Benara Udyog Ltd. vs Union Of India And 3 Others

HIGH COURT OF JUDICATURE AT ALLAHABAD
WRIT - C No. - 6098 of 2016
AFR
Reserved on 19.11.2025
Delivered on 27.02.2026
Benara Udyog Ltd.
…..Petitioner(s)
Versus
Union of India and 3 others
…..Respondent(s)
Counsel for Petitioner(s) : Anshul Kumar Singhal, Vinod
Kumar Agarwal
Counsel for Respondent(s) : A.S.G.I., Arvind Kumar Goswami,
C.S.C., Santosh Kumar Shukla
Along with :
Writ - C No. 10861 of 2016:
M/s Uflex Ltd.
1.
Versus
Union of India and 2 others
Writ - C No. 13869 of 2016:
Aqua Plumbings Pvt. Ltd.
2.
Versus
Union of India and 3 others
Writ - C No. 15535 of 2016:
Dh Ltd.
3.
Versus
Union of India and 3 others
Writ - C No. 16861 of 2016:
M/s Kanhaiya Hotels Pvt. Ltd. and another
4.
Versus
Union of India and 3 others
5. Writ - C No. 15374 of 2016:
M/s Harso Steels Pvt. Ltd.
Versus

2
WRIC No. - 6098 of 2016
Union of India and 3 others
Writ - C No. 15533 of 2016:
M/s Landcraft Developers Pvt. Ltd.
6.
Versus
Union of India and 3 others
Writ - C No. 15590 of 2016:
M/s Eco Cement India Ltd. and 3 others
7.
Versus
Union of India and 3 others
Writ - C No. 11480 of 2016:
M/s Sahaha India and another
8.
Versus
Union of India and 2 others
Writ - C No. 11481 of 2016:
Sahara India L.I.C. Ltd. and another
9.
Versus
Union of India and 2 others
Writ - C No. 13870 of 2016:
Vinay Iron Foundary
10.
Versus
Union of India and 3 others
Writ - C No. 16172 of 2016:
M/s Mahavir Jute Mills Ltd. and another
11.
Versus
Union of India and 3 others
Writ - C No. 44109 of 2016:
Benara International
12.
Versus
Union of India Thru Secy. and 4 others
Writ - C No. 8995 of 2016:
Shriram Pistons and Rings Ltd. and another
13.
Versus
Union of India and 3 others
Writ - C No. 15383 of 2016:
M/s Hi Tech Pipes Ltd.
14.
Versus
Union of India and 3 others
Writ - C No. 16168 of 2016:
M/s Agra Machine Tools Pvt. Ltd. and 5 others
15.
Versus
Union of India and 5 others
16. Writ - C No. 28048 of 2016:
Rungta Projects Limited
Versus

3
WRIC No. - 6098 of 2016
Union of India and 3 others
Writ - C No. 58324 of 2016:
Cauvery Aqua Pvt. Limited
17.
Versus
Union of India and 3 others
Writ - C No. 10915 of 2016:
Sahara Credit Cooperative Society Ltd. and another
18.
Versus
Union of India and 2 others
Writ - C No. 17781 of 2016:
Triveni Engineering and Industries Ltd.
19.
Versus
Union of India and 3 Ors.
Writ - C No. 13873 of 2016:
Benara Bearings and Pistons Ltd.
20.
Versus
Union of India and 3 others
Writ - C No. 28047 of 2016:
Rpl Projects Limited
21.
Versus
Union of India and 3 others
Writ - C No. 44316 of 2016:
M/s General Plumbings
22.
Versus
Union of India and 3 others
Writ - C No. 13871 of 2016:
Trafo Power and Electricals Pvt. Ltd.
23.
Versus
Union of India and 3 others
Writ - C No. 14039 of 2016:
Ms. Leiner Shoes Pvt. Ltd.
24.
Versus
Union of India and 4 others
Writ - C No. 14653 of 2016:
M/s Merino Industries Ltd.
25.
Versus
Union of India and 3 others
Writ - C No. 15388 of 2016:
M/s Rama Steels Tubes Ltd.
26.
Versus
Union of India and 3 others
27. Writ - C No. 20911 of 2016:
M/s Bitufelt Private Limited and 3 others
Versus

4
WRIC No. - 6098 of 2016
Union of India Thru Secy. and 2 others
Writ - C No. 44313 of 2016:
M/s Vacmet India Ltd.
28.
Versus
Union of India and 3 others
Writ - C No. 58321 of 2016:
Windsor Distributors Pvt. Ltd.
29.
Versus
Union of India and 3 others
Writ - C No. 58323 of 2016:
Brindavan Beverages Pvt. Limited
30.
Versus
Union of India and 3 others
HON'BLE SARAL SRIVASTAVA, J.
HON'BLE SUDHANSHU CHAUHAN, J.
(Delivered by Hon’ble Saral Srivastava,J.)
1. Heard learned counsel for the petitioners, Sri Shashi Prakash
Singh, learned Additional Solicitor General of India assisted by Sri
Arvind Kumar Goswami, Sri Purnendu Kumar Singh, Sri Ved Mani
Tiwari, Ms. Sujata Choudhary & Sri Ravi Prakash Singh, learned
counsels for respondent-Union of India and Sri Rajeshwar Tripathi,
learned Chief Standing Counsel-II for the State-respondent.
2. The petitioners in this bunch of writ petitions have prayed for a
writ of mandamus declaring the Payment of Bonus (Amendment) Act,
2015 (herein-after referred to as ‘Amendment Act, 2015’) published in
the Gazette of India dated 01.01.2016 as ultra-vires, and have further
prayed for quashing of the impugned recovery issued in pursuance of
Amendment Act, 2015.
3. For convenience, the facts have been delineated from Writ-C
No.6098 of 2016 (Benara Udyog Ltd. Vs. Union of India and Others)
4. The petitioner is an Engineering Industrial Unit established in the
vicinity of District Agra and is involved in manufacturing of products
like disc-brake pads, bushing, pistons of motorcycle. The petitioner

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WRIC No. - 6098 of 2016
states that since the establishment of petitioner’s unit, due care has been
taken of welfare and rights and benefits of the employees employed in
the petitioner’s company. The petitioner’s company has paid wages,
bonus, increments and other statutory emoluments to its employees from
time to time.
5. It is stated that Payment of Bonus Act, 1965 (hereinafter referred
to as ‘Act, 1965’) was enacted with a view to provide for payment of
bonus to persons employed in certain establishments on the basis of
profits or on the basis of production or productivity.
6. The President of India was informed about the subject matter of
Amendment Act, 2015. The President of India recommended the
introduction and consideration of Bill, 2015 in the House under Clause
(1) & (3) of Article 117 of the Constitution of India.
7. The Bill, 2015 was introduced in Lok Sabha on 07.12.2015 and
was passed on 22.12.2015. The Bill, 2015 (Bill No.265-C of 2015) was
passed by Rajya Sabha on 23.12.2015 and thereafter, the Bill, 2015
received assent of President of India.
8. The Act, 1965 is applicable to all business establishments which
has employed 20 employees or more. As per Section 2(13) of Act, 1965,
an ‘employee’ who was employed on a salary or wages not exceeding
Rs.10,000/- per mensem in any industry to do any skilled or unskilled
manual, supervisory, managerial, administrative, technical or clerical
work or for hire or reward and has worked for not less than thirty days in
an accounting year was eligible for bonus with a ceiling limit of
minimum 8.33% of salary payable to him and a maximum cap of 20%
of the salary. The Amendment Act, 2015 by amending Section 2(13)
which defines ‘employee’ has brought the eligibility limit from
Rs.10,000/- to Rs.21,000/-.
9. The Amendment Act, 2015 has further raised the ceiling provided
under Section 12 of the Act, 1965 for payment of bonus from Rs.3500/-
to Rs.7,000/- or the minimum wage for scheduled employment as fixed
by the Government, whichever is higher.

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WRIC No. - 6098 of 2016
10. It is stated that inclusion of minimum wage component in Section
12 of the Act, 1965 in calculating bonus will hinder the accounting
policy of companies. The petitioner states that by the Amendment Act,
2015, the employers have not been provided with any specified time
frame to factor the increased cost in their accounts in order to comply
with retrospective applicability of the Amendment Act, 2015.
11. According to pleadings in the writ petition, further grievance of
the petitioner by the Amendment Act, 2015 is that significant financial
burden on the establishment ought to have been taken into consideration
by the respondents while amending the Act, 1965. The petitioner states
that Bill No.265 of 2015 has been introduced in the Lok Sabha vide
st
Clause 1(2) to enforce the Bill from 1 day of April, 2015, which has not
been done, and the Amendment Act, 2015 has been made effective
st
retrospectively w.e.f. 1 day of April, 2014.
12. It is stated that by enforcement of Amendment Act, 2015
retrospectively, the petitioner would face difficulties inasmuch as
allocable surplus would required to be re-assessed to account in the
increased pool for eligible employees and the bonus eligibility based
upon the Amendment Act, 2015. According to petitioner, the price
fixation of the product has already been done, and the books of accounts
have already been closed, and the product has been launched in the
market, therefore, it is impossible to re-fix it’s price or to recover the
enhanced price.
13. Further difficulty, which is faced by the establishment is that fiscal
deficit incurred by virtue of Amendment Act, 2015 cannot be extracted
under any of the heads of the account except adding it to the liabilities of
the establishment resulting into decrease in profits or by variation of
price in the commodity market.
14. It is stated that by the Amendment Act, 2015 there would be an
increase in the financial burden and greater accounting complexities for
employers.

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WRIC No. - 6098 of 2016
15. It is further stated that insertion of ‘minimum wage’ under the
Minimum Wages Act, 1948 by amendment in Section 12 to calculate
bonus has created an additional challenge for the petitioner’s company. It
is stated that appropriate Government (State Government) and in
different cases, Central Government fixed different minimum wages for
various scheduled employment (skilled, unskilled and semi skilled)
because of this fact, the petitioner would have to carry out separate
assessment of applicable wage rate for different categories of employees
to calculate statutory bonus payable. The petitioner has alleged that
respondent has acted arbitrarily in enforcing the Amendment Act, 2015
retrospectively w.e.f. 01.04.2014.
16. Counter affidavit has been filed by the respondent-Union of India
contending inter-alia that issues relating to amendment in the Act, 1965
was discussed before number of forums including tripartite consultation
meetings with the representatives of various Departments of Central
Government, State Labour Secretaries, Employers’ Associations and
Central Trade Union Organization. It is further stated that under the
Chairmanship of the Minister for Labour and Employment, a tripartite
consultation meeting was held on 20.10.2014 at New Delhi in which
Employers’ Association, Central Trade Union Organization, various
Central Government Ministries and State Labour Secretaries had
participated.
17. The respondents further stated that vide order dated 21.11.2014,
an Inter Ministerial Group (IMG) was also set up to decide the revision
in calculating ceiling and eligibility limit under the Act, 1965. It is stated
that aforesaid Inter Managerial Group (IMG) for bonus held it’s meeting
on 03.12.2014 with the representatives of Employers’ Associations to
discuss the proposal relating to amendment in the Act, 1965.
18. It is also stated that the issue of amendment in the Act, 1965 was
th
also discussed in the 46 Session of the Indian Labour Conference on
20-21 July, 2015 at New Delhi. It is further stated that there has been
111.67% increase in All India Consumer Price Index fixed for industrial

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WRIC No. - 6098 of 2016
workers (Base 2001=100) from 120 in April, 2006 to 254 in March,
2015. Further it is the case of the respondent-Union of India that rise in
Consumer Price Index for industrial workers has been taken into
consideration in calculating ceiling which came to Rs.7408/- per month
till March, 2015 which is higher than the ceiling of Rs.7,000/- per month
under the Amendment Act, 2015.
19. It is stated that the object, which is sought to be achieved by the
amendment is fulfilled by making the law which increases the eligibility
limit to Rs.7000/- or minimum wage for the scheduled employment
whichever is higher, and plea of invalidity of retrospectivity of
amendment on the ground that it infringes Article 14 of the Constitution
of India is misconceived.
20. It is further stated that since bonus has to be paid after determining
profits and calculation of allocable surplus for that particular year,
therefore, retrospective implementation of Amendment Act, 2015 is just
and proper.
21. Respondents have also stated that necessary debit and credit is a
routine in an establishement, which implies that there should be no
difficulty as far as practical aspects in calculating bonus is concerned,
therefore, problems indicated by the petitioner are not justified and there
is no statutory bar in adjustment of the account books.
22. It is further stated that any provision, which has the effect of
promoting or effectuating directive principles is presumed to be
reasonable. Such provisions are to be construed in favour of beneficiary
for achieving the purpose of enactment being a social benefit oriented
legislation.
23. It is also stated that enforcement of Amendment Act, 2015
retrospectively does not violate any vested right of petitioner, which has
accrued to him nor retrospective enforcement of Amendment Act, 2015
has taken away any vested right of the petitioner. According to the
respondents, the legislature has power to enact an amendment with
retrospective effect. It is stated that the legislature possesses the right to

9
WRIC No. - 6098 of 2016
make retrospective legislation, which creates new obligation in respect
to the transactions already over and requires reopening of past, closed
and completed transactions.
24. Respondents contend that no hurdle is faced by the establishment
under the provisions of income tax, and other relevant statutes to ensure
compliance of statutory liability. It is also stated that Section 15(2) of the
Act, 1965 deals with a contingency where for any accounting year, if
there is no available surplus or allocable surplus in respect of that year
and falls short of the amount of minimum bonus payable to the
employees in the establishment under Section 10 of the Act, 1965 and
there is no amount or sufficient amount carried forward and set on in
sub-section (1) of that section, which could be utilised for payment of
minimum bonus, then such minimum amount or deficiency shall be
carried forward for being set off in the succeeding accounting year and
so on upto and inclusive of fourth accounting year.
25. The petitioner has filed rejoinder affidavit denying the averments
made in the counter affidavit. The petitioner has confined the challenge
to the Amendment Act, 2015 only to the extent it has been implemented
with retrospective effect i.e. 01.04.2014 and also enhancement of ceiling
for payment of bonus under Section 12 from Rs.3500/- to Rs.7000/- and
insertion of minimum wages under the Minimum Wages Act, 1948 to
calculate bonus under Section 12 of the Act, 1965.
26. Challenging the amendment, Sri Anshul Kumar Singhal, learned
counsel for the petitioner has contended that if, the amendment in the
Act, 1965 creates financial burden on a class of persons without
offending the rights of other persons, such amendment is permissible,
but if it offends the rights of other persons, the amendment cannot be
enforced with retrospective effect.
27. Supporting the aforesaid contention, Sri Shakti Swaroop Nigam,
learned Senior Counsel appearing in some petitions has contended that
any amendment in Act, 1965 can be implemented prospectively and not

10
WRIC No. - 6098 of 2016
retrospectively as it violates Article 14 of the Constitution of India. He
has relied upon the following judgements in support of his contention:-
(i). Remington Rand of India Ltd. Vs. The Workmen, AIR 1970 SC
1421;
(ii). State of Gujarat & Another Vs. Raman Lal Keshav Lal Soni &
Others 1983 (2) SCC 33;
(iii). T.R. Kapur & Others Vs. State of Haryana & Others1986 (Supp.)
SCC 584;
(iv). Union of India & Others Vs. Tushar Ranjan Mohanty & Others
(1994) 5 SCC 450.
28. He further submits that since Amendment Act, 2015 created a
financial liability, therefore, pre-decisional hearing before amending the
Act, 1965 is mandatory. Accordingly, it is contended that since no pre-
decisional hearing was given, therefore, Amendment Act is invalid. In
support of the said contention, he has relied upon judgement of Apex
Court in the case of Punjab State Co-operative Milk Producers
Federation Ltd. & Another Vs. Balbir Kumar Walia & Others, 2021
(171) FLR 397 .
29. He submits that legislative declaration cannot be contrary to the
judicial declaration. He submits that for the following two reasons, the
said principle of law is attracted in the present case:-
(a). According to him, amendment in Act, 1965 is not a declaratory Act
because it does not clarify anything embodied in the parent Act rather
the amendment creates a new right and obligation upon the
establishment;
(b). Act, 1965 is substantive law because it creates rights and liabilities
upon the employer and the employees and any amendment in the parent
Act i.e. Act, 1965 would create new rights and obligations.
30. Thus, for the aforesaid two reasons, he submits that Amendment
Act, 2015 is not a declaratory law. In support of the said contention, he
has placed reliance upon following judgements of the Apex Court:-

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WRIC No. - 6098 of 2016
(i). Indra Sawhney Vs. Union of India & Others, 2000(1) SCC 168;
(ii). State of Punjab & Others Vs. Bhajan Kaur & Others 2008 (12)
SCC 112;
(iii). Commissioner of Income Tax (Central)-I, New Delhi Vs. Vatika
Township Private Limited, 2015 (1) SCC 1.
31. He has further contended that financial burden cannot be applied
retrospectively unless the legislature has expressly and unambiguously
stated such an intent in the amendment
32. Sri Diptiman Singh, learned counsel appearing in some of the
petitions submitted that the Bill No.265 of 2015 was introduced w.e.f
01.04.2015, the statement of object and reasons do not mention that it
would be made effective retrospectively. He submits that financial
memorandum mentions that the Bill does not involve, ‘any other
recurring or non-recurring expenditure’. He has referred to certain
discussions on the Bill, which shall be considered at the appropriate
stage, to contend that constitutional decisions cannot be taken on the
whims and desires of the Government. He further submits that original
bill was to be made effective from 01.04.2015 and no explanation or
reason has been given in changing the date of implementation of the Bill
and making it retrospective. He has placed reliance upon the judgement
of Apex Court in the case of Jayam and Company Vs. Assistant
Commissioner & Another 2016(15) SCC 125.
33. Sri Sunil Kumar Tripathi, Advocate has addressed on the
Amendment in Section 12 of the Act, 1965. He submits that amendment
in Section 12 of the Act, 1965 in respect to increase in ceiling limit is
based upon unreasonable classification. Therefore, it is violative of
Article 14 of the Constitution of India.
34. Elaborating the said argument, he submits that industries notified
as scheduled employment under Minimum Wages Act, 1948, monthly
ceiling limit for calculation of bonus for this class of industry is the
minimum wages under the Minimum Wages Act, 1948. He submits that
at present minimum wages for unskilled workers is Rs.10,701/-, semi-

12
WRIC No. - 6098 of 2016
skilled workers is Rs.11,772/- and skilled workers is Rs.13,186/- and
bonus is to be calculated on the aforesaid notified wages with respect to
different classes of workers.
35. He submits that for industries, which have not been notified as
scheduled employment under the Minimum Wages Act, 1948, monthly
ceiling limit for this class of industries is Rs.7000/- per month for
calculation of bonus. He submits that classification is unreasonable and
discriminatory.
36. He further submits that the classification of industries in two
categories is arbitrary as the classification is not based on intelligible
differentia. He contends that object sought to be achieved by classifying
the industries in two categories is irrational because unorganised
industries covered by scheduled employment have to pay higher bonus
than the organised industries not covered by scheduled employment. He
has placed reliance upon following judgements of Apex Court:-
(i) Sukanya Shantha Vs. Union of India and Others, 2024 SCC
OnLine SC 2694;
(ii) Bhikusa Yamasa Kshatriya & Another Vs. Sangamner Akola
Taluka Bidi Kamgar Union & Others,AIR 1963 SC 806;
(iii) U. Unichoyi & Others Vs. State of Kerala AIR 1962 SC 12.
37. Rebutting the aforesaid contention, learned Additional Solicitor
General submits that the Act, 1965 being a welfare legislation should be
interpreted in a manner so as to achieve the object of the Act. He submits
that power and competence of the Parliament to amend the statutory
provision cannot be doubted, however, the only rider in amending the
Act, 1965 retrospectively is that the Act, 1965 must be reasonable and
not arbitrary and must not be violative of any of the fundamental rights
guaranteed under the Constitution of India. He submits that Amendment
Act, 2015 amending the Act, 1965 with retrospective effect is reasonable
and has been introduced to achieve the object for which it has been
introduced. Therefore, the Amendment Act, 2015 is neither arbitrary nor

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WRIC No. - 6098 of 2016
is violative of any fundamental rights of the petitioner guaranteed under
the Constitution of India.
38. It is contended that the Amendment Act, 2015 does not violate any
vested right of the petitioner. He submits that Amendment Act, 2015 has
been introduced for promoting and effectuating the Directive Principles
of State Policy enshrined in the Constitution of India, therefore, the
Amendment Act, 2015 cannot be said to be arbitrary and violative of any
of the provisions of Constitution of India.
39. He further contends that Section 15(2) of the Act, 1965 provides
for a situation where for any accounting year, if there is no available
surplus or allocable surplus in respect to that year falls short of the
amount of minimum bonus payable to the employees in the
establishment under Section 10 of the Act, 1965, and there is no amount
or sufficient amount carried forward and set on under sub-section (1) of
that Section, which could be utilised for payment of minimum bonus,
then such minimum amount or deficiency shall be carried forward for
being set off in the succeeding accounting year and so on upto and
inclusive of the fourth succeeding year. Therefore, the difficulty as
pointed out by the petitioner in the writ petition in implementing the
Amendment Act is non-existent in view of Section 15(2) of the Act,
1965.
40. He contends that proviso (b) to Section 19 of the Act, 1965
provides that time for payment can be extended. He submits that validity
of Amendment Act has been upheld by Patna High Court in Civil Writ
Jurisdiction Case No.15379 of 2017 and by Madras High Court in Writ
Petition No.6958 of 2016.
41. He has further contended that there is no arbitrariness in including
the concept of calculation on the basis of minimum wages under the
Minimum Wages Act, 1948 for the purpose of payment of bonus.
Accordingly, he submits that the contention advanced in this regard by
the learned counsel for the petitioners is misconceived.

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WRIC No. - 6098 of 2016
42. He further urges that the contention of learned counsel for the
petitioner that statement of object of the Bill indicates that the Bill was
to be implemented w.e.f. 01.04.2015 and its applicability cannot be made
retrospectively on the whims and desires of the Government is not
sustainable inasmuch as the Prime Minister of India has approved the
proposal of the Ministry for moving official amendments through
Amendment Act, 2015 as contained in para 8 of the proposal dated
22.12.2015 under Rule 12 of the Government of India (Transaction of
Business) Rules, 1961.
43. Accordingly, he submits that petitioners have failed to make out
any case calling for any interference by this Court in exercise of power
under Article 226 of the Constitution of India and declaring the
Amendment Act, 2015 as ultra-vires to the Constitution of India.
44. We have considered the rival submissions advanced by the learned
counsel for the parties and perused the record.
45. Section 2(13) of the Act, 1965 which defines ‘employee’ as it
stood prior to the Amendment Act, 2015 reads as under:
“2. Definitions-
(13) “employee” means any person (other than an apprentice)
employed on a salary or wage not exceeding [ten thousand rupees]
per mensem in any industry to do any skilled or unskilled manual,
supervisory, managerial, administrative, technical or clerical work
for higher or reward, whether the terms of employment be express or
implied.”
46. Section 12 of the Act, 1965 as it prior to amendment provides for
bonus payable to certain employees which reads as follows:-
“12. Calculation of bonus with respect to certain employees.-
Where the salary or wage of an employee exceeds [three thousand
and five hundred rupees] per mensem, the bonus payable to such
employee under section 10 or, as the case may be under section 11,
shall be calculated as if his salary or wage were [three thousand
and five hundred rupees] per mensem.”

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WRIC No. - 6098 of 2016
47. By the Amendment Act, 2015 in Section 2(13) which defines
expression “employee”, the ceiling on salary or wages has been
enhanced from Rs.10,000/- per month to Rs.21,000/- per month.
48. As a result of amendment in Section 12 of Act, 1965, the amount
of Rs.3500/- has been substituted by an amount of Rs.7000/- or the
minimum wages for scheduled employment as fixed by the Government
whichever is higher.
49. Section 19 of the Act, 1965 deals with the time limit for the
payment of bonus which reads as under:
“19. Time-limit for payment of bonus. -[All amounts] payable to an
employee by way of bonus under this Act shall be paid in cash by his
employer-
(a) where there is a dispute regarding payment of bonus pending
before any authority under section 22, within a month from the
date on which the award becomes enforceable or the settlement
comes into operation, in respect of such dispute;
(b) in any other case, within a period of eight months from the
close of the accounting year:
Provided that the appropriate Government or such authority as
the appropriate Government may specify in this behalf may, upon
an application made to it by the employer and for sufficient
reasons, by order, extend the said period of eight months to such
further period or periods as it thinks fit; so, however, that the total
period so extended shall not in any case exceed two years.”
50. According to the learned counsel for the petitioners that pre-
decisional hearing to the petitioners was necessary inasmuch as
retrospective operation of the Act has seriously prejudiced the vested
rights of the petitioners and has created fiscal liability upon the
petitioners. It is submitted that the petitioners as per Section 19 of the
Act, 1965 have paid the bonus to their employees within the time frame
provided under the said section, and the implementation of the Act with

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WRIC No. - 6098 of 2016
retrospective effect has resulted in financial liability for the petitioner
and has further created accounting complexities.
51. The respondent in the counter affidavit has stated that the issues
relating to the Amendment in the Act, 1965 were discussed before a
number of forums including tripartite consultation meetings with the
representatives of the various departments of Central Government, State
Labour Secretaries, Employers’ Association and Central Trade Union
Organization. It has also been stated that under the Chairmanship of the
Minister for Labour and Employment, a tripartite consultation meeting
was held on 20.10.2014 at New Delhi in which Employers’ Association,
the Central Trade Union Organization, various Central Government
Ministries and State Labour Secretaries had participated.
52. The aforesaid averments have not been denied by the petitioners in
their rejoinder affidavit. However, the petitioners have stated that mere
fact that certain consultation meetings and groups formed and chaired by
the government functionaries in respect of the Amendment Act, 2015
will not cure it’s constitutional vices and infirmities.
53. The facts stated in the counter affidavit, referred above, with
regard to consultation with various organizations by State Machinery
establishes that pre-decisional hearing was given to the recognised
organizations by the State Machinery before introduction of the
Amendment Bill in the Parliament, which is in compliance of the
principles of natural justice.
54. Further, the question as to whether before amending the Act, 1965
retrospectively, opportunity of hearing was required, we may state that in
the facts of the present case for the reasons delineated above, the pre-
decisional hearing for making the Act retrospective is not required,
inasmuch as retrospective application of the Amendment Act has not
prejudiced the rights of the petitioners. The reason why we say so shall
be dealt with at the appropriate stage in the latter part of the judgement.
55. Sri Shakti Swaroop Nigam, learned Senior Counsel appearing for
the petitioners in support of the contention that retrospective amendment

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WRIC No. - 6098 of 2016
has put financial liability upon the petitioner has placed reliance upon
the judgement in the case of Punjab State Co-operative Milk Producers
Federation Ltd. (supra) wherein it has been held that economic viability
or financial capacity of the employer is an important factor, which
cannot be ignored while fixing wage structure. The said judgement is not
applicable in the facts of the present case inasmuch as in the said case,
the employees of the Milk Federation demanded the pay scale as revised
by the Punjab Government Anomaly Committee w.e.f. 01.01.1986. The
Federation was suffering from acute financial stringency, therefore, it
granted revised pay scale from 01.01.1994 instead of 01.01.1986. The
employees of the Federation raised protest for grant of revised pay scale
w.e.f. 01.01.1986, therefore, a Committee was constituted to examine
several issues that arose.
56. The judgement of the Apex Court considered the
recommendations of the Committee in paragraph no.8 of the judgement,
the Committee in it’s recommendations found that large number of
employees will be financially benefited and the financial burden will be
of Rs.2 lacs per month, this was considered to be a huge liability. The
Committee was also apprised that the liability of the arrears from
01.01.1986 to 31.08.1992 was still outstanding. The Committee after
considering the above, as well as various other aspects, recommended
that the improved pay scales may be implemented w.e.f. 01.01.1994
without giving the benefit of even notional pay fixation w.e.f.
01.01.1986, this would have saved the organization from a huge liability
of the payment of arrears and would also give scope to the employees for
placement in better pay scales and getting other benefits, which might
accrue as a result of next revision of pay scale likely to be made from
01.01.1994 on the pattern of Punjab Government.
57. The report of the Committee was considered by the Board of
Directors of Federation who approved the grant of revised pay scale
w.e.f. 01.01.1994. Subsequently, the decision of the Board was approved
by the Registrar (Cooperative Societies) on 29.04.1997.

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58. The facts of the case noted above clearly discloses that the Apex
Court in granting pay scale w.e.f. 01.01.1994 found that the same was in
the interest of Federation as well as the employees of the Federation,
inasmuch as, if the benefit of revised pay scale was granted w.e.f.
01.01.1994, the Federation could be saved from collapsing because of
the huge financial liability likely to be incurred on the grant of revised
pay scale w.e.f. 01.01.1986. On the other hand, the employees interest
could also be protected, as that would help in extending the next revision
of pay scale likely to be made w.e.f. 01.01.1994 on the pattern of Punjab
Government.
59. In the present case, the petitioner has not disclosed any fact in the
writ petition indicating that on account of the retrospective amendment,
the liability is such, which would result in creating a huge financial
liability which is detrimental to the interest of the employer.
60. Learned counsel for the petitioner has further relied upon the
several judgements noted below on the issue that the amendment in
Bonus Act, 1965 could apply prospectively and not retrospectively, as it
violates Article 14 of the Constitution of India.
61. The first judgement relied upon by the learned counsel for the
petitioners is the case of Remington Rand of India Ltd. (supra) . The
petitioners have placed reliance on paragraph no.1 of the said judgement
with respect to the issue involved in the said case, which included the
issue of grant of bonus for the year 1963-64. The said issue has been
decided on concession given by the counsel for the workmen. Paragraph
no.3 of the said judgement is reproduced herein-below:-
“ 3. As regards the bonus, the company had already paid to the
workmen bonus at the rate of 4 months basic pay as against the
demand for the maximum bonus calculated in accordance with the
Payment of Bonus Act, 1965, and on consolidated as against the
basic wages. The Tribunal conceded that demand and granted bonus
at 20 percent of the consolidated wages. In view, however, of this
Court's decision in Jalan Trading Co. v. Mill Mazdoor Union, 1967-
1 SCR 15 (AIR 1967 SC 691), Mr. Ramamurthi for the workmen

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WRIC No. - 6098 of 2016
conceded that the Act cannot apply in respect of the year in question
and that the bonus payable for that year will have to be calculated
on the basis of the Full Bench Formula as approved by this Court.
The award to that extent therefore, has to be set aside and remanded
to the Tribunal for determining the bonus in accordance with the
said Formula.”
62. Accordingly, the aforesaid judgement of the Apex Court is not
applicable to the facts of the present case.
63. So far as the judgement of the Apex Court in the case of State of
Gujarat (supra) is concerned, the said judgement is not applicable as it
was a case where personnel were drawn from different sources viz.
government departments as well as local authorities or municipal
services and were merged together to constitute a single integrated Civil
Service (Panchayat Service) by a legislative enactment.
64. In the said case, a retroactive amendment of the enactment namely
Gujarat Panchayats (Third Amendment) Act, 1978 created a differential
classification in relation to the original position of the employees of
different departments and the said amendment deprived the ex-municipal
employees of their status of government servants.
65. In the aforesaid background, it was argued that the benefit
acquired could not be taken away with retrospective effect. On the other
hand, it was urged by the respondent that there was good reason for the
classification, and that in the circumstances of the case, the classification
was legitimately made with retrospective effect. In the said backdrop,
the Apex Court in paragraph no.52 of the judgement had held as under:-
“52. The legislation is pure and simple, self-deceptive, if we may use
such an expression with reference to a legislature-made law. The
legislature is undoubtedly competent to legislate with retrospective
effect to take away or impair any vested right acquired under existing
laws but since the laws are made under a written Constitution, and have
to conform to the dos and don'ts of the Constitution, neither prospective
nor retrospective laws can be made so as to contravene fundamental
rights. The law must satisfy the requirements of the Constitution today

20
WRIC No. - 6098 of 2016
taking into account the accrued or acquired rights of the parties today.
The law cannot say, 20 years ago the parties had no rights, therefore,
the requirements of the Constitution will be satisfied if the law is dated
back by 20 years. We are concerned with today's rights and not
yesterday's. A legislature cannot legislate today with reference to a
situation that obtained 20 years ago and ignore the march of events and
the constitutional rights accrued in the course of the 20 years. That
would be most arbitrary, unreasonable and a negation of history. It was
pointed out by a Constitution Bench of this Court in B.S. Yadav v. State
of Haryana. Chandrachud, C.J. speaking for the Court held :(SCC
head-note)
Since the Governor exercises the legislative power under the
proviso to Article 309 of the Constitution, it is open to him to give
retrospective operation to the rules made under that provision.
But the date from which the rules are made to operate must be
shown to bear either from the face of the rules or by extrinsic
evidence, reasonable nexus with the provisions contained in the
rules, especially when the retrospective effect extends over a long
period as in this case.
Today's equals cannot be made unequal by saying that they were
unequal 20 years ago and we will restore that position by making a law
today and making it retrospective. Constitutional rights, constitutional
obligations and constitutional consequences cannot be tampered with
that way. A law which if made today would be plainly invalid as
offending constitutional provisions in the context of the existing
situation cannot become valid by being made retrospective. Past virtue
(constitutional) cannot be made to wipe out present vice (constitutional)
by making retrospective laws. We are, therefore, firmly of the view that
the Gujarat Panchayats (Third Amendment) Act, 1978 is
unconstitutional, as it offends Articles 311 and 14 and is arbitrary and
unreasonable. We have considered the question whether any provision
of the Gujarat Panchayats (Third Amendment) Act, 1978 might be
salvaged. We are afraid that the provisions are so intertwined with one
another that it is well nigh impossible to consider any life-saving
surgery. The whole of the Third Amendment Act must go. In the result

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WRIC No. - 6098 of 2016
Writ Petitions Nos.4266-4270 of-1978 are allowed with costs quantified
at Rs 15,000. The directions given by the High Court, which we have
confirmed, should be complied with before June 30, 1983. In the
meanwhile, the employees of the panchayats covered by the appeal and
the writ petitions will receive a sum of Rs.200 per month over and above
the emoluments they were receiving before February 1, 1978. This
Order will be effective from February 1, 1983. The interim Order made
on February 20, 1978 will be effective up to January 31, 1983. The
amounts paid are to be adjusted later.”
66. Since, the facts of the present case are different from the facts in
the case of State of Gujarat (supra), therefore, the law laid down in the
said case does not help the petitioners in the present case.
67. So far as the judgement of the Apex Court in the case of T.R.
Kapur (supra) is concerned, the said judgement is also distinguishable
on facts of the present case, therefore, it is of no help to the petitioners.
In the said case, the petitioners being diploma holders were eligible for
consideration for promotion on the post of Executive Engineer.
68. In the said case by a retrospective amendment in Rule 6 (b) of the
Punjab Service of Engineers, Class-I, Public Works Department
(Irrigation Branch) Rules, 1964, the right of petitioners, who were
diploma holders, to be considered for promotion in Class-I service was
taken away. In the said context, the Apex Court in paragraph no.16 had
held as under:-
“16. It is well settled that the power to frame rules to regulate the
conditions of service under the proviso to Article 309 of the
Constitution carries with it the power to amend or alter the rules with
a retrospective effect: B.S. Vadhera v. Union of India, Raj Kumar v.
Union of India, K. Nagaraj v. State of A.P. and State of J & K v.
Triloki Nath Khosa. It is equally well settled that any rule which
affects the right of a person to be considered for promotion is a
condition of service although mere chances of promotion may not be.
It may further be stated that an authority competent to lay down
qualifications for promotion, is also competent to change the
qualifications. The rules defining qualifications and suitability for

22
WRIC No. - 6098 of 2016
promotion are conditions of service and they can be changed
retrospectively. This rule is however subject to a well recognised
principle that the benefits acquired under the existing rules cannot be
taken away by an amendment with retrospective effect, that is to say,
there is no power to make such a rule under the proviso to Article 309
which affects or impairs vested rights. Therefore, unless it is
specifically provided in the rules, the employees who are already
promoted before the amendment of the rules, cannot be reverted and
their promotions cannot be recalled. In other words, such rules laying
down qualifications for promotion made with retrospective effect
must necessarily satisfy the tests of Articles 14 and 16(1) of the
Constitution: State of Mysore v. M.N. Krishna Murty, B.S. Yadav v.
State of Haryana, State of Gujarat v. Raman Lal Keshav Lal Soni and
Ex-Captain K.C. Arora v. State of Haryana.”
69. The judgement of T.R. Kapur (supra) is also rendered in a
different factual backdrop, and therefore, the ratio laid down in the said
judgement does not help the petitioners.
70. The judgement of the Apex Court in the case of Union of India
(supra) is also not applicable in the present case inasmuch as by
introducing the amendment, the legislature attempted to deprive the
petitioners in the said case of an accrued right by enacting retrospective
legislation. The ratio laid down in paragraph nos. 14 and 15 of the
judgement, which has been relied upon by the learned counsel for the
petitioners does not help the petitioners in the present case and is
reproduced herein-below:-
“14. The legislatures and the competent authority under Article 309
of the Constitution of India have the power to make laws with
retrospective effect. This power, however, cannot be used to justify the
arbitrary, illegal or unconstitutional acts of the Executive. When a
person is deprived of an accrued right vested in him under a statute
or under the Constitution and he successfully challenges the same in
the court of law, the legislature cannot render the said right and the
relief obtained nugatory by enacting retrospective legislation.

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WRIC No. - 6098 of 2016
15. Respectfully following the law laid down by this Court in the
judgments referred to and quoted above, we are of the view that the
retrospective operation of the amended Rule 13 cannot be sustained.
We are satisfied that the retrospective amendment of Rule 13 of the
Rules takes away the vested rights of Mohanty and other general
category candidates senior to Respondents 2 to 9. We, therefore,
declare amended Rule 13 to the extent it has been made operative
retrospectively to be unreasonable, arbitrary and, as such, violative
of Articles 14 and 16 of the Constitution of India. We strike down the
retrospective operation of the rule. In the view we have taken on the
point it is not necessary to deal with the other contentions raised by
Mohanty.”
71. Further, the aforesaid judgements do not help the petitioners
inasmuch as though the petitioners claim that retrospective amendment
has infringed their vested rights but the petitioners have failed to
establish that by the retrospective amendment, which of their vested
rights have been infringed.
72. The Apex Court in the case of J.S.Yadav Vs. State of Uttar
Pradesh & Another 2011 (6) SCC 570 has defined the words ‘vested
right’. Paragraph nos.20 to 22 of the said judgement are reproduced
herein-below:
“20 . "17. The word 'vested' is defined in Black's Law Dictionary (6th
Edn.) at p. 1563, as:
‘Vested; fixed; accrued; settled; absolute; complete. Having the
character or given the rights of absolute ownership; not
contingent; not subject to be defeated by a condition precedent.’
Rights are 'vested' when right to enjoyment, present or prospective, has
become property of some particular person or persons as present
interest; mere expectancy of future benefits, or contingent interest in
property founded on anticipated continuance of existing laws, does not
constitute vested rights. In Webster's Comprehensive Dictionary
(International Edn.) at p. 1397, 'vested' is defined as:

24
WRIC No. - 6098 of 2016
'Law held by a tenure subject to no contingency; complete;
established by law as a permanent right; vested interests.’”
(See Bibi Sayeeda v. State of Bihar at SCC p. 527, para 17.)
21. The word "vest" is normally used where an immediate fixed right
in present or future enjoyment in respect of a property is created. With
the long usage the said word "vest" has also acquired a meaning as
"an absolute or indefeasible right". It had a "legitimate" or "settled
expectation" to obtain right to enjoy the property, etc. Such "settled
expectation" can be rendered impossible of fulfilment due to change in
law by the legislature. Besides this, such a "settled expectation" or the
so-called "vested right" cannot be countenanced against public
interest and convenience which are sought to be served by amendment
of the law. (Vide Howrah Municipal Corpn. v. Ganges Rope Co. Ltd.)
22. Thus, "vested right" is a right independent of any contingency.
Such a right can arise from a contract, statute or by operation of law.
A vested right can be taken away only if the law specifically or by
necessary implication provides for such a course”
73. The necessary corollary, which comes out from the reading of the
aforesaid judgement is that a right is considered vested, absolute, when it
is not dependent on any future event; it is generally immune from
subsequent changes in law that would impair it.
74. The payment of bonus is a statutory liability upon the employer
emanating from the Act, 1965. The employer is statutorily bound to pay
the bonus to the employees in compliance of statutory obligations posed
upon it by the Act, 1965, therefore, to say that the petitioners’ vested
right by implementing Amendment Act, 2015 retrospectively has been
infringed is not justified for the reason that the vested right is a right
independent of any contingency whereas the petitioners are obligated to
pay bonus by virtue of Section 10 of the Act, 2015.
75. The petitioners in the instant case have failed to demonstrate that
petitioners cannot be asked to pay bonus with retrospective effect since
such an amendment infringes their vested right.

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WRIC No. - 6098 of 2016
76. At this stage, it is pertinent to note that the Apex Court in
paragraph no.19 of the judgement in the case of M/S. Jalan Trading
Company Private Ltd. Vs. Mill Mazdoor Sabha AIR 1967 SC 691 has
held that there is a presumption of constitutionality in favour of the
statute and the onus of proving it unconstitutional lies upon the person
who challenges it.
77. In the case of R.C. Tobacco Pvt. Ltd. and Another Vs. Union of
India and Another, AIR 2005 SC 4203 , the Apex Court held that a
liability cannot be declared to be unreasonable because it merely
operates retrospectively. The Apex Court further in paragraph no.23 of
the judgement laid down the factors which are generally considered in
considering the challenge to an enactment because of its retrospective
implementation. Paragraph nos.22 and 23 of the said judgement are
reproduced herein below:-
“22. A law cannot be held to be unreasonable merely because it
operates retrospectively. Indeed even judicial decisions are in a sense
retrospective. When a statute is interpreted by a Court, the
interpretation is, by fiction of law, deemed to be part of the statute
from the date of its enactment. The unreasonability must lie in some
other additional factors. The retrospective operation of a fiscal statute
would have to be found to be unduly oppressive and confiscatory
before it can be held to be so unreasonable as to violate constitutional
norms. "Where for instance it appears that the taxing statute is plainly
discriminatory or provides no procedural machinery for assessment
and levy of the tax, or that it is confiscatory, Courts would be justified
in striking down the impugned statute as unconstitutional. In such
cases, the character of the material provisions of the impugned statute
is such that the Court would feel justified in taking the view that, in
substance, the taxing statute is a cloak adopted by the legislature for
achieving its confiscatory purposes". (Rai Ramkrishna v. State of
Bihar: AIR 1963 SC 1667). The question to be answered therefore is
whether Section 154, which is in terms retrospective, is ex facie
discriminartoy, or so unreasonable or confiscatory that it violates
Articles 14 and 19 of the Constitution.

26
WRIC No. - 6098 of 2016
23. The factors which are generally considered relevant in answering
this question are (i) the context in which retrospectivity was
contemplated, (ii) the period of such retrospectivity, and (iii) the
degree of any unforeseen or unforeseeable financial burden imposed
for the past period.”
78. In the light of the factors laid down by the Apex Court in the
aforesaid judgement while considering the validity of the retrospective
application of an Act, the contention of the learned counsel for the
petitioners that the legislative declaration cannot be contrary to judicial
declaration shall be considered by this Court.
79. The aforesaid proposition has been raised by the learned counsel
for the petitioners on the ground that the amendment in Principal Act i.e.
Act, 1965 is not a declaratory Act because it does not clarify anything
embodied in the parent Act i.e. Act, 1965 rather retrospective enactment
of the Amendment Act, creates new rights and obligations upon the
parties which is not permissible in law.
80. Further it is submitted that the Act, 1965 is substantive law
because it creates rights and liabilities upon the employers and the
employees and any amendment in the Principal Act, i.e. Act, 1965 which
creates new rights and obligations upon the employers is not a
declaratory law. In this regard, reliance has been placed upon the
judgements already referred above.
81. It is pointed out that paragraph no.43 of the judgement in the case
of Indra Sawhney (supra) relied upon by the learned counsel for the
petitioners in support of aforesaid contention has been rendered in a
peculiar factual background. The case of Indra Sawhney (supra)
requires ‘creamy layer’ to be identified and excluded. The State of
Kerala did not identify the creamy layer in the backward class in
compliance of the judgement of Indra Sawhney (supra) . The Apex
Court held that State of Kerala represented by its Chief Secretary was
guilty of contempt but the Apex Court gave further opportunity to the

27
WRIC No. - 6098 of 2016
State to purge the contempt by implementing the directions of the Apex
Court in the case of Indra Sawhney (supra).
82. The State of Kerala sought time to appoint a Commission to
identify the creamy layer. However, the legislature of State of Kerala
suddenly promulgated Kerala State Backward Classes (Reservation of
Appointments or Posts in the Services under the State) Act, 1995, which
declares that there was no creamy layer in the State of Kerala. Sections
3, 4 & 6 of the said Act contained provisions, which were contrary to
law laid down in the case of Indra Sawhney (supra) . The validity of the
said Act was challenged before the Apex Court.
83. The Apex Court keeping in view, the fact that the State
Government had failed to appoint a Commission as directed in the case
of Indra Sawhney (supra) requested the Chief Justice of Kerala High
Court to appoint a retired Judge to be the Chairman of a High Level
Committee for gathering necessary information regarding creamy layer.
The Committee submitted it’s report identifying the creamy layer in the
backward classes of State of Kerala and it is in this backdrop, the Apex
Court held that the Amendment Act, 1995 was unrelated to the facts in
existence. The Apex Court has further held in paragraph no.42 that the
said Act had shut it’s eyes to the realities and facts and it came up with a
declaration in clause (a) of Section 3, which had no factual basis inspite
of the word used, ‘known facts’. In such backdrop, the Apex Court held
in paragraph no.43 of the judgement as under:-
“43. In view of the facts and circumstances referred to above, we hold
that the declaration in clause (a) of Section 3 made by the legislature
has no factual basis in spite of the use of the words "known facts". The
facts and circumstances, on the other hand, indicate to the contrary. In
our opinion, the declaration is a mere cloak and is unrelated to facts in
existence. The declaration in Section 3(a) is, in addition, contrary to the
principles laid down by this Court in Indra Sawhney and in Ashoka
Kumar Thakur. It is, therefore, violative of Articles 14 and 16(1) of the
Constitution of India. Clause (a) of Section 3 is, therefore, declared
unconstitutional.

28
WRIC No. - 6098 of 2016
(viii) Clause (b) of Section 3-inadequate representation: Section 3(b)
mixes up two different concepts.”
84. The said judgement on facts is clearly distinguishable and does not
help the petitioners.
85. So far as the judgement of the Apex Court in the case of Bhajan
Kaur (supra) relied upon by the learned counsel for the petitioners is
concerned, it was a case where the accident had taken place on
08.01.1983. The claim petition was filed in relation to the said accident
purported to be in terms of Section 110-A of the Motor Vehicles Act,
1939.
86. The claim petition was dismissed by an Award dated 12.10.1984.
The appeal preferred against the said award was disposed off by the
learned Single Judge awarding a sum of Rs.15,000/- as compensation by
way of ‘no fault liability’. In intra-court appeal, the Appellate Court
enhanced the awarded amount to Rs.50,000/- under ‘no fault liability’.
It is by virtue of an Amendment Act 54 of 1994, amending Section 140
of the Motor Vehicles Act, 1988 came into force w.e.f. 14.11.1994. In
such backdrop, the Apex Court held that the Division Bench had erred in
law by enhancing the compensation to Rs.50,000/- under the Motor
Vehicles Act, 1988.
87. The Court held that Section 92A of the Act, 1939 created a right
and a liability on the owner of the vehicle being a statutory liability, as
the right was created by an enactment. In the absence of a clear
provision in the Motor Vehicles Act, 1988 that it is to be applied
retrospectively, the Court held that a statute is presumed to be
prospective, unless it is retrospective either expressly or by necessary
implication. It was held that a substantive law is presumed to be
prospective.
88. Learned counsel for the petitioners has also relied upon paragraph
nos. 28 to 32 & 35 of the judgement of the Apex Court in the case of
Commissioner of Income Tax (supra) which is reproduced herein-
below:-

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WRIC No. - 6098 of 2016
“28. Of the various rules guiding how a legislation has to be
interpreted, one established rule is that unless a contrary intention
appears, a legislation is presumed not to be intended to have a
retrospective operation. The idea behind the rule is that a current law
should govern current activities. Law passed today cannot apply to the
events of the past. If we do something today, we do it keeping in view
the law of today and in force and not tomorrow's backward adjustment
of it. Our belief in the nature of the law is founded on the bedrock that
every human being is entitled to arrange his affairs by relying on the
existing law and should not find that his plans have been
retrospectively upset. This principle of law is known as lex prospicit
non respicit: law looks forward not backward. As was observed in
Phillips v. Eyre, a retrospective legislation is contrary to the general
principle that legislation by which the conduct of mankind is to be
regulated when introduced for the first time to deal with future acts
ought not to change the character of past transactions carried on
upon the faith of the then existing law.
29. The obvious basis of the principle against retrospectivity is the
principle of "fairness", which must be the basis of every legal rule as
was observed in L'Office Cherifien des Phosphates v. Yamashita-
Shinnihon Steamship Co. Lid. Thus, legislations which modified
accrued rights or which impose obligations or impose new duties or
attach a new disability have to be treated as prospective unless the
legislative intent is clearly to give the enactment a retrospective effect;
unless the legislation is for purpose of supplying an obvious omission
in a former legisiation or to explain a former legislation. We need not
note the cornucopia of case law available on the subject because
aforesaid legal position clearly emerges from the various decisions
and this legal position was conceded by the counsel for the parties. In
any case, we shall refer to few judgments containing this dicta, a little
later.
30. We would also like to point out, for the sake of completeness, that
where a benefit is conferred by a legislation, the rule against a
retrospective construction is different. If a legislation confers a
benefit on some persons but without inflicting a corresponding

30
WRIC No. - 6098 of 2016
detriment on some other person or on the public generally, and where
to confer such benefit appears to have been the legislators' object,
then the presumption would be that such a legislation, giving it a
purposive construction, would warrant it to be given a retrospective
effect. This exactly is the justification to treat procedural provisions
as retrospective. In Govt. of India v. Indian Tobacco Assn., the
doctrine of fairness was held to be relevant factor to construe a
statute conferring a benefit, in the context of it to be given a
retrospective operation. The same doctrine of fairness, to hold that a
statute was retrospective in nature, was applied in Vijay v. State of
Maharashtra. It was held that where a law is enacted for the benefit
of community as a whole, even in the absence of a provision the
statute may be held to be retrospective in nature. However, we are
(sic not) confronted with any such situation here.
31. In such cases, retrospectivity is attached to benefit the persons in
contradistinction to the provision imposing some burden or liability
where the presumption attaches towards prospectivity. In the instant
case, the proviso added to Section 113 of the Act is not beneficial to
the assessee. On the contrary, it is a provision which is onerous to the
assessee. Therefore, in a case like this, we have to proceed with the
normal rule of presumption against retrospective operation. Thus, the
rule against retrospective operation is a fundamental rule of law that
no statute shall be construed to have a retrospective operation unless
such a construction appears very clearly in the terms of the Act, or
arises by necessary and distinct implication. Dogmatically framed,
the rule is no more than a presumption, and thus could be displaced
by outweighing factors.
32. Let us sharpen the discussion a little more. We may note that
under certain circumstances, a particular amendment can be treated
as clarificatory or declaratory in nature. Such statutory provisions
are labelled as "declaratory statutes". The circumstances under
which provisions can be termed as "declaratory statutes" are
explained by Justice G.P. Singh in the following manner:
"Declaratory statutes

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WRIC No. - 6098 of 2016
The presumption against retrospective operation is not
applicable to declaratory statutes. As stated in CRAIES and
approved by the Supreme Court: 'For modern purposes a
declaratory Act may be defined as an Act to remove doubts
existing as to the common law, or the meaning or effect of any
statute. Such Acts are usually held to be retrospective. The
usual reason for passing a declaratory Act is to set aside
what Parliament deems to have been a judicial error, whether
in the statement of the common law or in the interpretation of
statutes. Usually, if not invariably, such an Act contains a
Preamble, and also the word "declared" as well as the word
"enacted". But the use of the words 'it is declared’ is not
conclusive that the Act is declaratory for these words may, at
times, be used to introduced new rules of law and the Act in
the latter case will only be amending the law and will not
necessarily be retrospective. In determining, therefore, the
nature of the Act, regard must be had to the substance rather
than to the form. If a new Act is 'to explain' an earlier Act, it
would be without object unless construed retrospective. An
explanatory Act is generally passed to supply an obvious
emission or to clear up doubts as to the meaning of the
previous Act. It is well settled that if a statute is curative or
merely declaratory of the previous law retrospective
operation is generally intended. The language 'shall be
deemed always to have meant is declaratory, and is în plain
terms retrospective. In the absence of clear words indicating
that the amending Act is declaratory, it would not be so
construed when the pre-amended provision was clear and
unambiguous. An amending Act may be purely clarificatory to
clear a meaning of a provision of the principal Act which was
already implicit. A clarificatory amendment of this nature will
have retrospective effect and, therefore, if the principal Act
was existing law which the Constitution came into force, the
amending Act also will be part of the existing law."
The above summing up is factually based on the judgments of this
Court as well as English decisions.

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WRIC No. - 6098 of 2016
35. We would also like to reproduce hereunder the following
observations made by this Court in Govind Das v. ITO, while holding
Section 171(6) of the Income Tax Act to be prospective and
inapplicable for any assessment year prior to 1-4-1962, the date on
which the Income Tax Act came into force: (SCC p. 914, para 11)
"11. Now it is a well-settled rule of interpretation hallowed by
time and sanctified by judicial decisions that, unless the terms of
a statute expressly so provide or necessarily require it,
retrospective operation should not be given to a statute so as to
take away or impair an existing right or create a new obligation
or impose a new liability otherwise than as regards matters of
procedure. The general rule as stated by Halsbury in Vol. 36 of
the Laws of England (3rd Edn.) and reiterated in several
decisions of this Court as well as English courts is that
'all statutes other than those which are merely declaratory or
which relate only to matters of procedure or of evidence are
prima facie prospective and retrospective operation should
not be given to a statute so as to affect, alter or destroy an
existing right or create a new liability or obligation unless
that effect cannot be avoided without doing violence to the
language of the enactment. If the enactment is expressed in
language which is fairly capable either interpretation, it
ought to be construed as prospective only."
89. Similar proposition has been laid down by the Apex Court in the
case of Jayam and Company (supra). There is no quarrel to the
proposition of law laid down in the aforesaid judicial pronouncement by
the Apex Court, but in the opinion of this Court, the law enunciated by
the Apex Court in the aforesaid cases is not attracted in the present case
for the reasons delineated below.
90. At this stage, it would be appropriate to refer to Sections 2(4) &
(6) of the Act, 1965, which defines expression ‘allocable surplus’ and
‘available surplus’. Section 2(4) & (6) of the Act, 1965 are reproduced
herein below:-

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“2. Definitions.-
(4). “allocable surplus” means –
(a). in relation to an employer, being a company [(other than a
banking company)] which has not made the arrangements prescribed
under the Income-tax Act for the declaration and payment within India
of the dividends payable out of its profits in accordance with the
provisions of section 194 of that Act, sixty-seven per cent of the
available surplus in an accounting year;
(b). in any other case, sixty per cent of such available surplus.
(6). “available surplus” means the available surplus computed under
section 5.”
91. Section 15 of the Act, 1965 provides ‘set on’ and ‘set off’ of
‘allocable surplus’. Section 15 of the Act, 1965 reads as under:-
“15. Set on and set off of allocable surplus .-(1) Where for any
accounting year, the allocable surplus exceeds the amount of
maximum bonus payable to the employees in the establishment under
section 11, then, the excess shall, subject to a limit of twenty per cent
of the total salary or wage of the employees employed in the
establishment in that accounting year, be carried forward for being set
on in the succeeding accounting year and so on up to and inclusive of
the fourth accounting year to be utilised for the purpose of payment of
bonus in the manner illustrated in the Fourth Schedule.
(2) Where for any accounting year, there is no available surplus or
the allocable surplus in respect of that year falls short of the amount
of minimum bonus payable to the employees in the establishment
under section 10, and there is no amount or sufficient amount carried
forward and set on under sub-section (1) which could be utilised for
the purpose of payment of the minimum bonus, then, such minimum
amount or the deficiency, as the case may be, shall be carried
forward for being set off in the succeeding accounting year and so on
up to and inclusive of the fourth accounting year in the manner
illustrated in the Fourth Schedule.

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(3) The principle of set on and set off as illustrated in the Fourth
Schedule shall apply to all other cases not covered by sub-section (1)
or sub-section (2) for the purpose of payment of bonus under this Act.
(4) Where in any accounting year any amount has been carried
forward and set on or set off under this section, then, in calculating
bonus for the succeeding accounting year, the amount of set on or set
off carried forward from the earliest accounting year shall first be
taken into account.”
92. Section 19 of the Act, 1965 provides for the time limit for
payment of bonus.
93. In order to succeed in challenging the Act on the ground of
retrospective enactment, the petitioner has to establish that by enacting
the Amendment Act, 2015 retrospectively, the legislature has conferred
benefit of bonus to the employees, which inflicts a corresponding
detriment on the employer, which is not permissible as the legislature
can confer the benefit on employees retrospectively without inflicting a
corresponding detriment on the employer.
94. The law does not permit the legislature to take away or impair any
existing right or create a new obligation or impose a new liability
retrospectively. At this stage, it is pertinent to note that the payment of
bonus is a statutory right given to the employees. The liability to pay the
bonus lies upon the employer which emanates from the Act, 1965.
95. So by introducing the Amendment Act with retrospective effect, it
neither impairs any existing right of the employer nor creates any new
obligation upon the employer. The employer at the most can say that by
retrospective operation of Amendment Act, 2015, additional liability to
pay bonus upon the employer has been created. Thus, by Amendment
Act, 2015, no new liability has been imposed upon the employer.
96. The employer is liable to pay bonus under Section 10 of the Act,
1965. The minimum bonus which the employer is liable to pay is 8.33%
of the salary or wage earned by the employee during the accounting year

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or one hundred rupees, whichever is higher, whether or not, the
employer has any allocable surplus in the accounting year. The employer
is liable to pay bonus to a maximum 20% of the salary or wage under
Section 11 of the Act, 1965 subject to the existence of the conditions
enumerated in Section 11 of the Act, 1965.
97. Now, various difficulties have been posed by the petitioner in the
writ petition from paragraph nos.30 to 37 of the writ petition, which are
reproduced herein-below:-
“30. That thus the fiscal deficit incurred by virtue of the impugned
amendment act cannot be extracted under any of the heads of the
account except adding it to the liabilities of the company resulting into
the decrease in profits or variating the prices of the commodity
market.
31. That by the impugned amendment there would be an increase in
the financial burden and greater accounting complexities for
employers.
32. That for the first time by the impugned amendment there has been
a insertion of a reference to the minimum wage under the Minimum
Wages Act 1948 to calculate bonus and thus it has created an
additional challenge to the petitioner companies.
33. That it is relevant to mention that the appropriate government (i.e.
the State Government) and in different cases the Central Government
fix different minimum wages for various schedule employment (skilled,
unskilled and semi skilled). Thus the petitioner would have to carry
out a separate assessment of the applicable wage rate for different
category of employees to calculate the statutory bonus payable.
34. That since there has been a different minimum wages in different
states and further varying to different types of industries, therefore
now the bonus calculation has to be done separately for each
category.
35. That the General Principles concerning retrospectivity provides
various rules guiding as to how a legislation has to be interpreted and
one established rule is that unless a contrary intention appears, a

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legislation is presumed not be intended to have a retrospective
operation.
36. That the current law should govern the current activities while in
the present matter the impugned amendment is directly having a
consequence upon the activities done for past one year.
37. That the Principal of Law "Lex Prospicit non respicit" also
provides for a law to look forward and not backward. Human being
are entitled to arrange his affairs by relying upon the existing law and
should not find that his plans have been retrospectively assets.”
98. In order to appreciate the controversy in the light of facts, detailed
by the petitioner in the writ petition in implementing the Amendment
Act, 2015 retrospectively, the Court must remember that Act, 1965 is a
social welfare legislation enacted with an object to achieve the principles
enshrined in Articles 39 and 43 of the Constitution of India. Thus, the
amendment, which has been implemented retrospectively has been made
in a social welfare legislation.
99. The Apex Court in the case of M/s. Jalan Trading Company
(supra) has also affirmed the judgement of Bombay High Court whereby
the Bombay High Court has dismissed the petitions challenging the vires
of Section 10 of the Act, 1965 on the ground that it is violative of Article
19(1)(g) and Article 302 of the Constitution of India, paragraph no.2 of
the said judgement is reproduced herein below:-
“2. We are satisfied that the restriction imposed by the Bonus Act in
compelling the employer to pay the statutory minimum bonus even in
years where there has been a loss sustained by the management is
reasonable or in public interest within the meaning of Articles 19(6)
and 302. What is reasonable depends on a variety of circumstances,
but what is important is that the Directive Principles of State Policy in
Part IV of the Constitution are fundamental to the Governance of the
country. Therefore, what is directed as State Policy by the founding
fathers of the Constitution cannot be regarded as unreasonable or
contrary to public interest even in the context of Article 19 or 302. It
follows that payment of bonus, being in implementation of Articles 39

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and 43 of the Constitution, is reasonable. We agree with the High
Court and dismiss the appeal with costs quantified at Rs.2,000/-. The
costs be paid to respondent No.2”
100. The law is settled that a benevolent provision should be
interpreted liberally to achieve the purpose for which it has been
enacted. In other words, the interpretation of beneficial legislation
involves liberal and purposive construction to achieve the statute’s
underlying aim to ensure the welfare of the intended beneficiaries.
101. If we take a glance at Section 15 of the Act, 1965, we find the
difficulty posed by the petitioners is eliminated in view of Section 15(2)
of the Act, 1965, which provides for ‘set on’ and ‘set off’.
102. Section 15(1) of the Act, 1965 provides for carry forward and set
on and on it’s plain terms, it comes into operation only when in a given
accounting year, the allocable surplus exceeds the maximum bonus
payable under the Act, so that after payment of maximum bonus, there is
surplus left which can be carried forward and set on, subject, of course,
to the limit of 20% of the total salary or wage.
103. Section 15 of the Act, 1965 provides for ‘set on’ and ‘set off’ to
ensure a consistent payment of bonus over the years. If in a given case,
allocable surplus exceeds the maximum bonus amount such surplus,
subject to ceiling of 20%, shall have to be carried forward to the
succeeding year upto and inclusive of fourth accounting year to be
utilised for the purpose of payment of bonus.
104. The method to be followed in this behalf is set out in the Fourth
Schedule of the Act, 1965. As per Section 15(2) of the Act, 1965, if in
any succeeding accounting year, there is no available surplus or
allocable surplus in respect of that year falls short of the amount of
minimum bonus, the amount so carried forward has to be utilised for
paying the bonus.
105. Thus, Section 15(2) of the Act, 1965 permits the employer that if,
in any accounting year, there is no available surplus or allocable surplus

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in respect of that year falls short of the amount of minimum bonus
payable to the employees in the establishment under Section 10 and
there is no amount or sufficient amount which is carried forward and set
on under sub-section (1) that could be utilised for the purpose of
payment of minimum bonus, then, such minimum amount or deficiency,
as the case may be, shall be carried forward for being set off in the
succeeding accounting year and so on upto and inclusive of the fourth
accounting year in the manner illustrated in the Fourth Schedule.
106. So, in the absence of available surplus or allocable surplus in
respect of that year and there is shortfall of the amount of the minimum
bonus payable to the establishment under Section 10, and no amount or
sufficient amount has been carried forward and has been set on under
sub-section (1), which could be utilised for the purpose of payment of
minimum bonus, the said sub-section permits the petitioner to set off the
shortfall in the succeeding year upto and inclusive of fourth accounting
year.
107. The petitioner though has posed difficulty in implementing the Act
retrospectively, but has neither given any detail as to what available
surplus or allocable surplus is available with the companies, which has
been set on under Section 15(1) of the Act, 1965. The petitioner has not
stated in the writ petition that there is no available surplus or allocable
surplus in respect of that year, which falls short of minimum bonus
payable to the employees in the establishment under Section 10. In the
absence of any such detail in the writ petition, it is difficult to
comprehend that by retrospective amendment in Section 2(13) of the
Act, 1965, a huge financial liability has been inflicted upon the
petitioner, which would be detrimental to the interests of the petitioner.
108. The legislature keeping in view the difficulty of the employer in
providing the benefit of bonus to the employees has incorporated Section
15 of the Act, 1965 with a view to ease the employer in paying the bonus
in case of non-availability of available surplus and shortfall of allocable
surplus. Therefore, for the aforesaid reason, we do not find that the

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difficulty posed by the petitioner in the writ petition as stated in the
paragraphs, extracted above, are bonafide and genuine and a beneficial
legislation can be rendered unconstitutional on the said grounds.
109. For the reasons given above, we do not find that any such liability
has been imposed by implementing the Amendment Act retrospectively,
which poses a serious financial threat to the establishment so as to close
down the establishment because of such financial liability.
110. Sri Diptiman Singh, learned counsel for the petitioners in the
rejoinder affidavit has pointed out that the liability of the petitioner is
more than Rs.3 crores, but necessary facts have not been detailed in the
writ petition in the light of Section 15 of the Act, 1965.
111. So far as the contention of learned counsel for the petitioners that
as per Section 19, eight months period is provided to pay bonus and that
period has expired and any payment of bonus after the expiry of period
provided in Section 19 will entail penal consequences is concerned, the
said contention is also misconceived inasmuch as the Competent
Authority under the Proviso (b) to Section 19 has power to extend the
period of payment of bonus upto two years.
112. It is also settled law that if the bonus is paid retrospectively by
way of notification, no prosecution could be made or launched against
the petitioners for non-payment of bonus or for delayed payment of
bonus. Hence, when the Amendment Act, 2015 has not even seen the
light of the day, the petitioners cannot be prosecuted for the year 2015-
16 on the ground of delayed payment of bonus.
113. We have also perused the judgements cited by the learned counsel
for the respondents of Patna High Court in Civil Writ Jurisdiction Case
No.15379 of 2017 and Madras High Court in Writ Petition No.6958 of
2016 upholding the validity of Amendment Act with retrospective effect.
114. For the reasons delineated above, we are in agreement with the
judgement of Patna High Court as well as Madras High court.

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115. One further submission has been raised by Sri Diptiman Singh,
learned counsel for the petitioner that when the Amendment Bill was
presented before the Lok Sabha at 16:04 hours on 22.12.2015, it is
evident from the Lok Sabha discussion held on 22.12.2015, which is
enclosed at page-31 of the rejoinder affidavit in Writ-C No.8995 of
2016, that the Amendment Bill was presented with a proposal that it
st
should be made effective w.e.f. 1 day of April, 2015. However, without
there being any further discussion, it was proposed that the proposed
st
amendment may be made effective from the 1 day of April, 2014.
116. It is contended that since the Amendment Bill was presented with
proposal to amend it w.e.f. 01.04.2015 and without there being any
st
serious discussion, it was proposed to be made effective w.e.f. 1 day of
April, 2014. Thus, it is contended that constitutional decisions cannot be
made on the whims and desires of the Government. He further contends
that while the initial Bill by which it was proposed that the Bill to be
made effective w.e.f. 01.04.2015, the discussions had taken place with
regard to the financial aspect of the matter, but the proposed amendment
makes it’s applicability retrospectively and does not consider the
economic viability. Thus, it is evident that no proper discussion had
taken place for making the amendment with retrospective effect, and the
Amendment Act has been made effective retrospectively on the whims
of the Government, which cannot be permitted in law, therefore,
retrospective implementation of the Amendment Act, 2015 is bad in law
and against the spirit of the Constitution of India.
117. The respondent has filed a supplementary counter affidavit
annexing therewith the proposal relating to seeking approval of Hon’ble
Prime Minister under Rule 12 of the Government of India (Transaction
of Business) Rules, 1961 for moving an official amendment to the
Payment of Bonus (Amendment ) Bill, 2015. In paragraph nos.5 & 8 of
the said proposal, the justification for making the Bill retrospective have
been stated which are reproduced herein-below:-
“5. JUSTIFICATION : As it is evident from the above paragraph,
changes in the two ceilings have been given retrospective effect,

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initially through ordinance, for providing actual benefit to the
employees. On the same analogy, the date of implementation may be
1.4.2014. This will also help in meeting the expectations of the Trade
Union and may be useful in improving the relation with workers. The
competent authority to approve an official amendment to a Bill is the
Cabinet. However, it may not be feasible to bring the proposal before
the Cabinet at this stage.
8. APPROVAL : In view of the above, Cabinet Secretariat is requested
to convey the approval of the Hon'ble Prime Minister under Rule 12 of
the Government of India (Transaction of Business) Rules, 1961 for
moving an official amendment to the Payment of Bonus (Amendment)
Bill, 2015(pending in Lok Sabha) for making the date of
st
implementation as 1 day of April, 2014”.
118. Rule 12 of the Rules, 1961 is reproduced herein-below:-
“ 12. Departure from Rules .-
The Prime Minister may, in any case or classes or cases, permit or
condone a departure from these rules to the extent he deems
necessary.”
119. From perusal of Rule 12 of the Rules, 1961, it is evident that the
Prime Minister may, in any case or classes or cases, permit or condone
a departure from these rules to the extent he deems necessary. The
proposal to make the Rules, 1961 applicable has been duly approved by
the Prime Minister under Rule 12 of the Rules, 1961. Therefore, in view
of the aforesaid fact, the contention advanced by Sri Diptiman Singh,
learned counsel for the petitioners lacks merit and is accordingly,
rejected.
120. So far as the argument of Sri S.K. Tripathi that the amendment in
Section 12 of the Act, 1965 in respect to increase in ceiling limit is based
upon unreasonable classification is concerned, we find that the Madras
High Court in Writ Petition No.6958 of 2016 (The Employers’
Federation of Southern India and Others Vs. The Government of
India & Others) has given elaborate reasons for upholding the validity
of Section 12 of the Act, 1965, and has also dealt with the argument of

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rationale and reasonable classification. Relevant extract of paragraph
no.12 of the judgement of Madras High Court is reproduced herein
below:-
“(o) While considering the classification, the Hon'ble Supreme Court
considered the terms 'rationale and reasonable' in the judgment in
Transport & Dock Workers Union & Ors vs Mumbai Port Trust & Anr
(2011(2) SCC 575) and in paragraph 25, laid down the following test to
determine what is reasonable or having rationale. The same is
reproduced hereunder:
"25. In our opinion while it is true that a mathematically accurate
classification cannot be done in this connection, there should be
some broad guidelines. There may be several tests to decide
whether a classification or differentiation is reasonable or not.
One test which we are laying down and which will be useful in
deciding this case, is : is it conducive to the functioning of modern
society? If it is then it is certainly reasonable and rational."
(p) Useful reference can also be made as to the re-statement of law in
this regard to the judgment of the Hon'ble Supreme Court in State of
Tamil Nadu & Anr vs. National South Indian River Interlinking
Agriculturist Association, 2021 (15) SCC 534, more particularly,
paragraphs 15 to 15.2 which read as under:
"15. The equality code in Article 14 of the Indian Constitution
prescribes substantive and not formal equality. It is now a settled
position that classification per se is not discriminatory and violative
of Article 14. Article 14 only forbids class legislation and not
reasonable classification. A classification is reasonable, when the
twin tests as laid down by Justice SR Das in State of W.B v. Anwar
Ali Sarkar (1952 SCR 284) are fulfilled:
15.1 The classification must be based on an intelligible differentia
which distinguishes persons or things that are grouped, from others
left out of the group; and
15.2 The differentia must have a rational relationship to the object
sought to be achieved by the statute."

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(q) Thus, it is seen that the classification per se between the employees
who are in scheduled employment receiving minimum wages and
others by itself is not forbidden, provided the same is reasonable.
(r) The twin test for arriving at a finding as to the reasonability is that
it should be based on an intelligible differentia, which distinguishes
the persons or things that are grouped from the others left out of the
group. In this case, it is the workmen who are poorer among the poor
who are governed under the Minimum Wages Act, 1948 who are
grouped from the others left out.
(s) The second essentiality is that such differentiation must have a
rational relationship to the objects sought to be achieved by the
statute. The object sought to be achieved by the statute viz., the
original Act is to provide a reasonable amount of bonus. The object
of the amending Act is to enhance/modify or vary the quantum
according to the prevalent conditions. Taking into account the time it
takes to make amendments, i.e., it can be seen that the last
amendment was made in the year 2006 and it has taken almost
another decade to review the amount and the vagaries of the price
index, when at least in respect of one part of the employees an able
mechanism is available in the form of minimum wages, adopting the
same has a rational relationship to the objects sought to be achieved
by the statute. Therefore, we are unable to agree with the contentions
made on behalf of the petitioners that the impugned enactment
amounts to class legislation and is discriminatory. Accordingly, the
question is answered that the classification made is reasonable and
has nexus to the purposes of the Act.”
121. The judgements of Unichoyi (supra) & Bhikusa Yamasa
Kshatriya (supra) have elaborated the object behind promulgating the
Minimum Wages Act. The Apex Court in paragraph no.12 of the
judgement in the case of Unichoyi (supra) has stated that “ The policy of
the Act is to prevent the employment of such sweated labour in the
interest of general public and so in prescribing the minimum wage rates,
the capacity of the employer, need not be considered.”

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122. So the Apex Court while explaining the object behind the
introduction of Minimum Wages Act has held that the capacity of
employer is not to be considered as the welfare State assumes every
employer must pay the minimum wages to its labour before employing
them so as to prevent the exploitation of labours.
123. The Apex Court in the case of Sukanya Shantha (supra) has dealt
with contours of Article 14 of the Constitution of India, and in paragraph
no.34 of the judgement, the Apex Court has summarized the
constitutional standard laid down by the Court under Article 14 of the
Constitution of India. Paragraph no.34 of the said judgement is
reproduced herein below:-
“34. The constitutional standards laid down by the Court under Article
14 can be summarized as follows. First, the Constitution permits
classification if there is intelligible differentia and reasonable nexus
with the object sought. Second, the classification test cannot be merely
applied as a mathematical formula to reach a conclusion. A challenge
under Article 14 has to take into account the substantive content of
equality which mandates fair treatment of an individual. Third, in
undertaking classification, a legislation or subordinate legislation
cannot be manifestly arbitrary, i.e. courts must adjudicate whether the
legislature or executive acted capriciously, irrationally and/or without
adequate determining principle, or did something which is excessive
and disproportionate. In applying this constitutional standard, courts
must identify the “real purpose” of the statute rather than the
“ostensible purpose” presented by the State, as summarized in ADR.
Fourth, a provision can be found manifestly arbitrary even if it does
not make a classification. Fifth, different constitutional standards have
to be applied when testing the validity of legislation as compared to
subordinate legislation.”
124. It is true that a law should satisfy the twin test as laid down by the
Apex Court in order to pass the test of reasonable classification.
However, the Madras High Court has categorically repelled the
contention of employer that amendment in Section 12 of the Act, 1965
amounts to class legislation and is discriminatory. Therefore, the

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judgement of Apex Court in the case of Sukanya Shantha (supra) is of
no help to the petitioners.
125. Thus for the reasons given above, we are of the view that all the
writ petitions lack merit and are, accordingly, dismissed with no order as
to costs.
(Sudhanshu Chauhan,J.) (Saral Srivastava,J.)
th
27 February, 2026
Sattyarth/NS
Digitally signed by :-
SATTYARTH ANAND
High Court of Judicature at Allahabad