Validity of Retrospective Application of Payment of Bonus (Amendment) Act, 2015

OFFICE OF THE CHIEF LABOUR COMMISSIONER(CENTRAL), NEW DELHI

SECTION-LS SECTION

COMPENDIUM OF RELEVANT COURT CASES FOR REFERENCE OF OUR OFFICERS

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IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.15379 of 2017

M/s Magadh Sugar and Cenergy Ltd. Unit Bharat Sugar Mills erstwhile known as M/s Bharat Sugar Mills (proprietor Upper Ganges Sugar and Industries Limited), At, P.O. & P.S. Sidhwalia, District- Gopalganj through its Executive President Sri Balwant Singh Garewal, son of Late Hardeo Singh Garewal, Son of Late Hardeo Singh Garewal. ... ... Petitioner/s

Versus

1. The Union of India through the Secretary, Ministry of Law and Justice, Government of India, New Delhi.

2. The Government of Bihar through Principal Secretary, Labour Resources Department, Bihar, Patna.

3. The Principal Secretary, Labour Resources Department, Government of Bihar, Patna.

4. The deputy Labour Commissioner, Tirhut Division, Muzaffarpur.

5. The Deputy Labour Commissioner-Cum-Conciliation Officer, I/C Saran Division, Muzaffarpur. ... ... Respondent/s ====================================================== Appearance : For the Petitioner/s : Mr. Ashish Giri, Advocate For the Respondent/s : A.C. to A.A.G. 6 ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE PARTHA SARTHY C.A.V JUDGMENT (Per: HONOURABLE MR. JUSTICE PARTHA SARTHY) Date : 25.09.2023

6. Heard learned counsel for the petitioner, learned counsel for the Union of India and learned counsel for the State of Bihar.

7. The petitioner, a Company registered under the Indian Companies Act, 1956 has challenged the validity and especially the retrospective applicability of the Payment of Bonus (Amendment) Act, 2015, which was published in the Gazette of India (Extraordinary) on 1.01.2016 and was made retrospectively applicable with effect from 1.04.2014.

8. The Payment of Bonus (Amendment) Act, 2015 (‘Amending Act, 2015’ in short) by which sections 2(13), 12 and 38 of the Payment of Bonus Act, 1965 were amended is reproduced hereinbelow for ready reference.

“New Delhi, the 1st January 2016/Pausha 11, 1937 (Saka) The following Act of Parliament received the assent of the President on the 31st December, 2015, and is hereby published for general information:- THE PAYMENT OF BONUS (AMENDMENT) ACT, 2015 No. 6 OF 2016 [31st December, 2015.] An Act further to amend the Payment of Bonus Act, 1965. Be it enacted by Parliament in the Sixty-sixth Year of the Republic of India as follows 1.(I) This Act may be called the Payment of Bonus (Amendment) Act, 2015. (2) It shall be deemed to have come into force on the 1st day of April, 2014. 2. In section 2 of the Payment of Bonus Act, 1965 (hereinafter referred to as the principal Act), in clause (13), for the words "ten thousand rupees", the words "twenty-one thousand rupees" shall be substituted. 3. In section 12 of the principal Act,- (i) for the words "three thousand and five hundred rupees" at both the places where they occur, the words "seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher" shall respectively be substituted; (ii) the following Explanation shall be inserted at the end, namely:- ‘Explanation.- For the purposes of this section, the expression “scheduled employment" shall have the same meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act. 1948" 4. In section 38 of the principal Act, for sub-section (1), the following sub-section shall be submitted namely:- "(I) The Central Government may, subject to the condition of previous publication, by notification in the Official Gazette, make rules to carry out the provisions of this Act"”

4. It is submitted by learned counsel for the petitioner that the petitioner, which is a Company registered under the Indian Companies Act, having its sugar factory in the district of Gopalganj (Bihar) is engaged in the business of manufacture and sale of sugar. The Payment of Bonus Act, 1965 (hereinafter referred to as ‘the Act’), is applicable on the petitioner and accordingly for the period 2014-15 the petitioner paid to its employees bonus in terms of the provisions of the Act. Learned counsel submitted that the profit, production and productivity of sugar for the period 2014-15 having already been calculated and payment made, the enactment creates an additional financial liability which has retrospective application. The same being confiscatory in nature and imposing enforceable financial burden is ultra-virus Article 14 of the Constitution. It also takes away vested right accrued in favour of the dealers and the petitioner is thus entitled for refund. Learned counsel in support of his contention places reliance on the judgment of the Hon’ble Supreme Court in the case of Jayam and Company versus Assistant Commissioner and another; (2016) 15 SCC125.

5. Learned counsel for the Respondent-Union of India referring to the counter affidavit filed by the Assistant Labour Commissioner submits that reading of Articles 245 and 246 along with Article 43 of the Constitution, it would be evident that the Parliament has the power to make laws ensuring living wages adequate to maintain a decent standard of life; which includes power to enact law having retrospective effect. The instant Amending Act, 2015 has been enacted to protect the interest of the workers working in the scheduled employments. Learned counsel refers to the statement of object and reasons of both the Act as also the Amending Act, 2015. It is submitted that the Amending Act, 2015 being within the legislative competence of the Parliament, there is no merit in the writ application and the same be dismissed.

6. Having heard learned counsel for the parties and having perused the material on record, it may be stated that the Payment of Bonus Act, 1965 was enacted on receipt of the report of the Tripartite Commission set up by the Government of India on 6.12.1961 to consider the question of payment of bonus based on profits to employees employed in establishments and to make recommendations to the Government. The Act was later amended from time to time.

7. The statement of object and reasons of the Amending Act, 2015 states that the Central Government had been receiving representations for enhancement of the ceiling as provided under section 2(13) of the Act. After due consideration it had decided to enhance the eligibility limit for payment of bonus from Rs.10,000/- per mensem to Rs. 21,000/- per mensem. The Central Government had also decided to raise the calculation ceiling as provided under section 12 of the Act from Rs.3,500/- per mensem to Rs.7000/- per mensem or the minimum wage for the Scheduled employment, as fixed by the appropriate Government whichever is higher. Accordingly, amendments were made in sections 2(13) and 12 of the Act.

8. Learned counsel for the petitioner has placed reliance on the judgment of the Supreme Court in the case of Jayam and Company (supra). In the said case challenge was to an amendment brought about by the Amendment Act, 22 of 2010 by which a new sub section (20) of section 19 was inserted to the VAT Act. Although the provision came into force on 19.8.2010 but the same was given retrospective effect from 1.1.2007. The amendment was struck down by the Hon’ble Supreme Court holding that sub section (20) of section 19 was altogether a new provision introduced for determining the input tax in a specified situation and before the said amendment, the manner of calculation of the input tax credit was entirely different.

9. The Hon’ble Supreme Court in the said case of Jayam and Company (supra), on the retrospective application of a fiscal legislation, held as follows:-