S.L. Srinivasa
Jute Twine Mills P. Ltd Vs. Union of India & Anr [2006] Insc 76 (15 February 2006)
Arijit
Pasayat & R.V. Raveendran
(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 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 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:
-
"Act not to apply to factories belonging to Government or local authority and
also to infant factories.
This
Act shall not apply to-
-
any factory
belonging to the government or a local authority, and
-
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:
-
This Act shall not apply:
-
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
-
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:
-
" 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
-
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
-
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 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 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
-
revive anything
not in force or existing at the time at which the repeal takes effect; or
-
affect 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
-
affect 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
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 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.
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