Decided on October 01,1979



S.H.SHETH - (1.) . This group of 52 appeals arises out of as many suits filed in the City Civil Court Ahmedabad. They were filed by shareholders of corporate employers in which they challenged the vires of secs. 3 and 6 of the Bombay Labour Welfare Fund Act 1953 and Rules 3 and 4 of the Labour Welfare Fund (Gujarat) Rules 1962 They contended that the aforesaid provisions were ultra vires Art. 19 (1) (f) and Art. 31 (2) of the Constitution of India. Some of the suits were instituted in 1975 and others were instituted in 1976. No evidence was led in the suits. They were decided on the basis of legal arguments advanced before the learned trial Judge. On 2nd September 1978 they were decided by the learned trial Judge by a common judgment. He turned down the conten- tions raised by the plaintiffs and dismissed the suits. Decrees passed by him in all the suits are challenged by the plaintiffs in these appeals.
(2.) Before we enter upon the examination of the contentions raised by the plaintiffs before us it is necessary to set out the history of the litigation relating to the impugned provisions. The Bombay Labour Welfare Fund Act 1953 (hereinafter referred to as the Labour Wefare Act for the sake of brevity was enacted by Bombay Legislature in 1953. Sec. 3 as it was then was challenged in a grouP of writ petitions before the High Court of Bombay on the ground that it was ultra vires Art. 31 (2). Sec. 3 as it was then read as follows: (1). There shall be constituted a fund called the Bombay Labour Walfare Fund and notwithstanding anything contained in any other law for the time being in force the sums specified in sub-sec. (2) shall be paid into the Fund. (2). The Fund shall consist of (a) all fines realised from the employees; (b) all unpaid accumulations; (c) any voluntary donations; (d) any fund transferred under sub-sec. (5) of sec. 7; and (e) any sum borrowed under sec. 8. (3). The sums specified in sub-sec. (2) shall be collected by such agencies and in such manner and the accounts of the Fund shall be maintained and audited in such manner as may be prescribed. Sec. 7 (1) Provided: The Fund shall vest in and be held and applied by the Board as Trustees subject to the provisions and for the purposes of this Act sub-sec. (2) of sec. 7 provided as follows: "Without prejudice to the generality of sub-sec. (1) the moneys in the Fund may be utilised by the Board to defray expenditure on the following: (a) community and social education centres including reading rooms and libraries. (b) community necessities; (c) games and sports; (d) excursions tours and holiday homes; (e) entertainment and other forms of recreations; (f) home industries and subsidiary occupations for women and unemployed persons- (g) corporate activities of a social nature; (h) cost of administering the Act including the salaries and allowances of the staff appointed for the purposes of the Act; and (i) such other objects as would in the opinion of the State Government improve the standard of living and ameliorate the social conditions of labour. Provided that the Fund shall not be utilized in financing any measure which the employer is required under any law for the time being in force to carry out Provided further that unpaid accumulations and fines shall be paid to the Board and be expended by it under this Act notwithstanding anything contained in the Payment of Wages Act 1936 (IV of 1936) or any other law for the time being in force". Sub-sec. (10) of sec. 2 defined the expression Unpaid accumulations in the following terms: Unpaid accumulations means all payments due to the employees but not made to them within a period of three years from the date on which they became due whether before or after the commencement of this Act including the wages and gratuity legally payable.
(3.) The writ petitions were heard by Chagla C. J. and Tendolkar J who dismissed them by their order dated 14th September 1953. The reasons which weighed with the learned Judges were as follows. When the State acquires the property of a private citizen for a public purpose it does so in the exercise of the right which it has by reason of the principle of eminent domain. Therefore in the context of Art. 31 (2) under which challenge was raised to sec. 3 the learned Judges observed that they must be first satisfied that the legislation which they were considering acquired or took possession of the property belonging to the petitioner They further observed that on analysis of the impugned legislation the substance thereof was that the State directed the petitioner who was the debtor of his employees to pay to the State the debt due instead of paying it to his creditors. Therefore in the opinion of the learned Judges no property of the petitioner was involved in the impugned legislation and all that the law did was to substitute one creditor in place of another. They were of the opinion that the impugned legislation did not fall under Art. 31 (2). However in the alternative they observed that if the case fell under Art. 31 (2) there could be no doubt that the petitioner must succeed because obviousy no compensation was provided for acquisition or taking possession of the property of the petitioner. Howerver since the case did not fall under Art. 31 (2) the question of considering the challenge under that provision did not arise. The learned Judges also felt inclined to consider whether apart from Art. 31 (2) the State Legislature was competent to enact the impugned legislation and whether it contravened any fundamental right other than one specified in Art. 31(2).;

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