Pendse, J.:— By this petition, filed under Art. 226 of the Constitution, the petitioners are seeking declaration that the Bharat Petroleum Corporation, Ltd. (Determination of Conditions of Service of Employees) Act, 1988, hereinafter referred to as the said Act, is unconstitutional, void and unlawful. The petitioners are also seeking declaration that the Bharat Petroleum Corporation, Ltd. (Determination of Conditions of Service of Post-Nationalisation Refinery Employees) Scheme, 1989, is unconstitutional, void, unlawful and beyond the purposes of the Act. The petitioners are a registered trade union representing clerical workmen and labour workmen employed in Bharat Petroleum Corporation, Ltd.
2. It is necessary to set out the historical factors which gave rise to the passing of the Act by the Parliament. Burmah Shell Refineries, Ltd., was incorporated in the year 1952, under the Indian Companies Act, 1913, and the business of the company was to cefine crude oil. The source of revenue was by way of income derived from refining the rrude oil and the income was calculated in terms of Indian currency. The company had its own shareholding and Board of Directors and accounts were maintained in Indian currency. Burmah Shell Oil Storage and Distributing Company of India, Ltd., was a foreign company and was operating in India and the business of this foreign company was distribution and marketing of petroleum products. The foreign company had its account maintained in pound sterling and had its own Board of Directors. The service conditions of the Indian company and the foreign company were distinct and separate and so also the activities carried out by the two companies. There were several settlements between the employees of both the Indian company and the foreign company under the ndustrial Disputes Act, 1947, and the settlements were arrived at by taking into consideration income or the source of revenue of the respective companies.
3. By an agreement, dated 23 December, 1975, entered into between the Government of India and the Indian company, the Government of India acquired 100 per cent equity holding in the Indian company and on such acquisition, Burmah Shell Refineries, Ltd., became a Government company as contemplated under S. 619 of the Indian Companies Act, 1956. On the acquisition, the company came to be known as Bharat Relinery, Ltd. On 24 January, 1976, by virtue of S. 3 of Burmah Shell (Acquisition of Undertaking in India) Act, 1976, the foreign company came to be acquired by the Central Government. The Acquisition Act was enacted to provide for the acquisition and transfer the right, title and interest of the foreign company with a view to ensure co-ordinated distribution and utilisation of petroleum products distributed and marketed in India. After acquisition of the foreign company, the assets and liabilities of the company came to be vested in Bharat Refinery, Ltd. The merger of the Indian company and the foreign company gave birth to a new company which was initially known as Bharat Refineries. Ltd., and subsequently as Bharat Petroleum Corporation, Ltd. Section 9 of the Acquisition Act, inter alia, provided that the employees of the foreign company shall hold office or service under the Central Government on the same terms and conditions and with the same rights to pension, gratuity, etc. After merger of the two companies, the Corporation became an integrated refining and marketing Corporation having one Board of Directors, a consolidated balance sheet and profit and loss account. On merger, the two companies were run as a single unit and all establishments lost their separate identities. The Corporation being a Government company is subject to guidance, instructions and directives from the Government of India and more so, where substantial financial commitments are involved.
4. Prior to nationalisation, Burmah Shell Refineries, Ltd., had entered into various settlements regulating the conditions of services of the employees. The foreign company had branches and establishments spread over five regions, viz., Bombay, Calcutta, Delhi, Madras and Ernakulam. The conditions of services of the employees were evolved over a long period by negotiated settlements. In each region, on industry-cum-region basis and also by awards of Tribunals and decisions of Courts, there were as may as 42 major settlements regarding wages, bonus, dearness allowance, retirement age, etc., in respect of the employees spread over five regions. The settlement with the employees entered into by the Indian company and foreign company were separate and distinct and there was a considerable disparity in the conditions of service at all levels in the matter of remuneration for similar posts. After nationalisation, Under Secretary to the Government of India, Ministry of Petroleum, Chemicals and Fertilizers, addressed a communication, dated 27 February, 1981, to the Chairman of the Corporation intimating the Government directions that the service conditions which were prevalent before the take-over cannot be granted to the employees recruited subsequently. The direction was given to the Corporation to recruit all new entrants after takeover of the company on consolidated wages' The letter also directs the Corporation to evolve revised wage-scales/service Conditions on the public sector pattern which should provide for increase/decrease of variable dearness allowance at a rate not higher than Rs. 1.30 per point rise/fall in the All India Working Class Consumer Price Index, Simla Series 1960=100.
5. Large number of employees were recruited after nationalisation and their services were engaged in temporary basis and on consolidated wages. The service conditions of the newly recruited employees were obviously not equal to the service conditions of employees who were in employment prior to nationalisation. The Corporation made endeavours to evolve wage-structure basis on public sector pattern for all officers and employees with a view to achieve uniformity. The Corporation was able to sign regional settlements on the basis of public sector pattern with the unions in the marketing division but not in respect of the refinery division. The marketing division had employed about 6,000 employees and the unions representing them reached an All India settlement with the Corporation on 27 August, 1986, providing for uniform conditions of service based on public sector pattern. The Corporation could not succeed in the attempts to introduce the conditions of service based on public sector pattern in respect of employees numbering about 1,800 in the refinery division. These employees were claiming that they are entitled to all the benefits of the pre-nationalisation settlements on the ground that the Corporation was a successor-in-interest of the Burmah Shell Refineries, Ltd., and the Corporation was bound to extend the benefits contained in the pre-nationalisation settlements in accordance with S. 18(3) of the Industrial Disputes Act. The employees who joined the Corporation after nationalisation had adopted various proceedings in various Courts claiming that the pre-nationalisation settlements were applicable even to employees who were recruited after nationalisation. The employees resorted to the agitational approach and the work could not be carried out for a duration of five months in the year 1982. The Corporation claims that the employees went under the illegal strike while the employees assert that the management declared an illegal lockout. Eventually, on 17 June, 1982, settlement under S. 18 of the Industrial Disputes Act was arrived at and by this settlement the employees were awarded Rs. 103 per month as an interim relief. The settlement provided that both the employees and Corporation shall have a right to continue existing legal proceedings or file further legal proceedings up to the highest level with regard to what wages, dearness allowance and other service conditions are/should be applicable to the post-nationalisation employees. The settlement was reached after Government of India gave its approval on 3 June, 1982.
6. The employees had filed a writ petition in this Court for direction to the Government of Maharashtra to prosecute the Corporation for failure to implement the settlements which were reached prior to nationalisation in respect of employees who were recruited after nationalisation. The Division Bench of this Court dismissed the petition holding that there exists a valid dispute whether the pre-nationalisation settlements were applicable to the workmen employed after nationalisation and until this dispute is adjudicated upon, the Government of Maharashtra cannot be directed to prosecute the Corporation. One more petition came to be filed in this Court for a direction to implement the pre-nationalisation settlements in respect of employees recruited subsequent to nationalisation. This petition was summarily rejected. Several employees had instituted proceedings under S. 33-C(2) of the Industrial Disputes Act before the Labour Court claiming payment in accordance with the pre-nationalisation settlements. The Labour Court examined 31 applications in which diverse amounts were claimed by the employees. The Labour Court awarded the amounts as claimed in spite of the objection of the Corporation that in exercise of powers under S. 33-C(2) of the Industrial Disputes Act, it is not open to the Labour Court to investigate whether the claim made by the employees was permissible. The Corporation asserted that the liability flowing from the settlements reached prior to year 1973 cannot be fastened upon the Corporation which is a separate entity and not the successor-in-interest. The Corporation also claimed that unless and until the issue as to whether the employees recruited after nationalisation are entitled to benefits of settlements prior to the nationalisation is adjudicated upon, the relief under S. 33-C(2) of the Industrial Disputes Act cannot be granted. The Labour Court passed orders in favour of the employees but those orders were set aside in writ petition filed by the Corporation in this Court on the ground that the issue raised by the Corporation about applicability of settlements to the employees recruited after nationalisation requires determination in an industrial dispute on the reference under S. 10 of the Industrial Disputes Act and consequently, Labour Court lacks jurisdiction to grant relief under S. 33-C(2) of the Industrial Disputes Act. The employees or the union did not adopt any proceedings thereafter for adjudication of this dispute under S. 10 of the Industrial Disputes Act.
7. The union filed Complaint (ULP) No. 38 of 1978 against the Corporation before the Member, Industrial Court, Bombay, on 14 September, 1978, complaining unfair labour practices under items (6) and (9) of Sch. IV of Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. The gravemen of the complaint was that the Corporation was not giving benefits of settlements reached prior to year 1973 to the employees recruited subsequent to nationalisation. It was claimed that the employees recruited prior to nationalisation and subsequent to nationalisation arc carrying out same duties and on the doctrine of equal pay for equal work, which is an accepted norm, the Corporation was bound to give the same benefits to the employees recruited after nationalisation. The union complained that the Corporation by not extending the benefits of pre-nationalisation settlements had committed unfair labour practices and is liable to penal action. The Corporation resisted the complaint on diverse grounds and points out that the Corporation being a Government company is bound by instructions and directives issued by the Government of India and especially where substantial financial commitments are involved. The Corporation also pointed out that the Government of India had indicated that the Corporation should not perpetuate the high emoluments extended to various categories of employees by foreign company and the Corporation should evolve emoluments in line with those prevailing in public sector companies and obtain Government sanction. The Corporation claimed that in view of the Government direction, it is not proper to suggest that the Corporation is guilty of unfair labour practice. The Industrial Court by order, dated 4 May, 1987, held that the direction by the Government contained in letter, dated 27 February, 1981, cannot be construed as a direction but merely a request. The Industrial Court further held that the conditions of service cannot he altered without recourse to Legislature and if the Acquisition Act did not confer any such power, the liability to give benefits of settlements to the employees recruited after nationalisation cannot be avoided. The Industrial Court held that on the doctrine of equal pay for equal work, the employees recruited after nationalisation are entitled to the same benefits which are enjoyed by the employees prior to nationalisation in pursuance of the settlements.
8. The Corporation challenged the legality of the order passed by the Industrial Court holding the Corporation guilty of unfair labour practice and issuing direction to give benefits of the settlements, dated 21 February, 1973, 31 October, 1973 and 19 October, 1974, to the employees who had filed numerous complaints, by filing Writ Petition No. 1836 of 1987 under Art. 226 of the Constitution. The learned Single Judge by order, dated 1 July, 1987, admitted the petition. The learned Judge directed that the direction to give benefits of settlements stands stayed for the period till 30 June, 1987, and the Corporation should give the benefits after that date even to those employees who are recruited subsequently to the date of nationalisation. The Corporation and the employees who had filed complaint before the Industrial Court preferred cross appeals being Appeals Nos. 817 and 831 of 1987 before the Division Bench of this Court, but both the appeals were dismissed by order, dated 14 July, 1987. The petition for special leave to appeal filed by the Corporation before the Supreme Court to challenge the direction of the learned Single Judge to give benefits from 1 July, 1987, was dismissed. In view of the direction given by the learned Single Judge, the Corporation was required to give the benefits which were enjoyed by the employees recruited prior to nationalisation to all the employees of the refinery division who entered the service subsequent to nationalisation.
9. The Corporation felt that the result of the interim orders passed by the learned Single Judge has divided the employees into four categories and would be governed by four different bases of payment of wages. The categories are:
(a) employees to whom pre-acquisition settlements are applicable and who number about 192;
(b) post-acquisition workers numbering about 1,800 and who will be entitled to secure benefits of pre-1973–74 settlements which effect from 1 July, 1987;
(c) employees who are recruited after 1 July, 1987 and to whom it is not necessary for the Corporation to give benefits of pre-1973–74 settlements; and
(d) employees of marketing division who had accepted the public sector terms and signed the settlement with the Corporation.
10. At this juncture, the President of India promulgated Ordinance, dated 2 July, 1988, and which was subsequently replaced by the impugned Act, 1988. The Bill No. 57 of 1988 which was introduced in the Parliament sets out the Statement of Objects and Reasons for the legislation. After setting out the history of formation of the Corporation and the conditions of service enjoyed by the employees, the statement of objects sets out the order passed by the learned Single Judge of this Court. The statement recites that the award of the Industrial Court will amount to giving a higher wage-structure in the Corporation and other employees in similar undertakings may demand that they should also get benefits of the higher scales of pay on the principle of equal pay for equal work. This may eventually result in the high wage islands and depart radically from the public sector wagepolicy. The statement then claims that it is, therefore, necessary that the conditions of services of the employees of Bharat Petroleum should be made comparable with the conditions of service prevalent in other public sector companies in accordance with Government of India's wage policy. The statement further recites that any attempt to make conditions of service of the officers and employees of the Corporation comparable with the conditions of service of other public sector companies can only be done by legislation and such a legislation can provide for determination of comparable conditions of service for all the categories of employees of Corporation and can also provide for protection of service conditions for pre-nationalisation employees. The legislation proposes to achieve the object by empowering the Central Government to frame one or more schemes for determination of conditions of service of the officers and employees of the Corporation.
11. The Act received assent of the President of India on 3 September, 1988, and subsequently it was published in the Government Gazette on 5 September, 1988. The preamble to the Act sets but that the legislation was enacted to empower the Central Government to determine the conditions of service of the officers and employees of Bharat Petroleum Corporation, Ltd., and for matters connected therewith. It further recites that for the purpose of making conditions of service comparable with the conditions of service or employees of the other public sector companies, it is necessary to empower the Central Government to determine the conditions of service of employees of the Corporation. Sub-section (2) of S. 1 of the Act provides that the Act shall be deemed to have come into force on 2 July, 1988. Sub-section (1) of S. 3 confers power upon the Central Government to frame one or more schemes for the purpose of determination of the conditions of service of the officers and employees of the Corporation. It further provides that the power to frame scheme is conferred notwithstanding anything contained in Industrial Disputes Act or any other law or 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. Sub-section (2) of S. 3 enables the Central Government to provide for continuance of the emoluments or other benefits received by the employees immediately before the acquisition or the appointed day under the Burmah Shell (Acquisition of Undertakings in India) Act, 1976, in spite of framing of any scheme. Sub-section (6) of S. 3, inter alia, confers power upon the Central Government to give retrospective effect to any scheme or provision thereof and also the power to amend, by way of addition, variation or repeal, any existing provisions determining the conditions of service of the officers and employees of the Corporation. Sub-section (5) of S. 3 requires the Central Government to lay before the each House of Parliament, while it is in session for a total period of thirty days, any such scheme. It further provides that the scheme shall have effect in case both the Houses agree in making modifications then subject to such modifications and in case both the Houses determine that the scheme should not be made, then the scheme framed shall stand annulled.
12. In exercise of the power conferred under Sub-sec. (1) of S. 3 of the Act, the Central Government, on being satisfied that for the purpose of making the conditions of service of the employees of the Corporation comparable with the conditions of service of the employees of other public sector companies, framed the scheme and the same is gazetted on 28 April, 1989. Clause (2) of the scheme provides that it shall be deemed to have come into force on and from 24 January, 1976. Clause (4) of the scheme sets out that clerical employees and labour employees of the Corporation employed in the refinery division will be governed by the conditions of service as applicable to them for four different specified periods. The four specified periods are set out in the First Schedule to the scheme. Tart A refers to the wage-structure in respect of employees recruited between 25 January, 1976 and 31 December, 1979. Part B covers the wage-structure for a period between 1 January, 1980 and 31 December, 1983 while Part C for a period commencing on 1 January, 1984 and ending with 31 December, 1987. Clauses 4(iv) and 4(v) deal with the wage-structure of employees recruited between 1 January, 1988 up to 31 January, 1991 and thereafter. The broad features of the scheme are that the wage-scales are fixed from 24 January, 1976 and based on public sector companies in oil industry. The wage-structure contemplates upward revision of wage-scales and other benefits every four years. The wage-structure results into grant of higher wages to the employees than the wages received under the settlement of year 1982. The wage-structure provides for grant of dearness allowance on the basis of public sector pattern. The scheme confers benefits of additional components like fitment, fixed dearness allowance, special compensatory allowance, city compensatory allowance, transport allowance, washing allowance, education allowance, etc. The rate of variable dearness allowance is fixed in accordance with the fixation carried out by the Bureau of Public Enterprises and which mode and rate are applicable in respect of Central Government and other Public Sector Corporations. The scheme also sets out that the wage-scales are consolidated at All India Consumer Price Index No. 244 Simla Series (1960 = 100). The scheme provides that the Corporation shall be entitled to transfer employees from one unit to another unit in the same department or from one department to another in the same establishment. The scheme also enables the Corporation to transfer any employee from one establishment to another in the interest of increasing production. The scheme provides that the employee shall retire on attaining age of 58 years. The categories of employees are divided in seven grades for clerical employees and labour employees as set out in the schedule annexed to the scheme.
13. The scheme was placed on the floor of the Lok Sabha on 18 July, 1989 and on the floor of the Rajya Sabha on 24 July, 1989 and stands approved.
14. The petition under Art. 226 of the Constitution was filed on 3 November, 1989, on enactment of the Act but before the scheme was framed by the Central Government. The petition was duly admitted and after the scheme was published on 28 April, 1989, the petition was amended and the validity of the scheme is also challenged. In answer to the petition, Chimanbhai Somabhai Valand/the Chief Staff and Senior Industrial Relations Manager of the Corporation has filed detailed return sworn on 15 November, 1989. On behalf of Union of India, P. Gopalakrishnan, Under Secretary to the Government of India, Ministry of Petroleum and Natural Gas, has filed return on 16 November, 1989, adopting the contents filed in the return filed on behalf of the Corporation.
15. Sri Gadkari, learned counsel appearing on behalf of the petitioner, and Sri Deshmukh, learned counsel appearing on behalf of the petitioners in the Corporation petition, advanced detailed arguments in support of the submission that the Act is ultra vires of the fundamental rights guaranteed under Part III of the Constitution. Both the counsel contended that the enactment of the legislation was a colourable exercise and the object was to defeat enforcement of fundamental rights by employees of public sector undertakings. It was contended that the Act is an abuse of the legislative process and the Act treats equal as unequals. The counsel further urged that the Act provides for classification of employees into two groups — pre-nationalisation and post-nationalisation and this distinction between the employees who carry out same duties and functions is violative of Art. 14 of the Constitution. Sri Gadkari also submitted that the object for enacting the legislation is extremely hazy and the Act does not provide for any clear guidelines. Sri Gadkari submitted that the Parliament was not entitled to enact the legislation in view of the doctrine of promissory estoppel which stand attracted on the facts of the case. An attempt was made to urge that the Act is invalid as it provides for validation of illegal action of Corporation in violating the fundamental rights of the employees. A faint attempt was made to urge that the Act deprives the employees of the fundamental rights under Art. 19(1)(g) of the Constitution. In regard to the challenge to the validity of the scheme, it was urged by the learned counsel that the delegation of authority to the Central Government suffers from the vice of excessive delegation and the scheme is not in accordance with the directions contained in the Act. Sri Gadkari also submitted that the scheme suffers from impermissible classifications and the scheme should be struck down because it was declared without carrying out the requisite pre-exercise before settling the conditions of service. It was also contended that the Central Government could not have declared the scheme without providing for prior hearing to the employees and the failure to give hearing amounts to violation of principles of natural justice. Sri Gadkari submitted that the scheme could not have been framed for application only to some of the employees belonging to refinery division and it was incumbent upon the Central Government to frame the scheme which would be applicable to all the employees of all the public sector undertakings. Sri Gadkari urged that the scheme provides for transfer of employees from one establishment to other and conferment of such power violates right under Art. 19(1) of the Constitution. Both the counsel submitted that the scheme provides for the age of retirement on completion of 58 years and this power to retire the employee at the age of 58 years takes away the effect of the judgment of the Supreme Court where the age of retirement was fixed as 60 years. Both the counsel submitted that the object of enacting the legislation and the scheme was to set at naught the judgment delivered by the Industrial Court in complaints filed in respect of unfair labour practice and the interim order passed by the learned Single Judge of this Court in exercise of its jurisdiction under Art. 226 of the Constitution.
16. Sri Attorney-General, who appeared on behalf of the Government of India, submitted that the challenge to the Act and scheme is devoid of any merit. It was contended that the legislative intervention was necessitated because of the order passed by the Industrial Court and which led to serious anamoly in respect of payment of wages to different sets of employees of the Corporation. It was submitted that the policy of the Central Government to regulate the wages paid to the employees of the public sector undertakings would stand totally destroyed if effect was to be given to the direction issued by the Industrial Court and confer benefits on all employees irrespective of the fact whether they were recruited prior to nationalisation or subsequent to nationalisation. The learned Attorney-General then submitted that the classification of employees between pre-nationalisation and post-nationalisation is perfectly valid and has received legislative recognition and consequently, the scheme based on such classification does not suffer from the vice of discrimination. It was pointed out that the Act requires placement of scheme before both the Houses of Parliament and when the power is conferred upon the subordinate authority to make rule, then the conferment of such power does not amount to excessive delegation. The provisions of Sub-sec. (1) of S. 3 of the Act confer power upon the Central Government to frame a scheme and withdraw the application of provisions of the Industrial Disputes Act to the employees of the Corporation and the scheme can be framed irrespective of and notwithstanding any decision or order of any Court or Tribunal. It was submitted that it was necessary for the Legislature to pass the Act for the employees of the Corporation for the historical reasons which required merger of the two companies and the litigation which was undertaken by the employees of the refinery and marketing divisions. The learned Attorney-General submitted that it was open for the Legislature to step in to avoid impact of an order passed by the Industrial Court for safeguarding and regulating the financial liability and to avoid conferment of undue benefits on a group of employees. It was pointed out that the benefits of pre-1973–74 settlements were available only to a group or diminishing employees and whose number was less than 200 at the time of enactment of the legislation. A large number of employees of the Corporation working in the marketing division had accepted the conditions of service based on public sector pattern while only few employees numbering about 1,800 who were recruited after the nationalisation in the refinery division are demanding benefits which are enjoyed by a small group of employees recruited prior to nationalisation.
17. The validity of a statute passed by the Parliament can be challenged only on the grounds—
(a) legislative competence; and
(b) violation of fundamental rights conferred by Part III of the Constitution.
Entry (22) of List III read with entry (97) of List I of the Constitution enables the Parliament to pass legislation for condition of service of employees of Government company. The petitioners did not challenge the legislative competence of the Parliament to enact the Act, but complained that the provisions of the Act violate fundamental rights under Art. 14 and Art. 19(1) of the Constitution. Before adverting to the challenge on that count, it would be convenient to examine the challenge to the Act on some other contentions which are not permissible.
18. The complaint of the petitioners that the passing of the Act was mala fide action on the part of the Parliament as it was motivated to set at naught the decision recorded by the Industrial Court and the interim order passed by a Single Judge of this Court in exercise of powers under Art. 226 of the Constitution requiring the Corporation to give benefits pending the petition, cannot be entertained. The submission of Sri Deshmukh that the Act is a piece of colourable legislation is also without any merit. The enquiry as to whether the Act is a piece of colourable legislation arises when the challenge to the Act is on ground of legislative competence. The expression “colourable legislation” cannot be attracted to claim that the object of the Act is to subserve the purpose different than which is claimed by the Act. The contention that the action of the Parliament in enacting Act is mala fide is not available to the petitioners. The legislation cannot be struck down on the ground that the action of the legislation as mala fide. The reference can be made on the decision of the Supreme Court in K. Nagaraj v. State of Andhra Pradesh, [1985— II L.L.N 1]. Chief Justice Chandrachud speaking for the Bench observed that the Legislature as a body, cannot be accused of having passed a law for an extraneous purpose. 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. The Supreme Court observed that this kind of “transferred malice” is unknown in the filed of legislation.
19. The submission of Sri Gadkari that the Parliament could not have passed the Act in view of the doctrine of promissory estoppel is also entirely misconceived. The learned counsel urged that after the work of the Corporation came to a standstill in the year 1982 because of refusal to grant demands of the employees, a settlement was reached between the employees' union and the Corporation on 17 June, 1982. The settlement was arrived at after the Central Government gave approval on 3 June, 1982. By this settlement, the employees were given interim relief of increase of Rs. 100 per month in the consolidated salary as per Cl. 4.8 of the settlement. Clause 4.13 of the settlement provides that both the parties shall have the right to continue existing legal proceedings, or seek further legal remedies, up to the highest level, with regard to what wages, be made applicable to temporary workmen. Sri Gadkari submitted that the settlement was binding on the Central Government who had given approval and as the settlement clearly provides that the parties can fight litigation right up to the Supreme Court to determine the service conditions which are and should be applicable, the Central Government could not have moved a legislation in the Parliament. Sri Gadkari claims that the settlement amounts to a promise of the Central Government and by enacting legislation, breach has been committed and by attracting doctrine of promissory estoppel it should be held that the legislation is invalid. In support of the submission, reliance is placed on certain observations of Chief Justice Beg in Para. 12 in the decision in Madan Mohan Pathak v. Union of India, [1978 — I L.L.N 516]. The learned Chief Justice observed that the principles laid down in Anglo Afghan Agencies, Ltd. case, [A.I.R 1968 S.C 718], can be taken into account in judging the reasonableness of provisions of Life Insurance Corporation amendments. We are unable to accede to the submission of the learned counsel for more than one reason. In the first instance, it is futile to suggest that by the settlement, dated 17 June, 1982, a promise was given to the employees that their service conditions can be determined in accordance with the decision of the final Court of this country. What the settlement provides is that it is open for the parties to continue pending litigation right up to the highest Court. I feel, it was not necessary to provide for such contingency as it was always open for either of the parties to carry the litigation to the highest Court of this country. Secondly, the settlement was between the employees and the Corporation and the mere fact that the Government had given approval to the same cannot lead to the conclusion that it is a promise given by the Government. Thirdly, even assuming that the settlement amounts to a promise by the Government, that would not bind the Legislature which is independent from executive. Fourthly, the assertion of Sri Gadkari that the doctrine of promissory estoppel is available in respect of legislative enactment is entirely incorrect. The Supreme Court has repeatedly pointed out that the doctrine cannot be invoked against the exercise of legislative functions. The Legislature cannot be precluded from exercise of its legislative functions by resort to the doctrine. Chief Justice Bhawati in Motilal Padampat Sugar Mills Company, Ltd. case, [(1979) 2 SCC 409], observed that there can be no promissory estoppel against the Legislature in the exercise of its legislative functions. The decision was reiterated in large number of subsequent decisions of the Supreme Court and reference to the decision in Vasantkumar R. Vara v. Board of Trustees of Port of Bombay, [(1991) 1 SCC 761], is suffice. In our judgment the submission of Sri Gadkari that the Act could not have been enacted in view of the principle of promissory estoppel is without any substance and is required to be turned down.
20. On Saturday 20 June, 1992: It was then contended by Sri Gadkari and Sri Deshmukh that the impugned Act trenches upon judicial power and set at naught the order passed by the Industrial Court, on complaint of unfair labour practice and the interim order passed by the learned Single Judge of this Court in a writ petition filed by the Corporation to challenge the order of Industrial Court. It was contended that the object of the Act was to take away the force of the judgment of this Court granting benefits of pre-1973–74 settlements in favour of employees of the Corporation pending the disposal of writ petition filed by the Corporation. The counsel submitted that the right under the order passed by the writ Court arises independently of Art. 19 of the Constitution and this right arising out of the judgment cannot be set aside by legislation. In support of the submission, strong reliance is placed on the decision of Supreme Court in Pathak case, [1978— I L.L.N 516] (vide supra), and especially on the observations of Chief Justice Beg in Paras. 7, 8 and 9 of the judgment. It was also contended with reference to Para. 10 of the judgment of Chief Justice Beg that the enactment of the legislation for depriving the workers of the benefits of the settlement arrived at under the provisions of the Industrial Disputes Act, may very well be said to be contrary to public interest and, therefore, not protected by Art. 19(6) of the Constitution. It is not possible to accede to the submission of the learned counsel for more than one reason.
21. In Pathak case, [1978— I L.L.N 516] (vide supra), settlement was approved by the Board of Directors of the Life Insurance Corporation as also by the Central Government by circular, dated 12 March, 1974. The settlement, inter alia, dealt with payment of cash bonus. On 25 September, 1975, an Ordinance was promulgated which was replaced subsequently by Payment of Bonus (Amendment) Act, 1976, which was brought into force with retrospective effect and which considerably curtails the rights of the employees to bonus in industrial establishments. The Act had no impact so far as the employees of the Life Insurance Corporation were concerned since the original Payment of Bonus Act was not applicable to the employees. The Life Insurance Corporation, therefore, by circular, dated 25 September, 1975, informed all the offices that since the question of payment of bonus was being reviewed in the light of the Bonus Ordinance, dated 25 September, 1975, no bonus should be paid to the employees under the existing provisions until further instructions. On 29 May, 1976, the parliament enacted legislation governing, inter alia, for modification of the settlement, dated 24 January, 1974, arrived at between the Insurance Corporation and its employees. Section 3 of the Act, inter alia, provided that:
“Notwithstanding anything contained in the Industrial Disputes Act, 1947, the provisions of the settlement in so far as they relate to the payment of an annual cash bonus to every Class III and Class IV employee of the Corporation at the rate of 15 per cent of his annual salary, shall not have any force or effect and shall not be deemed to have had any force or effect on and from 1 April, 1975.”
The refusal of Corporation to honour statement was challenged by the employees by filing a writ petition before Calcutta High Court and the learned Single Judge issued a writ of mandamus directing the Corporation to pay annual cash bonus as provided by the settlement. The Letters Patent Appeal was preferred before a Division Bench of Calcutta High Court by the Corporation and during the pendency of the appeal, the legislation was passed by the Parliament. The appeal was not pressed and withdrawn in view of passing of the legislation. The validity of the Act came for consideration before the Supreme Court and it was contended that the provisions of the Act cannot set at naught the effect of the judgment of the Calcutta High Court which had acquired the binding character in view of disposal of the appeal of the Corporation. The employees claimed before the Supreme Court that the provisions of the Act are violative of Art. 19 and also under Art. 31(2) of the Constitution in view of the finality of the judgment of the Calcutta High Court.
22. While examining this contention, the principal judgment was delivered by Justice Sri Bhagwati as he then was on behalf of himself, Justice Sri Krishna Iyer and Justice Sri D.A Desai. The judgment of the learned Single Judge holds in Para. 25 that the right available to the employees because of the judgment of the Calcutta High Court was not taken away by the impugned Act and the judgment continued to subsist and the Corporation was bound to pay cash bonus. The learned Judge observed that the Life Insurance Corporation did not press the Letters Patent Appeal and the result was that the judgment of the learned Single Judge granting writ of mandamus became final and binding on the parties. It was then observed that:
“It is difficult to see how in these circumstances the Life Insurance Corporation could claim to be absolved from the obligation imposed by the judgment to carry out the writ of mandamus by relying on the impugned Act.”
Chief Justice Beg, while concurring with the judgment delivered by Justice Sri Bhagwati, made observations to the effect that the right flowing from the judgment was independent of a right available under Art. 19 of the Constitution. Chief Justice Beg concurred with Justice Sri Bhagwati that judgment of the learned Single Judge of Calcutta High Court acquired finality and the rights flowing from the judgment could not be taken away in indirect fashion by enacting the legislation. It is required to be stated that the other three Judges Justice Sri Chandrachud, Justice Sri S. Murtaza Fazal Ali and Justice Sri P.N Shinghal who constituted the Bench, though agreed with the conclusion that the impugned Act violates the provisions of Art. 31(2), did not consider it necessary to express any opinion on the effect of the judgment of the Calcutta High Court.
23. The reliance on this judgment to urge that the provisions of the Act under challenge in the present proceedings are void is not correct. In the first instance, the interim order passed by the learned Single Judge of this Court in the writ petition filed by the Corporation to challenge the order of the Industrial Court is operative only during the pendency of the petition and do not finally adjudicate the rights of parties as interim order passed by the learned Single Judge has not become final and binding, the ratio of the decision of the Supreme Court in Pathak case, [1978 — I L.L.N 516], (vide supra) is not applicable. Subsequently, learned Single Judge passed further interim orders and appeals filed against those orders are also placed before us for hearing. The order passed by the Industrial Court holding Corporation guilty of unfair labour practice is equally not final because of the pendency of the writ petition which has been admitted by the learned Single Judge and which is also posted before us for final hearing. Sri Gadkari submitted that even the interim orders passed by the writ Court pending the disposal of the petition amounts to judgment and have equal binding force as the final judgment. It is not possible to accede to the submission. Though the interim orders passed by the writ Court after entertainment of the petition are executable, those orders do not finally determine the rights between the parties. The interim orders are passed to protect and safeguard the interest of the parties during the pendency of the writ petition and such orders cannot be equated to the final judgment which is delivered after considering all the pros and cons of the matter. It is also necessary to bear in mind that what was impugned before the Supreme Court in Pathak case (vide supra), was an amendment of the Act and not a special Act as is passed in the present case. The clause enacted under S. 3 of the Amending Act in Pathak case (vide supra), is also not same as in the present case. Section 3 of the Act in the present case is very wide in its ambit and provided that while framing the scheme for the purpose of determination of conditions of service of the employees, it is open for the Central Government to ignore any provisions of the Industrial Disputes Act or any other law or any agreement, settlement, award, judgment, decree or order of the Court, Tribunal or any other authority. The wide ambit of the law makes it clear that the Parliament had conferred power upon the Central Government to frame the scheme even by ignoring judgment delivered by the Court. Such was not a clause in Pathak case (vide supra). Justice Sri Bhagwati in Para. 28 of the judgment delivered in Pathak case (vide supra), specifically observed that the right under the judgment was not sought to be taken away by the impugned Act. The Act trader challenge in the present proceedings specifically takes away the right flowing from the interim order passed by the learned Single Judge and this fact was clearly set out in the statement of objects at the time of introduction of the Bill. Sri Deshmukh submitted that the enactment of the legislation is contrary to the public interest because it deprives the workers of the benefit of an order of the Industrial Court as well as interim order passed by the learned Single Judge of this Court. It is not possible to accede to the submission of the learned counsel. We fail to appreciate what public interest is designed to be defeated by enactment of legislation which provides for regulating the conditions of service of few employees of the refinery division. The Act desires to bring the conditions of service of these employees on par with the conditions of service of public sector units and it is impossible in our judgment to suggest that the legislation was designed to defeat the interest of the workers. In our judgment, the complaint that the legislation trenches upon judiciary and, therefore, is invalid is not correct and is required to be turned down.
24. Sri Gadkari then submitted that the provisions of Sub-sec. (1) of S. 3 of the Act are required to be struck down as the effect of conferring power upon the Central Government to frame a scheme ignoring the judgments and orders of the Courts and Tribunals, affects the decision of the Industrial Court holding that the post-nationalisation employees are entitled to the benefits of settlement arrived at with the employees prior to the date of nationalisation. Sri Gadkari submitted that the legislation is invalid as it proposes to validate the illegal action carried out by the Corporation prior to the order of the Industrial Court. The learned counsel urged that the Corporation was indulging in unfair labour practices and the employees approached the Industrial Court to desist the Corporation from doing so. The employees pointed out to the Industrial Court that the Corporation is depriving the benefits available to them flowing from the principle of equal pay for equal work which is enshrined in Art. 39 of the Constitution. Sri Gadkari submitted that the doctrine is well accepted by catena of decisions of the Supreme Court and the Industrial Court had proceeded to grant relief to the employees based on those decisions. It was contended that by conferring power upon the Central Government to ignore the decision of the Industrial Court and also the principles laid down by the Supreme Court in various decisions amounts to validating the illegal acts perpetuated by the Corporation and on that ground also the provisions of S. 3(1) of the impugned Act should be struck down. In support of the submission, Sri Gadkari relied upon certain observations made by Justice Sri Chandrachud, as he then was, in the decision in Smt. Indira Gandhi v. Raj Narain, [1975 Supp SCC 1 : A.I.R 1975 S.C 2299]. We are unable to accede to the submission of the learned counsel. In the first instance, it must be noted that the legislative intervention to remove the effect of a judgment is a well-accepted principle of legislative jurisdiction. The Legislature is required to step in when the Court interprets the provisions of particular statute and such an interpretation is likely to cause serious prejudice to the public interest or has an impact upon the economic conditions of the country. Sri Gadkari very rightly did not dispute that the legislative intervention to remove the effect of a judgment is permissible but submitted that if the judgment is based or refers to enforcement of a fundamental right, then it is not permissible even for the Legislature to set that judgment at naught. We cannot appreciate the submission because every judgment is delivered in accordance with the Constitution and merely because the judgment refers to certain rights prescribed under the Constitution that would not make it untouchable by the Legislature. In the present case, the Industrial Court proceeded to grant relief to the employees by upholding unfair labour practices by resort to the doctrine enshrined under Art. 39 of the Constitution, but that factor itself is not sufficient to conclude that such a decision cannot be set at naught or ignored by the Parliament. The Parliament is required to step in because the Industrial Court held that it is not permissible to deny the benefits of pre-1973–74 settlements to the employees who were recruited after nationalisation in absence of a statutory provision. The Parliament thereupon enacted the legislation and conferred power upon the Central Government to frame a scheme providing for conditions of service of the employees which would be comparable with the condition of the employees of other public sector units. In our judgment, it is futile to suggest that the Parliament was enacting legislation to validate the invalid or illegal acts perpetuated by the Corporation in denying the benefits of settlements available to the employees prior to nationalisation to employees recruited after nationalisation. The reliance upon observation of Justice Sri Chandrachud, as he then was, in Para. 690 of the judgment in Smt. Indira Gandhi case (vide supra), is also inappropriate. The learned judge was examining the validity of the legislation which conferred a pure and indubitable judicial functions on the Legislature. The parliament had withdrawn the application of all laws whatsoever to the disputed election and had taken upon itself to decide that the election is valid. The legislation then commanded the Supreme Court to dispose of the appeal and the cross-appeal in conformity with the provisions of Cl. (4) of Art. 329-A of the Constitution. The learned Judge observed that the command is in conformity with the judgment delivered by the Parliament. The learned Judge then observed that the exercise by the Legislature of what is purely and indubitably a judicial function is impossible to sustain in the context even of our co-operative federalism which contains no rigid distribution of powers but which provides a system of salutary cheeks and balances. The legislation in the present case is entirely different and it is futile to suggest that the Legislature has taken over the judicial functions by the impugned legislation. Chief Justice Beg while delivering judgment in Smt. Indira Gandhi case (vide supra), observed in Para. 138 that the well-known pattern of all Validation Acts by which the basis of judgments and orders of competent Courts and Tribunals is changed and the judgments and orders are made ineffective is to be found in the case in M.P.V Sundararamier and Company v. State of Andhra Pradesh, [A.I.R 1958 S.C 468]. The rendering of a judgment ineffective by changing the basis by legislative enactment is not encroachment on judicial power because the legislation is within the competence of the Legislature. It is not in dispute that the impugned legislation was within the competence of the Parliament. In our judgment, the challenge to the Act on the ground that the legislation was passed with the object of validating illegal acts is without any substance.
25. Sri Gadkari and Sri Deshmukh then submitted that the retrospective effect given both to the operation of the Act and the scheme is contrary to law and is violative of fundamental rights of the employees because it takes away the benefits which were made available to the employees. The submission is without any merit. It is now well settled by catena of decisions of the Supreme Court that giving retrospective effect to legislative amendment is accepted as valid exercise of legislative power. The power of the Legislature to pass a law includes the power to pass it with retrospective effect. Sub-section (4) of S. 3 of the Act specifically confers power upon the Central Government to make any scheme and such power includes the power to give retrospective effect to such scheme. It is necessary for the Legislature to confer such a power upon subordinate authority to achieve the object of the Act. The object of the Act is to make the conditions of service of the employees of the Corporation comparable with the conditions of service of the employees of the other public sector companies. It could not be possible for the Central Government to achieve the object of the Act without providing for application of the scheme with retrospective effect. Sri Gadkari submitted that Sub-sec. (1) of S. 3 of the Act enables the Central Government while framing the scheme to ignore any judgment or order of the Court or Tribunal. It was contended that the said clause which enables the Government to frame a scheme notwithstanding any judgment or order of the Court or Tribunal can override the effect of the judgment only from the date of declaration of the scheme. The learned counsel submitted that the scheme was gazetted on 28 April, 1989, and consequently, the judgment which was delivered after 28 April, 1989, can be ignored. In the alternative, it was contended that at the most the judgments delivered after 2 July, 1988, i.e, the date on which the Act came into force can be overlooked or ignored. The claim is that the power to override or ignore the judgments of the Court or Tribunal was available to the subordinate authority, i.e, the Central Government only on enactment of the legislation and, therefore, it is not permissible to ignore the judgments delivered prior to the dale of Act coming into operation. The submission is entirely devoid of any merit. The scheme which was published on 28 April, 1989, specifically provides that it shall deem to have come into force on and from 24 January, 1976. As mentioned hereinabove, Sub-sec. (4) of S. 3 of the Act confers power upon the Central Government to give retrospective effect to the scheme to be framed under Sub-sec. (1) of S. 3. The Central Government has exercised the power conferred under the Act and given retrospective effect to the implementation of the scheme. We are unable to appreciate how if can ever be contended that the retrospective effect could not have been given with effect from 24 January, 1976. In our judgment the submission is nothing but a desperate attempt to claim that the judgment of the Industrial Court should not be ignored. The challenge to the power conferred by the Parliament to give retrospective effect to the scheme is without any substance and the contention is deserved to be turned down.
26. The next submission made by Sri Gadkari and Sri Deshmukh is that the provisions of the Act and the scheme violate the fundamental rights guaranteed under Art. 19(1)(g) of the Constitution. In support of the submission, reliance is placed on the observations of Chief Justice Beg in Para. 11 of the judgment in Pathak case, [1978—I L.L.N 516] (vide supra). We have already pointed out as to how the observations on which reliance is placed do not support the submission of the petitioners. The observations made by the learned Chief Justice is that the measure which seeks to deprive workers of the benefits of a settlement arrived at and assented to by the Central Government, under the provisions of the Industrial Disputes Act, should not be set at naught by an Act designed to defeat a particular settlement and if this be the purpose of the Act, it could very well be said to be contrary to public interest. The observation made by the learned Chief Justice in a different context cannot be torn out to claim that the legislation to deprive the workers of the benefit of the settlement automatically violates Art. 19 of the Constitution. In this connection, it would be appropriate to refer to another decision of the Supreme Court in Ajoy Kumar Banerjee v. Union of India, [1984—II L.L.N 1]. In this case the notification, dated 30 September, 1980, of the Ministry of Finance (Department of Economic Affairs) (Insurance) introducing what is called General Insurance (Rationalisation and Revision of Pay Scales and other Conditions of Service of Supervisory, Clerical and Subordinate Staff) Second Amendment Scheme, 1980, was challenged as illegal and violative of fundamental rights under Arts. 14, 19(1)(g) and 31 of the Constitution. The General Insurance Corporation submitted the scheme to the Central Government and on approval, the scheme was notified. In Para. 25 of the judgment delivered by Justice Sri Sabyasachi Mukharji, as he then was, it was stated that the basic and the main question was whether the Government and the Corporation had power in law to introduce the scheme and whether the exercise of power is in arbitrary and whimsical manner to deny the employees any of the fundamental rights. While examining the challenge to the scheme as violative of Art. 19(1)(g) of the Constitution, the learned Judge observed in Para. 45 of the judgment that empowering the Government to frame schemes for carrying out the purpose of the Act does not affect or abridge the fundamental rights of the employees and would not attract Art. 19(1)(g). It is, therefore, clear that the legislation did not violate the fundamental rights guaranteed under Art. 19 of the Constitution by delegating the power to frame a scheme to the Central Government. The power was delegated to enable the Central Government to frame a scheme to achieve the object of the Act. It is a well-established principle that the Legislature lays down the guidelines, the principles of policy and leaves it to the subordinate authority to work out the details. The observation of the Supreme Court in (Re Art. 143, Constitution of India and Delhi Laws Act) [A.I.R 1951 S.C 332], to the following effect succinctly put the position:
“The essential legislative function consists in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of conduct. It is open to the Legislature to formulate the policy as broadly and with as little or as much details as it thinks proper and it may delegate the rest of the legislative work to a subordinate authority who will work out the details within the framework of that policy.”
It was faintly urged by Sri Gadkari that the object to be achieved is extremely hazy and the Act does not furnish any guidelines as to how the object is to be achieved. It was contended that the object was to make the conditions of service of the employees of the Corporation comparable with the conditions of service of employees of other public sector companies and the statement of objects refers to public sector wage pattern, but such a pattern cannot be gathered either from a policy decision of the Central Government or from any judgment of Court or Tribunal. It was contended that in absence of the clear-cut object and the guidelines to achieve that object, the Act contravenes the fundamental right under Art. 19 of the Constitution. We are unable to accede to the submission. In our judgment, the object of the Act is extremely clear and the anxiety of the Legislature was to prevent creation of “high wage islands” by giving higher wage-structure to some of the employees of the Corporation and that too by departing radically from the public sector wage-policy. The public sector wage-policy is not an unknown concept and the wage-pattern is settled by Bureau of Public Enterprises which is a Government concern. The concept is formulated with a view to ensure that the wages drawn by the employees of various public sector companies are not so disproportionate as to create disturbance in working of the public sector. The wage pattern is settled after taking into consideration large number of circumstances. Sri Gadkari submitted that the circumstances which are taken into consideration while determining public sector wage-policy are not justifiable. We are unable to strike down the legislation on the ground that the object of the Act is hazy or the Act does not provide sufficient guidelines to the subordinate authority to frame the scheme.
27. The principal challenge both to the Act and the scheme is on the ground of violation of doctrine of equality enshrined under Art. 14 of the Constitution. The Act broadly makes distinction between the employees recruited prior to nationalisation and employees recruited after nationalisation. The petitioner's claim is that the classification of employees as pre-nationalisation and post-nationalisation is unreasonable and the distinction made for the purpose of determination of conditions of service results into gross discrimination. It was claimed that the employees of the Corporation in the refinery division though equal are treated as unequal by creating an artificial division and classifying them as pre-nationalisation and post-nationalisation. It was contended that the distinction made is without any nexus to the object to be achieved. It is now well settled that the differentiation is not always discriminatory. If there is a rational nexus on the basis of which differentiation has been made with the object sought to be achieved, then such differentiation is not discriminatory and does not violate the provisions of Art. 14 of the Constitution. Once it is found that there is intelligible basis for differentiation, then whether the same result or better result could have been achieved is within the domain of Legislature and must be left to the wisdom of the Legislature. In Ajoy Kumar Banerjee case, [1984—II L.L.N 1] (vide supra), the Supreme Court held that historical reasons can provide an intelligible differentiation between the employees of the same category. The question which arose before the Supreme Court in Ajoy Kumar Banerjee case (vide supra), while examining the challenge on the ground of violation under Art. 14 of the Constitution was two-fold. The first question was whether making a provision for salary and emoluments of the employees of the General Insurance Corporation specifically and differently from the employees of other public sector undertakings is discriminatory in any manner. The second question was whether making a provision for the employees of the General Insurance Corporation for settlement of their dues by schemes and not leaving the question open to the general provision of the Industrial Disputes Act is discriminatory and violative of the right of the employees. Identical contentions are urged on behalf of the petitioners in the present case. It was contended that the Act was enacted with the object to determine the conditions of service of the employees of the Corporation and to make them comparable with the conditions of service of employees of other public sector companies. The grievance was that it is not permissible to enact the legislation only for the purpose of regulating conditions of service of the employees of the Corporation and not providing legislation for other public sector units. It was also contended that the Act permits excessive delegation to the subordinate authority and also violates the doctrine of equality. Principally, three questions are required to be determined to ascertain whether the challenge to the Act on the ground of violation of Art. 14 is correct. The three questions are:
(a) Whether the legislation enacted for regulating service conditions of employees of the Corporation and not other public sector units is valid?.
(b) Whether the Act suffers from vice of “excessive delegation”? and
(c) Whether the classification of employees in two broad categories of pre-nationalisation and post-nationalisation is valid?
28. The historical background leading to the passing of the Act has already been extensively set out in the earlier part of the judgment and it is not necessary to reiterate the same. The Legislature was required to step in as it was noticed that the order of the Industrial Court will lead to providing a higher wage-structure to the employees of the Corporation engaged in refinery division alone and permitting that would lead to other employees in similar undertakings demanding benefits of higher scales of pay on the principle of equal pay for equal work. The result of such demand and grant could have lead to radical departure from the public sector wage-policy. The return filed on behalf of the Corporation sets out that the service conditions and especially the wage-structure of the employees of the foreign concern prior to nationalisation were unusually high and while carrying out the process of nationalisation as a fair claim the Government decided not to disturb the service conditions of the employees who were already serving in the foreign concern prior to nationalisation. The number of such employees were dwindling from year to year and as return says so, it was less than 200 when the Legislature stepped in by passing the Act. A large number of employees were recruited after nationalisation and their service conditions were based on public sector wage-policy and the wages drawn by them were obviously less than those drawn by the employees who were in service prior to nationalisation. The demand of post-nationalisation employees to be treated on par with pre-nationalisation employees as far as conditions of service are concerned would have led to heavy financial burden upon the Corporation apart from the fact that the chain of demand on the same terms would have spread over to all the other public sector units. The return sets out that there arc six or seven oil companies which are nationalised and the fear is expressed that the application of the order of the Industrial Court would lead to the demand for higher wages by the post-nationalisation employees in all these companies. It is required to be stated that in regard to the Bharat Petroleum Corporation, Ltd., there are two divisions, refinery and marketing and the employees in the marketing, division who were recruited after nationalisation are not demanding the same wage-structure as the pre-nationalisation employees, but on the other hand their conditions of service are determined by a settlement arrived at on the basis of public sector wage-policy. The order of the Industrial Court carved out a special case for the employees recruited in the refinery division after nationalisation and the number of such employees are comparatively less than the employees recruited in the marketing division. To overcome the situation brought about by the decision of the Industrial Court, the Legislature stepped in and passed the Act for determination of conditions of service of employees of the Bharat Petroleum Corporation, Ltd, alone. The question which requires determination is whether passing of an act for one of the Corporation and not for other public sector units is invalid in the circumstances of the case. The decision in Ajoy Kumar Banerjee case, [1984—II L.L.N 1] (vide supra), clearly answers the issue. In Para. 47, at page 19 of the judgment, it was observed that:
“It is true that sometimes there have been rise in emoluments with the rise in the cost of index in certain public sector corporations. The Legislature, however, is free to recognise the degree of harm or evil and to make provisions for the same. In making dissimilar provisions for one group of public sector undertakings does not per se make a law discriminatory as such. It is well settled that Courts will not sit as super-Legislature and strike down a particular classification on the ground that any under-inclusion, namely that some others have been left untouched so long as there is no violation of constitutional restraints…”
The Supreme Court referred to its earlier decision in State of Gujarat v. Sri Ambica Mills, Ltd., Ahmedabad, (1974) 4 SCC 656 : [A.I.R 1974 S.C 1300], with approval and observed that in the matter of economic legislation or reform, a provision would not be struck down on the vice of under-inclusion, inter alia, for the reason that the Legislature could not be required to impose upon administrative agencies task which could not be carried out or which must be carried out on a large scale at a single stroke. The piecemeal approach to a general problem permitted by under-inclusive classifications is sometimes justified when it is considered that Legislatures deal with such problems usually on an experimental basis. The decision of the Supreme Court, in our judgment, answers the complaint that the legislation was enacted only for Bharat Petroleum Corporation, Ltd., and not for other public sector companies and, therefore, is violative of Art. 14 of the Constitution.
29. The second question which requires determination is whether the Act is violative of Art. 14 of the Constitution due to the vice of excessive delegation. The submission was advanced by claiming that the Act provides for exclusion of provisions of Industrial Disputes Act and indeed repeals the said provisions and consequently repeals of a statutory provision depriving the employees of the benefit of adjudication under the Industrial Disputes Act, amounts to excessive delegation. The question is no longer res Integra in view of the decision of the Supreme Court in A.V Nachane v. Union of India, [1982—I L.L.N 65]. In this case, the validity of the provisions of the Life Insurance Corporation (Amendment) Act, 1981, and the Life Insurance Corporation (Amendment) Ordinance, 1981, were challenged, inter alia, on the ground that Art. 14 is infringed, and the issue arose as Sub-see. (2-C) of S. 48 provided that any rule made under cl. (cc) of sub-sec. (2) of that section touching the terms and conditions of service of the employees of the Corporation shall have effect notwithstanding anything contained in the Industrial Disputes Act. It was claimed before the Supreme Court that there was no basis on which the employees of the Corporation could be said to form a separate class for denying to them the protection of the Industrial Disputes Act. The challenge was met with the reply that remuneration paid to Class III and Class IV employees of the Corporation was far in excess of what was paid to similarly situated employees in other establishments of the public sector and, therefore, the need arose for securing the interests of the Life Insurance Corporation and its policy-holders and to control the cost of administration. The Supreme Court held that the material produced by the Government 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. Thereafter while examining the contention that the amendment virtually repeals the Industrial Disputes Act, the Supreme Court observed that repealing law was an essential legislative function which had been delegated to the Central Government and that amounts to excessive delegation. The Supreme Court referred to its earlier decision in A.I.R 1951 S.C 332 (vide supra), to highlight that delegating the legislative work to a subordinate authority after the Legislature formulates the policy does not amount to excessive delegation. The Supreme Court then observed that in Para. 9 at page 72:
“In the instant case S. 48(2-C) read with S. 48(2)(cc) authorises the Central Government to make rules to carry out the purposes of the Act notwithstanding the Industrial Disputes Act or any other law. This means that in respect of the matters covered by the rules the provisons of the Industrial Disputes Act or any other law will not be operative…”
In Para. 10 of the judgment, the Supreme Court pointed out the question which arose was whether the Amendment Act, 1981, lays down no legislative policy or furnish no guidance to indicate the nature and extent of the modifications of the rules permitted to make in the existing laws. The Supreme Court referred with approval to the decision in Harishankar Bagla v. State of Madhya Pradesh, [A. 1. R. 1954 S.C 465], to the following effect:
“Section 6 does not either expressly or by implication repeal any of the provisions of pre-existing laws neither docs it abrogate them. Those laws remain untouched and unaffected so far as the statute book is concerned. The repeal of a statute means as if the repealed statute was never on the statute book. The effect S. 6 certainly is not to repeal any one of those laws or abrogate them. Its object is simply to by-pass them where they are inconsistent with the provisions of the Essential Supplies (Temporary Powers) Act, 1956, or the orders made thereunder. In other words, the orders made under S. 3 would be operative in regard to the essential commodity covered by the textile control order wherever there is repugnancy in this order with the existing laws and to that extent the existing laws with regard to those commodities will not operate. By-passing a certain law does not necessarily amount to repeal or abrogation of that law. That law remains unrepealed but during the continuance of the order made under S. 3 it does not operate in that field for the time being.”
The decision of the Supreme Court in Nachane case (vide supra), makes it clear that confirmation of power upon a subordinate authority to frame a scheme which may result in withdrawing application of provisions of Industrial Disputes Act to the employees of the Corporation will not amount to excessive delegation. In our judgment, the complaint that the withdrawal of the advantage of provisions of Industrial Disputes Act to the employees of the Corporation attracts the vice of Art. 14 of the Constitution is not correct.
30. The third question which needs answer is whether the classification of employees into two classes, i.e, pre-nationalisation and post-nationalisation is valid. It cannot be debated that the classification of employees by the Legislature is clearly discernible. It is not difficult to ascertain the two classes of employees and the sole question is whether there is the rational nexus on the basis of which differentiation has been made. As mentioned hereinabove, the object sought to be achieved by the legislation is to prevent the post-nationalisation employees from demanding the same conditions of service as are available to the employees of pre-nationalisation period. The historical background clearly reveals the reason why the conditions of service of pre-nationalisation employees were better. To make available those conditions of a dwindling number of employees to large number of employees who were recruited after nationalisation is bound to lead to large number of economic difficulties. The object to be achieved was to provide conditions of service of post-nationalisation employees on par with public sector companies. To achieve this object, it was necessary to differentiate between the two classes of employees. The Corporation had assured while carrying out the exercise of nationalisation that the conditions of service of the existing employees will be continued unless altered by the Central Government. The Central Government did not want to disturb the service conditions of a dwindling number of employees but could not permit the employees to be recruited after nationalisation to claim that the same conditions of service should be made available to them. The classification of employees in these circumstances between pre-nationalisation and post-nationalisation cannot be termed as invalid or de hors of the object to be achieved. The classification has received legislative recognition in view of the provisions of Sub-sec. (2) of S. 3 of the Act which has specifically empowered the Central Government to provide for the continuance of such emoluments and benefits as were payable to the employees of the Corporation who were in service prior to the date of nationalisation. The legislative recognition of classification of employees in two categories does not suffer from any infirmity. The Legislature was fully conversant of the dispute raised by the employees of the Corporation and the settlement reached by the employees recruited after nationalisation in the marketing division accepting the conditions of service on par with the public sector wage-structure. Article 14 does not restrict from introducing a reform by applying the legislation to some selective class or areas only according to the grievance of the situation and classification of selection can be sustained on historical reasons or reasons of administrative exigency or piecemeal method of introducing reforms. The law need not apply to all the persons in the sense of having universal application and the law can be sustained if it deals equally with the people of well-defined classes and is not open to challenge on the ground that it was not applicable to other persons. In our judgment the challenge to the Act on the ground of infringement under Art. 14 cannot be sutained.
31. It was then urged on behalf of the petitioners that the scheme framed by the Central Government also infringes upon the fundamental right guaranteed under Art. 14 of the Constitution.
32. It was contended that the scheme does not cover all the workmen of the Corporation but covers only employees recruited in the refinery division after nationalisation. The complaint is that the scheme does not deal with the employees recruited after nationalisation in the marketing division and thereby even amongst the employees of the Corporation, classification is made and such classification has no nexus to the object to be achieved. The submission is not correct because it overlooks that the employees recruited after nationalisation in the marketing division have already entered into settlement with the Corporation and the conditions of service of those employees were settled in accordance with the conditions of service prevalent in the other public sector companies or undertakings. We specifically enquired from the learned counsel for the petitioners as to whether the service conditions of the employees of the marketing division arc in any manner higher or better than the service conditions of the employees of the refinery division and the learned counsel could not assert that the conditions of service of the employees in the marketing division and refinery division are not equal or the scheme in any manner deprives the employees of the refinery division from any benefits which are available to the employees of the marketing division. It is obvious from the mere perusal of the provisions of S. 3 of the Act that the power has been conferred upon the Central Government to frame one or more schemes or even to modify or vary the scheme. The Central Government is entitled to frame the scheme on being satisfied that it is necessary to regulate the conditions of service of the employees of the Corporation to make them comparable with the conditions of service of employees of other public sector companies. The conditions of service of employees of marketing division are already regulated by the settlement and consequently, it was unnecessary for the Central Government to disturb those conditions by the impugned scheme. In our judgment, the challenge to the scheme on the ground of violation of Art. 14 is without any substance and, is therefore, required to be turned down.
33. That leads us to the challenge levelled to the scheme framed by the Central Government. Sri Deshmukh submitted that the scheme is not in accordance with the Act and suffers from impermissible sub-classification. It was claimed that the public sector pattern is a concept which is extremely vague and neither the Corporation nor the Central Government has disclosed on affidavit the exercise undertaken for determination of wage-structure of the employees as set out in the scheme. It was contended on behalf of the petitioners that the scheme was framed without giving any hearing to the employees to be affected and, therefore, the scheme should be struck down on the ground of violation of principles of natural justice. It is not possible to accede to the submission of the petitioners. As mentioned hereinabove, the concept of public sector wage-pattern is not vague and has been evolved by the Bureau of Public Enterprises. Sri Deshmukh submitted that S. 3(1) of the Act provides that conditions of service of the employees of the Corporation should be made comparable with the conditions of service of employees of other public sector companies and the expression “public sector company” is defined under S. 2(3) of the Act. Public sector company means any Corporation established by or under any Central Government Act or a Government company as defined by S. 617 of the Companies Act, 1956. Sri Deshmukh urged that the return filed on behalf of the Corporation indicates that while determining the conditions of service and especially the wage-structure and dearness allowance, the guidelines of Bureau of Public Enterprises were taken into consideration and those guidelines have considered the comparable companies like Indian Oil, Bharat Petroleum, Indo Burma Petroleum, etc. Sri Deshmukh submitted, that the expression “public sector company” covers all the Corporations established by the Central Government or Government company as defined under the Indian Companies Act and, therefore, it was not permissible to determine the wage-structure under the scheme by taking into consideration the wage-structure in existence only in companies like Indian Oil, Bharat Petroleum, Indo Burma Petroleum, etc. It is undoubtedly true that the expression “public sector company” as defined under S. 2(c) of the Act is of a very wide ambit and covers all Corporations and the Government companies, but it is sufficient only to ascertain whether the Central Government while determining the conditions of service of the employees of the Corporation has compared the conditions of service of other public sector companies in the oil sector.
34. The principle of region-cum-industry for determination of wage-structure is well settled in industrial jurisprudence. It was not disputed that in the oil sector there are six or seven companies and in case the Government has taken into consideration the comparable conditions of service in these six or seven oil companies while framing a scheme in exercise of powers under S. 3(1) of the Act, then no fault can be found with such exercise. It is a far cry to suggest that the scheme is not in accordance with the Act because the Central Government did not compare the conditions of service of all the Corporations established by the Central Government and all the Government companies defined under S. 617 of the Companies Act. In our judgment, it is necessary to read down the definition of expression “public sector company” in the facts and circumstances of the case. It is now well settled that it is open for the Court to read down a provision so as to make the provisions of the law workable. Sri Deshmukh then submitted that while framing the scheme, the Central Government has not carried out any exercise of holding discussion with the employees who were going to be adversely affected. It was contended that the scheme merely announces the wage-structure prepared by the Central Government but nowhere refers to what steps were taken to reach such conclusion. According to Sri Deshmukh, what was required was first to draft a scheme to provide what factors would be taken into consideration for arriving at the wage-structure and thereafter prepare another scheme which will provide the wage-structure. It is impossible to accept this submission. The Legislature has conferred powers upon the Central Government to frame a scheme and the guidelines are set out in the Act itself. The Central Government is not required to disclose in the scheme what steps were taken to arrive at the wage-structure. While delegating the power to the Central Government, the Legislature provided a safeguard by enactment of Sub-sec. (5) of S. 3 which demands that every scheme framed by the Central Government, shall be placed before each House of the Parliament. The statutory provision enables the legislation to control the scheme and to suggest modification, variation or even cancellation of the scheme. It is, therefore, futile to suggest that the Legislature had delegated the power without any guidelines or without any regulatory control. In our judgment, it was wholly unnecessary for the Central Government to declare the scheme only after disclosing the steps taken for arriving at the method of determination. The learned counsel also contended that the Government should have disclosed on affidavit the method of determination and the reasons why different scales of wages are provided to employees by dividing them in four different specified periods. In our judgment, it was wholly unnecessary for the Central Government to do so because the exercise undertaken was legislative in nature and it is not open for the employees to challenge such exercise unless it is violative of any fundamental right. In respect of legislative exercise, it is not permissible for the Court to demand justification for the same. Sri Deshmukh, then submitted that it was incumbent upon the Central Government to give hearing to the employees who were adversely affected and failure to do so amounts to breach of natural justice and on that count, the scheme should be struck down. In support of the submission, reference was made to the decision of the Supreme Court in H.L Trehan v. Union of India, [1989 — I L.L.N 294]. In the case before the Supreme Court, the Chairman of the Board of Directors of Caltex Oil Refining (India), Ltd., issued the impugned circular stating therein that consequent upon the take over of the Caltex (India), Ltd., by the Government, the question of rationalisation of the perquisites and allowances admissible to management staff had been under consideration of the Board for sometime, and that as an interim measure, the Board had decided that the prequisites admissible to the management staff should be rationalised in the manner stated in the said circular. The validity of the scheme was challenged before Delhi High Court and the circular was struck down on the ground that it was violative of principles of natural justice. The Supreme Court upheld the decision observing that there can be no deprivation or curtailment of any existing right, advantage or benefit enjoyed by a Government servant without complying with the rules of natural justice by giving the Government servant concerned an opportunity of being heard. Any exercise of power prejudicially affecting the existing conditions of service of a Government servant will offend against the provision of Art. 14 of the Constitution. The reliance on the decision of the Supreme Court is entirely inaccurate. In the case before the Supreme Court what was under challenge was the circular issued by the Chairman and which was issued in exercise of executive function. It hardly requires to be stated that the executive act which affects the conditions of service of the employees demands observance of principles of natural justice, but such requirement is uncalled for when a legislative function is performed. It is impossible even to suggest that the principle of natural justice of giving prior hearing to the employees is a must when conditions of service are altered by exercise of legislative powers. In our judgment, the decision of the Supreme Court has no application whatsoever to the exercise of legislative powers by the Central Government in framing a scheme.
35. That leaves for consideration two grounds referred to by the petitioners in respect of conditions of service settled by the scheme. Clause 9 of the scheme deals with subject of transfers and Sub-cl. (i) confers power upon the Corporation to transfer employees from one unit to another and from one department to another. The grievance is made in respect of powers conferred under Sub-cl. (ii) of Cl. 9 which confers power on the Corporation to transfer an employee from one establishment to another establishment in the interest of increasing productivity of the Corporation. Sri Gadkari submitted that the power conferring transfer from one establishment to other amounts to change in conditions of service and is brought about without complying with the requirement of S. 9-A of the Industrial Disputes Act and in any event is violative of Art. 19(1) of the Constitution. The submission is devoid of any merit. In the first instance, the requirement of S. 9-A of the Industrial Disputes Act providing for steps to be taken before effecting change in service conditions has no application whatsoever because the Government has been conferred with power to frame the scheme notwithstanding any of the provisions of the Industrial Disputes Act. Realising this aspect, Sri Gadkari, desperately submitted that in any event power to transfer is violative of Art. 19(1) of the Constitution because arbitrary power is conferred and such power is likely to be misused. We are unable to find any merit in the submission. The power conferred is not arbitrary because Sub-cl. (ii) makes it specifically clear that power to transfer from one establishment to another is available provided such power is in the interest of increasing productivity. The requirement of increasing productivity is a condition precedent for recommending transfer. The power conferred by the scheme cannot be termed as arbitrary and in case any transfer is effected contrary to Sub-sec. (ii), then it is open for such aggrieved employee to get a suitable redressal from the Court or Tribunal.
36. It was then contended that Cl. 18 of Sch. 2 of the scheme provides that all clerical and labour employees of the Corporation shall retire on completion of age of 58 years. It was contended that this part of the scheme sets at naught the effect of the judgment delivered by the Supreme Court in Workmen of Bharat Petroleum Corporation, Ltd., Refinery Division, Bombay v. Bharat Petroleum Corporation, Ltd., [1984—I L.L.N 76]. The grievance is not correct for more than one reason. In the case before the Supreme Court, the workmen of the Bharat Petroleum Corporation, Ltd., raised an industrial dispute with regard to the retirement age and the demand was that the age should be raised from 55 years to 60 years keeping with the trend in the Bombay region. The Industrial Tribunal noticed that the age of retirement of the clerical staff of the company in marketing division was fixed at 58 years and thereupon held that there was no valid reason why the retirement age of the clerical staff employed in the refinery division should not be raised at least to 58 years. The raising of the age up to 58 years was challenged in the Supreme Court and the Supreme Court raised the age to 60 years on the basis of the trend in the Bombay region. The Central Government was authorised by S. 3(1) of the Act to frame a scheme and determine the conditions of service notwithstanding any judgment of the Court and that includes the judgment of the Supreme Court. The legislative power was exercised by the Central Government and the scheme was framed determining the age of retirement on completion of 58 years as prevalent in all other public sector companies. The scheme which includes the age of retirement was placed before the Parliament and was approved. We are unable to accede to the submission that the fixation of age of retirement at 58 years sets at naught the judgment of the Supreme Court and, therefore, the scheme should be struck down. The Central Government was entitled to bypass the judgment and bring the conditions of service of the employees of the Corporation on par as far as possible with the employees of the other public sector companies.
37. It would not be out of place of refer to two decisions to the Supreme Court in B.S Yadav v. Chief Manager, Central Bank of India, [1987—II L.L.N 423] and Life Insurance Corporation of India v. S.S Srivastava, [1988 Supp SCC 1], where the issue was about the different age of retirement between employees recruited prior to nationalisation and subsequent to nationalisation, in the first case, the bank employees and in the second case, the Life Insurance Corporation employees. The Supreme Court upheld the different age of retirement by holding that the classification in two categories as pre-nationalisation employees and post-nationalisation employees was perfectly valid. In our judgment, the challenge to the Act and the scheme is without any substance and the petition must fail.
38. Even though the challenge to the Act and the scheme is turned down, we enquired from the learned Attorney-General as to whether the scheme deprives the employees of any benefits or deprives them of the pay-packet drawn by them earlier. Sri Attorney-General with reference to the return filed by the Corporation pointed out that not only the employees are not deprived of their pay-packets but 86 per cent of the employees are benefitted by the scheme introduced. The learned Attorney-General pointed out that apart from giving better wage-structure, the scheme confers upon the employees new components like fitment, fixed dearness allowance, special compensatory allowance, city compensatory allowance, transport allowance, etc. The learned Attorney-General pointed out that the perusal of return, dated 19 June, 1989, filed by Chimanbhai Somanbhai Valand, the Chief Staff and Industrial Relations Manager of the Corporation, in Notice of Motion No. 1293 of 1989 ill Writ Petition No. 3619 of 1988 would disclose that out of the total strength of 1882 employees, 1621 employees would gain by the impugned scheme while loss would be caused to only 261 employees and these 261 employees arc in the higher bracket. The annexure to this affidavit sets out in detail the advantage conferred by the scheme in respect of wage-scales, fitment, house rent allowance, city compensatory allowance, etc. The learned Attorney-General pointed out that the only grievance of the employees is in respect of variable dearness allowance because this variable dearness allowance is settled with reference to All India Consumer Price Index and not on Bombay Cost of Living Index as desired by the employees. The learned Attorney-General pointed out that the All India Consumer Price Index is applicable to the employees of all the public sector companies and on this count, grievance cannot be made. The learned counsel for the petitioners disputed the claim that the employees are going to be benefitted by the scheme. We need not examine this question in greater detail and our anxiety to ascertain this aspect was only with a view to find out whether the scheme seriously prejudices the interest of the employees. We do not find that it seriously affects the employees. Even otherwise, we could not have disturbed the scheme when it was framed in exercise of legislative functions. In our judgment, the petitioners are not entitled to any relief and the petition must fail.
39. Accordingly, rule is discharged, but there will be no order as to costs.
40. Sri Gadkari orally applies for certificate to file appeal to the Supreme Court. Leave refused.