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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.