Full Judgment Text
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CASE NO.:
Appeal (civil) 6777 of 2003
PETITIONER:
S.L. Srinivasa Jute Twine Mills P. Ltd
RESPONDENT:
Union of India & Anr
DATE OF JUDGMENT: 15/02/2006
BENCH:
ARIJIT PASAYAT & R.V. RAVEENDRAN
JUDGMENT:
J U D G M E N T
(With Civil Appeal Nos. 6778 to 6780 of 2003)
ARIJIT PASAYAT, J.
These four appeals involve common points of law and, therefore,
are disposed of by this judgment which shall govern each one of them.
Appellant in each appeal has questioned correctness of the judgment
rendered by a Division Bench of the Andhra Pradesh High Court
dismissing the writ petitions filed before the High Court praying
issuance of a writ of mandamus to declare that Act 10 of 1998 seeking to
amend provisions of Section 16 of the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 (in short the ’Act’) shall not apply to
the writ petitioners and they would continue to have the "infancy
protection" for the period of 3 years starting from the date of
establishment of the industry. The High Court by the impugned
judgments dismissed the writ petitions holding that the amendment was
intended to take away certain benefits by way of necessary amendments
to Section 16 and the question as to whether any vested right are sought
to be affected would arise only when the provisions are given
retrospective operation.
It was held that the real intention was to deal with the
establishments universally on equal footing under the provisions of the
Act and, therefore, no exemption whatsoever was intended to be provided
in favour of any establishment. On and from date of enforcement of the
amended provisions all establishments including the establishments who
had enjoyed the benefit of exemption are brought within the purview of
the operation of the Act and they in no way alter any of the rights
accrued in favour of the writ petitioners’ establishments.
The factual scenario needs to be noted in brief as the controversy
is whether the appellants are entitled to the protection as claimed.
At the time of enactment of the Act:
Name of the
appellant
Sri Lakshmi
Srinivasa
Navya Jute
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Mills
Srinivasa
Jute Mills
Sitaram
Lakshmi
Jute Mills
Civil Appeal No.
6777/2003
6778/2003
6779/2003
6780/2003
Commencement of
infancy
period/commercial
production
November
17, 1995
April 1, 1996
August 19,
1997
February 19,
1997
Expiry of infancy
period as per
Section 16(d) as
claimed by appellant
November
16, 1998
March 31,
1999
August 20,
2000
February 18,
2000
Date of Ordinance
No.17/1997
September
22, 1997
September
22, 1997
September
22, 1997
September
22, 1997
Date of omission of
Section 16(d) (vide
Act 10/1998)
June 22,
1998 w.e.f.
22.9.1997
June 22,
1998 w.e.f.
22.9.1997
June 22,
1998 w.e.f.
22.9.1997
June 22,
1998 w.e.f.
22.9.1997
Balance infancy
period to be availed
1 year
1 month
24 days
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1 year
6 month
8days
2 years
10 month
28 days
2 years
5 month
26 days
Learned counsel for the appellants submitted that the High Court
has clearly erred in holding that the accrued rights were in no way
affected or altered. In fact, under the un-amended provisions the
appellants were entitled to the protection for the infancy period as
provided in the Act.
Learned counsel for the respondents on the other hand submitted
that in public interest the amendment can be done and this is a case
where keeping the ultimate welfare of the workers in view the
amendment was made and the exemption was not granted to any
category of establishment. That according to learned counsel for the
respondents meet the requirements of law and the judgment of the High
Court is therefore not open to challenge.
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
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.
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".
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,
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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".
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
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."
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.)
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
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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.
The crucial question therefore is the effect of the amendment on
the existing rights.
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."
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 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."
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
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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."
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."
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.
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
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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). "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)
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.
Above being the legal position, the judgments of the High Court are
indefensible and are set aside. The appellants shall be entitled to the
protection as had accrued to them prior to the amendment in 1997 for
the period of 3 years starting from the date the establishment was set up
irrespective of repeal of the provision for such infancy protection.
The appeals are accordingly allowed. No costs.