Back
High Court Of Madhya Pradesh
N. H. BHAGWATI, T. L. VENKATARAMA AYYAR, S. K. DAS, A. K. SARKAR AND VIVIAN BOSE, JJ.
BOMBAY DYEING AND MANUFACTURING COMPANY LIMITED - Appellant
Versus
STATE OF BOMBAY - Respondents
Civil 167 Of 1954
Decided On : 12/20/1957
BOMBAY LABOUR WELFARE FUND ACT, 1953 - CONSTITUTIONALITY - S. 3(1) AND S. 3(2)(B) - UNPAID ACCUMULATIONS - WHETHER UNCONSTITUTIONAL - S. 3(1) AND S. 3(2)(A) - FINES - WHETHER UNCONSTITUTIONAL - HELD, S. 3(1) AND S. 3(2)(B) UNCONSTITUTIONAL - S. 3(1) AND S. 3(2)(A) CONSTITUTIONAL.
Fact of the Case:
The appellant, a limited company incorporated under the Indian Companies Act, 1879, challenged the validity of the Bombay Labour Welfare Fund Act, 1953 (the Act), which required employers to pay fines realized from employees and unpaid accumulations to a fund for the welfare of labour in the state. The appellant argued that the Act violated Articles 19(1)(f) and 31(2) of the Constitution by depriving it of its property without compensation.
Finding of the Court:
The Court held that S. 3(1) and S. 3(2)(b) of the Act, which related to unpaid accumulations, were unconstitutional and void as they deprived the appellant of its property without compensation. However, the Court held that S. 3(1) and S. 3(2)(a) of the Act, which related to fines, were valid as the appellant had no beneficial interest in the fines and the trust was created by the Legislature.
Issues: 1. Whether S. 3(1) and S. 3(2)(b) of the Bombay Labour Welfare Fund Act, 1953, which required employers to pay unpaid accumulations to a fund for the welfare of labour in the state, were unconstitutional? 2. Whether S. 3(1) and S. 3(2)(a) of the Act, which required employers to pay fines realized from employees to the fund, were unconstitutional?
Ratio Decidendi: 1. The Court held that S. 3(1) and S. 3(2)(b) of the Act were unconstitutional as they deprived the appellant of its property without compensation. The Court reasoned that unpaid accumulations were moneys belonging to the appellant and that the Act took away those moneys without giving any compensation. The Court further held that the Act could not be upheld under Article 19(1)(f) of the Constitution as it did not merely regulate the exercise of the rights guaranteed by that Article but totally extinguished them. 2. The Court held that S. 3(1) and S. 3(2)(a) of the Act were valid as the appellant had no beneficial interest in the fines and the trust was created by the Legislature. The Court reasoned that the appellant was merely a bare trustee in respect of the fines and that it had no right to the beneficial interest in the fund.
Final Decision: The Court held that S. 3(1) and S. 3(2)(b) of the Bombay Labour Welfare Fund Act, 1953, were unconstitutional and void, while S. 3(1) and S. 3(2)(a) of the Act were valid. The Court issued an appropriate writ against the respondents in the terms stated in the judgment.
( 1 ) THE appellant is a limited Company incorporated under the Indian Companies Act, 1879. It is carrying on business in the manufacture of textiles , and owns three factories called Spring Mills, Textile Mills and Bombay Dye Works, all of which are situate in Bombay. In its balance sheet for the year 1951, it has shown as one of its liabilities a sum of Rs. 1,65,731-1-0 under the heading "unclaimed wages". This amount is made up of wages earned by the workmen in the factories but remaining undrawn by them, and represents accumulations from year to year ever since the formation of the Company which, it is stated, was about the year 1880. The dispute in this appeal mainly relates to this amount.
( 2 ) IN 1953, the Legislature of the State of Bombay enacted the Bombay Labour Welfare Fund Act (Bom 40 of 1953) (hereinafter referred to as the Act), and it came into force on 4/06/1953. We may, at this stage, refer to the relevant provisions of the Act, as it is their validity that is the main point for our determination in this appeal. The preamble to the Act recites that "it is expedient to constitute a Fund for the financing of activities to promote welfare of labour in the State of Bombay and for conducting such activities". S. 2 is the definition section: sub-s. (2) defines an "employee" as meaning "any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in an establishment". "employer" is defined in sub-s. (3) as meaning "any person who employs either directly or through another person either on behalf of himself or any other person, one or more employees in an establishment and includes - in a factory and person named under S. 7 (i) (f) of the Factories Act. 1948,. As the manager". Sub-section (10) defines "unpaid accumulations " 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 this Act including the wages and gratuity legally payable. ""wages" is defined in sub-s. (11) as meaning"all remuneration capable of being expressed in terms of money which would, if the terms of the contract of employment, express or implied were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment. . . ".
( 3 ) THEN, there is S. 3, which runs as follows: (1) "there shall be constituted a fund called the Bombay Labour Welfare Fund and, notwithstanding anything contained in any other law for the time being in force, the sums specified in sub-s. (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-s. (5) of S. 7; and (E) any sum borrowed under S. 8. (3) The sums specified in sub-s. (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. "section 7 (1) provides that "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-section (2) of S. 7 is very material, and is as follows:"without prejudice to the generality of sub-s. (1) the moneys in the Fund may be utilized by the Board to defray expenditure on the following: (A) community and social education centers 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 l
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
