1974 (3) TMI 108 - SC - Indian Laws

Issues Involved:
1. Constitutionality of Sections 3, 6A, and 7 of the Bombay Labour Welfare Fund Act, 1953 and Sections 13 of the Bombay Labour Welfare Fund (Gujarat Extension and Amendment) Act, 1961.
2. Validity of Rules 3 and 4 of the Bombay Labour Welfare Fund Rules, 1953.
3. Violation of fundamental rights under Article 19(1)(f) and Article 14 of the Constitution.
4. Competency of non-citizen entities to challenge the constitutionality of the provisions.
5. Reasonableness of the classification under Section 2(4) defining 'establishment'.

Issue-wise Detailed Analysis:

1. Constitutionality of Sections 3, 6A, and 7 of the Bombay Labour Welfare Fund Act, 1953 and Sections 13 of the Bombay Labour Welfare Fund (Gujarat Extension and Amendment) Act, 1961:
The Supreme Court reviewed the amendments made by the Gujarat Legislature to address defects identified in the Bombay Dyeing case. The amendments aimed to declare unpaid accumulations as abandoned property and transfer them to the Labour Welfare Fund. The Court found that the legislative intent was to safeguard the property for the benefit of the true owners and to ensure that unpaid accumulations were utilized for labor welfare. The Court held that the provisions did not violate constitutional rights as they provided a reasonable period (seven years) for employees to claim unpaid accumulations, and the State's substitution as debtor did not impose an unconstitutional burden on employees.

2. Validity of Rules 3 and 4 of the Bombay Labour Welfare Fund Rules, 1953:
Rules 3 and 4 were challenged as unconstitutional. The Court examined the machinery provided by these rules for enforcing the Act's provisions regarding fines and unpaid accumulations. It concluded that the rules were within the legislative competence and did not infringe upon any constitutional rights.

3. Violation of fundamental rights under Article 19(1)(f) and Article 14 of the Constitution:
The High Court initially held that the impugned provisions violated the fundamental rights of citizen-employers and employees under Article 19(1)(f) and were void under Article 13(2). However, the Supreme Court clarified that a corporation is not a citizen for the purposes of Article 19 and thus cannot claim fundamental rights under this article. The Court further stated that the impugned provisions were not void as against non-citizens and remained valid laws enacted by a competent legislature.

4. Competency of non-citizen entities to challenge the constitutionality of the provisions:
The Court emphasized that a corporation, being a non-citizen, cannot invoke the fundamental rights under Article 19. The Court cited precedents to assert that laws void under Article 13(2) for citizens remain valid for non-citizens. Therefore, the first respondent, a company, could not challenge the provisions on the ground that they violated the fundamental rights of citizen-employers or employees.

5. Reasonableness of the classification under Section 2(4) defining 'establishment':
The High Court found the classification under Section 2(4) unreasonable, as it included some establishments while excluding others without a rational basis. The Supreme Court, however, upheld the classification, stating that administrative convenience and the practical difficulties in implementing the legislation justified the exclusion of certain establishments. The Court noted that the legislature is entitled to address the most acute phase of a problem first and proceed cautiously. It concluded that the classification was reasonable and did not violate Article 14.

Conclusion:
The Supreme Court allowed the appeals, holding that the impugned sections and rules were valid. The classification under Section 2(4) was deemed reasonable, and the provisions did not violate constitutional rights. The Court emphasized judicial deference to legislative judgment in matters of economic regulation and administrative convenience.

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