory Scheme,
which has been made retrospective in exercise of statutory power expressly C
granted to the Central Government, cannot be faulted on that ground.
[8'16-G-H, 817-A]
. 5. The Judgment of the Industrial Court has been set aside by the
High Court. The retrospective operation given to the Scheme provides for
the conditions of service of all employees who joined the Corporation after D
24.1.1976, it necessarily lays down these terins and conditions operative
from 24.1.1976. The Scheme also provides emoluments, which are higher
than the emoluments, which the post-nationalisation employees were
receiving to the coming into effect of the Scheme. The Scheme also brings
into effect the avowed pattern in the Corporation conform to the wage E
pattern of public sector undertakings. A legislation which imposes
retrospectively a wage pattern may thereby discontinue the application of
any earlier settlement by an express legislative provision to that effect. Such
legislation is within the legislative competence of Parliament. [820-E-G]

Shri Prithvi Cotton Mills Ltd. & Anr. v. Broach Borough Municipality F
& Ors., [1970] 1 SCR 388; Comorin Match Industries (P) Ltd. v. State of
T.N., [1996] 4 SCC 281 and P. Kannadasan & Ors. v. State of T.N. & Ors.,
[1996] 5 sec 670, relied on.

A. V. Nachane & Anr. v. Union of India & Anr., [1982] 2 SCR 246 and G
Madan Mohan Pathak v. Union of India & Ors., [1978] 3 SCR 335, held
inapplicable.

LIC v. D.J. Bahadur & Ors., [1981] 1 SCR 1083, referred to.

6.1. The difference between the wages given to the refinery employees H
804 SUPREME COURT REPORTS [1997) 2 S.C.R.

A under the 1989 Scheme and the wages received by the employees of the
Marketing Division of the Corporation is not discriminatory as the latter
were their wages under a settlement and were, consequently, governed by
the Scheme. Hence, each of them constituted a distinct class.

6.2. The distinction made by the Bharat Petroleum Corporation Ltd.
B (Determination of Conditions of Service of Post· Nationalisation Refinery
Employees) Amendment Scheme, 1996 between those employees who have
entered into a settlement and those employees who have not entered into a
settlement cannot be considered as discriminatory. The Corporation of-
fered to sign a similar settlement with the appellant-Union but the appel-
C lant- Union declined to do so. Therefore, the appellant cannot complain of
discrimination. There are various considerations which go into finalising
such settlements on the part of the employer. These include (1) industrial
peace so that the workers can concentrate on their work with out agitations
(2) putting an end to expensive litigation between the employer and the
employees and establishment of goodwill and harmony between the
D employer and the employees leading to better functioning of the estab-
lishment. These considerations are very different from considerations,
which govern the framing of a statutory Scheme by the Central Govern-
ment. Such a Scheme must necessarily bear in mind the wage pattern in
other public sector undertakings and provide for revisions of wages based
E on certain accepted principles for all public sector 'undertakings. The con·
siderations for framing the amended Scheme are different. Those who are
governed by a statutory Scheme cannot compare themselves with employees
who have entered into a negotiated settlement with their employer. The
charge of discrimination under Article 14, therefore, cannot be sustained
in this regard. [823-C-H]
F
7. The employees who are members of the appellant-Union being the
only set of employees, who have not entered into a settlement with their
employer, have necessarily to be provided for under statutory Scheme.
Such a Scheme, therefore, has been framed and the employees cannot
complain that they have been singled out. They cannot expect a statutory
G Scheme to give them the benefits of the settlements, which the other
-
employees have entered into with the employer. It is framed by the Central
Government under the statutory provisions of the 1988 Act. The amended
Scheme of 1996 gives substantial additional benefits to the employees. It
-
is in valid exercise of statutory powers, and is brought into effect from
H 1.1.1992 since the earlier Scheme covered period upto 1.1.1992. [824-B-D]
PROCESS TECHNICIANS AND ANALYSTS' UNION'· U.0.1. [MRS. SUJATA V. MANO HAR, J.) 805

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3878 of A
1992.

From the Judgment and Order dated 22.6.92 of the Bombay High
Court in W.P. No. 3549 of 1988.

Madan G. Phadnis, Jitendra Sharma, Ms. Gunwant Dara, Ms. B
Minakshi Vij for P. Ga~r for the Appellant.

T.R. Andhyarujina, Solicitor General, K.N. Shukla, K.C. Kaushik,
A.K. Sharma for B.K. Prasad for the Respondent for (Union of India).

Soli J. Sorabjee, Harish N. Salve, P.H. Parekh and Sameer Parekh C
for the Respondents.

The Judgment of the Court was delivered by

MRS. SUJATA V. MANOHAR, J. Bharat Petroleum Corporation
Ltd., the second respondent in this appeal has about 12,000 employees. Out D
of these about 1850 employees are working in the refinery division of the
second respondent. Process Technicians and Analysts' Union which is the
appellant-Union has a membership of about 411 employees in the refinery
division of the second respondent-corporation.

Prior to 1976 there were two companies; one was Burmah Shell E
Refineries Ltd. which was an Indian company and the other was Burmah
Shell Oil Storage and Distributing Company which was a foreign company
registered in the United Kingdom and was a marketing company. On or
about 24th of January, 1976, the entire share capi~al of Burmah Shell
Refineries Ltd. was purchased by the Government of India and Burmah p
Shell Refineries Ltd. became a Government Company, and later a public
Sector Undertaking. The Burmah Shell Oil Storage and Distributing Com-
pany which was a foreign company was acquired by the Central Govern-
ment by enacting the Burmah Shell (Acquisition of Undertakings in India)
Act, 1976. After the acquisition of the Burmah Shell Oil Storage and
Distributing Company, both these companies were merged and a notifica- G

- tion was issued under Section 7 of the said Act vesting the undertakings of
the Burmah Shell Oil Storage and Distributing Company in Burmah Shell
Refineries Ltd. The name of the said company was changed on or about
1st of August, 1977, to Bharat Petroleum Corporation Ltd. Upto 24th of
January, 1976, there were approximately 220 Burmah Shell workmen who H
806 SUPREME COURT REPORTS [1997] 2 S.C.R.

A were working in the Refinery Company. After 24th of January, 1976, some
of these employees continued with the Government Company. Fresh
workmen were employed thereafter by the Government/Public Sector
Company on a temporary basis on consolidated salaries.

In February 1978 Petroleum Employee's Union filed U.L.P.38/1978
B under the Maharashtra Recognition of Trade Unions and Prevention of
Unfair Labour Practices Act, 1971, claiming on behalf of post- nationalisa-
tion workmen in the refinery of Bharat Petroleum Corporation Ltd.
benefits of Pre-Nationalisation Wage Settlements signed by them unions
with Burmah Shell Refineries Ltd. Those settlements were dated 21.2.1973,
C 31.10.1973 .and 16.8.1974.

By a latter dated 27th of February, 1981 addressed by the Govern-
ment of India to the second respondent-corporation, the attention of the
second respondent was invited to existing directions to the effect that the
D Wage Scales/Service Conditions which were prevalent before the take-over
of the company cannot be granted to the employees recruited subsequently
and that the second respondent-corporation should recruit all new entrants
after take-over of the company on consolidated wages. It was in compliance
with this directive that the second respondent-corporation had engaged
employees after nationalisation on a temporary basis and on consolidated
E salaries.

During the pendency of U.L.P .38/1978;-there were other litigations
between the employees and/or unions of these employees and the
second respondent~corporation pertaining to service conditions of the
F employees. These are, however, not relevant .for the present purposes.
On 29th of April, 1987 U.L.P.38/1978 was allowed in favour of the
employees. The Industrial court held that the second respondent-cor-
poration was a successor-in-interest of Burmah Shell Refineries Ltd. and
that the settlement of 16th of August, 1974 continued to apply to employees -
recruited after nationalisation (hereinafter referred to as post-nationalisa-
G tion employees'). It was also held that the letter from the Government of
India to the second respondent- corporation dated 27.2.1981 was of no
legal effect and legislation was required if it was intended that the same -
service conditions would not apply to post-nationalisation employees. This
decision was challenged by the second respondent by filing a writ petition
H being Writ Petition No. 1835 of 1987 in the Bombay High Court on or"'
··~

PROCESS TECHNICIANS AND ANAL YSl'S' UNION'· U.0.1. [MRS. SUJATA V. MANOHAR, l.J 807

about 1st of July, 1987. The writ petition prayed for a writ of certiorari to A
quash the judgment dated 29th of April 1987 in U.L.P.38 of 1978. By an
interim order of the same date the application of the settlement of 16th of
August, 1974 was stayed for the past period but for prospective period from
1.7.1987 the said settlement of 1974 was made applicable to all workmen
of the refinery who were complainants in UL.P.38 of 1978.
B
On 2nd of July, 1988, Bharat Petroleum Corporation Ltd. (Deter-
mination of Conditions of Service of Employees) Ordinance, 1988, was
promulgated. Under Section 3 of the Ordinance power was vested in the
Ministry of Petroleum, Government of India to determine service condi-
tions under a scheme comparable with the employees of other public sector C
companies. The Ordinance was replaced by The Bharat Petroleum Cor-
poration Ltd. (Determination of Conditions of Service of Employees) Act,
1988, being Act 44 of 1988 (hereinafter referred to as 'the Act of 1988').
The relevant provisions of Section 3 of the said Act are as follows :

"3(1) : Where the Central Government is satisfied that for the D
purpose of making the conditions of service of the officers and
employees of the Corporation comparable with the conditions of
service of the officers and employees of other public sector com-
panies, it is necessary so to do, it may, notwithstanding anything
contained in the Industrial Disputes Act, 1947 or any other law or E
any agreement, settlement, award or other instrument for the time
being in force, and notwithstanding any judgment, decree or order
of any court, tribunal or other authority, frame one or more
schemes for the purpose of determination of the conditions of
service of the officers and employees of the Corpora~ion.
F
(2) x x x x x x

(3) The Central Government may make a scheme to amend or vary
scheme made under sub-section (1).

(4) The power to make any scheme under sub-section (1) or G
sub-section (3) shall include -

(a) the power to give retrospective affect to any such scheme
or any provision thereof; and

(b) the power to amend, by way of addition, variation or H
808 SUPREME COURT REPORTS (1997] 2 S.C.R.

A repeal, any existing provisions determining the conditions of
service of the officers and employees of the Corporation in
force immediately before the commencement of this Act.

(5) Every scheme made under sub-section (1) or sub- section (3)
shall be laid, as soon as may be after it is made, before each House
B 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 succes-
sive 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 scheme, or both
c Houses agree that the scheme should not be made, the scheme
shall thereafter have effect only in such modified form or be of no
effect, as the case may be; so, however, that any such modification
or annulment shall be without prejudice to the validity of anything
previously done under that scheme."

D
Pursuant to the power given under Section 3, the Central, Govern-
ment, or about 29th of April, 1989, framed a scheme by a notification of
that date, being that Bharat petroleum Corporation Ltd. (Determination
of Conditions of Service of Post-Nationalisation Refinery Employees)
Scheme, 1989 (hereinafter referred to as 'the Scheme of 1989'). The
E Scheme was made retrospective and clause 1(2) of the Scheme provided
that the Scheme shall be deemed to have come into force on and from the
24th day of January, 1976. The Scheme laid down conditions of service for
the employees covered by the Scheme for five different periods; (1) the
period from 24th of January, 1976 to 31st December, 1979; (2) 1st of
January, 1980 to 31st December, 1983; (3) 1st January, 1984 to 31st
F
December, 1987;(4) 1st January, 1988 to 31st December, 1991; and (5) after
31st of December, 1991, unless the conditions are altered, varied or
repealed by any other scheme.

Two unions of the employees of the second respondent-corporation,
G namely, the appellant union and Petroleum Workmen's Union filed Writ
Petition No. 3549 of 1988 in the Bombay High Court challenging the
constitutional validity of the Bharat Petroleum Corporation (Determina-
tion of Conditions of Service of Employees) Act, 1988. Another writ
petition being Writ Petition No. 3619 of 1988 was filed by another union,
H namely, Bharat Petroleum Corporation (Refinery) Employees' Union cha!-
--{
PROCESS TECHNICIANS AND ANALYSTS' UNION'· U.0.1. [MRS. SUJATA V. MANO HAR, J.) 809

lenging the constitutional validity of the said Act of 1988. After the coming A
into force of the said Scheme of 1989, these writ petitions were amended
to challenge the validity of the said Scheme which· was framed on 29th of
April, 1989. These writ petitions were heard together. By a common
judgment and order, a Division Bench of th_e Bombay High Court has
dismissed these writ petitions and has upheld the constitutional validity of B
the said Act of 1988 and the Scheme of 1989.

The present appeal is filed by the appellant-union from the judg-
ment and order of the Division Bench of the Bombay High Court in Writ
Petition No. 3549 of 1988. Similarly, an appeal was also filed from the said
judgment and order by the Petroleum Workmen's Union who was a joint C
petitioner in the said Writ Petition No. 3549 of 1988. An appeal was also
filed by the Bharat Petroleum Corporation (Refineries) Employees's
Union before this Court from the said judgment and order in Writ Petition
No 3619 of 1988. The other two appeals, however, have been disposed of
before us by earlier orders in view of the settlements arrived at by the said D
!WO unions with the second respondent-corporation on or about 17th May,
1996. The appellant-union, however, has not reached a settlement with the
corporation.

After the dismissal of the said writ petitions by the Bombay High
Court by the impugned judgment and order, Writ Petition No. 1835 of 1987 E
which had been filed by the second respondent-corporation challeng:ng the
judgment and order of the Industrial court in U.L.P.38of1978 was allowed
by the Bombay High Court by its judgment and order of 27th June 1992,
and the judgment and order of the Industrial court dated 29th of April,
1987 in U .L.P .38 of 1978 was set aside.
F
During the pendency of this appeal before us, the Central Govern-
ment, Ministry of Petroleum and Natural Gas by a notification dated 24th
of September, 1996 has notified a scheme further to amend the Bharat
Petroleum Corporation Ltd. (Determination of Conditions of Service of
Post-Nationalisation Refinery Employees) Scheme, 1989. The amended G
Scheme is known as the Bharat Petroleum Corporation Ltd. (Determina-
tion of Conditions of Service of Post-Nationalisation Refinery Employees)
Amendment Scheme, 1996 (hereinafter referred to as 'the Scheme of
1996'). It is deemed to have to come into force on and from the 1st day of
January, 1992. Under Clause 3 of the Amended Scheme, it applies to all H
810 SUPREME COURT REPORTS [1997] 2 S.C.R.

A clerical and labour employees who have joined the refinery of the Corpora-
tion on or after the 24th day of January, 1976, whose jobs are set out in
Part-B of the Fourth Schedule, provided that the Scheme shall cease to
have effect in respect of the employees who shall opt or consent to be
governed by the terms and conditions as may be mutually agreed with the
B Corporation. As a result, the employees who are governed by the settle-
ment which have now been entered into on ·or about 17th of May, 1996,
will not be governed by the Amended Scheme of 1996. While the
employees who are members of the appellant-union, who have not signed
such settlements, will now be goxerned by the Amended Scheme of 1996.
The validity of this Amended Scheme of 1996 is also challenged before us.
c
The appellant-union contends that Section 3 of the Bharat Petroleum
Corporation Limited (Determination of Conditions of Service of
Employees) Act, 1988 confers unguided and arbitrary powers on the
Central Government to frame schemes. Hence Section 3 of the Act of 1988
D must be struck down. Section 3, however, clearly provides within itself the
guidelines for framing the scheme under that section. Thus Section 3(1)
stipulates that the Central Government should be satisfied, that for the
purpose of making the conditions of service of the officers and employees
of the Corporation comparable with the conditions of service of the officers
and employees of other public sector companies, it may frame one or more
E schemes for the purpose of determination of the conditions of service of
the officers and employees of the Corporation. It can do this notwithstand-
ing anything contained in the Industrial Disputes Act, 1947 or any other
law, agreement, settlement, award or other instrument for the time being
in force, and notwithstanding and judgment, decree or order of any court,
p tribunal or other authority. The power to frame the scheme, therefore, can
be exercised for the purpose of making the service conditions of the second
respondent's employees comparable with those of other public sector
companies. This is not unguided power. The guidelines are contained
within Section 3 itself. ·

G It is next submitted that under Section 3(2) while framing any scheme
under sub-section (1) of Section 3, it shall be competent for the Central
Government to provide for the continuance, after the commencement of
any such scheme, of such of the emoluments and other benefits as were
payable to the officers and employees of the Corporation immediately
H before Burmah Shall Refineries became a Government Company or before
PROCESS TECHNICIANS AND ANALYSTS' UNION v. U.0.1. (MRS. SUJATA V. MANO HAR, J.] 811

the appointed day under the Burmah S~ell (Acquisition of Undertaking in A
India) Act 1976. It is submitted that by reason of Section 3(2) different
service conditions can be permitted for the pre-nationalisation employees
of Burmah Shell Refineries or Burmah Shell Oil Storage and Distributing
Company who have become employees of the second respondent-corpora-
tion as a result of the nationalisation. This, according to the appellant, B
violates Article 14 of the Constitution as it discriminates between two sets
of employees of the second respondent-corporation.

This submission, however; ignores the entire historical background
of creation of the second respondent-corporation. Prior to 1976 the
employees of Burmah Shell Refineries as well as Burmah Shell Oil Storage C
and Distributing Company of India Limited enjoyed salaries and emolu·
ments and had the benefit of a wage structure which was very different
from that of other public sector undertakings. When Burmah Shell
Refineries became a Government Company, and when the Burmah Shell
Oil Storage and Distributing Company of India Limited was taken over D
under the Burmah Shell (Acquisition of Undertakings in India) Act, 1976,
the. employees of these two companies who became the employees of the
second respondent-corporation, were given protection of their wages. Sec-
tion 9 of the Burmah Shell (Acquisition of Undertakings in India) Act,
1976, in this connection, provides that these employees shall hold office or E
service under the Central Government or the Government Company, as
the case may be, on the same terms and conditions and with the same rights
to pension, gratuity and other matters as would have been admissible to
them, had there been no such vesting. It is to protect the conditions of
service of these pre-nationalisation employees that Section 3(2) of the 1988
Act provides that a scheme framed under Section 3(1) may provide for the F
continuance of the salary and other benefits received by the pre-
nationalisation employees. This was done to tr~at the pre-nationalisation
employees in a fair and just manner. it is also necessary to note that by its
very nature this group of pre-nationalisation employees was a dwindling
group. Originally, there were about 200 such employees who were entitled G
to their pre-nationalisation service benefits. By the time these appeals came
to be filed their numbers had dwindled to 10. We are now informed that
there is only one employee now left who is entitled to pre-nationalisation
emoluments. In this context, it cannot be said that the provisions of Section
3(2) violate Article 14 of the Constitution. H
812 SUPREME COURT REPORTS [1997)2S.C.R.

A In the case of Life Insura'!ce Corporation of India & Ors. v. S.S.
Srivastava & Ors., [1988] Supp SCC 1, a distinction had been made in the
age of retirement between employees transferred to a Government Cor-
poration from its predecessor private company and employees directly
recruited by the Corporation. The age of retirement for transferred
employees was fixed at 60 years and the age of retirement for those directly
B
recruited to the Government Corporation was fixed at 58 years. It was held
that the transferees and direct recruits formed two distinct classes and
providing different ages of retirement was not discriminatory. This Court
noted that the transferred employees belonged to a diminishing cadre.
Ultimately, the cadre would consist only of directly recruited employees.
C Secondly, a separate classification for transferred employees had become
necessary of historical facts and the need for treating these employees in
a fair and just way. This Court referred with approval to the decision of
the Calcutta High Court in Maninder Chandra Sen v. Union of India & Ors.,
AIR (1973) Cal. 385, in which the classification of railway employees into
D two categories, namely, those who joined on or before March 31, 1938 and
those who joined after March 31, 1938 for purposes of fixing the age of
superannuation was upheld. The classification was upheld as it was based
on historical facts, and as necessary for treating the employees in a just and
fair way.

E In the case of B.S. Yadav & Anr. v. Chief Manager, Central Bank of
India & Ors., [1987] 3 SCC 120, this Court upheld rules fixing 60 years as
the ages of Superannuation for those inducted prior to bank nationalisa-
tion, but 58 years for those inducted after that date. These rules were held
as not violative of Articles 14 and 16 of the Constitution. The Court said
F that the classification of the employees into these two categories was a valid
classification involving justice and fairness. These was good reason to make
a distinction between the employees who had entered service prior to
nationalisation and those who joined thereafter. At the time of nationalisa-
tion the corresponding new banks did not have their own employees to run
the wide business taken over under the Act. There was, therefore, necessity
G to secure the services of the employees of the former banking companies
without causing much dissatisfaction to them. There was also need for
standardising the conditions of service of all such employees belonging to
the 14 banks. Hence the age of retirement of the new entrants was fixed
consistent with the conditions prevailing in almost all the sectors of public
fl employment.
~
I

PROCESS TECHNICIANS AND ANAL YSI'S' UNION'· U.O.L[MRS. SUJATA V. MANOHAR, J.] 813

The considerations which have impelled the provisions of Section A
3(1) and 3(2) in the 1988 Act are very similar to those cited in B.S. Yadav's
case (supra). In the case of Imperial Bank of India Pensioners Association
& Ors. v. State Bank of India & Ors., [1989] Supp. 1 SCC 236, this Court
upheld a distinction made between the India-based and London-based
pensioners of Imperial Bank of India which was later taken over by the
State Bank of India. The Court said that such a distinction did not violate B
Articles 14 and 16 of the Constitution. It said that London-based
employees constitute a class by themselves and there was no discrimination
within the same class. The contention of the appellant, therefor, in this
regard, cannot be sustained.
c
The appellant has drawn our attention to the Statement of Objects
arid Reasons of the 1988 Act. Paragraph 3 of the Statement of Objects and
Reasons accompanying the said points out that the Bharat Petroleum now
consists of three categories of employees. They are the employees of the
Burmah Shell Refineries who continued to serve in that company even after D
it became a Government Company; the employees of Burmah Shell whose
services were transferred to Burmah Shell Refineries under the provisions
of the 1976 Take-over Act,· and the employees recruited by Bharat
Petroleum after it became a Government Company. In paragraph 4 it is
pointed out that out of the first two categories of employees mentioned
above, a few have not agreed to abide by the public sector wage policy and, E
therefore, continue to enjoy the emoluments and other conditions of ser-
vice to which they were entitled under the aforesaid companies even after
the Burmah Shell Refineries became a Government Company or, as the
case may be, after the nationalisation of Burmah Shell. The emoluments
and other conditions of service of the third category of employees men- F
tioned above and who were recruited by Bharat Petroleum were, however,

--
, -sought to be regulated after taking into consideration the conditions of
service applicable to employees in other public sector companies in accord-
ance with the Wage Policy ·of the Government for Public Sector. This was
with a view that there should be, a far as possible, parity in the conditions
of service of Public Sector Companies. G

The Statement of Objects and Reasons goes on to point out that
since the service conditions of this large category of employees were less
favourable then the employees of Burmah Shell Refineries and Burmah
a
Shell, dispute was raised by them which was taken to the Industrial Court. H
814 SUPREME COURT REPORTS [1997] 2 S.C.R.

A The Industrial Court has held that in view of the provisions Section 18(3)
of the Industrial Disputes Act, 1947, these employees are also entitled to
the same conditions of service as are applicable to other two categories of
employees. The Statement goes on to say, "The award of the Industrial
Tribunal if given effect to in Bharat Petroleum will amount to giving a
B higher wage structure in this Corporation alone and other employees in
similar undertakings may demand that they should also get the benefit of
the higher scales of pay on the principle of equal pay for equal work. This
may eventually result in high wage islands and depart radically from the
public sector wage policy." As the continuance of the conditions of service
of the employees of the former company was due to historical reasons and
C as the conditions of service of the employees of Bharat Petroleum were
arrived at as a result of settlements made between the company and the
workmen, the demand of post-nationalisation employees for parity with the
employees of the former company may have to be conceded in view of the
provisions of the Industrial Disputes Act and the award of the Industrial
D Tribunal. Any attempt to make the conditions of service comparable with
the conditions of service of other public sector companies can only be done
by legislation. Such a legislation could provide for determination of com-
parable condition of service for all the categories of employees of Bharat
Petroleum but at the same time provide for protection to those pre-
nationalisation employees of their conditions of service.
E
It is to achieve this objective that the Act of 1988 came to be enacted.
The appellant contend that the entire basis of the Act is unfounded
because there is no such thing as public sector wage policy. It contends
that wage structures in different public sector undertakings are different.
p The appellant has submitted charts of wages in different public sector
companies. There is, for example, a chart showing the wages of the lowest
category of workmen of the second respondent in the refinery compared
with other public sector units at different levels at starting, 5th, 10th and
maximum level. At the beginning the total wages in RCF, for example, are
Rs. 2421, which at the 5th level go upto Rs. 2559, and at the 10th level to
G Rs. 2693. In comparison, under the 1989 BPCL Refinery Scheme, the total
at the beginning is Rs. 2323, at the 5th level it is Rs. 2399, and at the 10th
level it is Rs. 2480. In BPCL Marketing Division, the comparable figures
are Rs. 2630, Rs. 2814 and Rs. 3062. We are not referring in detail to these
charts which have been submitted and which we have perused. The con-
H tention of the appellant that the figures in different public sector unions
. -f
PROCESS TECHNICIANS AND ANALYSl'S' UNION'- U.0.1. [MRS. SUJATA V. MANOHAR, J.j 815

do not tally is correct. But what we have to see is not the actual figure but A
the pattern or the structure of the wage, or what the respondents describe
as the public sector wage pattern.

The respondents have explained the fundamental rationale behind
evolving a public sector wage pattern, which is to achieve consistency and B
uniformity in the wage structure of the public sector enterprises so as to
ensure that the wages drawn by various public sector companies are not so
disproportionate with one another as to create any imbalance in the public
sector. Towards ·this end, the Government of India has issued, form time
to tome, directives and orders to public sector enterprises to maintain
uniformity and consistency in that wage pattern, for this purpose the C
Department cif Public Enterprises has been set up to ensure, inter alia,
parity of public sector wages. The· method of computation of dearness
allowance, house rent allowance, city compensatory allowance etc. is iden-
tical for all the public sector enterprises. The components of the total wage
packet consist of a basic salary scale which is formulated by merging a D
portion of the dearness allowance with the pre-existing basic salary at the
beginning of each wage settlement period, which is currently a period of
five years. The basic salary scale has a minimum and maximum value which
is arrived at by providing for increments. The second component is dear-
ness allowance whicl. is linked to the All India Consumer Price Index Simla
Series (Base 1960 = 100). All public sector enterprises follow the same E
industrial D .A. pattern. The third component is house rent allowance
which is payable at the rate of 30% of the basic salary in the metropolitan
cities, 25% of basic salary in other A class cities, 15% of basic salary in Bl
and B2 class cities and 7- 1/2%/10% for C class cities and unclassified
areas. The other components are city compensatory allowance and wage F
revision which generally take place now every five year. The respondents
have prepared a table of emoluments drawn by the employees in the public
sector oil companies for the highly skilled category at the maximum of the
scale as of now. In HPCL Refinery, the total emoluments are Rs. 11,964,
in IOC Refinery it is Rs. 11,574 and in the BPCL Refinery it is Rs. 12, 386.
The essential features, therefore, of the public sector wage pattern are G
variable industrial D.A., payment of H.R.A./C.C.A. based on Department
of Public Enterprises guidelines, linkage of revision in wages to produc-
tivity, permissible limits to rise in wages and adoption of the principle of
region-cum-industry as the basis for any wage revisions. The respondents
have pointed out .that the wage structure of the pre-nationalisation Burmah H
).-
816 SUPREME COURT REPORTS [1997] 2 S.C.R.

A Shell Refineries was at complete variance with this wage pattern. Hence it
needed to be changed.

The scheme of 1989 which has been framed under'the Act of 1988
• is for the purpose of introducing the public sector wage pattern in the
second respondent-corporation for post-nationalisation employees. It
B would not, therefore, be correct to say that ther.e is no such thing as a
public sector wage pattern. The variations pointed out by the appellant are
a result of revisions being made in different public sector enterprises at __,
different times and under different settlements. In fact the disparity. in the
wages paid by the second respondent in its Marketing Division and its
c Refinery Division is also on account of the differences in the settlements
which the second respondent has arrived at with its employees in the
Marketing Division. We are informed that the employees of the Marketing
Division were the first group of employees of the second respondent who
agreed to a change-over to the public sector wage pattern under the
Settlement of 1986. The revision in their wages thereafter is in accordance
D
with the pattern so adopted for the Marketing Division. The Refinery
Division, however, did not agree to such a settlement and hence there are
some differences in the wages paid in these two divisions. Such differences
cadnot nullify the basic intention of the second respondent to bring about
parity in the wage pattern of their employee with the wage pattern in other
E public sector undertakings especially in the oil sector which is the relevant
sector.

The appellant has challenged the power given under Section 3 of
1988 Act to frame a scheme retrospectively. The appellant has also cha!-
F lenged the 1989 Scheme framed under the said Act on the ground that it
has been made applicable retrospectively from 24th of January, 1978. The
appellant has contended that the Scheme cannot be made operative
retrospective from 24th of .T anuary, 1976 when the Act under which it is
framed came into force only on 2nd of July, 1988. This submission is based
on a misconception. Under sub-section (4) of Section 3 of the said Act an
G express power is given to the Central Government to give retrospective
effect to any scheme framed under sub-section (1) or sub-section (3) of
Section 3. The retrospective operation which is given to the Scheme or 1989
is, therefore, under a statutory power so given to the Central Government. -
Since the scheme regulates the conditions of service of post-nationalisation '
H refinery employees, it must necessarily cover the post-nationalisation
817
..,
PROCESS TECHNICIANS AND ANAL YS'IS' UNION'· U.O.l. [MRS. SUJATA V. MANOHAR, J.]

period which began from 24th of January, 1976. It is open to the legislature A
to make retrospective laws. Therefore, the statutory scheme which has been

... retrospective in exercise of statutory power expressly granted to the Central
Government cannot be faulted on that ground.
' '

The appellant further contends that the Industrial Court by its order
29.4.1987 in U.L.P. 38 of 1978 held that the Settlement of 16th of August, B
1974 which was arrived at by the Burmah Shell Refinery with its employees
would apply to the employees recruited after nationalisation by the second
respondent. It was to override this decision of the Industrial Court that the
Bharat Petroleum Corporation Ltd.· (Determination of Conditions of Ser-
vice of Employees) Act, 1988, came to be enacted. In fact, the statement C
of Objects and Reasons which has been set out earlier clearly shows that
as a result of the decision of the Industrial Court there would be a high
wage island in the public sector in the form of high wages being paid to
the employees of the Refinery Division of second respondent which may
lead to imbalances in the public sector. It was to overcome such imbalance
that the Act was being passed. Secti_on 3(1) of the Act clearly provides that
D
a scheme which may be framed under Section 3(1) can "be framed not-
withstanding anything contained in the Industrial Disputes Act or any other
law, settlement or other instrument for the time being in force and not-
withstanding any judgment, decree or order of any court, tribunal or other
authority." The scheme of 1989 is accordingly framed with retrospective E
effect from 24th of January, 1976 and it provides for detailed conditions of
service of the employees for five different periods. The appellant contends
that the Act of 1988 and the Scheme of 1989 are designed to overcome the
judgment of the Industrial court. Such legislation, according to the appel-
lant, is invalid.
F
Learned counsel for the appellant has placed strong reliance upon
the decision of this Court in the case of A. V. Nachane and Anr. v. Union
of India & Anr., [1982] 2 SCR 246 in support of his contention that a statute
such as the 1988 Act, and the Scheme of 1989 formed under it, are invalid
in so far as they are retrospective because they are aimed at setting aside G
the judicial decision of the Industrial Court. This cannot be done by
legislation. This contention, however, does not bear any detailed scrutiny.
As far back as in 1969, in the case of Shri Prithvi Cotton Mills Ltd. & Anr.
v. Broach Borough Municipality & Ors., [1970] 1 SCR 388 a Bench of five
judges of this Court examined the efficacy of a validating Act which H
818 SUPREME COURT REPORTS [1997] 2 S.C.R.

A retrospectively validated the levy of a tax. It said that ordinarily a court
holds a tax to be invalidly imposed because the power to tax is wanting or
the statute or the rules or both are invalid or do not sufficiently create
jurisdiction. Validation of a tax so declared illegal may be done only if the
grounds of illegality of invalidity are capable of being removed and are in
B fact removed and the tax thus made legal. Observing that there are several
-
methods of doing this, the Court said that the legislature may, by following
one method or the other, neutralise the effect of an earlier decision of the
court which becomes ineffective after the change of the law. If the legisla-
ture has the power over the subject-matter and competence to make a valid
law, it can, at any time, make such a valid law and make it retrospectively
C so as to cover even past transactions..

A Bench of seven judges of this Court was required to consider the
validity of the Life Insurance Corporatior. (Modification of Settlement)
Act, 1976 in the case of Madan Mohan Pathak v. Union of India & Ors.
D Etc:, [1978] 3 SCR 335. Life Insurance Corporation had arrived at a
settlement with its employees relating to the terms and conditions of service
of Class III and Class IV employees including bonus . payable to them.
Under one of the clauses of this settlement, an armual cash bonus was
payable by the Life Insurance Corporation to all Class· III and Class IV
employees. This settlement was valid for a period of four years from 1st of .
E April, 1973. In 1976, the Payment ofBonus (Amendment) Act which was
enacted considerably curtailed the rights or employees to bonus. Although
this Act was not applicable to the employees of the Life Insurance Cor-
poration, the Corporation issued administrative instructions not to pay cash
bonus to its employees. Thereupon, the employees moved the Calcutta
F High Court for a writ directing the Life Insurance Corporation to pay a
cash bonus in accordance with the terms of the settlement. A Single Judge
of the High Court allowed the writ petition. While a Letters Patent Appeal
was pending, Parliament passed the Life Insurance Corporation (Modifica-
tion of Settlement) Act, 1976. The effect of the Act was to deprive Class
III and Class IV employees of the Life Insurance Corporation of bonus
G payable to them under the settlement. After the enactment, the Letters
Patent Appeal which was filed by the Corporation was not pursued by the
Corporation under the. belief that after the Act was passed; there was no
necessity for proceeding with the appeal. As a result, the writ of mandamus
issued by .the Single Judge of the Calcutta High Court remained in tact.
H The Associations of employees filed writ petitions before this Court cha!-
PROCESS TECHNICIANS AND ANALYSTS' UNION'· U.0.1. [MRS. SUJATA V. MANOHAR, J.] 819

lenging the constitutional validity of the Life Insurance Corporation A
(Modification of Settlement) Act, 1976. This Court said that the real
• objective of this Act was to set aside the result of the mandamus issued by
the Calcutta High Court. Bhagwati, J., who delivered the majority judgment
said that irrespective of whether the impugned Act was constitutionally
valid or not, the Corporation was bound to obey the writ of mandamus B
issued by the High Court. Section 3 of the impugned Act merely provided
that the provisions of the settlement shall not have any force or effect. But
the writ of mandamus issued by the High Court was not touched by the
impugned Act. The judgment continued to subsist and the Corporation was
bound to honour it. The majority held that the impugned Act which took
away the rights of the employees to receive bonus was violative of Article C
31(2). The observations of Bhagwati J. (as he then was) are in the context
of the Ll.C. being bound to obey the writ of mandamus issue by the High
Court. Also, Section 3 of the impugned Act did not override any judgment
or order of any court. The position in the case before us is very different
and we shall examine it a little later.
D
After the above decision, L.l.C. issued notices terminating the settle-
ment and issued a notification changing staff regulations. The validity of
the two notices and the notification issued for the purpose of nullifying any
further claim to annual cash bonus was challenged by the workmen in the
case of The Life Insurance Corporation of India v. D.J. Bahadur & Ors., E
[1981] 1 SCR 1083 and this Court had directed the Corporation to give
effect to the terms of the settlement of 1974 relating to bonus until
superseded by a fresh settkment, industrial award or relevant legislation.

On January 31, 1981, the Life Insurance Corporation (Amendment) F
Ordinance, 1981, was promulgated which was later replaced by an Act.
Sub-section (2)( c) which was added to Section 48 provided that the
provisions of clause (cc) of sub-section (2) and sub- Section (2)(B) and any
rule made under clause (cc) shall have effect notwithstanding any judg-
ment, decree or order of any court, tribunal or other authority, the In-
dustrial Disputes Act etc. New statutory rules also were promulgated. Of G
these, Rule 3 was given retrospective operation with effect from July 1,
1979. It provided that the employees shall not be entitled to any cash bonus.
The validity of Life Insurance Corporation (Amendment) Ordinance and
Act of 1981 and the 1981 Rules were challenged in the case of A. V.
Nachane (supra). The court said that the effect of the two judgment in H
820 SUPREME COURT REPORTS [1997] 2 S.C.R.

A Madan Mohan Pathak's case and DJ. Bahadur's case (supra) was clear.
Rule 3 operating retrospectively cannot nullify the effect of the subsisting
writ issued in D.J. Bahadur's case (supra) which directed the Life Insurance
Corporation to give effect to the terms of the 1974 settlement relating to
bonus until superseded by a fresh settlement, industrial award or relevant
B legislation. The impugned Act of 1981 and the rules were relevant legisla-
tion. However, in view of the decision in Madan Mohan Pathak's case
(supra) these Rules in so far as they seek to abrogate the terms of the 1974
settlement relating to bonus can operate only prospectively, i.e. from the
date of publication of the rules.

c We fail to see how these decision help the appellant in the present
case. The decision in A. V. Nachane's case (supra) on which strong reliance
is placed by Mr. Phadnis, learned senior counsel for the appellant, has
turned upon an existing writ of mandamus which was issued by the Calcutta
High Court and which the court said would have to be obeyed. This was
D the reason why only prospective operation was given to the Rules of 1981
in A. V. Nachane's case (supra). In the present case, there is no writ of
mandamus or any other writ issued by any High Court in favour of the
appellant directing the second respondent to apply the pre-nationalisation
settlements of 1974 to the post-nationalisation employees. Even the judg-
E ment and order of the Industrial Court has been set aside by the High
Court in Writ Petition No. 1835 of 1987. The retrospective operation given
to the scheme framed under the present Act, is within the legislative
competence of Parliament. Since the scheme provides for the conditions
·of service of all employees who joined the second respondent-corporation
after 24th of January, 1976, it necessarily lays down these terms and
F conditions operative from 24th of January, 1976. The scheme also provides
emoluments which are higher than the emoluments which the post-
nationalisation employees were receiving prior to the coming into effect of
the scheme. The scheme also brings into effect the avowed purpose of the ..
1988 Act which is to make the wage pattern in the second respondent-cor-
G poration conform to the wage pattern of public sector undertakings. a

-
legislation which imposes retrospectively a wage pattern may thereby dis-
continue the application of any earlier settlement by an express legislative
provision to that effect. Such legislation is within the legislative competence
of Parliament. The ratio of Nachane's case (supra) does not apply in the
H present circumstances.

/
PROCESS TECHNICIANS AND ANALYSTS; UNION'· U.0.1. [MRS. SUJATA V. MANOHAR, J.] 821

The decisions in Madan Mohan Pathak's case (supra) and Nachane's A
case (supra) have been recently explained by this Court in two judgments.
The first of these is Comorin Match Industries (P) Ltd. v. State of T.N.,
[1996] 4 sec 281 where this Court has reiterated the ratio laid down by
Shri Prithvi Cotton Mills' case (supra). The court has observed that in
Madan Mohan Pathak's case (supra) what was sought to be done was to B
reverse a decision of a court of law given in the exercise of judicial power
1
by legislation. This was not permissible. The Court also said that Nachane's
case (supra) was a sequence to the decision in Madan Mohan Pathak's case
(Supra) and the principles laid down in Shri Prithvi Cotton Mills' case
(supra) had not been overruled or doubted by the majority view in Madan
Mohan Pathak's case (supra). C

The second case is P. Kannadasan and Ors_. v. State of T.N. & Ors.,
[1996] 5 SCC 670. Referring to the doctrine of separation of powers this
Court said that where an Act made by State legislature is invalidated by
the courts on the ground that the State legislature was not competent to D
enact it, the State legislature cannot enact a law declaring that the judg-
ment of the court shall not operate; it cannot overrule or annul the decision
of the court. But this does not mean that the legislature which is competent
to enact that law cannot enact that Jaw. Similarly, it is open to a legislature
to alter the basis of the judgment while adhering to the constitutional
limitation. In such a case the decision of the Court become ineffective. The E
new law cannot be challenged on the ground that it seeks to circumvent
the decision of the Court. The Court observed that this is what is meant
by "checks and balances" inherent in a system of Government incorporating
the concept of separation of powers. Referring to the decision in Madan
Mohan Pathak's case (supra) and Nachane's case (supra), this Court said F
that these two cases do not effect the above principle in any manner.

..
'
Since these two decisions have been explained at length in the case
of P. Kannadasan as well as Comorin Match Industries (P) Ltd. (supra) we
need not reiterate the same position. In any case, these two decisions have
no bearing on the present case when there is no subsisting order of the G
Court which is sought to be overturned by the impugned 1988 Act or 1989
Scheme.

The other challenges to the Scheme of 1989 are similar to the
challenge to the Act of 1988. It is contended that Under the Scheme there H
822 SUPREME COURT REPORTS [1997] 2 S.C.R.

A is discrimination between pre-nationalisation and post-nationalisation
employees of the refinery. The distinction made between these two
categories of employees does not violate Article 14, for the reasons which
we have already set out in connection with the provisions of the 1988 Act.
It is also submitted that the wages given to the refinery employees under
B the 1989 Scheme are different from the wages and emoluments received
by the employees of the Marketing Division of the second respondent-Cor-
poration and this also constitutes discrimination. The Marketing Division
employees, however were the first to reach settlements with the second
respondent agreeing to the application of public sector wage pattern to
C their wages and emoluments. As a result under the settlements which are
arrived at, the Marketing Division has been receiving emoluments and
revised emoluments from time to time. Since the refinery employees did
not reach any settlement with the second respondent they are now being
governed by the Scheme which was framing by the Central Government
under the Act of 1988. It is in these circumstances that there is difference
D between the wages received by the employees of the two different depart-
ments of the second respondent. Each of these employees constitutes a
distinct class which is receiving different pay packets because of different
circumstances which have affected the wage structure of each class. This
cannot be considered as discrimination under Article 14.
E
The next challenge is to the Scheme of 1996 which has been framed
while the present appeal was pending before this Court. The Scheme of 1996
excludes from its ambit those employees who have entered into settlements
with the second respondent pending the disposal of this appeal. These
p settlements cover approxmately 77% of the employees in the refinery.
These are two settlements : one arrived at with the Bharat Petroleum
Corporation Refinery Employees' Union and the other with the Petroleum i. -
Workers' Union. Both these settlements are dated 17.5.1996. They were
signed pursuant to memoranda of understanding dated 25.3.1996 and
....
5.4.1996. In view of these memoranda this Court passed orders on 26.4.1996
G disposing of the appeals filed by these two unions. ·While doing so this
Court recorded that learned Solicitor General had stated at the Bar that
he had instructions to convey to the Court that the Government of India
had studied the memoranda of understanding and would exclude the
employees who are covered by these memoranda of understanding from
H the operation of the 1989 Scheme with effect from 1.1.1992 which is the
PROCESSTECHNIC!ANS AND ANALY5TS' UNION'· U.0.1. [MRS. SUJATA V. MANOHAR, J.) 823

- effective date of the two memoranda of understanding. This Court, there-
fore, in its above order of 26th of April, 1996 gave a direction to the Central
A

Government to forthwith take action to exclude the employees covered
under the two memoranda of understanding from the operation of the 1989
Scheme with effect from 1.1.1992. The Central Government has accordingly
amended the 1989 Scheme in 1996 expressly excluding the employees who B

--
have arrived at the above settlements from the operation of the amended
scheme with effect from 1.1.1992. The appellant submits that this is dis-
criminatory. We fail to see how the distinction made between those
employees who have entered into a settlement and those employees who
have not entered into a settlement can be considered as discriminatory.
The second respondents have even now stated before us that they are C
willing to sign a similar settlement with the appellant union. The appellant
union, however, has declined to do so. Having declined to do so the
appellant cannot complain of discrimination. The amended Scheme of 1996
grants further benefits to the employees of the appellant union who are the
only group of employees in the refinery not covered by the settlements, by D
giving them further increases in the manner set out in the amended scheme.
The appellant cannot compare the benefits which they get under the
amended scheme with the benefits which other employees have got under
settlements signed with the employer, Better terms under the settlement
may be the result of negotiations between the employer and the employees. E
There are various considerations which go into finalising such settlements
on the part of the employer. These include (1) industrial peace so that the
workers can concentrate on their work without agitations (2) putting
an end to expensive litigation between the employer and the emplo1ees and
establishment of goodwill and harmony between the employer and the
employees leading to better functioning of the establishment. These con-
F
siderations are very different from considerations which govern the framing
of the statutory scheme by the Central Government. Such a scheme must
necessarily bear in mind the wage pattern in other public sector undertak-
ings and provide for revision of wages based on certain accepted principles
for all public sector undertakings. The considerations for framing the G
amended scheme are different. Those who are governed by a statutory
scheme cannot compare themselves with employees who have entered into
a negotiated settlement with their employer. The charge of discrimination
under Article 14, therefore, cannot be sustained in this regard.
H
It is also pointed out by the appellant that the amended scheme of
824 SUPREME COURT REPORTS [1997] 2S.C.R.

A 1996 now covers only 400 and odd employees who are members of the
appellant union. They should not have been singled out. There is, however,
no question of singling out any one set of employees out of a large group.
The employees who are members of the appellant union being the only set
of employees who have not entered into a settlement with their employer,
B have necessarily to be provided for under a statutory scheme. Such , a
scheme therefore, has been framed and the employees cannot complain
that they have been singled out. They cannot expect a statutory scheme to
give them the benefits of the settlements which the other employees have
entered into with the employer. The amended scheme of 1996 is not framed
by the employer. It is framed by the Central Government under the
C statutory provisions of the 1988 Act. The amended scheme of 1996 gives
substantial additionalbenefits to the employees. It is in valid exercise of
statutory powers, and is ~rought into effect from 1.1.1992 since the earlier
scheme covered periods upto 1.1.1992.

In the circumstance, we agree with the reasoning and conclusion of
D the High Court. We further hold that the amended scheme of 1996 is also
a valid exercise of pywer under the Act of 1988. The appeal is, therefore,
dismissed with costs.

v.s.s. Appeal dismissed.
E