Full Judgment Text
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CASE NO.:
Appeal (civil) 1785 of 2001
PETITIONER:
Sangam Spinners
RESPONDENT:
Regional Provident Fund Commissioner-I
DATE OF JUDGMENT: 04/12/2007
BENCH:
Dr. ARIJIT PASAYAT & P. SATHASIVAM
JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO. 1785 OF 2001
Dr. ARIJIT PASAYAT, J.
1. Challenge in this appeal is to the judgment rendered by a
Division Bench of the Rajasthan High Court at Jodhpur
dismissing the Special Appeal filed by the appellant.
Challenge in the Special appeal was to the judgment of a
learned Single Judge whereby the writ petition filed by the
appellant was dismissed upholding the decision of the
Regional Provident Fund Commissioner (in short the
’Commissioner’). It was held that Section 16(1)(d) of the
Employees Provident Funds Act, 1952 (hereinafter referred to
as the ’Act’) was omitted from the statute by Act No.10 of 1998
with retrospective effect i.e. from 22.9.1997. In other words, it
was held that the infancy protection shall not be available to
the appellant factory after 22.9.1997.
2. The factual scenario lies into a very narrow compass.
Appellant started production on 1.9.1995 and according to it,
it was entitled to benefit under Section 16(1)(d) of the Act from
that day. From August, 1998 appellant started to comply with
the provisions of the Act as the three year fledging period as
envisaged under Section 16(1)(d) of the Act came to an end.
On 26.3.1999 enquiry under Section 7A of the Act was
initiated to secure the compliance of the Act from September,
1995 to July, 1998. By order dated 27.7.2000 the
Commissioner recorded a specific finding that the company
was a new unit and was eligible for exemption under Section
16(1)(d) of the Act but since it was effaced from the statue from
22.9.1997 the benefit was available till that date and not
thereafter. The writ petition filed was dismissed by the learned
Single Judge, so was the special appeal.
3. In support of the appeal learned counsel for the appellant
submitted that the view of the High Court is untenable and
even if retrospective effect was given the same was to not in
any way affect the entitlement of the appellant.
4. Learned counsel from the respondent on the other hand
supported the orders of the Commissioner and the High Court.
5. The position of Section 16 at different points of time can
be noticed. Section 16 as originally enacted read as follows:
"16. Act not to apply to factories belonging to
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Government or local authority and also to
infant factories.
This Act shall not apply to-
(a) any factory belonging to the government
or a local authority, and
(b) any other factory established whether
before or after the commencement, of this Act
unless three years have elapsed from its
establishment.
6. Section 16 was amended by the Employees’ Provident
Funds (Amendment) Act, 1958 and sub-section (1) of Section
16 of the Principal Act was substituted as under:
"(1) This Act shall not apply to any
establishment until the expiry of three years
from the date on which the establishment is,
or has been set up.
Explanation: For the removal of doubts it is
hereby declared that an establishment shall
not be deemed to be newly set up merely by
reason of a change in its location".
7. Section 16(1) was once again amended by the Employees’
Provident Funds (Amendment) Act, 1960 and sub-section (1) of
Section 16 was substituted as under:
"(1) This Act shall not apply:
(a) to any establishment registered
under the Co-operative Societies Act, 1912, or
under any other law for the time being in force
in any State relating to Co-operative Societies,
employing less than fifty persons and working
without the aid of power; or
(b) to any other establishment
employing fifty or more persons or twenty or
more but less than fifty persons until the
expiry of three years in the case of the former
and five years in the case of the latter, from
the date on which the establishment is, or has
been, set up.
Explanation: For the removal of doubts, it is
hereby declared that an establishment shall
not be deemed to be newly set up merely by
reason of a change in its location".
8. Section 16 was further amended by the Employees’
Provident Funds and Miscellaneous (Amendment) Act, 1988
with effect from 1.8.1988, and Clause (b) of sub-section (1) of
Section 16 was substituted by clauses (b), (c) and (d) and the
said amendment to Section 16 is as under:
"(b) to any other establishment belonging to
or under the control of the Central
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Government or the State Government and
whose employees are entitled to the benefit of
contributory provident fund or old age pension
in accordance with any scheme or rule framed
by the Central Government or the State
Government governing such benefit; or
(c) to any other establishment set up under
any Central Provincial or State Act and whose
employees are entitled to the benefits of
contributory provident fund or old age pension
in accordance with any scheme or rule framed
under that Act governing such benefits; or
(d) to any other establishment newly set up,
until the expiry of a period of three years from
the date on which such establishment is, or
has been set up."
9. Thereafter, Section 16 was again amended by Employees’
Provident Funds and Miscellaneous Provisions (Amendment)
Act, 1988, omitting clause (d) with explanation in sub-section
(1) of Section 16 with effect from 22.9.1997. (The said
omission was initially carried out by Ordinance No.17/1997
promulgated on 22.9.1997 followed by Ordinance No.25/1997
dated 25.12.1997 and Ordinance No.8 of 1998 dated
23.4.1998 followed by Act 10 of 1998.)
10. According to the appellants, the un-amended provisions
as it stood after the amendment in 1988 under clause (d),
apply to their cases and they were entitled to the protection
regarding non-application of the Act for a period of 3 years
from the date on which such establishment was set up.
According to the High Court, as clause (d) was deleted with
effect from 22.9.1997, the Act had application to every
establishment and no exemption or ’infancy period’ whatsoever
was available from 22.9.1997.
11. The crucial question therefore is the effect of the
amendment on the existing rights.
12. In Jayantilal Amratlal v. Union of India and Others (AIR
1971 SC 1193), it has been laid down as under :
"In order to see whether the rights and
liabilities under the repealed law have been
put to an end by the new enactment, the
proper approach is not to enquire if the new
enactment has by its new provisions kept alive
the rights and liabilities under the repealed
law but whether it has taken away those rights
and liabilities. The absence of a saving clause
in a new enactment preserving the rights and
liabilities under the repeated law is neither
material nor decisive of the question."
13. In Govinddas and others v. Income Tax Officer and
another (AIR 1977 SC 552), it was laid down that:
"Now it is 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
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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 of either
interpretation, it ought to be construed as
prospective only."
14. A Division Bench of Bombay High Court while
considering the earlier amendment to Section 16(1)(d)
curtailing the infancy period from 5 years to 3 years, held
thus, in Magic Wash Industries (P) Ltd v. Assistant Provident
Fund Commissioner, Panaji and Anr. (1999 Lab.I.C. 2197):
"There is no doubt that the vested rights or
benefits under the legislation could be
retrospectively taken away by legislation, but
then the statute taking away such rights or
benefits must expressly reflect its intention to
that effect. The infancy period prior to the
amended provision Section 16(1)(d) was five
years in the case of establishments employing
20 to 50 workers and in the event this infancy
benefit was to be withdrawn, it was necessary
that the intention of the Legislature should
have been clearly reflected in the amended
provision itself that the rights and benefits
which had already accrued stood withdrawn.
The amended clause 16(1)(d) came on the
statute book on June 2, 1988, when it was
assented by the President of India but the
amended Section 16 was put into operation
only with effect from August 1, 1988, which
empowered the Central Government to appoint
different dates for the coming into force of
different provisions of the Act. We find it
difficult in the circumstances, to conclude that
the intention of the Legislature was to take
away the benefit of infancy period which had
already accrued to the existing establishments
and this benefit has not been expressly taken
away or by implication by the amended
provision Section 16(1)(d). In the
circumstances, we are of the opinion that the
infancy period benefit of the petitioner for a
period of five years with effect from May 26,
1986, is not taken away by the amended
provision Section (1)(d) of the Act; and the
petitioner could continue to enjoy the said
infancy benefit for a period of five years till
May, 1991. Therefore, the demand made by
respondent 1 for the period up to May, 1991,
has to be quashed. The petitioners are
complying with the provisions of the Act with
effect from June, 1991."
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15. The matter can be looked at from another angle. Section
6 of the General Clauses Act, 1897 (in short ’General Clauses
Act’) deals with effect of repeal. The said provision so far
relevant reads as follows:
"6. Effect of repeal.- Where this Act, or any
(Central Act) or Regulation made after the
commencement of this Act, repeals any
enactment hitherto made or hereafter to be
made, then, unless a different intention
appears, the repeal shall not \026
(a) revive anything not in force or
existing at the time at which the
repeal takes effect; or
(b) affect the previous operation of any
enactment so repealed or anything
duly done or suffered thereunder; or
(c) affect any right, privilege, obligation
or liability acquired, accrued or
incurred under any enactment so
repealed; or
(d) affect any penalty, forfeiture or
punishment incurred in respect of
any offence committed against any
enactment so repealed; or
(e) affect any investigation, legal
proceeding or remedy in respect of
any such right, privilege, obligation,
liability, penalty, forfeiture or
punishment as aforesaid;
and any such investigation, legal proceeding or
remedy may be instituted, continued or
enforced, and any such penalty, forfeiture or
punishment may be imposed as if the
repealing Act or Regulation had not been
passed."
16. In terms of Clause (c) of Section 6 as quoted above,
unless a different intention appears the repeal shall not affect
any right, privilege or liability acquired, accrued or incurred
under the enactment repeal. The effect of the amendment in
the instant case is the same.
17. It is a cardinal principle of construction that every
statute is prima facie prospective unless it is expressly or by
necessary implication made to have retrospective operation
(See Keshvan Madhavan Memon v. State of Bombay AIR 1951
SC 128). But the rule in general is applicable where the object
of the statute is to affect vested rights or to impose new
burdens or to impair existing obligations. Unless there are
words in the statute sufficient to show the intention of the
Legislature to affect existing rights, it is deemed to be
prospective only ’nova constitutio futuris formam imponere
debet non praeteritis’. In the words of LORD BLANESBURG,
"provisions which touch a right in existence at the passing of
the statute are not to be applied retrospectively in the absence
of express enactment or necessary intendment." (See Delhi
Cloth Mills & General Co. Ltd. v. CIT, Delhi AIR 1927 PC 242).
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"Every statute, it has been said", observed LOPES, L.J., "which
takes away or impairs vested rights acquired under existing
laws, or creates a new obligation or imposes a new duty, or
attaches a new disability in respect of transactions already
past, must be presumed to be intended not to have a
retrospective effect."(See Amireddi Raja Gopala Rao v.
Amireddi Sitharamamma AIR 1965 SC 1970). As a logical
corollary of the general rule, that retrospective operation is not
taken to be intended unless that intention is manifested by
express words or necessary implication, there is a subordinate
rule to the effect that a statute or a section in it is not to be
construed so as to have larger retrospective operation than its
language renders necessary. (See Reid v. Reid, (1886) 31 Ch D
402). In other words close attention must be paid to the
language of the statutory provision for determining the scope
of the retrospectivity intended by Parliament. (See Union of
India v. Raghubir Singh (AIR 1989 SC 1933). The above
position has been highlighted in "Principles of Statutory
Interpretation" by Justice G.P. Singh. (Tenth Edition, 2006) at
PP. 474 and 475)
18. In The State of Jammu and Kashmir v. Shri Triloki Nath
Khosa & Others. (1974 (1) SCC 19) and in Chairman, Railway
Board & Ors. v. C.R. Rangadhamaiah & Ors. (1997 (6) SCC
623), this Court held that provision which operates to affect
only the future rights without affecting the benefits or rights
which have already accrued or enjoyed, till the deletion, is not
retrospective in operation.
19. The above position was highlighted by this court in S.L.
Srinivasa Jute Twine Mills (P) Ltd. v. Union of India and Anr.
[2006(2) SCC 740].
20. In view of the above position in law, the judgments of the
Commissioner and the High Court are indefensible and are set
aside. The appellant shall be entitled to the protection for the
period of three years starting from the date the establishment
was set up irrespective of the repeal of the provision for such
infancy protection.
21. Appeal is allowed. No costs.