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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.