Important points
1. The Banking Laws (Amendment) Act, 1984 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.
2. Legislature cannot by a merely declaration 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.

Headnote:(i) State Bank of India Act, 1955—Section 43-A—State Bank of India (Subsidiary Banks) Act, 1959—Section 50A—Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980—Section 12A—Customary bonus held not payable by State Bank of India after enactment of Banking Laws (Amendment) Act—Appeal against—Constitutional validity of the Amendment Act challenged—Allegations that bonus which was directed to be paid was in the nature of deferred wages and the impugned legislation had the effect of freezing wages—Bonus being a customary bonus was peculiar to employees of the Bank—Whether High Court was justified in holding that customary bonus was not payable by State Bank of India after the Amendment Act was enacted—(Yes).
       Held : 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. (Paras 36 to 39)
       (ii) Constitution of India—Articles 245 and 246—Legislation—Curative statutes—Retrospective legislation—Constitutional validity—Public interest at large is one of the relevant considerations—Curative and validating statutes operate on conditions already existing and are therefore wholly retrospective.
       Held : 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 (Para 32)
       It has to be noted that the legislature, as a body, cannot be accused of having passed a law for extraneous purpose. If no reasons are stated as appear from the provisions enacted by it, its reasons for passing a law are those stated in the Objects and Reasons. Even assuming that the Executive, in a given case, has an ulterior motive in moving a legislation, that motive cannot render the passing of the law mala fide. This kind of “Transferred malice” is unknown in the field of legislation. (Para 34)
       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. (Para 36)
       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. (Paras 37 to 39)
       (iii) Words and Phrases—Word ‘retrospective’—Meaning—Retrospective statutes—Definition.
       Held : Judicial Dictionary (13th Edn.) K.J. Aiyar, Butterworth, p. 857, states that the word “retrospective” when used with reference to an enactment may mean (i) affecting an existing contract; or (ii) reopening up of past, closed and completed transaction; or (iii) affecting accrued rights and remedies; or (iv) affecting procedure. Words and Phrases, Permanent Edn., Vol. 37-A, pp. 224-25, defines a “retrospective or retroactive law” as one which takes away or impairs vested or accrued rights acquired under existing laws. A retroactive law takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transaction or considerations already past. (Para 22)
       Public interest at large is one of the relevant considerations in determining the constitutional validity of a retrospective legislation. (Para 28)
       (iv) Interpretation of Statutes—Objects and Reasons of a Statute—Extrinsic aid to find out legislative intent.
       Held : It is a cardinal rule of interpretation that Objects and Reasons of a Statute is to be looked into as an extrinsic aid to find out legislative intent only when the meaning of the statute by its ordinary language is obscure or ambiguous. But if the words used in a statute are clear and unambiguous then the statute itself declares the intention of the legislature and in such a case, it would not be permissible for a court to interpret the Statute by examining the Objects and Reasons for the Statute in question. (Para 13)
       The smooth balance built with delicacy must always be maintained, and in the anxiety to safeguard judicial power, it is unnecessary to be over-zealous and conjure up incursion into the judicial preserve to invalidate the valid law competently made. (Para 14)

Judgment

Arijit Pasayat, J.—Challenge in this Appeal is to judgment of a Division Bench of Madras High Court holding that customary bonus was not payable by the State Bank of India (in short the ‘Bank’) after Banking Laws (Amendment) Act, 1984 (Central Act No. 64 of 1984) (in short the ‘Amendment Act’) was enacted. Appellant has questioned constitutional validity of the said amendment before the Madras High Court by filing a writ petition which was dismissed.

2. Factual position which is almost undisputed is as follows:-

By the Amendment Act, State Bank of India Act, 1955 (in short the ‘State Bank Act’) and State Bank of India (Subsidiary Banks) Act, 1959 (in short the ‘Subsidiary Act’) and Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (in short ‘the Undertakings Acts’) were amended.

3. By that amending Act, a new Section 43-A comprising of three sub sections (1), (2) and (3) and marginal heading “Bonus” was introduced in the State Bank Act. The said Section reads as under:-

“(1) No Officer, Adviser or other Employee (other than an employee within the meaning of Clause (13) of Section 2 of the Payment of Bonus Act, 1965 (21 of 1985) of the State Bank shall be entitled to be paid any bonus.

(2) No employee of the State Bank, being an employee within the meaning of Clause (13) of Section 2 of the Payment of Bonus Act, 1965 (21 of 1965), shall be entitled to be paid any bonus except in accordance with the provisions of that Act.

(3) The provisions of this Section shall have effect notwithstanding any judgment, decree or order of any Court, Tribunal or other authority and notwithstanding anything contained in any other provision of this Act or in the Industrial Disputes Act, 1947 (14 of 1947), or any other law for the time being in force or any practice usage or custom or any contract, agreement, settlement, award or other instrument.”

4. In the Subsidiary Act, a new Section 50A was introduced in identical language. Similar provisions numbered as Section 12-A were introduced in the Banking Undertakings Acts.

5. The Statement of Objects and Reasons, which accompanied the Bill which later became the Amending Act, reads thus:

“In an award notified as 14.1.1984, the Central Government Industrial Tribunal, Madras held that the employees of the State Bank of India covered by the award should be paid bonus at the rate of one month’s substantive pay every half year on the ground that this has also along been the custom and practice. A writ petition filed against this award is pending in the Madras High Court.

All public Sector banks including the State Bank of India come under the purview of the Payment of Bonus Act, 1965, and the intention is that no bonus other than what is required to be paid under the Payment of Bonus Act, 1965, shall be paid to the employee of the State Bank of India or of any other public sector bank. It is proposed to make express provisions in this behalf in the State Bank of India Act, 1955 and the enactment relating to the other public sector banks.

The Bill seeks to achieve the above objects.”

6. That award of the Central Government Industrial Tribunal was challenged by the Management in a writ petition filed in the Madras High Court being Writ Petition No. 1273 of 1984. It was during the pendency of that petition in the High Court, that the State Bank Act came to be amended by introducing Section 43-A in that Act. On 24.11.1986, the Writ Petition filed by the Bank was dismissed. The matter was not further agitated, and the award attained finality.

7. Appellant’s primary stand before the High Court was that the Amendment Act was unconstitutional as it merely intended to nullify a judicial decision which Parliament had no competence to do. Other contentions were to the effect that an award passed under the Industrial Disputes Act, 1947 (in short ‘the Industrial Act’) is entitled to greater recognition as in the case of co

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2005 Supreme(SC) 1191

Cases Referred (16)