2009 (2) TMI 813 - SC - Indian Laws

Whether Sections 47(3) and 47(4) of the Andhra Pradesh Shops & Establishments Act, 1988 (hereinafter referred to as the Shops Act ) are unconstitutional, discriminatory and violative of the Articles 14 and 19(1)(g) of the Constitution of India?

Summary

Issues Involved:
1. Constitutional validity of Sections 47(3) and 47(4) of the Andhra Pradesh Shops & Establishments Act, 1988.
2. Alleged discrimination and violation of Articles 14 and 19(1)(g) of the Constitution of India.

Comprehensive, Issue-Wise Detailed Analysis:

1. Constitutional Validity of Sections 47(3) and 47(4) of the Andhra Pradesh Shops & Establishments Act, 1988:

The High Court declared Sections 47(3) and 47(4) of the Andhra Pradesh Shops & Establishments Act, 1988 as unconstitutional, discriminatory, and violative of Articles 14 and 19(1)(g) of the Constitution of India. The provisions were challenged on the grounds that they were illegal, invalid, inoperative, and unsustainable in law. The High Court found that these sections imposed unreasonable restrictions on the right of the employer to carry on business. Specifically, Section 47(3) was criticized for requiring the payment of service compensation even to employees who resigned or voluntarily left service after attaining the age of 60 years, without the necessity of long and continuous service as required under the Payment of Gratuity Act. Section 47(4) was found to be onerous as it mandated the payment of wages from the date of termination or cessation of services until the actual payment of service compensation.

2. Alleged Discrimination and Violation of Articles 14 and 19(1)(g) of the Constitution of India:

The High Court noted that the provisions of Sections 47(3) and 47(4) were discriminatory. It observed that these sections created an unreasonable classification by providing service compensation to employees who had served even less than five years, while the Payment of Gratuity Act required a minimum of five years of service. This was seen as arbitrary and oppressive. The High Court also pointed out the contradiction that employees working in administrative offices adjacent to factories would be eligible for service compensation after merely one year of service, unlike their counterparts in the factories who needed to serve for five years to be eligible for gratuity. This was found to be discriminatory and violative of Article 14.

The High Court relied on the judgment in Express Newspapers Vs. Union of India, which held that gratuity is a reward for long, continuous, and meritorious service, and providing gratuity for a short period of service was unreasonable. The Court also referred to the Peerless General Finance and Investment Co. Ltd. Vs. R.B.I. case, emphasizing that any law imposing restrictions on fundamental rights must be reasonable and not arbitrary.

The High Court further found that the provisions were not saved by the Presidential assent under Article 254(2) of the Constitution, as there was no evidence that the conflict between the Central and State Acts was brought to the notice of the President before obtaining the assent.

Conclusion:

The Supreme Court concurred with the High Court's judgment, confirming that Sections 47(3) and 47(4) of the Andhra Pradesh Shops & Establishments Act, 1988 were unconstitutional and discriminatory. The appeal was dismissed, upholding the High Court's decision that these provisions violated Articles 14 and 19(1)(g) of the Constitution of India.