Judgment

MATHEW, J:- The facts are similar in all these cases. We propose to deal with Civil Appeal No. 2271 of 1968. The decision there will dispose of the other appeals.

2. The first respondent, a company registered under the Companies Act, filed a Writ Petition in the High Court of Gujarat. In that petition it impugned the provisions of Section 3, 6-A and 7 of the Bombay Labour Welfare Fund Act, 1953 (hereinafter referred to as the Act) and Section 13 of the Bombay Labour Welfare Fund (Gujarat Extension and Amendment) Act, 1961 (hereinafter referred to as the First Amendment Act) and Rules 3 and 4 of the Bombay Labour Welfare Fund Rules, 1953 (hereinafter referred to as the Rules) as unconstitutional and prayed for the issue of a writ in the nature of mandamus or other appropriate writ or direction against the respondents in the writ petition to desist from enforcing the direction in the notice dated August 2, 1962 of respondent No. 3 to the writ petition requiring the petitioner-1st respondent to pay the unpaid accumulations specified therein.

3. The High Court held that Section 3 (1) of the Act in so far as it relates to unpaid accumulations specified in Section 3 (2) (b), Section 3 (4) Section 6-A of the Act and Rules 3 and 4 of the Rules was unconstitutional and void.

4. In order to appreciate the controversy, it is necessary to state the background of the amendment made by the Legislature of Gujarat in the Act. The Act was passed by the legislature of the then State of Bombay in 1953 with a view to provide for the constitution of a fund for financing the activities for promoting the welfare of labour in the State of Bombay. Section 2 (10) of the Act defined "unpaid accumulation" as meaning 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 the Act, including the wages and gratuity legally payable, but not including the amount of contribution, if any, paid by any employer to a Provident Fund established under the Employees Provident Funds Act, 1952. Section 3 (1) provided that the State Government shall constitute a fund called the Labour Welfare Fund and that notwithstanding anything contained in any other law for the time being in force, the sums specified in sub-section (2) shall, subject to provisions of sub-section (4) and Section 6-A be paid into the fund. Clause (b) of sub-section(2) of Section 3 provided that the Fund shall consist of all unpaid accumulations". Section 7 (1) provided that the fund shall vest in and be applied by the Board of Trustees subject to the provisions and for the purposes of the Act. Section 19 gave power to the State Government to make rules and in the exercise of that power, the State Government made the Rules. Rules 3 and 4 concerned the machinery for enforcing the provisions of the Act in regard to fines and unpaid accumulations.

5. In Bombay Dyeing & Manufacturing Co. Ltd. v. The State of Bombay, 1958 SCR 1122 this Court held that the provisions of Ss. 3 (1) and 3 (2) (b) were invalid on the ground that they violated the fundamental right of the employer under Article 19 (1) (f). The reasoning of the Court was that the effect of the relevant provisions of the Act was to transfer to the Board the debts due by the employer to the employees free from the bar of limitation without discharging the employer from his liability to the employees and that Section 3 (1) therefore operated to take away the moneys of the employer without releasing him from his liability to the employees. The Court also found that there was no machinery provided for adjudication of the claim of the employees when the amounts were required to be paid to the fund.

6. The State sought to justify the provisions of the Act as one relating to abandoned property and, therefore, by their very nature, they could not be held to violate the rights of any person either under Article 19 (1) (f) or Article 31 (2).