Retrospective bonus legislation upheld where Parliament validly altered the statutory basis of customary bonus entitlement.

Retrospective amendment barring customary bonus for employees of the State Bank and allied public sector banks was upheld as a valid exercise of legislative power. The Court held that the legislature did not impermissibly annul a judicial award, but changed the underlying statutory basis by regulating bonus entitlement through a non-obstante clause and limiting payment to what was permissible under the Payment of Bonus Act. Such curative or validating legislation is constitutionally permissible if it stays within legislative competence and does not usurp judicial power. The Court further held that customary bonus is not immune from statutory change and that retrospective alteration of these service conditions did not, by itself, violate constitutional guarantees.

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Issues: Whether the amending legislation that inserted a provision barring customary bonus to employees of the State Bank and allied public sector banks was constitutionally valid, including whether it amounted to a legislative overruling of the award, impermissible interference with vested rights, or an invalid retrospective measure.

Analysis: The amendment was upheld as a valid exercise of legislative power. The provision did not merely declare a judicial award ineffective by fiat, but altered the statutory basis on which the award rested by expressly regulating bonus entitlement through a non-obstante clause and by limiting payment to what was permissible under the Payment of Bonus Act. A legislature may validate or neutralize the effect of a judicial decision by changing the underlying law within its competence, even with retrospective or curative effect, so long as it does not usurp judicial power or transgress constitutional limits. The Court further held that customary bonus is not immune from statutory change, that service conditions in a statutory banking framework can be altered by law, and that retrospective alteration of such entitlements does not by itself violate constitutional guarantees.

Conclusion: The amendment was held constitutionally valid, and the challenge to the withdrawal of customary bonus failed.

Ratio Decidendi: A legislature within its field may retrospectively change the law and thereby render a prior judicial decision ineffective, provided it does not directly set aside the decision itself and remains within constitutional and legislative limits.

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