Spinners Vs. Regional Provident Fund Commissioner-I  Insc 1218 (4 December 2007)
Arijit Pasayat & P. Sathasivam
APPEAL NO. 1785 OF 2001 Dr. ARIJIT PASAYAT, J.
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.
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.
factual scenario lies into a very narrow compass.
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.
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.
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.
Learned counsel from the respondent on the other hand supported the orders of
the Commissioner and the High Court.
position of Section 16 at different points of time can be noticed. Section 16
as originally enacted read as follows:
Act not to apply to factories belonging to Government or local authority and
also to infant factories.
Act shall not apply to-
factory belonging to the government or a local authority, and
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
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
This Act shall not apply:
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
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:
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
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
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 set up.
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
Jayantilal Amratlal v. Union of India and Others (AIR 1971 SC 1193), it has
been laid down as under :
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."
Govinddas and others v. Income Tax Officer and another (AIR 1977 SC 552), it
was laid down that:
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."
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):
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.
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."
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:
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
anything not in force or existing at the time at which the repeal takes effect;
the previous operation of any enactment so repealed or anything duly done or
suffered thereunder; or
affect any right, privilege, obligation or liability acquired, accrued or
incurred under any enactment so repealed; or
any penalty, forfeiture or punishment incurred in respect of any offence
committed against any enactment so repealed; or
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
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.
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).
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
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.
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].
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
Appeal is allowed. No costs.