2014 (12) TMI 1340 - SC - Indian Laws

Whether proviso to Section 16 Explanation II(5) of Tamil Nadu Advocates Welfare Fund Act 1987 denying the payment of two lakh rupees to the kin of advocates receiving pension or gratuity or other terminal benefits would be violative of Article 14 of the Constitution of India? Whether distinguishing this class of advocates from other law graduates enrolling in the Bar straight after their law degree did not have any rational basis? Held that - As per the scheme of the Welfare Fund Act every advocate who has enrolled with the State Bar Council as per the Advocates Act 1961 would not automatically become a member of the Advocates Welfare Fund and it is only those advocates who applied to the Trustee Committee can become member of the Advocates Welfare Fund. As per Section 15 of the Welfare Fund Act only those who applied on payment of membership of 200/- towards application shall be admitted as a member of the Fund. It is thus not in dispute not only the advocates who have enrolled with the Bar Council immediately after completion of their law degree but also those who enrolled as advocates after their retirement from other employment may become the members of the Advocates Welfare Fund. It is only those advocates who have become the members of the Advocates Welfare Fund are eligible for the benefits under the Welfare Fund Act which may be the payment of schedule amount on cessation of practice in terms of Section 16(1) and payment of lump sum amount as per the impugned proviso. The persons who enrolled as advocates after their retirement even though they are denied the benefit of lump sum payment under the impugned proviso on cessation of their practice they shall be entitled to the Welfare Fund at the rate specified in the schedule. The differentiation of the retired employee-advocates who have set up practice as advocates after demitting their office who are in receipt of pension or other terminal benefits and the advocates who set up practice straight from the law college in our considered view appears to be rational and reasonable. The said classification in our view has a nexus with the object sought to be achieved. Statement of Objects and Reasons of the Tamil Nadu Welfare Fund Act clearly states that the Welfare Fund is intended to provide welfare to the advocates and to provide them retirement benefits. - on cessation of practice the members of the Welfare Fund are entitled to the benefits as available in the schedule to the Welfare Fund Act based on the years of service and what is denied is just a lump sum amount. It is an established principle that mere hardship caused to a group should not be a ground to strike down a law. While Article 14 forbids class legislation it does not forbid reasonable classification of persons objects and transactions by the legislature for the purpose of achieving specific ends. But classification must not be arbitrary artificial or evasive . It must always rest upon some real and substantial distinction bearing a just and reasonable relation to the object sought to be achieved by the legislation - What is necessary is that there must be nexus between the basis of classification and the object of the Act. It is only when there is no reasonable basis for a classification that legislation making such classification may be declared discriminatory.

Summary

Issues Involved:

1. Whether the proviso to Section 16 Explanation II(5) of the Tamil Nadu Advocates' Welfare Fund Act, 1987, denying the payment of two lakh rupees to the kin of advocates receiving pension or gratuity or other terminal benefits, is violative of Article 14 of the Constitution of India.
2. Whether Section 1(3) of the Bihar State Advocates' Welfare Fund Act, 1983, excluding retired employees receiving retiral benefits from the purview of the Act, is discriminatory and unconstitutional.

Issue-wise Detailed Analysis:

1. Proviso to Section 16 Explanation II(5) of the Tamil Nadu Advocates' Welfare Fund Act, 1987:

The appellants, retired employees who enrolled as advocates post-retirement, challenged the proviso to Section 16 Explanation II(5) of the Tamil Nadu Advocates' Welfare Fund Act, 1987. This proviso denies the lump sum payment of two lakh rupees to the kin of advocates who receive pension or gratuity from any State or Central Government or other organizations. The appellants argued that this classification is arbitrary, unreasonable, and violative of Article 14 of the Constitution of India, which guarantees equality before the law.

The single judge of the Madras High Court allowed the writ petitions filed by the appellants, striking down the impugned proviso as violative of Article 14. However, the Division Bench reversed this decision, holding that the distinction between advocates who enrolled immediately after their law degree and those who joined the profession post-retirement is reasonable. This classification was deemed to have a rational nexus to the objectives sought by the Act, thus not arbitrary or violative of Article 14.

The Supreme Court upheld the Division Bench's view, stating that the differentiation of retired employee-advocates who receive pension or other terminal benefits and those who set up practice straight from law college is rational and reasonable. The classification has a nexus with the object sought to be achieved by the Act, which is to provide welfare or social security benefits to advocates fully committed to the profession of law.

2. Section 1(3) of the Bihar State Advocates' Welfare Fund Act, 1983:

Similar to the Tamil Nadu Act, Section 1(3) of the Bihar State Advocates' Welfare Fund Act, 1983, excludes retired employees receiving retiral benefits from their employers from the purview of the Act. The appellants contended that this exclusion creates an artificial classification among advocates, which is discriminatory and unconstitutional.

The Supreme Court noted that the Welfare Fund Scheme is intended for young advocates who struggle from the inception of their profession and not for retired employees who receive pension and other terminal benefits from their previous employers. The Court observed that various state legislations, including the Central Advocates' Welfare Fund Act, 2001, make similar distinctions.

The Court reiterated that Article 14 forbids class legislation but permits reasonable classification. The classification must not be "arbitrary, artificial or evasive" but based on real and substantial distinctions with a just and reasonable relation to the object sought to be achieved by the legislation. The classification in the Bihar Act was found to be reasonable, having a rational relation to the objective of providing financial assistance to junior lawyers and welfare schemes for indigent or disabled advocates.

Conclusion:

The Supreme Court concluded that the classifications made in both the Tamil Nadu and Bihar Advocates' Welfare Fund Acts are reasonable and have a rational nexus to the objectives sought to be achieved. The distinctions are not arbitrary or violative of Article 14 of the Constitution. The appeals were dismissed, upholding the validity of the impugned provisions in both Acts.