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PETITIONER: PROCESS TECHNICIANS AND ANALYSTS’ UNION

       Vs.

RESPONDENT: THE UNION OF INDIA & ORS.

DATE OF JUDGMENT:       10/03/1997

BENCH: CJI, A.M. AHMADI, SUJATA V. MANOHAR

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T Mrs. Sujata V. Manohar. J.      Bharat   Petroleum   Corporation   Ltd.,   the   second respondent in this appeal has about 12,000 employees. Out of these about  1850 employees  are  working  in  the  refinery division of  the second  respondent. Process Technicians and Analysts’  Union   which  is   the  appellant-Union   has  a membership of  about 411  employees in the refinery division of the second respondent-corporation.      Prior to  1976 there were two companies; one was Burmah shell Refineries  Ltd. which  was an  Indian company and the other was  Burmah Shell oil Storage and Distributing Company which was a foreign company registered in the United Kingdom and was  a marketing  company. On  or about 24th of January, 1976, the  entire share  capital of  Burmah Shell Refineries Ltd. was  purchased by  the Government  of India  and Burmah shell Refineries Ltd. became a Government Company, and later a Public  Sector Undertaking.  The Burmah  Shell oil Storage and Distributing  Company which  was a  foreign company  was acquired by  the Central  Government by  enacting the Burmah Shell (Acquisition  of Undertakings  in  India)  Act,  1976. After the  acquisition of  the Burmah  Shell oil Storage and Distributing Company, both these companies were merged and a notification was  issued under  Section 7  of the  said  Act vesting the undertakings of the Burmah Shell Oil Storage and Distributing Company  in Burmah  Shell Refineries  Ltd.  The name of  the said  company was  changed on  or about  1st of August, 1977, to Bharat Petroleum Corporation Ltd. Upto 24th of January,  1976, there were approximately 220 Burmah Shell workmen who were working in the Refinery Company. After 24th of January, 1976, some of these employees continued with the Government Company.  Fresh workmen  were employed thereafter by the Government/Public Sector Company on a temporary basis on consolidated salaries.      In  February  1978  Petroleum  Employees’  Union  filed U.L.P.38/1978 under  the Maharashtra  Recognition  of  Trade Unions and  Prevention of Unfair Labour Practices Act, 1971, claiming on  behalf of  post-nationalisation workmen  in the refinery or  Bharat Petroleum  Corporation Ltd.  benefits of Pre-Nationalisation Wage  Settlements  signed  by  the  then

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unions with  Burmah Shell  Refineries Ltd. Those settlements were dated 21.2.1973, 31.10.1973 and 16.8.1974.      By a  letter dated  27th of February, 1981 addressed by the  Government   of  India   to  the   second   respondent- corporation, the  attention of  the  second  respondent  was invited to  existing directions  to the effect that the Wage Scales/Service Conditions  which were  prevalent before  the take-over of  the company cannot be granted to the employees recruited  subsequently  and  that  the  second  respondent- corporation should  recruit all new entrants after take-over of the  company on  consolidated wages. It was in compliance with this  directive that  the second respondent-corporation had engaged  employees after  nationalisation on a temporary basis and on consolidated salaries.      During the pendency of U.L.P. 38/1978, there were other litigations between  the employees  and/or unions  of  these employees and  the second  respondent-corporation pertaining to service  conditions of the employees. These are, however, not relevant  for the  present purposes.  On 29th  of April, 1987, U.L.P. 38/1978 was allowed in favour of the employees. The  Industrial  court  held  that  the  second  respondent- corporation was  a  successor-in-interest  of  Burmah  Shell Refineries Ltd.  and that  the settlement of 16th of August, 1974  continued   to  apply  to  employees  recruited  after nationalisation   (hereinafter   referred   to   as   ‘post- nationalisation employees’).  It  was  also  held  that  the letter  from   the  Government   of  India   to  the  second respondent-corporation  dated  27-2-1981  was  of  no  legal effect and  legislation was required if it was intended that the  same  service  conditions  would  not  apply  to  post- nationalisation employees.  This decision  was challenged by the second  respondent by  filing a writ petition being Writ Petition No.  1835 of  1987 in  the Bombay  High Court on or about 1st of July, 1987. The writ petition prayed for a writ of certiorari  to quash  the judgment  dated 29th  of April, 1987 in  U.L.P. 38  of 1978. By an interim order of the same date the  application of  the settlement  of 16th of August, 1974 was  stayed for  the past  period but  for  prospective period from  1.7.1987 the  said settlement  of 1974 was made applicable  to   all  workmen   of  the  refinery  who  were complainants in U.L.P. 38 of 1978.      On 2nd of July, 1988, Bharat Petroleum Corporation Ltd. (Determination  of   conditions  of  Service  of  Employees) Ordinance, 1988,  was promulgated.  Under Section  3 of  the ordinance power  was vested  in the  Ministry of  Petroleum, Government of  India to determine service conditions under a scheme comparable  with the employees of other public sector companies.  The   Ordinance  was   replaced  by  The  Bharat Petroleum Corporation  Ltd. (Determination  of Conditions of Service of  Employees) Act,  1988,  being  Act  44  of  1988 (hereinafter referred  to as ’the Act of 1988). The relevant provisions of Section 3 of the said Act are as follows:      "3(1): Where the Central Government      is satisfied  that for  the purpose      of making the conditions of service      of the  officers and  employees  of      the Corporation comparable with the      conditions  of   service   of   the      officers  and  employees  of  other      public  sector   companies,  it  is      necessary  so   to  do.   it   may,      notwithstanding anything  contained      in  the  Industrial  Disputes  Act,      1947  or   any  other  law  or  any      agreement,  settlement,   award  or

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    other instrument for the time being      in force,  and notwithstanding  any      judgment, decree  or order  of  any      court, tribunal or other authority,      frame one  or more  schemes for the      purpose  of  determination  of  the      conditions  of   service   of   the      officers  and   employees  of   the      Corporation.      (2)       x         x      x      x      x        x         x      (3) The Central Government may make      a  scheme  to  amend  or  vary  any      scheme made under sub-section (1).      (4) The  power to  make any  scheme      under  sub-section   (1)  or   sub-      section (3) shall include--      (a) the power to give retrospective      effect to  any such  scheme or  any      provision thereof; and      (b) 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  in  force  immediately      before  the  commencement  of  this      Act.      (5) Every  scheme made  under  sub-      section  (1)   or  sub-section  (3)      shall be  laid, as  soon as  may be      after it is made, before each House      of  Parliament,   while  it  is  in      session  for   a  total  period  of      thirty days  which may be comprised      in one  session or  in two  or more      successive sessions, and if, before      the   expiry    of   the    session      immediately following  the  session      or    the    successive    sessions      aforesaid,  both  Houses  agree  in      making  any   modification  in  the      scheme, or  both Houses  agree that      the scheme  should not be made, the      scheme shall thereafter have effect      only in such modified form or be of      no effect,  as the case may be; so,      however, that any such modification      or annulment  shall be  without  or      erejudice  to   the   validity   of      anything previously done under that      scheme.      Pursuant to  the  power  given  under  Section  3,  the central government on of about 29th of April, 1989, framed a scheme by  a notification  of that  date. being  the  Bharat Petroleum Corporation  Ltd. (Determination  of Conditions of Service of  Post-Nationalisation Refinery Employees) Scheme, 1989 (hereinafter  referred to as ‘the Scheme of 1989’). The Scheme was made retrospective and clause 1 (2) of the Scheme provided that  the Scheme  shall be deemed to have come into force on  and from the 24th day of January, 1976. The Scheme laid down conditions of service for the employees covered by the Scheme  for five  different periods; (1) the period from 24th of  January, 1976  to 31st  December, 1979;  (2) 1st of January, 1980  to 31st December, 1983; (3) 1st January, 1984

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to 31st  December, 1987;  (4)  1st  January,  1988  to  31st December, 1991; and (5) after 31st of December, 1991, unless the conditions  are altered, varied or repealed by any other scheme.      Two unions  of the  employees of the second respondent- corporation,  namely,  the  appellant  union  and  Petroleum workmen’s Union  filed Writ Petition No. 3549 of 1988 in the Bombay High Court challenging the constitutional validity of the   Bharat   Petroleum   Corporation   (Determination   of Conditions of  Service of Employees) Act, 1988. Another writ petition being  writ petition  No. 3619 of 1988 was filed by another  union,   namely,   Bharat   Petroleum   Corporation (Refinery) Employees’  Union challenging  the constitutional validity of  the said  Act of  1988. After  the coming  into force of  the said Scheme of 1989, these writ petitions were amended to  challenge the  validity of the said Scheme which was framed on 29th of April, 1989. These writ petitions were heard together.  By a common judgement and order, a Division Bench  of   Bombay  High  Court  has  dismissed  these  writ petitions and  has upheld the constitutional validity of the said Act of 1988 and the Scheme of 1989.      The present appeal is filed by the appellant-union from the judgment  and order  of the Division Bench of the Bombay High Court  in writ petition No. 3549 of 1988. Similarly, an appeal was  also filed  from the  said judgment and order by the Petroleum  workmen’s Union who was a joint petitioner in the said  Writ petition No. 3549 of 1988. An appeal was also filed  by  the  Bharat  Petroleum  Corporation  (Refineries) Employee’s Union  before this  Court from  the said judgment and order  in writ  Petition No. 3619 of 1988. The other two appeals, however, have been disposed of before us by earlier orders in view of the settlements arrived at by the said two unions with  the second  respondent-corporation on  or about 17th  May,  1996.  The  appellant-union,  however,  has  not reached a settlement with the corporation.      After the  dismissal of  the said writ petitions by the Bombay High  Court by  the impugned judgment and order, writ petition No. 1835 of 1987 which had been filed by the second respondent-corporation challenging the judgment and order of the Industrial court in U.L.P. 38 of 1978 was allowed by the Bobmay  High   Court  by  its  judgment  and  order  of  the Industrial court  dated 29th of April, 1987 in U.L.P. 38 was set aside.      During the  pendency of  this  appeal  before  us,  the Central Government,  Ministry of  Petroleum and Natural Gas, by a notification dated 24th of September, 1996 has notified a scheme  further to  amend the Bharat Petroleum Corporation Ltd.  (Determination  of  conditions  of  Service  of  Post- Nationalisation  Refinery   Employees)  Scheme,   1989.  The amended Scheme  is known as the Bharat Petroleum Corporation Ltd.  (Determination  of  Conditions  of  Service  of  Post- Nationalisation Refinery  Employees) Amendment  Scheme, 1996 (hereinafter referred  to as  ’the Scheme  of 1996’).  It is deemed to have to come into force on and from the 1st day of January, 1992.  Under Clause  3 of  the Amended  Scheme,  it applies to all clerical and labour employees who have joined the refinery  of the Corporation on or after the 24th day of January, 1976,  whose jobs  are set  out in  Part-B  of  the Fourth Schedule  provided that  the Scheme  shall  cease  to have effect  in respect  of the  employees who  shall opt or consent to be governed by the terms and conditions as may be mutually agreed  with the  Corporation.  As  a  result,  the employees who are governed by the settlements which have now been entered into on or about 17th of May, 1996, will not be governed by  the Amended Scheme of 1996. While the employees

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who are  members of the appellant-union, who have not signed such settlements. will now be governed by the Amended Scheme of 1996. The validity of this Amended Scheme of 1996 is also challenged before us.      The appellant-union  contends that  Section  3  of  the Bharat  Petroleum   Corporation  Limited  (Determination  of Conditions  of  Service  of  Employees)  Act,  1988  confers unguided and  arbitrary powers  on the Central Government to frame schemes.  Hence Section  3 of  the Act of 1988 must be struck down.  Section 3,  however, clearly  provides  within itself the  guidelines for  framing the  scheme  under  that section. Thus  Section  3(1)  stipulates  that  the  Central Government should  be satisfied,  that for  the  purpose  of making  the  conditions  of  service  of  the  officers  and employees of other public sector companies, it may frame one or more  schemes for  the purpose  of determination  of  the conditions of  service of  the officers and employees of the corporation.  It   can  do   this  notwithstanding  anything contained in  the Industrial Disputes Act, 1947 or any other law, agreement,  settlement, award  or other  instrument for the time  being in  force, and notwithstanding any judgment, decree or  order of  any court, tribunal or other authority. The power  to frame  the scheme, therefore, can be exercised for the  purpose of  making the  service conditions  of  the second respondent’s employees comparable with those of other public sector  companies. This  is not  unguided power.  The guidelines are contained within Section 3 itself.      It is  next submitted  that under  Section  3(2)  while framing any  scheme under  sub-section (1)  of Section 3, it shall be competent for the Central Government to provide for the continuance,  after the commencement of any such scheme, of   such of  the emoluments  and  other  benefits  as  were payable to  the officers  and employees  of the  Corporation immediately  before   Burmah  shell   Refineries  became   a government Company  or before  the appointed  day under  the Burmah Shell  (Acquisition of  Undertakings in  India)  Act, 1976. It  is  submitted  that  by  reason  of  Section  3(2) different service  conditions can  be permitted for the pre- nationalisation employees  of  Burmah  Shell  Refineries  or Burmah Shell  oil Storage  and Distributing Company who have become employees  of the  second   respondent-corporation as result  of  the  nationalisation.  This,  according  to  the appellant, violates  Article 14  of the  Constitution as  it discriminates between  two sets  of employees  of the second respondent-corporation.      This submission, however, ignores the entire historical background of creation of the second respondent-corporation. Prior to  1976 the  employees of  Burmah Shell Refineries as well as Burmah Shell Oil Storage and Distributing company of India Limited  enjoyed salaries  and emoluments  and had the benefit of  a wage  structure which  was very different from that of  other public sector undertakings. When Burmah Shell Refineries became  a Government Company, and when the Burmah Shell oil  Storage and Distributing Company of India Limited was taken  over  under  the  Burmah  Shell  (Acquisition  of Undertakings in  India) Act,  1976,  the  employees  of  the second  respondent-corporation,  were  given  protection  of their wages.  Section 9  of the Burmah shell (Acquisition of Undertakings  in  India)  Act,  1976,  in  this  connection, provides that  these employees  shall hold office or service under the  Central Government  or the Government Company, as the case  may be,  on the same terms and conditions and with the same  rights to  pension, gratuity  and other matters as would have  been admissible  to them, had there been no such vesting. It is to protect the conditions of service of these

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pre-nationalisation employees  that Section 3(2) of the 1988 Act provides  that a  scheme framed  under section  3(1) may provide for the continuance of the salary and other benefits received by the pre-nationalisation employees. This was done to treat  the pre-nationalisation  employees was a dwindling group. originally,  there were  about 200 such employees who were entitled to their pre-nationalisation service benefits. By the time these appeals came to be filed their numbers had dwindled to  10. We  are now informed that there is only one employee now  left who  is entitled  to  pre-nationalisation emoluments. In  this context,  it cannot  be said  that  the provisions  of  Section  3(2)  violate  Article  14  of  the Constitution.      In the case of Life Insurance Corporation of India &777 Ors. v.  S.S.  Srivastava  &  Ors.  (1988  Supp  SCC  1),  a distinction had  been made  in the age of retirement between employees transferred  to a  Government Corporation from its predecessor private company and employees directly recruited by the  Corporation. The  age of  retirement for transferred employees was  fixed at  60 years  and the age of retirement for those  directly recruited  to the Government Corporation was fixed  at 58 years. It was held that the transferees and direct recruits  formed two  distinct classes  and providing different ages  of retirement  was not  discriminatory. This Court noted  that the  transferred, employees  belonged to a diminishing cadre.  Ultimately, the cadre would consist only of  directly   recruited  employees.  Secondly,  a  separate classification  for   transferred   employees   had   become necessary on  account of  historical facts  and the need for treating these  employees in a fair and just way. This Court referred with  approval to the decision of the Calcutta High Court in  Maninder Chandra Sen v. Union of India & Ors. (AIR 1973 Cal.  385), in  which  the  classification  of  railway employees into  two categories,  namely, those who joined on or before  March 31,  1938 for purposes of fixing the age of superannuation was  upheld. The classification was upheld as it was  based on  historical facts,  and  as  necessary  for treating the employees in the just and fair way.      In the  case of  B.S. Yadav  & Anr.  v. Chief  Manager, Central Bank of India & Ors. (1987 [3] SCC  120), this Court upheld rules  fixing 60  years as  the age of superannuation for those  inducted prior  to bank  nationalisation, but  58 years for  those inducted  after that date. These rules were held as   not  violative  of  Articles  14  and  16  of  the Constitution. The Court said  that the classification of the employees  into   these   two   categories   was   a   valid classification involving  justice and  fairness.  There  was good reason  to make a distinction between the employees who had entered  service prior  to nationalisation and those who joined  thereafter.  At  the  time  of  nationalisation  the corresponding new  banks did not have their own employees to run the  wide business  taken over under the Act. There was, therefore, necessity to secure the services of the employees of  the   former  banking  companies  without  causing  much dissatisfaction  to   them.  There   was   also   need   for standardising  the   conditions  of   service  of  all  such employees belonging  to the  14  banks.  Hence  the  age  of retirement of the new entrants was fixed consistent with the conditions prevailing  in almost  all the  sectors of public employment.      The considerations  which have  impelled the provisions of Section 3(1) and 3(2) in the 1988 Act are very similar to those cited  in B.S.  Yadav’s case  (supra). In  the case of Imperial Bank  of India  Pensioners’ Association  & Ors.  v. State Bank  of India  & Ors.  (1989 Supp.[1]  SCC 236), This

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Court upheld  a distinction made between the India-based and London-base pensioners  of Imperial  Bank of India which was later taken by the State Banks of India. The Court said that such a distinction did not violate Articles 14 and 16 of the Constitution. It said that London-based employees constitute a class by themselves and there was no discrimination within the same  class. The contention of the appellant, therefore, in this regard, cannot be sustained.      The appellant  has drawn our attention to the Statement of Objects  and Reasons  of the 1988 Act. Paragraph 3 of the Statement of  Objects and  Reasons accompanying the said Act points out  that the  Bharat Petroleum now consists of three categories of  employees. They  are  the  employees  of  the Burmah Shell  Refineries who  continued  to  serve  in  that company even  after it  became  a  government  Company;  the employees of Buramh Shell whose services were transferred to Burmah Shell  Refineries under  the provisions  of the  1976 Take-over  Act.   and  the  employees  recruited  by  Bharat Petroleum after it became a Government Company. In paragraph 4 it  is pointed out that out of the first two categories of employees mentioned above, a few have not agreed to abide by the public  sector wage  policy and,  therefore, continue to enjoy the  emoluments and  other conditions  of  service  to which they  were entitled under the aforesaid companies even after the  Burmah Shell. The emoluments and other conditions of service  of the  third category  of  employees  mentioned above   and who  were recruited  by Bharat  Petroleum  were, however,  sought   to  be   regulated  after   taking   into consideration  the   conditions  of  service  applicable  to employees in  other public  sector companies  in  accordance with the  wage policy  of the  Government of  Public Sector. This was  with a  view that  there  should  be,  as  far  as possible, parity  in the  conditions of  service  of  Public Sector Companies.      The Statement  of objects  and Reasons goes on to point out that since the service conditions of this large category of employees  were less  favourable than  the  employees  of Burmah Shell  Refineries and  Burmah Shell,  a  dispute  was raised by  them which was taken to the Industrial Court. The Industrial Court  has held  that in  view of  the provisions Section 18(3)  of the  Industrial Disputes  Act, 1947, these employees are  also  entitled  to  the  same  conditions  of service  as  are  applicable  to  other  two  categories  of Employees. The  Statement goes  on to say, "The award of the Industrial Tribunal  if given effect to in Bharat  Petroleum will amount  to giving  a  higher  wage  structure  in  this Corporation   alone   and   other   employees   in   similar undertakings may  demand  that  they  should  also  get  the benefits of  the higher  scales of  pay on  the principle of equal pay for equal work. This may eventually result in high wage islands  and depart  radically from  the public  sector wage policy."  As  the  continuance  of  the  conditions  of service of  the employees  of the  former company was due to historical reasons  and as the conditions of service  of the employees of Bharat Petroleum were arrived at as a result of settlements make  between the  company and  the workmen, the demand of post-nationalisation employees for parity with the employees of  the former  company may have to be conceded in view of  the provisions  of the  Industrial Disputes Act and the award  of the  Industrial Tribunal.  Any attempt to make the conditions  of service comparable with the conditions of service of other public sector companies can only be done by legislation.  Such   a   legislation   could   provide   for determination of  comparable conditions  of service  for all the categories  of employees  of Bharat Petroleum but at the

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same   time   provide   for   protection   to   those   pre- nationalisation employees of their conditions of service.      It is  to achieve  this objective  that the Act of 1988 came to  be enacted.  The appellant contends that the entire basis of the Act is unfounded because there is no such thing as  public   sector  wage  policy.  It  contends  that  wage structures  in  different  public  sector  undertakings  are different. The  appellant has  submitted charts  of wages in different public  sector companies. There is, for example, a chart showing the wages of the lowest category if workmen of the second  respondent in  the refinery  compared with other public sector  units at  different levels  at starting, 5th, 10th and  maximum level. At the beginning the total wages in RCF, for  example, are Rs. 2421/-, which at the 5th level go upto Rs.  2559/-, and  at the  10th level  to Rs. 2693/-. In comparison, under  the 1989  BPCL Refinery Scheme, the total at the  beginning is  Rs. 2323/-, at the 5th level it is Rs. 2399/-, and  at the  10th level  it is  Rs. 2480/-.  In BPCL Marketing Division,  the comparable  figures are Rs. 2630/-, Rs. 2814/- and Rs. 3062/-. we are not referring in detail to these charts  which have  been submitted  and which  we have perused. The contention of the appellant that the figures in different public  sector unions do not tally is correct. But what we have to see is not the actual figure but the pattern or the  structure of  the  wage,  or  what  the  respondents describe as the public sector wage pattern.      The  respondents   have   explained   the   fundamental rationale behind evolving a public sector wage patter, which is  to  achieve  consistency  and  uniformity  in  the  wage structure of  the public  sector enterprises so as to ensure that the  wages drawn by various public sector companies are not so  disproportionate with  one another  as to create any imbalance in  the  public  sector.  Towards  this  end,  the Government  of   India  has   issued,  from  time  to  time, directives  and  orders  to  public  sector  enterprises  to maintain uniform  it and  consistency in  that wage pattern. For this  purpose the  Department of  public Enterprises has been set  up to  ensure, inter alia, parity of public sector wages. The  method of computation of dearness allowance etc. is in  identical for  all the public sector enterprises. The components of  the total  wage packet  consist  of  a  basic salary scale which is formulated by merging a portion of the dearness allowance with the pre-existing basic salary at the beginning of each wage settlement period, which is currently a period of five years. The basic salary scale has a minimum and maximum  value which  is arrived  at  by  providing  for increments. The second component is dearness allowance which is linked to the All India Consumer price Index Simla Series (Base 1960=100).  All public  sector enterprises  follow the same industrial  D.A. pattern.  The third component is house rent allowance  which is  payable at  the rate of 30% of the basic salary in the metropolitan cities, 25% of basic salary in other  A class  cities, 15%  of basic salary in B1 and B2 class  cities   and  7-1/2%/10%   for  C  class  cities  and unclassified  areas.   The   other   components   are   city compensatory allowance  and wage  revision  which  generally take place  now  every  five  years.  The  respondents  have prepared a table of emoluments drawn by the employees in the public sector  oil companies for the highly skilled category at the maximum of the scale as of now. In HPCL Refinery, the total emoluments are Rs. 11,964/-, in IOC Refinery it is Rs. 11,574/- and  in the  BPCL Refinery  it is Rs. 12.386/-. The essential features,  therefore, of  the public  sector  wage pattern   are    variable   industrial   D.A.   payment   of H.R.A./C.C.A. based  on  Department  of  public  Enterprises

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guidelines, linkage  of revision  in wages  to productivity, permissible limits  to rise  in wages  and adoption  of  the principle of  region-cum-industry as  the basis for any wage revision. The  respondents have  pointed out  that the  wage structure of the pre-nationalisation Burmah Shell Refineries was at  complete variance  with this  wage pattern. Hence it needed to be changed.      The scheme  of 1989 which has been framed under the Act of 1988  is for the purpose of introducing the public sector wage pattern  in the second respondent-corporation for post- nationalisation  employees.  It  would  not,  therefore,  be correct to  say that  there is  no such  thing as  a  public sector wage  pattern. The  variations  pointed  out  by  the appellant are  a result of revisions being made in different public sector  enterprises  at  different  times  and  under different settlements.  In fact  the disparity  in the wages paid by  the second respondent in its Marketing Division and its Refinery  Division is also on account of the differences in the  settlements which  the second respondent has arrived at with  its employees  in the  Marketing Division.  We  are informed that  the employees  of the Marketing Division were the first  group of  employees of  the second respondent who agreed to  a change-over  to the  public sector wage pattern under the  Settlement of  1986. The  revision in their wages thereafter is in accordance with  the pattern so adopted for the Marketing  Division. The Refinery Division, however, did not agree  to such  a settlement  and hence  there are  some differences in  the wages  paid in these two divisions. Such differences cannot nullify the basic intention of the second respondent to  bring about  parity in  the wage  pattern  of their employees with the wage pattern in other public sector undertakings especially  in the  oil  sector  which  is  the relevant sector.      The appellant  has challenged  the  power  given  under Section 3 of 1988 Act to frame a scheme retrospectively. The appellant has  also challenged  the 1989 Scheme framed under the said  Act on the ground that it has been made applicable retrospectively from  24th of  January, 1976.  The appellant has contended  that the  Scheme  cannot  be  made  operative retrospective from  24th of January, 1976 when the Act under which it  is framed  came into  force only  on 2nd  of July, 1988. This  submission is  based on  a misconception.  Under sub-section (4)  of Section  3 of  the said  Act an  express power  is   given  to   the  Central   Government  to   give retrospective effect  to any scheme framed under sub-section (1) or  sub-section (3)  of  Section  3.  The  retrospective operation  which   is  given  to  the  Scheme  of  1989  is, therefore, under  a statutory  power so given to the Central Government. Since  the scheme  regulates the  conditions  of service of  post-nationalisation refinery employees, it must necessarily  cover  the  post-nationalisation  period  which began from  24th  of  January,  1976.  It  is  open  to  the legislature  to  make  retrospective  laws.  Therefore,  the statutory  scheme  which  has  been  made  retrospective  in exercise of statutory power expressly granted to the Central Government cannot be faulted on that ground.      The appellant  further  contends  that  the  Industrial court by its order dated 29.4.1987 in U.L.P. 38 of 1978 held that the  Settlement of  16th  of  August,  1974  which  was arrived at  by the  Burmah Shell Refinery with its employees would apply to the employees recruited after nationalisation by the  second respondent.  It was to override this decision of  the   Industrial  Court   that  the   Bharat   Petroleum Corporation Ltd.  (Determination of Conditions of Service of Employees) Act,  1988, came  to be  enacted.  In  fact,  the

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Statement of  Objects and  Reasons which  has been  set  out earlier clearly  shows that  as a  result of the decision of the Industrial  Court there  would be  a high wage island in the public  sector in  the form  of high wages being paid to the employees  of the Refinery Division of second respondent which may lead to imbalances in the public sector. It was to overcome such  imbalance that  the  Act  was  being  passed. Section 3(1)  of the  Act clearly   provides  that a  scheme which may  be framed   under  Section 3(1)  can  "be  framed notwithstanding  anything   contained  in   the   Industrial Disputes  Act   or  any   other  law,  settlement  of  other instrument for  the time  being in force and notwithstanding any judgment,  decree or  order of  any court.  tribunal  or other authority."  The scheme  of 1989 is accordingly framed with retrospective  effect from 24th of January, 1976 and it provides for detailed conditions of service of the employees for five  different periods. The appellant contends that the Act of  1988 and the Scheme of 1989 are designed to overcome the judgment  of the  Industrial  court.  such  legislation, according to the appellant, is invalid.      Learned counsel  for the  appellant has  placed  strong reliance upon  the decision of the Court in the case of A.V. Nachane and Anr. v. Union of India & Anr. (1982 (2) SCR 246) in support of his contention that a statute such as the 1988 Act, and  the Scheme of 1989 formed under it, are invalid in so far  as they  are retrospective because they are aimed at setting aside the judicial decision of the Industrial Court. This  cannot   be  done  by  legislation.  This  contention, however, does not bear any detailed scrutiny. As far back as in 1969,  in the  case of  Shri Prithvi  cotton Mills Ltd, & Anr. v.  Broach Borough  Municipality &  Ors. (1970  (1) SCR 388) a  Bench of  five judges  of this  Court  examined  the efficacy of a validating Act which retrospectively validated the levy  of a  tax. It said that ordinarily a court holds a tax to  be invalidly  imposed because  the power  to tax  is wanting or the statue or the rules or both are invalid or do not sufficiently create jurisdiction. Validation of a tax so declared  illegal  may  be  done  only  if  the  grounds  of illegality or  invalidity are  capable of  being removed and are in  fact removed  and the tax thus made legal. Observing that there are several methods of doing this, the Court said that the  legislature may,  by following  one method  or the other, neutralise  the effect  of an earlier decision of the court which becomes ineffective after the change of the law. If the legislature has the power over the subject-matter and competence to  make a  valid law,  it can, at any time, make such a  valid law and make it retrospectively so as to cover even past transactions.      A Bench  of seven  judges of this Court was required to consider the  validity of  the  Life  Insurance  Corporation (Modification of  Settlement) Act, 1976 in the case of Madan Mohan Pathak  v. Union  of India  & Ors.  etc. (1978 (3) SCR 335). Life Insurance Corporation had arrived at a settlement with its  employees relating  to the terms and conditions of service of  Class III and Class IV employees including bonus payable  to   them.  Under   one  of  the  clauses  of  this settlement, an  annual cash  bonus was  payable by  the Life Insurance  Corporation   to  all  Class  III  and  Class  IV employees. This  settlement was  valid for  a period of four years from 1st of April, 1973, In 1976, the payment of Bonus (Amendment) Act which was enacted considerably curtailed the rights of  employees to  bonus. Although  this Act  was  not applicable  to   the  employees   of  the   Life   Insurance Corporation,   the    Corporation   issued    administrative instructions  not  to  pay  cash  bonus  to  its  employees.

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Thereupon, the employees moved the Calcutta High Court for a writ directing  the Life Insurance Corporation to pay a cash bonus in  accordance with  the terms  of the  settlement.  A Single Judge  of the  High Court  allowed the writ petition. While a Letters Patent Appeal was pending, Parliament passed the Live  Insurance Corporation (Modification of Settlement) Act, 1976.  The effect  of the  Act was to deprive Class III and Class  IV employees of the Life Insurance Corporation of bonus payable  to them  under  the  settlements.  After  the enactment, the  Letters Patent Appeal which was filed by the Corporation was  not pursued  by the  Corporation under  the belief that after the Act was passed, there was no necessity for proceeding  with the  appeal. As  a result,  the writ of mandamus issued  by the  Single Judge  of the  Calcutta High Court remained  in tact. The Associations of employees filed writ   petitions   before   this   Court   challenging   the constitutional validity of the Life Insurance Corporation (Modification of Settlement) Act, 1976. This Court said that the real  objective of  this Act was to set aside the result of the mandamus issued by the Calcutta High Court, Bhagwati, J.,  who   delivered  the   majority  judgment   said   that irrespective   of    whether   the    impugned    Act    was constitutionally valid  or not, the Corporation was bound to obey the  writ of mandamus issued by the High Court. Section 3 of the impugned Act merely provided that the provisions of the settlement  shall not  have any force or effect. But the writ of mandamus issued by the High Court was not touched by the impugned  Act. The judgment continued to subsist and the Corporation was  bound to  honour it. The majority held that the impugned Act which took away the rights of the employees to  receive  bonus  was  violative  of  Article  31(2).  The observations of  Bhagwati J.  (as he  then was)  are in  the context of  the L.I.C.  being bound  to  obey  the  writ  of mandamus issued  by the  High Court.  Also, Section 3 of the impugned Act  did not  override any  judgment or order of my court. The  position in the case before us is very different and we shall examine it a little later.      After  the   above  decision,   L.I.C.  issued  notices terminating    the  settlement  and  issued  a  notification changing staff  regulations. The validity of the two notices and the  notification issued  for the  purpose of nullifying any further claim to annual cash bonus was challenged by the workmen in  the case  of The  Life Insurance  Corporation of India v.  D.J. Bahadur  & Ors.  (1981 (1) SCR 1083) and this Court had  directed the  Corporation to  give effect  to the terms of  the settlement  of 1974  relating to  bonus  until superseded  by  a  fresh  settlement,  industrial  award  or relevant legislation.      On January  31, 1981,  the Life  Insurance  Corporation (Amendment) Ordinance, 1981, was promulgated which was later replaced by  an Act.  Sub-section (2)(c)  which was added to Section 48  provided that  the provisions  of clause (cc) of sub-section (2)  and sub-section  (2)(B) and  any rule  made under clause  (cc) shall  have  effect  notwithstanding  any judgment, decree  or order  of any  court, tribunal or other authority, the  Industrial Disputes  Act etc.  New statutory rules also  were promulgated.  Of these,  Rule 3  was  given retrospective operation  with effect  from July  1, 1979. It provided that  the employees  shall not  be entitled  to any cash bonus.  The  validity  of  Life  Insurance  Corporation (Amendment) Ordinance  and Act  of 1981  and the  1981 Rules were challenged  in the  case of  A.V. Nachane  (supra). The court said  that the  effect of  the two  judgments in Madan Mohan Pathak’s  case and  D.J. Bahadur’s  case  (supra)  was clear. Rule  3 operating  retrospectively cannot nullify the

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effect of  the subsisting writ issued in D.J. Bahadur’s case (supra) which  directed the  Life Insurance  Corporation  to give effect  to the terms of the 1974 settlement relating to bonus until  superseded by  a fresh  settlement.  industrial award or  relevant legislation. The impugned Act of 1981 and the rules were relevant legislation. However, in view of the decision in Madan Mohan Pathak’s case (supra) these Rules in so far  as they  seek to  abrogate the  terms  of  the  1974 settlement relating to bonus can operate only prospectively, i.e. from the date of publication of the rules.      We fail  to see  how these decisions help the appellant in the  present case.  The decision  in A.V.  Nachane‘s case (supra) on  which strong reliance is  placed by Mr. Phadnis, learned senior counsel for the appellant, has turned upon an existing writ  of mandamus  which was issued by the Calcutta High Court and which the court said would have to be obeyed. This was the reason why only prospective operation was given to the Rules of  1981 in A.V. Nachane’s case (supra). In the present case, there is no writ of mandamus or any other writ issued  by  the  High  Court  in  favour  of  the  appellant directing  the   second  respondent   to  apply   the   pre- nationalisation   settlements   of   1974   to   the   post- nationalisation employees.  Even the  judgment and  order of the Industrial Court has been set aside by the High Court in writ Petition  No. 1835 of 1987. The retrospective operation given to  the scheme framed under the present Act, is within the legislative  competence of  Parliament. Since the scheme provides for  the conditions of service of all employees who joined  the  second  respondent-corporation  after  24th  of January, 1976.  it necessarily  lays down  these  terms  and conditions operative  from 24th of January. 1976. The scheme also  provides   emoluments  which   are  higher   than  the emoluments which  the  post-nationalisation  employees  were receiving prior to the coming into effect of the scheme. The scheme also  brings into  effect the  avowed purpose  of the 1988 Act  which is  to make  the wage  pattern in the second respondent-corporation conform to the wage pattern of public sector   undertakings.    A   legislation    which   imposes retrospectively a  wage pattern  may thereby discontinue the application  of   any  earlier   settlement  by  an  express legislative provision  to that  effect. Such  legislation is within the  legislative competence  of Parliament. The ratio of Nachane’s  case (supra)  does not  apply in  the  present circumstances.      The decisions  in Madan Mohan Pathak’s case (supra) and Nachane’s case  (supra) have been recently explained by this Court in  two judgments. The first of these is Comorin Match Industries (P)  Ltd. v.  State of  T.N. (1996  [4] SCC  281) where this  Court has  reiterated the  ratio laid  down Shri Prithvi Cotton  Mills’ case  (supra). The court has observed that in Madan Mohan Pathak’s case (supra) what was sought to be done was to reverse a decision of a court of law given in the exercise  of judicial power by legislation. This was not permissible. The Court also said that Nachane’s case (supra) was a  sequence to the decision in Madan Mohan Pathak’s case (supra) and the principles  laid down in Shri Prithvi Cotton Mills’ case (supra) had not been overruled or doubted by the majority view in Madan Mohan Pathak’s case (supra).      The second  case is  P. Kannadasan and Ors. v. State of T.N. & Ors. (1996 [5] SCC 670). Referring to the doctrine of separation of  powers this Court said that where an Act made by State  legislature is  invalidated by  the courts  on the ground that the State legislature was not competent to enact it, the  State legislature cannot enact a law declaring that the   judgment of  the court  shall not  operate; it  cannot

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overrule or  annul the  decision of the court. But this does not mean  that the  legislature which  is competent to enact that law  cannot enact  that law. Similarly, it is open to a legislature  to  alter  the  basis  of  the  judgment  while adhering to  the constitutional  limitation. In  such a case the decision  of the  Court become  ineffective. The new law cannot  be  challenged  on  the  ground  that  it  seeks  to circumvent the  decision of  the Court.  The Court  observed that this is what is meant by "checks and balances" inherent in a  system of  Government  incorporating  the  concept  of separation of  powers. Referring  to the  decisions in Madan Mohan Pathak’s case (supra) and Nachane’s case (supra), this Court said  that these  two cases  do not  affect the  above principle in any manner.      Since these  two decision have been explained at length in the  cases of  P. Kannadasan  as well  as  Comorin  Match Industries (P).  Ltd. (supra) we need not reiterate the same position. In  any case, these two decisions  have no bearing on the present case when there is no subsisting order of the Court which  is sought to be overturned by the impugned 1988 Act or 1989 Scheme.      The other  challenges to the Scheme of 1989 are similar to the  challenge to  the Act  of 1988. It is contended that under  the  Scheme  there  is  discrimination  between  pre- nationalisation and  post-nationalisation employees  of  the refinery. The  distinction made between these two categories of employees  does not  violate Article  14, for the reasons which we  have  already  set  out  in  connection  with  the provisions of  the 1988  Act. It  is also submitted that the wages given  to the refinery employees under the 1989 Scheme are different  from the wages and emoluments received by the employees of the Marketing Division employees. however, were the first  to reach  settlements with  the second respondent agreeing to the application of public sector wage pattern to their  wages   and  emoluments.   As  a   result  under  the settlements which are arrived at, the Marketing Division has been receiving  emoluments and  revised emoluments from time to time.  Since the  refinery employees  did not  reach  any settlement with  the second  respondent they  are now  being governed by  the Scheme  which was  framed  by  the  Central Government  under   the  Act   of  1988.   It  is  in  these circumstances that  there is  difference between  the  wages received by  the employees  of the two different departments of  the   second  respondent.   Each  of   these   employees constitutes a  distinct class  which is  receiving different pay packets  because of  different circumstances  which have affected the  wage structure  of each  class. This cannot be considered as discrimination under Article 14.      The next  challenge is  to the Scheme of 1996 which has been framed while the present appeal was pending before this Court. The  Scheme of  1996 excludes  from its  ambit  those employees who  have entered into settlements with the second respondent  pending  the  disposal  of  this  appeal.  These settlements cover  approximately 77% of the employees in the refinery. There are two settlements: one arrived at with the Bharat Petroleum  Corporation Refinery  Employees’ Union and the other  with the  Petroleum Workers’  Union.  Both  these settlements are  dated 17.5.1996.  They were signed pursuant to memoranda  of understanding  dated 25.3.1996 and 5.4.196. In view  of these  memoranda this  Court  passed  orders  on 26.4.1996 disposing  of  the  appeals  filed  by  these  two unions. While  doing so  this Court  recorded  that  learned Solicitor  General  had  stated  at  the  Bar  that  he  had instructions to  convey to  the Court that the Government of India had  studied the  memoranda of understanding and would

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exclude the  employees who are covered by these memoranda of understanding from  the operation  of the  1989 Scheme  with effect from  1.1.1992 which is the effective date of the two memoranda of  understanding. This  Court, therefore,  in its above order  of 26th  of April, 1996 gave a direction to the Central Government  to forthwith  take action to exclude the employees covered  under the  two memoranda of understanding from the  operation of  the 1989  Scheme  with  effect  from 1.1.1992. The Central Government has accordingly amended the 1989 Scheme  in 1996  expressly excluding  the employees who have arrived  at the above settlements from the operation of the amended  scheme with effect from 1.1.1992. The appellant submits that  this is discriminatory. We fail to see how the distinction made  between those  employees who  have entered into a  settlement and  those employees who have not entered into a  settlement can  be considered as discriminatory. The second respondents  have even now stated before us that they are willing  to sign a similar settlement with the appellant union. The  appellant union, however, has declined to do so. Having declined  to do  so the  appellant to  do so.  Having declined  to   do  so   the  appellant  cannot  complain  of discrimination. The  amended Scheme  of 1996  grants further benefits to the employees of the appellant union who are the only group  of employees  in the refinery not covered by the settlements. by  giving them further increases in the manner set out  in the amended scheme. The appellant cannot compare the benefits  which they  get under  the amended scheme with the  benefits   which  other   employees  have   got   under settlements may  be the  result of  negotiations between the employer and the employees. There are various considerations which go into finalising such settlements on the part of the employer. These  include (1)  industrial peace  so that  the workers can concentrate on their work without agitations (2) putting an  end to expensive litigation between the employer and the  employees and establishment of goodwill and harmony between the  employer and  the employees  leading to  better functioning of  the establishment.  These considerations are very different  from considerations which govern the framing of a  statutory scheme  by the  Central Government.  Such  a scheme must  necessarily bear  in mind  the wage  pattern in other public  sector undertakings.  The  considerations  for framing the  amended scheme  are different.  Those  who  are governed by a statutory scheme cannot compare themselves   with   employees  who   have  entered  into  a  negotiated settlement with their employer. The charge of discrimination under Article  14, therefore,  cannot be  sustained in  this regard.      It is  also pointed  out  by  the  appellant  that  the amended scheme of 1996 now covers only 400 and odd employees who are members of the appellant union. They should not have been singled out. There is, however, no question of singling out any  one set  of employees  out of  a large  group.  The employees who  are members  of the appellant union being the only  set  of  employees    who  have  not  entered  into  a settlement with  their   employer, have  necessarily  to  be provided for  under  a  statutory  scheme.  Such  a  scheme, therefore, has been framed and the employees cannot complain that they  have been  singled  out.  They  cannot  expect  a statutory  scheme   to  give   them  the   benefits  of  the settlements which the other employees have entered into with the employer.  The amended  scheme of  1996 is not framed by the employer.  It is  framed by the Central Government under the statutory provisions of the 1988 Act. The amended scheme of  1996   gives  substantial  additional  benefits  to  the employees. It  is in valid exercise of statutory powers, and

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is brought  into effect  from  1.1.1992  since  the  earlier scheme covered periods upto 1.1.1992.      In the  circumstances, we  agree with the reasoning and conclusion of  the High  Court. We  further  hold  that  the amended scheme  of 1996  is also  a valid  exercise of power under the  Act of  1988. The  appeal is therefore, dismissed with costs.