IMPORTANT POINT
Section 4(2) of The Kerala Fisherman s Welfare Fund Act, 1985 is declared to be unconstitutional.

JUDGMENT

Syed Shah Mohammed Quadri, J.-This appeal arises from the judgment and order of a Division Bench of the High Court of Kerala at Ernakulam upholding the constitutional validity of Section 4(2) read with Section 2(d) of the Kerala Fishermen s Welfare Fund Act, 1985 (Act 30 of 1985) (as amended by Act 15 of 1987) (for short, the Act ) in O.P. No. 19806 of 1995 and the batch by the common judgment dated August 22/23, 1996.

2. On September 25, 1997 when this appeal came up for hearing before a Bench of two learned Judges of this Court, it was noticed that a Bench of three learned Judges of this Court in Gasket Radiators Pvt. Ltd. v. Employees State Insurance Corporation & Anr. (1985(2) SCC 68) had taken the view that any contribution imposed by State Legislation under Entry 23 of the Concurrent List would not amount to either tax or fee, which was relied upon by the respondent-State and that the appellant placed reliance on decisions ofthe Constitution Bench of this Court in The Corporation of Calcutta & Anr. v. Liberty Cinema (AIR 1965 SC 1107) and M/s. Hoechst Pharmaceuticals Ltd. & Anr. v. State of Bihar & Ors. (AIR 1983 SC 1019). It was submitted that compulsory impost could be either by way of tax or fee and that the definition of taxation as found in Article 366(28) of the Constitution of India and the said cases were not considered in Gasket Radiators (supra). The appeal was, therefore, referred to a Bench of three learned Judges. The Bench of three learned Judges opined that in Gasket Radiators (supra), a concept of impost in the form of compulsory contribution had been given birth to and whether such birth should further multiply was a question touching the interpretation of the Constitution and referred the appeal to a Constitution Bench of five Hon ble Judges. That is how this appeal has come up before us.

3. Mr. A.K. Jain, the learned counsel appearing for the appellant, contended that the appellant was a purchaser and exporter of fishes and there was no relationship of employer and employee between the appellant and the fishermen as such the Legislature cannot levy impost by way of contribution on it under Section 4(2) of the Act and that the impugned provision was bad for want of legislative competence.

4. Mr. K.N. Bhat, the learned senior counsel appearing for the State of Kerala (respondent Nos. 1 and 2), has argued that the Act and the scheme framed thereunder are welfare legislation as postulated in Articles 39 and 41 of the Constitution for the benefit of the fishermen who are members of poor and downtrodden community. His further submission was that a legislation under Entry 23 of List III of the Seventh Schedule of the Constitution requiring one set of persons to pay contributions for the benefit of another set of persons, is valid and there need not be relationship of employer and employee between them. To sustain the validity of Section 4(2) of the Act he relied on the decisions of this Court in Mangalore Ganesh Beedi Works etc. etc. v. Union of India etc. (1974(3) SCR 221) and Gasket Radiators (supra). He submitted that this Court in Regional Executive, Kerala Fishermen s Welfare Fund Board v. Fancy Food & Anr. (1995(4) SCC 341) had held that the appellant was a dealer and liable to pay contributions under the Act.

5. Mr. V.R. Reddy, the learned senior counsel appearing for the Welfare Fund Board (respondent No. 3) while adopting the argument of Mr. Bhat, sought to justify the impost as fee but inasmuch as the learned Advocate-General of the State of Kerala had taken a stand before the High Court that the impost was neither tax nor fee we did not permit him to urge that contention.

6. In view of the stand of the State that the impost under Section 4(2) of the Act is neither tax nor fee, it would not be necessary to consider the definition of taxation in Article 366(28) of the Constitution and the decisions of this Court in Corporation of Calcutta & M/s. Hoechst Pharmaceuticals Ltd. (supra).

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