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PETITIONER: STATE OF TAMIL NADUREPRESENTED BY SECRETARY,HOUSING DEPTT.,

       Vs.

RESPONDENT: K.SABANAYAGAM & ANR. ETC.

DATE OF JUDGMENT:       25/11/1997

BENCH: S.B. MAJHUDAR, M. JAGANNADHA RAO.

ACT:

HEADNOTE:

JUDGMENT:                THE 25TH DAY OF NOVEMBER, 1997 Present:               Hon’ble Mr.Justice S.B.Majmudar               Hon’ble Mr.Justice M.Jagannadha Rao R.Mohan, Sr.Adv.,  A.Mariarputham  and  Mrs.  Aruna  Mathur, Advs. with him for the appellant Ambrish Kumar Adv. for the Respondents.                       J U D G M E N T      The following Judgment of the Court was delivered:                           W I T H [Civil Appeal Nos.28/90; 2463-65/91; Civil Appeal Nos. 8274- 8275  of 1997 (Arising out of S.L.P. (C) Nos. 19795-96 of 1991); and Civil Appeal Nos. 8276-8278 of 1997 (Arising out of S.L.P. (C) Nos. 17684 of 1991] S.B. Majmudar, J.      Leave granted in the S.L.Ps.      As common questions of law and fact arise in this group of appeals  they were  heard together and are being disposed of by  this common judgment. The State of Tamil Nadu and the Tamil Nadu  State Housing  Board (hereinafter referred to as ’the Housing  Board’) as  appellants in  these appeals  have raised a  contention for our consideration as to whether the Payment of  Bonus Act, 1965 (hereinafter referred to as ‘the Act’) will  be applicable  to the  employees of  the Housing Board during  the relevant  accounting  years  from  1976-79 onwards. It  is contended  on behalf  of the appellants that the employees  of the  Board will  not be  entitled  to  the statutory bonus  under the  Act on twin grounds. Firstly, in view of  the statutory  exclusion of  the Housing Board from the applicability  of the Act as per Section 32(V)(C) of the Act: and secondly, on the ground that the State of the Tamil Nadu for  the relevant  years had  exercised  its  power  of exempting the Housing Board under Section 36 of the Act from all the  provisions of  the Act. In the writ petitions filed by employees  of the  Housing Board the High Court of Madras has taken the view that the Housing Board is not entitled on the facts  of the  cases to  earn statutory  exemption under Section 32(V)(C)  of the  Act and  the orders  of  exemption issued by  the State of Tamil Nadu in exercise of its powers under Section  36 of  the Act in favour of the Housing Board

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for the  relevant years,  were not  legally sustainable. The High Court   has  also taken  the view  that in any case the State of  Tamil Nadu  had no  authority  to  retrospectively grant exemption  under Section 36 of the Act for the earlier accounting years.  Net result of the impugned orders is that the Housing  Board has  been directed  to  make  payment  of statutory bonus  to the employees from accounting year 1978- 79 onwards.      It may  be mentioned that while admitting these appeals to final  hearing  the  stay  of  impugned  orders  was  not granted. Resultantly  we are informed that but for one year, for all  the rest  of the  years the  amounts  of  bonus  in dispute have  already been released by the Housing Board and paid to its employees.      Background facts and the relevant statutory scheme      For highlighting  the aforesaid controversy between the parties it  is necessary  to note  a few introductory facts. The Housing  Board is a statutory body established under the Tamil Nadu State Housing Board Act, 1961. As the Preamble of the said  Act shows  it is  to provide  for the execution of housing and  improvement schemes  for the establishment of a State Housing  Board and  for certain  other matters. By the Central Act,  namely, the  Payment of  Bonus Act. 1965 every factory as  defined by  clause  (m)  of  Section  2  of  the Factories Act,  1946 and  every other establishment in which twenty or  more persons  are employed  on  any  day  in  the accounting year,  are covered by the sweep of the Act as per Section 1  thereof. The  employees of  such establishment as per Section  8 of  the Act  are entitled to be paid by their employers in  an accounting  in year.  bonus, in  accordance with the provisions of the Act provided he has worked in the establishment for  not less than thirty working days in that year. Section  10  which  deals  with  ‘Payment  of  minimum bonus’. lays  down that. ’subject to the other provisions of this Act,  every employer  shall be  bound to  pay to  every employee in respect of the accounting year commencing on any day in  the year  1979 and  in respect  of every  subsequent accounting year,  a minimum  bonus which  shall be  8.33 per cent of the salary of wage earned by the employee during the accounting year  or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year’.  Section 32  of the  Act gives  classes of employees   who    are   statutorily   exempted   from   the applicability of  the Act.  Relevant provisions  thereof lay down that,  ’nothing in  this Act shall apply to - (1) ....; (ii) ...;  (iii) ...;  (iv) ...; (v) employees employed by - (a) ...; (b) ...; and (c) institutions (including hospitals, chambers  of   commerce  and  social  welfare  institutions) established not  for purposes  of profit’. Section 36 of the Act deals with ’Power of exemption’ and reads as under:      "36.  Power  of  exemption.-If  the      appropriate   Government,    having      regard to  the  financial  position      and other relevant circumstances of      any  establishment   or  class   of      establishments, is  of opinion that      it will  not be  in public interest      to  apply   all  or   any  of   the      provisions of  this Act thereto, it      may,   be   notification   in   the      official Gazette,  exempt for  such      period as  may be specified therein      and subject  to such  conditions as      it may  think fit  to impose,  such      establishment    or     class    of

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    establishments from  all or  any of      the provisions of this Act."      In exercise  of its  powers under Section 36 of the Act the State  of Tamil  Nadu by  Government Ms.  No. 2016 dated 31st October  1979 in  the  Housing  and  Urban  Development Department directed  that the  Tamil Nadu  Housing Board was exempted from  all the  provisions of  the Payment  of Bonus Act, 1965  for a  period upto  accounting  year  1977-78.  A similar Government Order Ms. No. 1033 on the same Department was issued  on 23rd  November 1962  exempting the Tamil Nadu Housing Board  from all  the provisions  of the  Payment  of Bonus Act.  1965 for  a further  period upto accounting year 1982-83. We  are told that for subsequent years similar such Government Orders under Section 36 of the Act were issued by the State  of Tamil Nadu in favour of the Tamil Nadu Housing Board. The  employees who  were to get statutory bonus under the Act  naturally felt  aggrieved  by  the  said  exemption orders of  the State  of Tamil  Nadu and  moved various writ petitions in the High Court on diverse grounds. The earliest Petition No.2343  of 1981 before the High Court was heard by a learned  Single Judge  of the High Court, Mohan, j. (as he then was),  wherein the  claim of  bonus was confined by the employee from  accounting year  1976-79 onwards.  This  writ petitions was  allowed and  the Housing Board as directed to pay the  minimum statutory  bonus to  the employee  from the accounting 1978-79  onwards. The learned Single Judge voided the exemption orders issued by the State of Tamil Nadu under Section 36  of the  Act qua  the relevant  accounting years. Writ Appeals  preferred by  the Housing Board as well as the State of  Tamil Nadu were disposed of by the impugned common judgment by  a Division  Bench of  the High  Court  speaking through Nainar  Sundaram J.  (as the  then  was).  That  was resulted in  Civil Appeal  No.4559 of  1989. Following  this decision the  High Court  also granted  similar  relief  for successive years  to the employees concerned after declaring the exemption  orders for  the relevant  years, as issued by the State  of Tamil  Nadu under Section 36 of the Act, to be null and  void. That  is how  in this  group of  appeals the State of Tamil Nadu and the Housing Board have sought to re- agitate their  main grievances  against  the  claim  of  the employees for statutory bonus under the Act for the relevant years.      Rival Contentions      Learned  senior   counsel,  Shri   R.  Mohan,  for  the appellants vehemently  contended that  the High Court in the impugned judgments  has patently  erred in  taking the  view that the State of Tamil Nadu in exercise of its powers under Section 36  of the  Act had no authority and jurisdiction to grant exemption  retrospectively for the  earlier accounting years. This  submission was  canvassed in  the light  of the aforesaid two  Government Orders dated 31st October 1979 and 23rd  November   1982.  It  was  next  contended  that  even otherwise the  Housing Board  had earned statutory exemption under Section  32 (v)  (c) of  the Act  as it  was a  social welfare institution  established not  for  the  purposes  of profit and  consequently its  employees could  not claim any bonus under the Act. It was ultimately contended that in any view of  the matter  once power  of exemption  which in  the nature of conditional legislation was exercised by the State of Tamil  Nadu under  Section 36  of the  Act, the orders of exemption for  the relevant  years as issued by the State of Tamil Nadu  could not have been declared to be null and void on the  ground that  before invoking such power of exemption the State  had not  given  opportunity  of  hearing  to  the employees concerned  who were  likely to  be affected by the

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grant of such exemption.      Learned   counsel    for   the   respondent   employees represented by their unions on the other hand submitted that the impugned  orders of  the High Court were quite justified on the  facts  and  circumstance  of  the  cases.  That  the Government Order  dated 23rd  November 1982 was rightly held by the  High Court  to be  inoperative so far as it tried to retrospectively grant  the exemption under Section 56 of the Act for  earlier accounting  years to  the Housing  Board as such an  exercise of  power is  not contemplated by the said Section. It was next contended that question of availability of statutory  exemption to the Board under Section 32(v) (c) of the  Act does not arise on the facts and circumstances of the present  cases inasmuch  as it  was  the  stand  of  the Housing Board  itself before  the High Court and even before the State  that the  Act was  applicable to  it and it would have been  required to  pay the  bonus and  for exemption it from its  liability the  exemption powers of the State under Section 36 of the Act were invoked by the Board and that too successfully. It  was submitted  that questions  whether the Housing Board  was an  institution in  the nature  of social welfare institution  and whether  it was established not for the purposes  of profit, required investigation of facts and when such contentions which raise mixed questions of law and fact were  not canvassed earlier by the Housing Board and on the contrary  the Housing  Board had  accepted its statutory liability to be covered by the Act but for the invocation of the powers  of the  State Under  section 36 it could be said that such contentions on the facts of the present cases were waived by  the Housing  Board and  was rightly  held  to  be estopped from raising such contentions before the High Court as held in the impugned judgments. In the alternative it was tried to  be submitted as the Housing merits this contention had no  substance as  the Housing  Board in the light of the relevant provisions  of the  Act cannot  be said  to  be  an institution established  not for  the purposes of profit. In this connection  it  was  submitted  that  there  was  ample evidence on  record including  admissions on the part of the authorities of  the Housing  Board themselves  that  various other Housing  Boards like  the West  Bengal Housing  Board, Gujarat Housing  Board and  other Housing Boards were paying bonus under the Act to their employees. That in view of this stand taken  by the  Board itself, for invoking the power of exemption by  the State  Government under  Section 36 of the Act,  this  Court  may  not  examined  the  merits  of  this contention especially  when bonus  amounts for  the relevant years  have   already  been  paid  by  the  Housing  to  its employees. It  was lastly  contended that the High Court was justified in  taking the  view that  the impugned  exemption orders issued  by the  State from time to time were null and void as no opportunity of hearing was given to the employees by the  State while  issuing the impugned orders which had a direct pernicious  and adverse  effect on their civil rights and amounted  to depriving  them of their statutory right of bonus under  the Act.  That implicit  in Section  36 is  the requirement for the appropriate Government to have a look at the rival  contentions which  may have  to  be  put  forward before  the  appropriate  Government  by  the  claimants  of exemption on  the one  hand and  their employes likely to be adversely affected  by such  exemptions on  the other  hand, before such  drastic power  of exemption  having  pernicious civil consequences  and evil  effects on  the  employees  on their pay  packet could  be visited on the employes for whom minimum statutory  bonus  as  granted  by  the  Act  of  the Parliament was a sort of a deferred wage.

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    Points for Consideration      In the  light of  the aforesaid  rival contentions  the following points arise for consideration: 1.   Whether the exemption order dated 23rd November 1982 is      bad inasmuch  as it  seeks to  retrospectively apply to      earlier accounting  years 1978-79, 1979-80, 1980-81 and      1981-82. 2.   Whether the provisions of the Act are not applicable to      the Housing  Board in  view of Section 32(v) (c) of the      Act. 3.   Whether the  exemption orders  issued by  the State  of      Tamil Nadu  from time to time during the relevant years      as per  Section 36  of the  Act are null and void as no      hearing was admittedly given by the State of Tamil Nadu      to the employees likely to be affected by such exercise      of power of exemption before issuing such orders.      We shall  deal which  these  points  for  determination seriatim.      Point No.1      So  far   as  the   alleged  retrospective   effect  of Government Order  dated 23rd  November 1982 is concerned, we have to  keep in  view  that  earlier  Government  Order  of exemption under Section 36 of the Act was dated 31st October 1979. The  said order  recited that.  ’in  exercise  of  the powers conferred  by section  36 of the Payment of Bonus Act 1965 (Central  Act 21 of 1965), the Government of Tamil Nadu hereby exempts  the Tamil  Nadu Housing  Board, from all the provisions of  the said  Act for  a further  period upto the accounting year  1977-78’. That was followed by the impugned notification/Government Order Ms.No.1033 dated 23rd November 1982. It  recited that  having read  the earlier  Government Order dated  31st October  1979 and  other relevant  letters from the  Chairman of  the Housing  Board, the  Governor, in exercise of  the powers  conferred  by  section  36  of  the Payment of Bonus Act, 1965 (Central Act 21 of 1965), exempts the Tamil Nadu Housing Board, from all the provisions of the said Act  for a  further period  upto the  accounting  years 1982-83. It  was  vehemently  contended  by  learned  senior counsel for  the appellants that first notification  of 31st October 1979  exempted the Housing Board from the provisions of the Act for a further period upto accounting year 1977-78 and in  continuation thereof  the  second  notification  was issued on  23rd November  1982 by  which exemption  from the provisions  of   the  Act  was  further  extended  upto  the accounting  year   1982-83  and,   therefore,   the   second notification certainly  sought to  cover earlier  accounting years 1976-79,  1979-80, 1980-81  and 1981-82.  That such an exercise,  according  to  learned  senior  counsel  for  the appellants, was  legally permissible  for  the  State  under Section 36  of the  Act as  it was  an exercise  of power of conditional legislation  and that the High Court had wrongly held  that   such   a   power   could   not   be   exercised retrospectively. We  would have  been  required  to  closely examined this  contention but  for  the  fact  that  on  the language of  the notification dated 23rd November 1982 it is not possible to countenance the contention of learned senior counsel for the appellants that the said notification on its express terminology  sought to  apply the  net of  exemption retrospectively for   earlier  years 1976-79  to 1981-82. On the language  of the notification it appears clear that even though the  Governor had  read the  earlier Government Order dated 31st  October 1979  as recited in the notification all that the  Governor was  pleased to  order was  that all  the provisions of  the Act  will not  apply to the Housing Board for a  further period  upto  accounting  year  1982-83.  The

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notification is  dated 23rd  November 1982.  Therefore, from that date  23rd November  1982.  Therefore,  from  the  date onwards  till   the  end  of  the  accounting  year  1982-83 exemption was  granted. Nowhere  in the said notification it is stated  that the  author of  the notification  wanted the said notification  to  retrospectively  cover  even  earlier accounting  years which had already gone by. If such was the intention of  the author  of the notification the wording of the notification  would  have  clearly  mentioned  that  the provisions of  the Act  would not apply for a further period from  1978-79   upto  the   accounting  year  1982-83,  Such terminology is  conspicuously absent  in the notification of 23rd November  1982. We must, therefore, hold that the State of  Tamil  Nadu  while  issuing  the  notification  of  23rd November 1982,  for reasons best known to it, had thought it fit not  to cover  the earlier accounting years from 1978-79 to 1981-82 inspite of the fact that the earlier notification under Section  36 of  the Act  had ceased  to operate on the expiry of  the accounting  year 1977-76  as  seen  from  the express wording  of  the  earlier  notification  dated  31st October 1979.      In view of the aforesaid conclusion of ours. therefore, it  will  not  become  necessary  to  examined  the  further question whether  the notification  dated 23rd November 1982 could be  legally issued with any retrospective effect. This question becomes  academic  in  the  light  of  the  express language  of  the  said  notification  as  discussed  by  us earlier. We,  therefore, hold that the ultimate decisions of the High  Court that  the notification  dated 23rd  November 1982 had  no  retrospective  effect,  is  justified  but  we express no  opinion on  the question  whether the  purported retrospective effect  given by the notification to the claim of exemption  for the  earlier accounting  years was legally permissible under  Section 36 or not. This wider question is kept  open.  Point  No.1  is,  therefore,  answered  in  the negative for  the aforesaid reasons which are different from those which appealed to the High Court.      Point No.2      The  contention  of  learned  senior  counsel  for  the appellants is  that the  Bonus Act itself does not apply the Housing Board  in view  of Section  32(v)  (c)  of  the  Act extracted hereinabove.  A mere  look at  the said  provision shows that  the  Bonus  Act  will  not  apply  to  employees employed  by  the  establishment  established  not  for  the purposes of  profit. The appellants’ contention is two-fold. Firstly it  is a  social welfare institution and secondly it is established  not  for  the  purposes  of  profit.  It  is statutorily  established   for   under   taking   beneficial activities for  the people  of Tamil  Nadu with  a  view  to supplying them housing accommodation at reasonable costs and to save them from exploitation by builders; that the Housing Board  has   also  to  undertake  various  other  beneficial functions of  public interest  as per  the provisions of the Act. So  far as  this contention is concerned the High Court in the  impugned judgment  has taken  the view that by their own act  the Housing  Board accepted that the Act applies to it and, therefore, it, by passing various resolutions sought for exemption  from the  Act by  invoking the  powers of the State of  Tamil Nadu  under Section  36 of  the Act. In this connection it  has to  be kept  in view  that before Section 32(v) (c) of the Act can be pressed in service the following factual aspects have to be pleaded and proved by the Housing Board - 1.   That it is a social welfare institution; 2.   That it  is established not for the purposes of profit;

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    and 3.   Even  otherwise   it  is   an  institution   which   is      established from  its inception not for the purposes of      profit.      This would  require  investigation  into  facts  as  to whether the Statute under which the Housing Board is created enjoins upon the Housing Board functions which are likely to generate profit and whether in fact profit gets generated by the exercise  of  permissible  statutory  functions  by  the Housing Board.  These questions  which are factual questions would be  required to  be considered  if properly pleaded by the Housing  Board. Instead  of pressing  in  service  these factual aspects  for consideration  the  Housing  Board  had consistently relied  upon the  exemption power  of the State Government under  Section 36  of the  Act for the accounting years in questions. In this connection the High Court relied upon various  proceedings of  the Housing  Board spread over years wherein  the Housing  Board has consistently taken the stand that it would require exemption from the provisions of the Act by invoking the powers of the State under Section 36 of the  Act. We have gone through these relevant proceedings referred to  by the  High Court in the impugned judgment and these proceedings dated 28th February 1978 and 04th May 1979 clearly give  out a  picture about  the stand of the Housing Board even  before the  present litigation  saw the light of the day.  Once it  is the  case of  the Housing Board itself that the Act would apply to it in the light of the statutory functions carried  out by  it and, therefore, there was need to get exemption from the Act under Section 36 of the Act no fault can be found with the reasoning of the High Court that the Housing Board had waived its contention that there was a statutory exemption  for the  Housing Board  as per  Section 32(v) (c)  of the  Act. It  is obvious  that if  the Housing Board was  statutorily exempted  under  the  said  provision there was no need for the Housing Board to invoke the powers of the  State of  Tamil Nadu under Section 36 of the Act for getting exemption  from the  Act by  satisfying the State of Tamil Nadu  that it  is an  establishment  which  in  public interest  requires  such  exemption  having  regard  to  its financial  position   and  other   relevant   circumstances. Simultaneous invocation  of Sections 32(v) (c) and 36 of the Act during  the course of present proceedings would indicate that the  Housing Board  tried to  blow hot  and cold at the same time  by taking  inconsistent positions.  In  fact  the claim for  statutory exemption  under Section  32 (v) (c) of the Act  cannot stand if the power of exemption of the State Government under Section 36 is invoked by the Housing Board. Similarly Section  36 of  the Act  would get  out of picture once Section  32 (v)  (c) of  the Act was resorted to by the Housing  Board.   But  both  the  provisions  could  not  be simultaneously  resorted   to.  Under  these  circumstances, therefore, the  High Court  was right in not considering the case of  the Housing  Board for  statutory  exemption  under Section 32(v)  (c) of  the Act  for the  relevant accounting years wherein  the Housing  Board had  tried to  obtain  and actually got  orders of  exemption under  Section 36  of the Act. In  this connection  it is useful to refer to the Notes of proceedings of 04th May 1979 under Item 277 of the agenda of the  Special Board  meeting of  the Housing Board wherein its Chairman had prepared the Note to the following effect:      "...The Tamil  Nadu  Housing  Board      was exempted from the provisions of      the  Payment  of  Bonus  Act  under      Section 36 of the Act for (sic) the      temporary periods  upto the  end of

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    the  1973-74.  This  exemption  had      necessarily to  be obtained for the      reason that  the Tamilnadu  Housing      Board   is   governed   under   the      Industrial Disputes  Act  according      to the orders issued in G.O.Ms. No.      9139,   H.U.    III/2/69-2,   dated      14.3.69  (copy  appended  herewith)      when the  Housing Board is governed      under the  Industrial Disputes Act,      the applicability  of the Bonus Act      is  not   obligatory  but   it   is      statutory.   As    the    financial      position of  the Board  in the past      was not  sound enough,  the payment      exemption was previously sought for      by the Board...."      In the  said note  it has  been  further  mentioned  as under:      "Under the  rules, the  payment  of      minimum bonus will be 8.1/3% of the      pay for  persons  who  are  drawing      less than  Rs.1600/-    per  month,      subject to  a maximum  of  Rs.750/-      per  annum.   Presently,  the  West      Bengal Housing  Board  and  Gujarat      Housing Board  are paying bonus for      their   employees.   It   is   also      ascertained from  the Government of      West Bengal  that they  are  making      payment of bonus to their employees      at the  rate of 8.1/3% treating the      Board as  an ‘Industry’  under  the      Industrial   Disputes    Act.   The      payment is  made by them from their      revenues only,  which they are able      to  earn  by  adding  buildings  by      public auctions  etc., on  the same      analogy, the Housing Board may also      derive income  in the  near  future      and there may not be any difficulty      in meeting this expenditure in this      regard from  its  available  funds.      Besides, the Housing Board with its      assets and  liabilities is  earning      more  and   more  every  year.  the      income derived  by way  of  rental,      leasing of  shops and stalls, etc.,      will undoubtedly  go towards profit      to certain extent.      In the  circumstances,  it  appears      not  necessary   to  seek  for  the      exemption of  the  Government  from      the payment  of  minimum  bonus  of      8.1/3% which  is a  statutory right      as per  the orders  issued in  G.O.      Ms.  No.   1045.   Finance,   dated      1.11.1977. The Government have also      directed that when payment of bonus      to  the  employees  of  the  public      sector undertakings  is strictly in      accordance with  the provisions  of      the Bonus  Act, such cases need not      be referred  to the  Government for      approval.  No  deviation  from  the

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    Bonus Act  should normally be made.      However,  if   any   deviation   is      proposed  to  be  made  by  way  of      payment of  ex gratia  or any other      incentive in cash or any kind, then      only  it  should  carry  the  prior      approval of the Government."      In view  of this  clear stand  taken by the Chairman of the Housing  Board at  the relevant  time it becomes obvious that is  was never in the contemplation of the Housing Board that it  was statutorily  exempted from the Act and from the obligation to  pay the minimum bonus to the employees as per Section 32  (v) (c)  of the Act when other Housing Boards as mentioned therein were also paying bonus to their employees. It was  also noted by the Housing Board in these proceedings spread over years that other Housing Boards like West Bengal Housing Board  and Gujarat  Housing Board  were also  paying bonus to  their employees.  Under these  circumstances,  the Housing Board  had rightly  taken the stand that the Payment of Bonus Act would apply to it and that is the reason why it sought exemption from the operation of the Act under Section 36 from the Tamil Nadu Government from time to time.      We may  mention that by the decisions of a Bench of two learned Judges of this Court in the case of Housing Board of Haryana v. Haryana Housing Board Employees’ Union and others [(1996) 1  SCC 95]  Bonus Act  is held applicable to Haryana Housing  Board  by  holding  that  it  is  not  entitled  to statutory exemption from the Act under Section 32 as a local authority. We  are informed  that accordingly bonus is being paid by  the said  Board to  its employees  as per the Bonus Act.      In this  connection it  is, therefore, too late in  the day for  the Tamil  Nadu Housing  Board to take a somersault and to  try to  submit that despite its consistent course of conduct spread  over decades  accepting the position that it was statutorily  liable to  pay the minimum bonus as per the Act, but  for the exemption sought by it under Section 36 of the Act,  in fact  the  Act itself did not apply to it under Section 32  (v) (c)  of the  Act and  all  attempts  to  get exemption from the Act under Section 36 were misconceived or uncalled for or an exercise in futility. We must, therefore, proceed on  the basis  that it  was an  admitted position on behalf of the Housing g Board during the relevant accounting years with which we are concerned that it is governed by the provisions of the Act and but for exemption under Section 36 of the  Act it  would be  bound to pay the minimum statutory bonus as laid down by the Act to its employees. On the basis of this admitted position and stand on behalf of the Housing Board the  High Court  was quite justified on observing that the Housing  Board had  waived its objections regarding non- applicability of  the Act under Section 32(v) (c) of the Act in the  present cases.  There is no question of any estoppel against Statute  as tried  to be submitted by learned senior counsel for  the appellants  in this  connection. On factual aspects if  a consistent stand is taken by the Housing Board to the  effect that  is governed by the Act, implicit in the stand is  the admission  on facts  that statutory  exemption under Section  32(v) (c)  of the Act factually is not earned by the  Board. When  on facts  the  Housing  Board  has  not thought it fit to raise such a factual dispute or contention for the  relevant accounting  years its  stand admitting the non-existence of  the relevant  data  for  invoking  Section 32(v) (c)  of the  Act must  be held  binding to the Housing Board. It  is obvious that facts which are admitted need not be proved.  The Housing Board itself by its conduct admitted

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non-existence of  relevant factual  data  for  invoking  the powers under Section 32(v) (c) of the Act. Therefore, it can certainly be  held to  be bound  by its  admissions on these facts and  it can  at least  to the  lowest be  said to have waived its  contention in  this connection  for the relevant accounting years.  It would  amount to estoppel on facts and not on  law and  would also  certainly amount to a conscious giving up  of its  claim for  statutory exemption  under the said  provisions.  Thus  on  the  principle  of  waiver  and estoppel the  second contention  of the appellants has to be repelled as  has been  rightly done by the High Court, Point No.2 is, therefore, answered in the negative.      Point No.3      This takes  us to  the  last  contention  canvassed  on behalf of  the appellants. It is true that Section 36 of the Act is  held by  a Constitution  Bench of this Court to be a piece of  conditional legislation.  In  the  case  of  Jalan Trading co.  (Private Ltd.)  v. Mill Mazmoor Union [(1967) 1 SCR 15]  the majority  of the  Constitution  Bench  speaking through J.C.  Shah. J.  while interpreting Section 36 of the Act has made the following pertinent observations:      "By s.36 the appropriate Government      is invested with power to exempt an      establishment   or   a   class   of      establishments from  the  operation      of the Act, provided the Government      is  of   the  opinion  that  having      regard to  the  financial  position      and other relevant circumstances of      the establishment,  it would not be      in the public interest to apply all      or any  of the  provisions  of  the      Act. Condition for exercise of that      power is  that the Government holds      the opinion  that it  is not in the      public interest to apply all or any      of the  provisions of the Act to an      establishment    or     class    of      establishments, and that opinion is      founded on  a consideration  of the      financial   position    and   other      relevant circumstances.  Parliament      has clearly  laid  down  principles      and has  given adequate guidance to      the appropriate  Government in  the      implementing  the   provisions   of      s.36. The  power so  conferred does      not   amount   to   delegation   of      legislative authority.  Section  36      amounts to conditional legislation,      and is not void, whether in a given      case,  power   has  been   properly      exercised   by    the   appropriate      Government   would   have   to   be      considered   when   that   occasion      arises."      The said  observations have been made for repelling the challenge to  the vires  of Section  36 of  the Act  on  the ground that  is amounted  to  excessive  delegation  of  the legislative power  or was  violative of  Article 14  of  the Constitution of  India.  The  question  with  which  we  are concerned in the present proceedings was not on the anvil of scrutiny before the Constitution Bench of this Court in that case, namely, whether before exercising powers under Section 36 as  a delegate  of conditional  legislative function  the

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appropriate Government  was estopped  from  considering  the rival version  or rebuttal  evidence that  may be offered by the employees  whose employer  seeks exemption  from the Act under Section  36 thereof. The distinction between delegated legislation and  conditional legislation  is clear  and well settled one.  In this  connection we may usefully refer to a Constitution Bench  decision of  this Court  in the  case of Hamdard Dawakhana  (Wakf) Lal  Kuan, Delhi   and  another v. Union of  India and  others [(1969)  2 SCR  671]. Kapur.  J. speaking for  the Constitution  Bench has made the following pertinent observation at page 695 of the Report :      "...   The    distinction   between      conditional    legislations     and      delegated legislation  is this that      in the  former the delegate’s power      is  that   of  determining  when  a      legislative   declared    rule   of      conduct  shall   become  effective:      Hampton &  Co. v.  U.s.  [276  U.S.      3941  and   the   latter   involves      delegation  of  rule  making  power      which   constitutionally   may   be      exercised  by   the  administrative      agent.   This    means   that   the      legislature having  laid  down  the      broad principles  of its  policy in      the legislation  can then leave the      details  to   be  supplied  by  the      administrative authority.  In other      words by  delegated legislation the      delegate completes  the legislation      by  supplying  details  within  the      limits prescribed  by  the  statute      and in  the case of the conditional      legislation  the   power   of   the      legislation  is  exercised  by  the      legislature  conditionally  leaving      to the  discretion of  an  external      authority the  time and  manner  of      carrying   its   legislation   into      effect as  also the   determination      of the  area  to  which  it  is  to      extend; [The  Queen1] v.  The Queen      (1822) 7  App. Cas.  829. 835; King      Emperor v.  Benoarilal Sarma (1944)      L.R. 72 I.A. 57; Sardar Inder Singh      v. State  of Rajasthan  (1957)  SCR      605]. Thus  when  the  delegate  is      given the power of making rules and      regulations in order to fill in the      details to  carry out  and subserve      the purposes of the legislation the      manner in which the requirements of      the statute  are to  be met and the      rights  therein   created   to   be      enjoyed  it   is  an   exercise  of      delegated legislation.  But wen the      legislation is  complete in  itself      and the legislature has itself made      the law  and the only function left      to the delegate is to apply the law      to an area or to determine the time      and  manner  of  carrying  it  into      effect,    it     is    conditional      legislation."

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    It is  thus obvious  that in  the case  of  conditional legislation, the  legislation is  complete in itself but its operation  is  made  to  depend  on  fulfilment  of  certain conditions and what is delegated to an outside authority, is the power to determine according to its own judgment whether or not  those conditions are fulfilled. In case of delegated legislation proper, some portion of the legislative power of the Legislature  is delegated  to the  outside authority  in that, the  Legislature, though competent to perform both the essential and ancillary legislative functions, performs only the former  and parts  with the  latter, i.e., the ancillary function of  laying down  details in  favour of  another for executing the policy of the statute enacted. The distinction between the  two exists  in this  that  whereas  conditional legislation contains no element of delegation of legislative power and  its, therefore,  not open to attack on the ground of excessive  delegation, delegated  legislation does confer some legislative  power on  some outside  authority  and  is therefore  open   to  attack  on  the  ground  of  excessive delegation. In  this connection  we  may  also  refer  to  a decision of  this Court rendered in the case of Sardar Inder Singh v.  State of Rajasthan [AIR 1957 SC 510] wherein it is laid down  that when as appropriate Legislature enacts a law and authorities  an outside authority to bring it into force in such  area or  at such  time as  it may  decide, that  is conditional and not delegated legislation.      A number  of decisions  of this  Court were  pressed in service by  the learned senior counsel for the appellants to submit that  there is  no question  of giving any hearing to the affected  parties by  an agent who exercises conditional legislative power. We may briefly refer to them.      In the  case of  Tulsipur Co. Ltd. v. The Notified Area Committee. Tulsipur  [(1960) 2  SCC  295]  Venkataramiah.j.. speaking for  this Court had to consider the nature of power entrusted to  the State  under Section  3 of U.P. Town Areas Act, 1914  under which  the State Government by notification could declare  and define  town areas  where the  U.P.  Town Areas Act  could apply.  Considering this  exercise  of  the power being  in the  nature of  a conditional legislation it was held  that the  power  of  the  Legislature  to  make  a declaration under  the Section  is legislative  in character because the  applicability of the rest  of the provisions of the Act to the geographical area which is declared as a down area is dependent upon such declaration. The maximum of audi alteram partem  does not  become applicable  to the  case by ncessary implication.  Section 3  does not require the State Government to  make declaration  after giving  notice of its intention so to do to the members of the public and inviting their representation  regarding such  action. Our  attention was also  invited to a decision of this Court in the case of Union of  India and  another  v.  Cynamide  India  Ltd.  and another [(1987)  2 SCC  720]. In  that case  the  Court  was concerned with  the question  whether price  fixation  under Paragraph 3  of Drugs  (Prices Control)  Order, 1979  was an executive function or a legislative function. Treating it to be a  legislative function  Chinnappa Reddy,J., speaking for the Court  observed that  the legislative action, plenary or subordinate, is  not subject to rules of natural justice. In the case  of Parliamentary  legislation, the  proposition is self-evident. In the case of subordinate legislation, it may happen that  Parliament may  itself provide for a notice and for a  hearing in  which case the substantial non-observance of the  statutorily prescribed  mode  of  observing  natural justice may  have the effect of invalidating the subordinate legislation. But,  where the  legislature has  not chosen to

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provide for any notice or hearing, no one can insist upon it and it  will not be permissible to read natural justice into such  legislative  activity.  It  was  further  observed  in paragraph 27  of the  Report that  the price  fixation under Paragraph 3  of the said Order being a legislative activity, the principles of natural justice are not attracted. In this connection Chinnappa Reddy, J., in paragraph 7 of the Report has made the following pertinent observations:      "... A price fixation measures does      not   concern   itself   with   the      interests    of    an    individual      manufacturer  or  producer.  It  is      generally   in   relation   to   an      particular commodity  or  class  of      commodities or  transactions. It is      a direction of a general character,      not directed  against a  particular      situation.  It   is   intended   to      operate  in   the  future.   It  is      conceived in  the interests  of the      general consumer  public. The right      of the  citizen to obtain essential      articles at  fair  prices  and  the      duty of  the State  to  so  provide      them are transformed into the power      of the  State to fix prices and the      obligation  of   the  producer   to      charge  no   more  than  the  price      fixed. Viewed  from whatever angle,      the angle  of general  application,      the prospectiveness  of its effect,      the public interest served, and the      rights  and  obligations  following      therefrom, there can be no question      that price fixation is ordinarily a      legislative     activity.     Price      fixation may occasionally assume an      administrative  or   quasi-judicial      character  when   it   relates   to      acquisition or requisition of goods      or  property   to  fix   the  price      separately  in   relation  to  such      individuals.  Such  situations  may      arise when the owner of property or      goods   compelled   to   sell   his      property or goods to the government      or its  nominee and the price to be      paid is directed by the legislature      to be  determined according  to the      statutory guidelines  laid down  by      it.   In    such   situations   the      determination of  price may acquire      a quasi-judicial character...."      The aforesaid observations clearly show that even while exercising a  delegated legislative function or while acting in exercise  of conditional  legislative power  the delegate may in  a given  case be  required to  consider viewpoint of rival parties  which may  be likely  to be  affected by  the exercise of such power. We must keep in view that Section 36 is not  held to  be a  piece  of  delegated  legislation  as authoritatively ruled  by the  Constitution  Bench  of  this Court in  Jalan Trading  Co.’s case  (supra). Therefore,  we must proceed  on the basis that it is a piece of conditional legislation only.      It will  be noticed  from the  above rulings in Hamdard

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Dawakhana (supra),  Sardar Inder  Singh (supra) and Tulsipur Sugar Co.  Ltd. (supra)  which  are  cases  of  ’conditional legislation’  that   this  Court  while  dealing  with  mere extension of  the provisions  of  an  Act  to  other  areas, persons  etc.   has  categorically   held  the  same  to  be ‘conditional’  legislation   .  On  the  other  hand  ’price fixation’  etc.   was  treated   in  Cynamide   (supra)   as ‘delegated’ legislation,  the reason  being that in the case of delegated  legislation  the  Legislature  lays  down  the policy broadly  leaving it to the delegate to supply details while in the case of conditional legislation the legislation is complete  and the  Legislature leaves  it to the delegate the exercise  discretion  as  to  the  time  and  manner  of carrying  the   legislation  into   effect   as   also   the determination of  the area to which it si to extend. This is clear from the decision of the Constitution Bench in Hamdard Dawakhanna’s case  (supra). In  fact. even  in Cynamide case (supra), which  is a  case of  delegated legislation dealing with price fixation, Chinnappa Reddy, J. pointed out that an action of  the delegate,  while  supplying  details  of  the legislation lays  down the policy for the future as in price fixation cases  and therefore  the action of the delegate is legislative  in   character  and  precludes  application  of principles of  natural justice. But the learned judge agreed that where  the delegate  is making factual decisions on the basis  of   past  or   existing   facts,   it   amounts   to ‘administrative adjudication’  and different  considerations can apply.  The learned  Judge said  that there  is  a  real distinction between  a ‘legislative act’ and ‘administrative adjudication’ (p. 736) :      "... adjudication   determines past      and  present   facts  and  declares      rights   and    liabilities   while      legislation  indicates  the  future      course of action."      and quoted  Schwartz’s Administrative Law (1976 Edn. pp 143-144). See  now Schwartz  (1991 Ed.  p.  163-64)  quoting Scalia,J. in  Bowen v. Georgetown University Hospital (1988) 488 US 204 (217 and 221), to the effect that,      "a rule  is a  statement  that  has      legal  consequences  only  for  the      future";  and  "adjudication  deals      with what  the law was, rule making      deals with what the law will be"      Oliver Wendell  Holmes said that a "rule is the skin of a  living  policy  ...  ut  hardens  an  inchoate  normative judgment into  the frozen  form of  words....  Its  issuance marks the  transformation of policy from the private wish to public expectation... the framing of a rule is the climactic act of  the policy  making process.  [(Quoted by Prof. Colin Diver, Dean of Pennsylvania Law School in "Making Regulatory Policy’ Ed.  Keith  Hawking  &  John  Thompson  1989  p.199) Referred to  in Rule  Making - How Government Agencies Write Law and  make policy  - Cornetius M. Kerwin, 1994, page 3)]. Kerwin says at page 7 -      "Rules like legislation, attempt to      structure the  future. By  creating      new     conditions,     eliminating      existing ones, or preventing others      from  coming   into   being,   rule      implement legislation that seeks to      improve the  quality life. The lerm      ‘future effect’  is thus  a crucial      element in  the definition of rules      because it  allows a clear contrast

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    to  situations  in  which  agencies      issue decisions,  acting  in  their      judicial  capacity.  ....  ....  An      order  applies  existing  rules  to      past  or   existing  circumstances.      Although an order may have a future      effect,  ...   ....   its   primary      purpose is  not  the  creation  its      primary purpose is not the creation      of policy  or  law  to  create  new      conditions."           [Emphasis supplies]      Conditional  legislation   can,  therefore  be  broadly classified into three categories -      In  the   first  category   when  the  Legislature  has completed  its  task  of  enacting  a  Statute,  the  entire superstructure of  the legislation  is ready  but its future applicability to  a given  area is  left to  the  subjective satisfaction of  the delegate  who being satisfied about the conditions  indicating   the  ripe  time  for  applying  the machinery of  the said  Act to  a given  area exercises that power as a delegate of the parent legislative body. Tulsipur Sugar Co.  ’s case (supra) is an illustration on this point. When the  Act itself  is  complete  and  is  enacted  to  be uniformly applied  in future  to all  those who  are  to  be covered by the sweep of the Act, the Legislature can be said to have  completed its  task. All  that  it  leaves  to  the delegate is  to apply  the same  uniformly to  a given  area indicated  by  the  parent  Legislature  itself  but  at  an appropriate time.  This would  be an  act of pure and simple conditional  legislation   depending  upon   the  subjective satisfaction of the delegate as to when the said Act enacted and completed  by the  parent  Legislature  is  to  be  made effective. As  the parent Legislature itself has laid down a binding course  of conduct  to be followed by all and sundry to be  covered by the sweep of the legislation and as it has to act  as a binding rule of conduct within that weep and on the basis  of which  all their  future  actions  are  to  be controlled and  guided, it can easily be visualised that  of the parent  Legislature while  it enacted  such law  was not required to  hear the  parties likely  to be affected by the operation of  the Act,  is delegate  exercising an extremely limited and  almost ministerial  function as an agent of the principal Legislature  applying the  Act to  the area  at an appropriate time  is also  not supposed and required to hear all those  who are  likely to  be affected  in future by the binding code  of conduct  uniformly laid down to be followed by all  within the sweep of the Act as enacted by the parent Legislature.      However, there  may be  second category  of conditional legislations wherein  the delegate has to decide whether and under what  circumstances a  completed  Act  of  the  parent legislation which  has already  come into  force  is  to  be partially withdraw  from operation  in a  given area  or  in given cases  so as  not to be applicable to a given class of persons who  are otherwise  admittedly governed  by the Act. When such a power by way of conditional legislation is to be exercised by the delegate a question may arise as to how the said power  can be  exercised. In such an eventuality if the satisfaction regarding  the existence of condition precedent to the  exercise of  such power depends upon pure subjective satisfaction of  the delegate and if such an exercise is not required to be based on the prima face proof of factual data for ad  against such  an exercise and if such an exercise to uniformly apply  in  future  to  a  given  common  class  of

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subjects to be governed by such an exercise and when such an exercise is  not to  be confined  to individual  cases only, then  even  in  such  category  of  cases  while  exercising conditional legislative  powers  the  delegate  may  not  be required to  have an  objective assessment after considering rival versions  on the data placed before it for being taken into consideration  by it  in  exercise  of  such  power  of conditional legislation.  For example  if a  tariff is fixed under the  Act and  exemption  power  is  conferred  on  the delegate  whether   to  grant   full  exemption  or  partial exemption from  the tariff  rate  it  may  involve  such  an exercise of  conditional legislative  function  wherein  the exercise  has  to  be  made  by  the  delegate  on  its  own subjective satisfaction  and  once  that  exercise  is  made whatever  exemption  is  granted  or  partially  granted  or partially withdrawn  from time  to time  would be binding on the entire  class of persons similarly situated and who will be covered by the seep of such exemptions, partial or whole, and whether  granted or  withdrawn, wholly or partially, and in exercise of such a power there may be no occasion to hear the parties  likely to  be affected by such an exercise. For example from  a settled  tariff say if earlier 30% exemption is granted by the delegate and then reduced to 20% all those who are  similarly situated and covered by the sweep of such exemption and its modification cannot be permitted to say in the absence  of any  statutory provision to that effect that they should  be given a hearing before the granted exemption is wholly or partially withdrawn.      In the aforesaid first two categories of cases delegate who exercises  conditional legislation  acting on  its  pure subjective satisfaction  regarding existence  of  conditions precedent for  exercise of such power may not be required to hear parties  likely to  be affected by the exercise of such power. Where  the delegate proceeds to fill p the details of the legislation  for the  future -  which  is  part  of  the integrated action  of policy-making  for the  future, it  si part of  the future  policy and is legislative. But where he merely  determines  either  subjectively  or  objectively  - depending upon  the  "conditions"  imposed  in  the  statute permitting exercise  of power  by the delegate - there is no legislation involved in the real sense and therefore, in our opinion,  applicability   of  principles   of   fair   play, consultation or  natural justice  to  the  extent  necessary cannot be said to be foreclosed. Of course, the fact that in such cases of ‘conditional legislation’ these principles are not foreclosed  does not  necessarily  mean  that  they  are always mandated. In a case of purely ministerial function or in a  case where no objective  conditions are prescribed and the matter  is left  to the  subjective satisfaction  of the delegate (as  in categories  one and two explained above) no such  principles  of  fair  play,  consultation  or  natural justice could  be attracted. That is because the very nature of the  administrative determination  does not attract these formalities and not because the determination is legislative in character. There may also be situations where the persons affected are unidentifiable class of persons or where public interest or interests of State etc. preclude observations of such a procedure.      But there  may be a tired category of cases wherein the exercise  of   conditional  legislation  would  depend  upon satisfaction of  the delegate  on objective facts placed  by one class  of persons  seeking benefit  of such  an exercise with a  view to  deprive the  rival  class  of  persons  who otherwise might  have already  got statutory  benefits under the Act  and who  are likely  to lose  the existing  benefit

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because of  exercise of  such a  power by  the delegate.  In such type  of cases  the satisfaction  of the  delegate  has necessary to  be based  on objective  consideration of  such power. May  be such  an  exercise  may  not  amount  to  any judicial or  quasi-judicial function,  still it  has  to  be treated to  be one which requires objective consideration of relevant   factual data  pressed in  service by one side and which could  be tried  to be  rebutted by the other side who would be  adversely affected  if such  exercise of  power is undertaken by  the delegate.  In such  a third  category  of cases of  conditional legislation  the Legislature  fixes up objective conditions  for the  exercise of  power of  by the delegate to  be applied  to past  or existing  facts and for deciding whether  the rights  or liabilities  created by the Act are  to be  denied  or  extended  to  particular  areas, persons  or  groups.  This  exercise  is  not  left  to  his objective  satisfaction    nor  it  is  a  mere  ministerial exercise. Section  36 of the Act with which we are concerned falls in  this third  category  of  conditional  legislative functions. A mere look at the said Section shows that before an appropriate  Government can  form its  opinion  regarding grant of  partial of  full exemption to any establishment or class of  establishments which are otherwise already covered by the  sweep of  the Act  the following  factual conditions must be found to have existed at the relevant time to enable the delegate to exercise its powers under the Act: 1.   The financial position of the establishment or class of      establishments, as  the case  may be, must be such that      it would  not be in public interest to apply all or any      of the  provisions of  the Act to such establishment or      establishments. 2.   There may be other relevant circumstances pertaining to      such  establishment   or  establishments   which  would      require exercise of such power of exemption. 3.   Such exercise must be in public interest as a whole and      not confined to the personal or private interest of the      establishment or establishments concerned.      Now it is obvious that but for the exercise of power of exemption  under   Section  36   of  the   employees  of  an institution governed  by the  sweep  of  the  Act  would  be entitled to minimum statutory bonus as per Section 10 of the Act. It  has also  to be  kept in  view that  Bonus Act is a piece of  welfare legislation  enacted for  the benefit of a large category  of workmen  seeking a  living wage  to  make their  lives   more  meaningful   and  for  fructifying  the benevolent guarantee  of Articles  21 of the Constitution of India.  Bonus   is  treated   as  deferred  wage.  When  the Parliament in its wisdom has enacted such a beneficial piece of  social  legislation  which  already  guarantees  minimum statutory bonus  to  employees  governed  by  it,  if  their employers are to be allowed to earn exemption from the sweep of such  a beneficial  legislation which  would  ipso  facto adversely  affect  entire  class  of  their  employees,  the conditions for  exercise of  such power of exemption have to be strictly  and objectively  fulfilled by the repository of such a  drastic power.  A statutory right already accrues to employees under the Act. If the establishment employing such workmen or  employees is desirous of depriving the statutory right of  minimum bonus  to its  employees it  may move  the appropriate Government for exemption under Section 36 of the Act as  has been  done in  the present  case by  the Housing Board obviously  confining its  request  to  the  accounting years  in   question.  It  is  obvious  that  when  such  an establishment moves  the appropriate Government invoking its powers of  exemption it  has to submit relevant factual data

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about   its    financial   position   and   other   relevant circumstances in which it is placed during the relevant year which would necessitate the appropriate Government in public interest and not necessarily only in the private interest of such employer  or establishment  to get  satisfied  that  it should be  exempted and  insulated from  the rigours  of the provisions of  the Act  guaranteeing statutory minimum bonus to  its  employees.  Such  establishment,  therefore,  would naturally point  out that  its financial  position and other relevant circumstances are such that it may be that if it is required to  pay the minimum bonus to its employees it would not only be a catastrophe for such establishment or class of establishment but  a situation  might arise  when in  public interest  such   establishment  in   order  that   they  may effectively exist  and may  to be  wiped off, may be given a statutory protection  by way of exemption from the operation of the  relevant provisions  of the  Act by  the appropriate Government under  Section 36  of the Act. It is obvious that when  such   a  case   is  tried  to  be  made  out  by  the establishment concerned  invoking powers  of the State under Section 36,  the State would not act merely as a post office and accept  as a gospel truth what the establishment states. It will  have to  apply its  objective mind  on the relevant data before  it can  legitimately  exercise  its  powers  of exemption  under   Section  36   of  the  Act  qua  such  an establishment or  a class  of them.  While  exercising  that power  the   data  which   would  be   available  from   the establishment would  obviously be  one-sided data in support of its  claim for exemption. The employees who are likely to be deprived  of their minimum statutory bonus as per the Act would be  the rival  class of  persons who  are  necessarily likely to be adversely affected if such exemption is granted to the  establishment on  the basis of the one-sided data in support of  its claim.  Therefore, in  the  absence  of  any rebuttal data furnished by the other side which is likely to be affected  by such  an exercise, namely, the employees the opinion arrived  at by  the appropriate  Government,  purely based on  the one-sided  version and  data submitted  by the establishment on  a  class  of  establishment  for  claiming exemption,  would   be  a   truncated  opinion  which  would necessarily not  amount to  an opinion on all relevant facts placed before  it for and against the exercise of such power of exemption  qua  a  given  establishment  or  a  class  of establishments. If  such data  in rebuttal is not allowed to be furnished to the appropriate Government before it decides to exercise  its power  to exemption under Section 36 of the Act qua  the establishment  or a class of establishments its decision would  always remain  a truncated or a lopsided one and would  be liable  to be  voided on  the ground  of  non- application of  mind on  relevant facts  and data.  It would remain a still-born decision and the moment it is challenged in a  competent court  it would  be liable to be struck down immediately and  for consideration  of such  a challenge the competent court seized of the matter would naturally require the other  side, which  is likely  to be affected by such an exercise of  power of  exemption, to furnish its data by way of  rebuttal   and  once  such  material  is  furnished  the truncated  and   one-sided  decision   of  the   appropriate Government would  be required  either to be re-considered by the Government  itself or  the  court  may  be  required  to perform  that   task  which   was  left  incomplete  by  the appropriate Government  while arriving  at its  opinion  for exemption the claimant-establishment from the rigours of the Act. In  that eventually there would always be the necessity of remanding  the proceedings  for re-consideration  by  the

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appropriate Government  and then  the appropriate Government will have  to consider  not only  the data  furnished by the establishment claiming  the exemption  but also  the data in rebuttal which will travel to the appropriate Government via the court’s  order and thereafter the appropriate Government will have  to undertake the very same exercise once again de novo under  Section 36  of the  Act and at the stage it will have the  benefit of comprehensive consideration of the data furnished by the claimant-establishment for exemption on the one hand  and the  rival data  furnished in  rebuttal by the aggrieved employees  on the other and then the opinion would become comprehensive  and objective.  In the  setting of the Section, therefore,  and the  way it will work, as discussed earlier, implicit  in the  Section is  the direction  to the appropriate Government  by the  Legislature that  it  should form its  opinion on  objective facts  furnished not only by the establishment  or a class of establishment claiming such exemption but  also by  the employees  who are  likely to be affected by  the exercise  of  such  power  and  who  should necessarily get  an opportunity  to submit their material in rebuttal. If this requirement is not read in the Section the exercise of  power of  exemption qua  the establishment or a class of  establishments which will have a direct pernicious adverse effect  on the  employees who  would otherwise  earn statutory benefit  of the provisions of the Act would always remain a  truncated, inchoate,  half-baked and  a still-born exercise of  power and only on remand by competent court the exercise would  become an  informed one. Thus the submission of learned  senior counsel for the appellants would make the exercise under  Section 36  of  the  Act  one  futility.  To instill  life   in  such   an  exercise   and  to   make  it comprehensive and  kicking it  has to be held that before an appropriate  Government,   which   is   approached   by   an establishment or  a class  of establishments  for  exempting them from  the relevant  provisions of  the Act  for a given accounting year, arrives at any opinion for exercise of such power it  must take into consideration the rival version and material evidence  in rebuttal  furnished by  the  class  of employees who  are likely to be affected by such exercise of power of and thereafter if such opinion is arrived at by the appropriate Government  on a  comprehensive consideration of the rival  version and  then the power is exercised, such an exercise would  not become  vulnerable on the ground of non- application of  mind of  relevant facts  and subject  to the challenge of  such exercise on the ground that it was a mala fide or colourable exercise of power of conditions precedent were not  satisfied such  an exercise  of power would not be likely to  be found fault with by any competent court before which such  an   order under  Section 36  is brought  on the anvil  of   scrutiny.  Therefore,  in  the  aforesaid  third category of  cases even  though the  delegate is  said to be exercising conditional  legislative power  it cannot be said to be  entrusted by  the Legislature  with the function of a purely subjective  nature based  on its  sole discretion, no can it  be said  to be  exercising such  power  for  binding uniformly the  whole class of persons without benefiting one class at  the cost  of the  other class  of persons  who are subjected to  the exercise of such exemption power. It must, therefore be  held that  in such  third category of cases of exercise  of  power  of  conditional  legislation  objective assessment of  relevant data  furnished by  rival classes of persons likely  to be affected by such an exercise cannot be said to  be ruled  out or  a taboo  to such  an exercise  of power. It  is also  necessary to  keep in  view that in such category  of   cases  the   delegate  power  of  conditional

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legislation does not lay down a uniform course of conduct to be followed  by the  entire class  of persons covered by the sweep of  such an exercise but lays down a favourable course of conduct  for a  smaller class  of persons  at the cost of rival large  category of  persons covered  by the  very same exercise of  power. To  that extent  there  is  a  mini  lis between these  two rival  categories of persons likely to be affected by  such an exercise by the delegate. Such exercise may  also  cover  existing  situations  as  well  as  future situations sought  to be  subjected to the exemption for the period prescribed  in the  order and may sometimes affect to any permissible  extent even past transactions in individual cases. Such type of exercise of power cannot be said to rule out consideration  of rival  viewpoint on  the  question  of grant of  exemption to  an establishment  or to  a class  of establishments from  the relevant  provisions of the Act. In the case  before us the legislation has prescribed objective standards and  has permitted the delegate to grant exemption and to  withdraw the  benefit of  the statute which is being enjoyed by  the persons  and  in  our  opinion,  in  such  a situation,  principles  of  fair  play  or  consultation  or natural justice cannot be totally excluded.      In this  connection we  may also refer to a decision of this Court  in the  case of  Visakhapatnam  Port  Trust  and another v.  Ram Bahadur Thakur Pvt. Ltd and others [(1997) 4 SCC 582]  wherein this  Court had  to consider  the question whether  the   appropriate  Government  while  modifying  or cancelling the  rates of  welfare charges  framed    by  the Visakhapatnam Port exercising powers under Section 52 and 54 of the  Major Trusts  Act. 1963  was required  to  hear  the parties  likely   to  be   affected  by  such  an  exercise. Considering the  scheme of  Sections 52,  53 and  54 of  the said Act  it was  held that the scale of rates and statement of conditions  framed by  the Port  once sanctioned  by  the Central  Government  and  published  by  the  Board  in  the official gazette  operate on  their own  and at  this  stage parties  affected  were  not  to  be  heard.  However  while considering the modification or cancellation of the rates in exercise of  powers under  Section 54  of the  said Act  the Central  Government   could   appropriately   consider   the representations of the parties likely to be affected by such modification. In  paragraph 15  of the  Report on Point No.4 the following observation were made in this connections:      "....  It   is  axiomatic   that  a      legislative exercise or exercise by      a  subordinate  legislature  agency      imposing any  tax or fee or charges      would  not   require  the  affected      parties to  be  heard  before  such      charges or  impost are  levied. But      this argument  of Shri Bobde may be      relevant at the stage of Section 52      of the  Act wherein  the scales  of      rates and  statements of conditions      framed by  the Board are put up for      prior  sanction   of  the   Central      Government.   However    the   said      situation would  not prevail when a      grievance is  made by the aggrieved      parties concerned  who submit  that      the  sanctioned   scales  of  rates      which are  prevalent and  operative      require       modification       or      cancellation in  public interest as      they are unreasonable, excessive or

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    wholly or  partly lack  the back-up      of quid  pro quo.  As and when such      grievances   are   made   and   are      required  to  be  examined  by  the      Central Government  in exercise  of      its statutory  powers and functions      under Section 54 of the Act, if the      Central Government  gets  convinced      that in public interest appropriate      modifications  or  cancellation  of      rates are required to be made, then      it   would    be   the    statutory      obligation    of     the    Central      Government  to   direct  the  Board      concerned accordingly  and it  will      be equally the duty of the Board to      carry    out     such     suggested      modifications or  cancellations  as      directed by the Central Government.      At the  stage if  the objections of      aggrieved parties  are directed  to      be  considered   by   the   Central      Government in  public  interest  no      fault can  be  found  with  such  a      direction...."      The aforesaid  decision also  supports the  case of the respondents that  in  appropriate  cases  representation  of aggrieved  parties   can  be  considered  by  the  statutory authorities for  arriving at  a just and balanced conclusion on relevant facts.      On the  aforesaid conclusion  of ours  we  cannot  find fault with  the decision rendered by the High Court that the impugned exemption  notification issued from time to time by the State of Tamil Nadu under Section 36 of the Act were not legal and  valid and  they were  issued without  giving  any opportunity whatsoever to the employees of the Housing Board to have  their say  when  they  were  necessarily  adversely affected by the exercise of such power even though it was an exercise of  conditional legislative power. Such an exercise of power did not fall within any of the first two categories of delegated legislations but squarely fell within the third category of such an exercise of power.      However still  a question  as to whether the High Court was justified  in taking  the view  that hearing  should  be given to  the affected employees of the establishment before the  appropriate   Government  can  exercise  its  power  to exemption under  Section 36  qua a  given establishment like the Housing Board.      Now if  it is contended that any personal hearing is to be given  to the  employees likely  to be  affected  by  the exercise of  such power  either personally  or through their accredited representatives  like the  trade union leaders or other then  such a  contention cannot  be sustained  on  the nature of the power conferred under Section 36 of the Act on the appropriate Government, otherwise instead of remaining a conditional  legislative,   power  it   would   assume   the characteristics of  a quasi-judicial  power. It must be kept in view  that the appropriate Government does not adjudicate upon the  rights and  obligations of  parties  nor  does  it decide any  lies between the parties. All that it does while exercising powers  under Section 36 of the Act is to form an opinion on  the satisfaction  of objective  facts  regarding financial  position  and  other  relevant  circumstances  in connection  with  the  claimant-establishment  or  class  of establishments which  would require  in public  interest and

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not necessarily  purely  in  the  private  interest  of  the claimants that  relevant provisions of the Act should not be made applicable  to those  claimants for  a given  period of time. Once  the bona fide exercise of power under Section 36 is undertaken  the logical  consequence is  that the benefit otherwise flowing  from the  scheme of  the Act  may not  be available to  the class  of employees  affected thereby, for that limited  period during  which the  exemption continues. All that is required for such an exercise is, therefore, not any personal  hearing to  be granted to the employees likely to be  affected by  the said exercise but they must be given at least  an  opportunity  to  put  forward  their  rebuttal evidence or  material against  the material furnished by the claiment-establishment so  that the  appropriate  Government can have an objective assessment of the relevant data with a view to arriving at a rational, well-informed and reasonable opinion on a comprehensive consideration of pros and cons of the fact  situations concerned  calling for such an exercise of power on its part.      In the  light of  the aforesaid  conclusion of ours the question remains  as to what procedure should be followed by the appropriate  Government in  such  cases.  The  following steps can  be easily  visualised for  being followed  by the appropriate Government  when moved  by any  establishment or class of establishment for exemption under Section 36 of the Act for the relevant years : 1.   When such  applications are received by the appropriate      Government which  necessarily have  to be  supported by      relevant data  by the  claimants, the  receipt of  such      applications has  to be  brought to  the notice  of the      employees likely  to  be  affected  by  grant  of  such      applications  and  for  that  purpose  notices  can  be      suitably got  affixed by  the appropriate Government on      the notice  boards of  the concerns or factory premises      of the  establishments where  the workmen  are  working      mentioning the  dates on  which such  applications  are      received and  the grounds  on which such exemptions are      claimed under such applications. 2.   Suitable public notice in newspapers having circulation      in the  area of operation of such establishments can be      got published  and for  that purpose  suitable expenses      can be  required to  be reimbursed  by the claimants to      the appropriate Government. 3.   The concerned  employees through  their  representative      unions may,  under these circumstances, be permitted to      file their  written representation  with relevant  data      for rebutting  the material  furnished by the claimants      so that  the rival version put forward by the employees      also  will   become  available   to   the   appropriate      Government before it forms it opinion. For that purpose      the public  notice and  the notice to be affixed on the      notice boards  of the  concerns should  indicate as  to      within what reasonable time such representations may be      furnished with  relevant  data  by  the  representative      unions of the employees concerned. 4.   Though  it   is  not   necessary  for  the  appropriate      Government before  forming its opinion under Section 36      of the  Act on  the basis  of the data furnished by the      rival parties  to give  any personal  hearing either to      the claimant-establishment  or  to  the  representative      union of  the  employees.  It  may  be  still  open  in      appropriate cases  for the  Government, if  so  thought      fit, to  give opportunity  of personal  hearing to  the      representatives of the establishments as well as of the      employees  if  any  elucidation  is  required  in  this

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    connection. 5.   For  making   aforesaid  exercise   effective  if   the      concerned employees through their representative unions      seek an  opportunity to look into the material supplied      by the  establishments in  support of  their claims for      exemption, inspection  of such  material  can  be  made      available to  the unions of employees to enable them to      file their  representations and  to furnish the data in      rebuttal for opposing such claims. 6.   Strict time  schedule can  be fixed  by the appropriate      Government within  which the  entire exercise  can  get      completed so  that the  proceedings may not drag on for      indefinite number  of months.  Under the circumstances,      therefore, it  would always  be open to the appropriate      Government  on   receipt  of   such  applications   for      exemption under  Section 36 to fix the time schedule of      four to  six weeks from the date of publication of such      notices about  receipt of applications for exemption as      aforesaid within  which  the  employees  through  their      representative unions.  If so  advised, may  file their      representations and  within the  same time  they may be      given  an   opportunity,  if   so  required,   to  have      inspection of  the material  furnished by the claimant-      establishment in  support of  their claim applications.      Once  such   time  schedule   is  followed  no  written      representations would  ultimately  be  required  to  be      entertained after  the time  limit fixed for receipt of      such representations  from the employees’ unions likely      to be  affected by  the grant of such exemption so that      within a  short time  thereafter  as  expeditiously  as      possible  the   appropriate  Government  can  form  its      opinion, if  any, and complete the exercise if it is of      the opinion  that  all  the  requisite  conditions  for      exercise of  the power under Section 36 of the Act have      been  found   to  have   existed  qua   the   claimant-      establishment  or   class  of   establishment  for   an      appropriate period  for which  such exemption  is to be      granted.      The aforesaid  procedural steps are illustrative and to exhaustive. But  they have  to be  read in Section 36 of the Act so  as to  make the Section workable and the exercise of power can  be insulated  against  attack  on  the  ground  o irrational exercise  of power. We make it clear that only in the third  category of  cases of  conditional legislation in which Section   36 of the Act falls, as discussed by us, the aforesaid procedure  is required  to be  followed. It cannot have any application to the first two categories of cases of exercise of powers of conditional legislation.      On the  aforesaid conclusion  of ours we must hold that the ultimate  decision of  the High Court on Point No.3 that the impugned  exemption notification issued under Section 36 from year  to year  by the State of Tamil Nadu were null and void, has  to be  upheld not  on the  ground  that  hearing, personal or otherwise, was not given to the employees but on the ground  that the  procedure indicated  by us hereinabove regarding third  category of  case of  exercise of powers of conditional legislations  was admittedly not followed by the appellant-State  while   passing  the   impugned  orders  of exemption in  favour of  the Housing  Board. The third point for determination  is, therefore answered in the affirmative in the aforesaid terms.      Before parting  we may mention one submission canvassed by learned  counsel for the Housing Board. He submitted that Section  36   of  the  Act  also  entitles  the  appropriate Government  to   take  into   consideration  other  relevant

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circumstances for  exempting any  establishment or  class of establishments   from the  provisions of  the Act. That this may involve  a policy decision on the part of the Government to give  impetus to  a class  of may  be less  so  that  new industrial development may be less so that new industries in that area  can be attracted and their operation costs may be reduced.  We   fail  to   appreciate  how   such   type   of circumstances are  to  considering  to  rival  versions  put forward by existing establishment or class of establishments on the  one hand  and their  employees on  the other who are likely to  be affected by such exercise of power. It is also to be  kept in  view that  the financial  position and other relevant circumstances  are not  independent of  their nexus with  the   existing  claimant-establishment   or  class  of establishments  and   they  do   not  refer  to  any  future establishments which  have yet not seen the light of the day and which have not still employed any employees who could be said to  have earned  any statutory  benefits under  the Act till then.  Therefore, the  other relevant  circumstances as mentioned in  Section 36  will have  to  be  read  with  the financial  positions   of   the   claimant-   establishments themselves and  their other circumstances have to be seen on the touchstone  of public interest to enable the appropriate Government to   from  its opinion  under Section  36 qua the claims of  such existing  establishments. This submission of learned counsel  for the  Housing Board, therefore, does not advance the case of the Board any further.      In view  of our  aforesaid decision  on all  the  three points, therefore,  these appeals fail and are dismissed. In the facts  and circumstances  of the  case there  will be no order as to costs.