The State Of Gujarat And Another vs Shri Ambica Mills Ltd., ... on 26 March, 1974

    PETITIONER:

THE STATE OF GUJARAT AND ANOTHER

 Vs.

RESPONDENT:

SHRI AMBICA MILLS LTD., AHMEDABAD, ETC.

DATE OF JUDGMENT26/03/1974

BENCH:

MATHEW, KUTTYIL KURIEN

BENCH:

MATHEW, KUTTYIL KURIEN

RAY, A.N. (CJ)

KHANNA, HANS RAJ

CHANDRACHUD, Y.V.

ALAGIRISWAMI, A.

CITATION:

 1974 AIR 1300 1974 SCR (3) 760

 1974 SCC (4) 656

 CITATOR INFO :

 R 1975 SC 511 (17)

 RF 1975 SC 583 (37,39)

 F 1975 SC 594 (8)

 F 1975 SC1030 (11)

 RF 1976 SC 490 (22,23)

 R 1978 SC 803 (30)

 RF 1978 SC1296 (49)

 RF 1979 SC 25 (35,40)

 E&R 1979 SC 478 (72,122,133,134)

 R 1980 SC 738 (9)

 R 1981 SC1829 (35)

 D 1982 SC 149 (972)

 R 1984 SC1130 (46)

 R 1989 SC 100 (31)

 R 1990 SC1637 (21)

ACT:

Constitution of India, 1950, Art. 13--Legislation void in relation to citizens
as violating Art. 19--If corporation, a non-citizen, can contend that law is
non-est. Bombay Labour Welfare Fund Act, 1953, as amended by Gujarat Amendment
Act, 1961 s. 2(4)--'Establishment' definition of--If violates Art. 14.

HEADNOTE:

After the State of Bombay was bifurcated the legislature of the State of Gujarat
enacted the Bombay Labour Welfare Fund (Gujarat Extension and Amendment) Act,
1961, making various amendments in the Bombay Labour Welfare Fund Act, 1953. The
1953-Act was passed with a view to provide for the constitution of a fund for
financing activities for promoting the welfare of labour in the State of Bombay.
Section 3 as amended, provides that the State Government shall constitute a fund
called the Labour Welfare Fund and that the fund shall consist of. among other
things, all unpaid accumulations. Sec. 2(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 the Act including wages and gratuity legally payable. Sec.
6A(1) provides that unpaid accumulations shall be deemed to be abandoned
property and that the Board, constituted under the Act, shall take them over. As
soon as the Board takes over the unpaid accumulations, notice as provided in the
section, will have to be published and claims invited. Sub-section 3 to 6
provide for notice and sub-ss. 7 to 11 lay down the machinery for adjudication
of claims which might be received in response to the notice. It is only if no
claim is made for a period of four years from the date of the, publication of
the first notice, or if a claim is made but rejected wholly or in part, that the
State appropriates the unpaid accumulation, as bona vacantia.

Section 2(4) of the Act defines 'establishment' and the definition includes
factories, tramway or motor omnibus services and any establishment carrying
government establishments carrying on business or trade. Demand for the payment
ofthe unpaid accumulations having been made the respondents filed petitions
inthe High Court challenging various provisions of the Act and the High Court
held that s. 3(1), in so far as it relates to unpaid accumulations specified
ins. 3 (2) (b), 3 (4) and 6A of the Act, and rules 3 and 4 of the rules made
thereunder are unconstitutional and void on the grounds : (i) that the impugned
provisions violated the fundamental rights of citizen-employers and employees
under Art. 19(1)(f) and therefore were void under Art. 13(2) and hence there was
no law and the demands were thus without the authority of law; and (2) that
discrimination was writ large in the definition of 'establishment'.

Allowing the appeal to this Court,

HELD : (1)(a) Unpaid accumulations represent the obligations of the employers to
the employees and they are the property of the employees. In other words, what
is being treated as abandoned property under 6A is the obligation to the
employees owed by the employers and which is property from the standpoint of the
employees. [771 A-B]

761

(b) At common law, abandoned personal property could not be the subject of
escheat. It could only be appropriated as bona vacantia. Under the Act, though
unpaid accumulations are deemed to be abandoned property under s. 6A(1) they are
appropriated as bona vacantia only after claims are invited and disposed of.
[770 G-771A]

(c) If unpaid accumulations are not claimed within a total period of 7 years the
inactivity on the part of the employees would furnish adequate basis for the
administration by the State of the unasserted claims or demands. It cannot be
said that the period of 7 years allowed to the employees for the purpose of
claiming unpaid accumulations is an unreasonably short one which will result in
the infringement of any constitutional rights of the employees. [771E]

(d) There is no reason to think that the State will be. in fact less able or
less willing to pay the amounts when it has taken them over. [771E-F]

(e) It cannot also be assumed that the mere substitution of the State as the
debtor will deprive the employees of their property or impose on them any
unconstitutional burden. [771F]

(f) Since the employers are the debtors of the employees, they can interpose
noobjection if the State is lawfully entitled to demand the payment, for in
thatcase payment of the debt to the State under the statute releases the
employers of their liability to the employees. When the moneys representing the
unpaid accumulations are paid to the Board the liability of the employers to
make payment to the employees in, respect of their claims against the employers
would be discharged to the extent of the amount paid to the Board, and on such
liability being transferred to the Board, the debts or claims to that extent
cannot thereafter be enforced against the employers. [771D, G]

(g) As regards notice, all persons having property located within a state and
subject to its dominion must take note of its statutes affecting control and
disposition of such property and the procedure prescribed for those purposes.
The various modes of notice prescribed in s. 6A are sufficient to give
reasonable information to the employees to come forward and claim the amount if
they really want to do so. [771G-H]

In the absence of a showing of injury, actual or threatened, there could be no
constitutional argument. therefore, against the taking over of the unpaid
accumulations by the State. [771F-G]

(2) But assuming that the impugned provisions abridge the fundamental rights of
citizen-employers or citizen-employees under Art. 19(1)(f), the respondent, a
corporation and hence a non-citizen employer, could not claim (i) that the law
was void as against non-citizen employers also under Art. 13(2), and (ii) that
since a void law is a nullity, the privation of its property was without the
authority of law. [772D] (a) It is settled that a Corporation is not a citizen
for the purposes of Art. 19 and has, therefore no fundamental right under that
Article. [772E]

Tata Engineering and Locomotive Co. Ltd. v. State of Bihar and others, [1964] 6
S.C.R. 885, R. C. Cooper v. Union of India, [1970] 2 S.C.R. 530 and Bennett
Coleman & Co., etc. v. Union of India and Others [1972] 2 S.C.C. 788, followed.
(b) Courts should not adjudge on the constitutionality of a statute except when
they are called upon to do so when legal rights of the litigants are in actual
controversy; and as part of this rule, is the principle that one to whom the
application of a statute is constitutional will not be heard to attack the
statute on the ground that, it must also be taken as applying to other persons
to whom or situations in which, its application may be unconstitutional. [771
H-772B] United States v. Rainas, 362 U.S. 17, referred to. 762

(c) The same scheme permeates both the sub-articles of Art. 13, namely, to make
the law void in Art. 13(1) to the extent of the inconsistency with the
fundamental rights, and in Art. 13(2) to the extent of the contravention of
those rights. In other words, the voidness is not in rein but to the extent only
of inconsistency or contravention as the case may be, of the rights conferred
under Part III. Therefore, when Art. 13(2) uses the expression 'void, it can
only mean void as against persons whose fundamental rights are taken away or
abridged by a law. [777G-H] (d) If a pre-constitutional law which takes away or
abridges the rights under Art. 19 could remain operative even after the
Constitution came into force as regards non-citizens, there is no reason why a
post-constitutional law which takes away or abridges them should not be
operative as respects noncitizens, if the meaning of the word 'void' in Art.
13(1) is the same as its meaning in Art. 13(2). The reason why a pre-
constitutional law remains ,operative as against non- citizens is that it is
void only to the extent of its in- consistency with the rights conferred under
Art. 19 and that its voidness is, therefore, confined to citizens, as, ex
hypothesi the law became inconsistent with their fundamental rights alone. Art.
13(2) is an injunction to the State not to pass any law which takes away or
abridges the fundamental rights conferred by Part III and the consequence of the
contravention of the injunction is that the, law would be void to the extent of
the contravention. The expression 'to the extent of the contravention' in the
sub-article can only mean to the extent of the contravention of the rights
conferred under that Part. Rights always inhere in some person whether natural
or juridical. Just as a pre- constitutional law taking away or abridging the
fundamental rights under Art. 19 remains operative after the Constitution came
into force as respects of noncitizens as it is not inconsistent that their
fundamental rights so also a postconstitutional law, offending Art, 19, remains
operative as against non-citizens as it is not in contravention of any of their
fundamental rights. The law might be still-born so far as the persons, entities
or denominations whose fundamental rights are taken away or abridged; but there
is no reason why the law should he void or still-born as against those who have
no fundamental rights. 777B-D, E-G, H-778A]

(e) It could not be said that the expression 'to the extent of the
contravention' mean only that part of the law which contravenes the fundamental
right would alone be void and not the other parts which do not so contravene.
The expression 'any law' occurring in the latter part of the sub-article must
necessarily refer to the same expression, in the former part and, therefore, the
Constitution-makers have already made it clear that the law that would be void
is only the law which contravenes the fundamental rights conferred by Part III;
and, so, the phrase 'to the extent of the contravention' can mean only to the
extent of the contravention of the rights conferred. When it is seen that the
latter part of the sub-article is concerned with the effect of the violation of
the injunction contained in the former part, the words 'to the extent of the
contravention' can only refer to the rights conferred under Part III ind denote
only the compass of voidness with respect to persons or entities resulting from
the contravention of the rights conferred upon them, There is no reason why the
Constitution-makers wanted to state that the other sections which did not
violate the fundamental rights would not be void. Besides. any such categorical
statement would be wrong as the other sections might be void if they are
inseparably knitted to the void one. [778A-G] (f) Assuming that this Court has
rejected the distinction between legislative incapacity arising from lack of
power under the relevant legislative entry and that arising from a check upon
legislative power on account of constitutional provisions like fundamental
rights, it does not follow that if the law enacted by the legislature having no
capacity in the former sense would be void in rem a law passed by a legislature
having no legislative capacity in the latter sense should also be void in rem,
because : [778G-H] (i) If on a textual reading of Art. 13 the conclusion reached
namely, that a law passed by a legislature having no legislative capacity in the
latter sense

763

is only void qua those persons whose fundamental rights are taken away or
abridged, is the only reasonable one, there is no need to consider whether that.
conclusion could not be arrived at except on the basis of such a distinction;,
and (ii) Further, there is nothing strange in the notion of a legislature having
no inherent legislative capacity or power to take away or abridge by law the:
fundamental rights conferred on citizens and yet having legislative power to
pass the same law in respect of non-citizens who have no such fundamental rights
to be taken away or abridged. In other words, the legislative incapacity
subjectwise with reference to Arts. 245 and 246 in this context would be the
taking away or abridging by law the fundamental rights under Art. 19 of
citizens. [779A-E]

M. P. V. Sundararamaier v. State of A.P. (1958) S.C.R. 1422, referred. to.

(g) The expression "that State shall not make any law in Art. 13(2) is no doubt
a clear mandate of the fundamental law of the land and, therefore, it is case of
total incapacity and total want of power. But the mandate is that the State
shall not make any law which takes away or abridges the rights conferred by Part
III. If no rights are conferred under Part III upon a person, or, if rights are
conferred, but they are not taken away or abridged by law there could not be
incapacity of the legislature to make a law. If a law is otherwise good and does
not contravene any of their fundamental rights, noncitizens cannot take
advantage of the voidness of the law for the reason, that it contravenes the
fundamental rights of citizens and claim that there is no law at ail. Such a
proposition would not violate any principle of equality before the law, because,
citizens and non-citizens are not similarly situated as citizens have certain
fundamental rights which non-citizens have not. [779 B-D; 780 D-E]

Keshava Madhava Menon v. State of Bombay, [1951] S.C.R. 228, Bahran Khurshed
Pesikake v. State of Bombay. [1955] I S.C.R. 613, Bhikhali Narain Uhakras v.
State of M.P. [1955] 2 S.C.R. 589, M. P. V. Sundaramaier v. State of A.P.,
[1958] S.C.R. 1422. Deep Chand v. State of U.P. and Others,. [1959] Supp. 2 S.
C. R. 8, Mahendra Lal Jaini's case [1963] Supp. I S. C. R. 912 and Jagannath v.
Authorizcd Officer, Land Reforms, [1971] 2 S.C.C. 893, referred to.

(h) Therefore, even assuming that under Art. 226 of the Constitution the
respondent was entitled to move the High Court and seek a remedy for
infringement of its ordinary right to property, the impugned provisions could
not be treated as non-est. and the respondent cannot take the plea that his
rights to property are being taken away or abridged without the authority of
law. [772 H-773 A] (3) The definition of 'establishment' in S. 2(4) does not
violate Art. 14 and does not make the impugned provisions void.

(a) The equal protection of the laws is a pledge of the protection of equal
laws. But courts have resolved the contradictory demands of legislative
specialisation and constitutional generality by the doctrine of reasonable
classification. [782 B-C]

(b) A reasonable classification is one which includes all who are similarly
situated, and none who are not, with respect to the purpose of the law [782 C-D]
(c) A classification is under-inclusive when all who are included in the class
are tainted with the mischief, but there are others also tainted whom the,
classification does not include. A classification is over-inclusive when it
includes not only those who are similarly situated with respect to the purpose
but also others who are not so situated. [782 D-F]

(d) The Court has recognised the very real difficulties under which legislatures
operate difficulties arising out of both the nature of the legislative process
and of the society which legislation attempts perennially to reshape and it has
refused to strike down indiscriminately all legislation embodying-

764

classificatory inequality like the one here under consideration. The legislature
cannot be required to impose upon administrative agencies tasks which cannot be
carried out or which must be carried out on a large scale at a single stroke.
The piecemeal approach to a general problem permitted by under-inclusive
classifications is justified especially when it is considered that legislation
dealing with such problems is usually an experimental matter. It is impossible
to tell how successful a particular approach may be, what dislocation may occur,
what evasions may develop or what new evils might be generated in the attempt. A
legislation may take one step at a time addressing itself to the Phase of the
problem which seems most acute to the legislative mind. Therefore, a legislature
might select only one phase of one field for application of a remedy. Once an
objective is decided to be within the legislative competence the working out of
classification should not be impeded by judicial negatives. The courts attitude
cannot be that the state either has to regulate all businesses or even all
related businesses and in the same way, or not at all. The court must be aware
of its own remoteness and lack of familiarity with the local problems.
Classification is dependent on the particular needs and specific difficulties of
the community which are beyond the easy ken of the court, and which the
legislature alone was competent to make. Consequently, lacking the capacity to
inform itself fully about the peculiarities of a particular local situation, a
court should hesitate to dub the legislative classification as irrational.[782
H-783 G;784 A-D; 786 G-H; 787 A] Missouri, K&T. Rly. v. May, [1904] 194 U.S.267,
269, West Coast Hotel Company v. Parrish , 300 U.S. 379, 400, Two Guys from
Harrison-Allentown v. Mc Ginley 366, U.S. 582, 592, Mutual Loan Co. v. Martell,
56 L.Ed. 175, 180, Tianer v. Texas 310 U.S. 141 and Carmichel v. Southern Coal &
Coke Co., 201. U.S. 495, referred to.

(e) The question whether, under Art. 14, a classification is reasonable or
unreasonable must, in the ultimate analysis depend upon the judicial approach to
the problem. The more complicated society becomes, the greater the diversity of
its problems and the more does legislation direct itself to the diversities. In
the utilities, tax and economic regulation cases, there are good reasons for
judicial self- restraint if not official deference to legislative judgment. The
Courts have only the power to destroy but not to reconstruct. When to this are
added the complexity of economic regulation, the uncertainty, the liability to
error, the bewildering conflict of the experts, and the number of times the
judges have been overruled by events self limitation can be seen to be the path
to judicial wisdom and institutional prestige and stability. [784 F-785 D]

(f) Laws regulating economic activity should be viewed differently from laws
which touch and concern freedom of speech and religion, voting procreation,
rights with respect to criminal procedure etc. Judicial deference to legislature
in instances of economic regulation is explained by the argument that
rationality of a classification depends upon local conditions about which local
legislative or administrative bodies would be better informed than a court. [784
D-E; 786 A]

(g) In the present case, the purpose of the Act is to get unpaid accumulations
for utilising them. for the welfare of labour in general. It is from the
factories that the greatest amount of unpaid accumulations could be collected
and since the factories are bound to maintain records from which the amount of
unpaid accumulations could be easily ascertained the legislature brought all the
factories within the definition of 'establishment'. It then addressed itself to
other establishments but thought that establishments employing less than 50
persons need not be brought within the purview of the definition as unpaid
accumulations in those establishments would be less and might not be sufficient
to meet the administrative expenses of collection and as many of them might not
be maintaining records from which the amount of unpaid accumulations could be
ascertained. Administrative convenience in the collection of unpaid
accumulations is a factor to be taken into account in adjudging whether the
classification is reasonable. The reason why government establishments other
than factories were not included in the definition is that there are hardly any
establishments run by the Central or State Government [783 F-G; 785E-H; 786 A-B]

(h) The justification for including tramways and motor omnibuses within the
purview of the definition is that the legislature of the State of Bombay, when
it 765

enacted the Act in 1953, must have had reason to think that unpaid accumulations
in these concerns would be large, because, they usually employed a. large amount
of labour force' and they were bound to keep records of the wages earned and
paid. [786 C-D]

(i) Whether a court can remove the unreasonablenss of a classification when it
is under-inclusive by extending the ambit of the legislation to cover the class
omitted to be included, or by applying the doctrine of severability delete a
clause which makes a classification over-inclusive, are matters on which it is
not necessary to express any final opinion because the inclusion of tramway or
motor omnibus service in the definition of 'establishment' does not make the
classification unreasonable having regard to the purpose of the legislation.
[788 A-C]

JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1931 to 1933/68.

From the, Judgment and Order dated the 19th/20th/21st day of July 1965 of the
Gujrat High Court at Ahmedabad in Special Civil Application Nos. 579 to 581 of
1963.

Civil Appeal No. 2271 of 1968.

From the judgment and order dated the 19th/20th/21st day of July 1965, of the
Gujarat High Court at Ahmedabad in Special Civil Application No. 836 of 1962.

Civil Appeals Nos. 492 to 512 of 1969.

From the Judgment and order dated the 21st July, 1965 of the Gujarat High Court
at Ahmedabad in Special Civil Application Nos. 1069/62, 20, 21, 40, 49, 476,
699, 574 of 1963, 1070 to 1075 of 1962, 1086 to 1089 of 1962, 516, 727 and 728
of 1963.

Civil Appeals Nos. 1114 to 1129 of 1969.

From the judgment and order dated the 21st July, 1965 of the Gujarat High Court
in Special Civil Applications Nos. 458 to 473 of 1963.

S. T. Desai, S. K. Dholakia and S. P. Nayar, for the appellants. (In all the
appeals).

V. B. Patel, D. N. Misra, J. B. Dadachanji, O. C. Mathur and Ravinder Narain,
for respondent no. I (in C. As. 1115, 1118, 1125/ 69).

Ram Punjwani, P. C. Bhartari, J. B. Dadachanji, O. C. Mathur and Ravinder
Narain, for respondent no. I (in C.A. 1931/68).

P. C. Bhartari, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, respondent
no. I (in C. As. 1931-33/68, 492-494, 497, 499, 500-502, 504-507, 511-512/69,
1117, 1122, 1124 and 1126-27/69).

M. C. Setalvad, V. B. Patel and 1. N. Shroff, for respondent no. I (in C.A.
2271/68).

V. B. Patel and 1. N. Shroff, for respondent no. I (In C.As. 1 1 14, 1116,1119
and 1128/69).

M. C. Bhandare and M. N. Shroff, for intervener. The Judgment of the Court was
delivered by

MATHEW, J.-The facts are similar in all these cases. We propose to deal with
Civil Appeal No. 2271 of 1968. The decision there will dispose of the other
appeals. The first respondent, a company registered under the Companies Act,
filed a Writ petition in the High Court of Gujarat. In that

766

petition it impugned the provisions of sections 3, 6A and 7 of the Bombay Labour
Welfare Fund Act, 1953 (hereinafter referred to as the Act) and s. 13 of the
Bombay Labour Welfare Fund (Gujarat Extension and Amendment) Act, 1961
(hereinafter referred to as the First Amendment Act) and rules 3 and 4 of the
Bombay Labour Welfare Fund Rules, 1953 (hereinafter referred to as tie Rules) as
unconstitutional and prayed for the issue of a writ in the nature of mandamus or
other appropriate writ or direction against the respondents in the writ petition
to desist from enforcing the direction in the I notice dated August 2, 1962 of
respondent No. 3 to the writ petition requiring the petitioner-1st respondent to
pay the unpaid accumulations specified therein.

The High Court held that s. 3 (1) of the Act in so far as it relates to unpaid
accumulations specified in s. 3 (2) (b), s. 3 (4) and s. 6A of the Act and rules
3 and 4 of the Rules was unconstitutional and void.

In order to appreciate the controversy, it is necessary to state the background
of the amendment made by the Legislature of Gujarat in the Act. The Act was
passed by the legislature of the then State of Bombay in 1953 with a view to
provide for the constitution of a fund for financing the activities for
promoting the welfare of labour in the State of Bombay. Section 2(10) of the Act
defined "unpaid accumlation" 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 the Act, including the
wages and gratuity legally payable, but not including the amount of
contribution, if any, paid by any employer to a Provident Fund established under
the Employees' Provident Fund Act, 1952. Section 3(1) provided that the State
Government shall constitute a fund called the Labour Welfare Fund and that
notwithstanding anything contained in any other law for the time being in force,
the sums specified in subsection (2) shall, subject to the provisions of sub-
section (4) and sec- tion 6A be paid in to the fund. Clause (b) of sub-section
(2) of s. 3 provided that the Fund shall consist of "all unpaid accumulations".
Section 7(1) provided that the fund shall vest in and be applied by the Board of
Trustees subject to the provisions and for the purposes of the Act. Section 19
gave power to the State Government to make rules and in the exercise of that
power, the State Government made the Rules. Rules 3 and 4 concerned the
machinery for enforcing the provisions of the Act in regard to fines and unpaid
accumulations.

In Bombay Dyeing & Manufacturing Co. Ltd. v. The State of Bombay and Others(1)
this Court held that the provisions of sections 3(1) and 3(2)(b) were invalid on
the ground that they violated the fundamental right of the employer under
article 19(1)(f). The reasoning of the Court was that the effect of the relevant
provisions of the Act was to transfer to the Board the debts due by the employer
to the employees free from the bar of limitation without discharging the
employer from his liability to the employees and that s.3(1) therefore operated
to take away the moneys of the employer without releasing him from his liability
to the employees. The Court also

(1) [1958] S.C.R. 1122

767

found that there was no machinery provided for adjudication of the claim of the
employees when the amounts were required to be paid to the fund.

The State sought-to justify the provisions of the Act as one relating to
abandoned property and, therefore, by their very nature, they could not be held
to violate the rights of any person either under article 19(1) (f) or article,
31(2). The Court did not accept the contention of the State but held that the
purpose of a legislation with respect to abandoned property being in the first
instance to safeguard the property for the benefit of the true owners and the
State taking it over only in the absence of such claims, the law which vests the
property absolutely in the State without regard to the claims of the true owners
cannot be considered as one relating to abandoned property.

On May 1, 1960, the State of Bombay was bifurcated into the States of
Maharashtra and Gujarat. The legislature of Gujarat thereafter enacted to First
Amendment Act making various amendments in the Act, some of them with
retrospective effect. The First Amendment Act was intended to remedy the defects
pointed out in the decision of this Court in the Bombay Dyeing Case(1). The
preamble to the First Amendment Act recites that "it is expedient to constitute
a Fund for the financing of activities to promote welfare of labour in the State
of Gujarat, for conducting such activities and for certain other purposes".
Section 2(2) defines 'employee'. Section 2(3) defines 'employer' as 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 certain other persons. Section 2(4) defines 'establishment' and that
sub-section as amended reads :-

       "2(4) 'Establishment' means

       (i) A factory;

       (ii) A Tramway or motor omnibus service; and (iii) Any establishment
including a society registered under the Societies Registration Act, 1960, and a
charitable or other trust, whether registered under the Bombay Public Trusts
Act, 1950, or not, which carries on any business or trade or any work in
connection with or ancillary thereto and which employs or on any working day
during the preceding twelve months employed more than fifty persons; but does
not include an establishment (not being a factory) of the Central or any State
Government."

       Sub-section (10) of s. 2 defines 'unpaid accumulations'

       "unpaid accumulations' means 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 but not including the amount of contribution if any,
paid by an employer to a

(1) [1958] S.C.R. 1122.

768

       provident fund established under the

       Employees' Provident Funds Act 1952".

Section 3 is retrospectively amended and the amended section it its material
part provides that the State Government shall constitute a fund called the
Labour Welfare Fund and that the Fund shall consist of, among other things, all
unpaid accumulations. It provides that the sums specified 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. The section further
provides that notwithstanding anything contained in any law for the time being
in force or any contract or instrument, all unpaid accumulations shall be
collected by such agencies and in such manner as may be prescribed and be paid
in the first instance to the Board which shalt keep a separate account therefor
until claims thereto have been decided in the manner provided in s.6A. Section
6A is a new section introduced retrospectively in the Act and sub-section (1)
and (2) of that section state that all unpaid accumulations shall be deemed to
be abandoned property and that any unpaid accumulations paid to the Board in
accordance with the Provisions of s.3 shall, on such payment, discharge an
employer of the liability to make payment to an employee in respect thereof, but
to the extent only of the amount paid to the Board and 'that the liability to
make payment to the employee to the extent aforesaid shall, subject to the other
provisions of the section, be, deemed to be transferred to the Board. Sub-
section (3) provides that as soon as possible after any unpaid accumulation is
paid to the Board, the Board shall, by a, public notice, call upon interested
employees to submit to the Board their claims for any pay- ment due to them.
Sub-section (4) provides that such public notice shall contain such particulars
as may be prescribed and that it shall be affixed on the notice board or in its
absence on a conspicuous part of the premises, of each establishment in which
the unpaid accumulations were earned and shall be published in the Official
Gazette and also in any two newspapers in the language commonly understood in
the area in which such establishment is situated, or in such other manner as may
be- prescribed, regard being had to the amount of the claim. Sub-section
(5)states that after the notice is first affixed and published under sub-section
(4) it shall be again affixed and published from time to time for a period of
three years from the date on which it was first affixed and published, in the
manner provided in that subsection in the months of June and December each year.
Sub-section (6) states that a certificate of the Board to the effect that the
provisions of sub-section (4) and (5) were complied with shall be conclusive
evidence thereof Sub- section (7) provides that any claim received whether in
answer to the notice or otherwise within a period of four years from the date of
the first publication of the notice in respect of such claim, shall be
transferred by the Board to the authority appointed under s. 15 of the Payment
of Wages Act, 1936, having jurisdiction in the area in which the factory or
establishment is situated, and the Authority shall proceed to adjudicate upon
and decide such claim and that in bearing such claim the Authority shall have
the powers conferred by and shall follow the procedure (in so far as it is
applicable) followed in giving effect to the provisions of that Act. Sub-section
(8)

769

states that if in deciding any claim under sub-section (7), the Authority allows
the whole or part of such claim, it shall declare that the unpaid accumulation
in relation to which the claim is made shall, to the, extent to which the claim
is allowed ceases to be abandoned property and shall order the Board to pay to
the claimant the amount of the claim ,as allowed by it and the Board shall make
payment accordingly : provided that the Board shall not be liable to pay any sum
in excess of that paid under sub-section (4) of s.3 to the Board as unpaid
accumulations, in respect of the claim. Sub-section (9) provides for an appeal
against the decision rejecting any claim. Sub-section (10) provides that the
Board shall comply with any order made in appeal. Sub-section (11) makes the
decision in appeal final and conclusive as to the right to receive payment, the
liability of the Board to pay and also as to the amount, if any : and sub-
section (12) states that if no claim is made within the time specified in sub-
section (7) or a claim or part thereof has been rejected, then the unpaid
accumulations in respect of such claim shall accrue to and vest in the State as
bona vacantia and shall thereafter without further assurance be deemed to be
transferred to and form part of the Fund. 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 the Act and the moneys in the Fund shall be
utilized by the Board to defray the cost of carrying out measures which may be
specified by the State Government from time to time to promote the welfare of
labour and of their dependents. Sub-section (2) of s.7 specifies various
measures for the benefit of employees in general on which the moneys in the Fund
may be expended by the Board.

Section 11 provides for the appointment of an officer called the Welfare
Commissioner and defines his powers and duties. Section 19 confers rule-making
power on the State Government.

Section 22 empowers the State Government by notification in the official gazette
to exempt any class of establishment from all or any of the provisions of the
Act subject to such conditions as may be specified in the notification. During
the pendency of the writ petition before the High Court, the Gujarat Legislature
passed the Bombay Labour Welfare Fund (Gujarat Amendment) Act, 1962 on February
5, 1963 (hereinafter referred to as the Second Amendment Act) introducing
subsection (13) in s.6A with retrospective effect from the date of commencement
of the Act. That sub- section provides as follows

       "(13) Nothing in the foregoing provisions of this section shall apply to
unpaid

       accumulations not already paid to the Board; (a) in respect of which no
separate accounts have been maintained so that the unpaid claims of employees
are not traceable, or

       (b) which are proved to have been spent before the sixth day of December,
1961,

770

       and accordingly such unpaid accumulations shall not be liable to be
collected and paid under sub-section (4) of section 3".

The State Government, in the exercise of its rule-making power under s. 19
amended the Rules by amending rule 3 and adding a new rule 3A setting out the
particulars to be contained in the public notice issued under s. 6A(3). The
first respondent raised several contentions before the High Court, but the Court
rejected all except two of them and they were : (1) that the impugned provisions
violated the fundamental right of citizen-employers and employees under article
19(1) (f) and, therefore, the provisions were void under article 13(2) of the
Constitution and hence there was no law, and so, the notice issued by the
Welfare Com- missioner was without the authority of law; and (2) that
discrimination was writ large in the definition of 'establishment' in s. 2(4)
and since the definition permeates through every part of the impunged provisions
and is an integral part of the impugned provisions, the impugned provisions were
violative of article 14 and were void. So, the two questions in this appeal are,
whether the first respondent was competent to challenge the validity of the
impugned provisions on the basis that they violated the fundamental right under
article 19(1) (f) of citizen- employers or employees and thus show that the law
was void and non-existent and, therefore, the action taken against it was bad;
and whether the definition of 'establishment' in s. 2(4) violated the
fundamental right of the respondent under article 14 and the impugned provisions
were void for that reason.

Before adverting to these questions, it is necessary to see what the Act, after
it was amended, has purported to do. By s. 6A(1) it was declared that unpaid
accumulations shall be deemed to be abandoned property and that the Board shall
taken them over. As soon as the Board takes over the unpaid accumulations
treating them as abandoned property, notice as provided in s. 6A will have to be
published and claims invited. Sub-sections (3) to (6) of s. 6A provide for a
public notice calling upon interested employees to submit to the Board their
claims for any payment due to them and subsections (7) to (I 1) of s. 6A lay
down the machinery for adjudication of claims which might be received in
pursuance to the public notice. It is only if no claim is made for a period of 4
years from the date of the publication of the first notice, or, if a claim is
made but rejected wholly or in part, that the State appropriates the unpaid
accumulations as bona vacantia. It is not as if unpaid accumulations become bona
vacantia on the expiration of three years. They are, no doubt, deemed to be
abandoned property under s. 6A(1), but they are not appropriated as bona
vacantia until after claims are invited in pursuance to public notice and
disposed of.

At common law, abandoned personal property could not be the subject of ascheat.
It could only be appropriated by the sovereign as bona vacantia (see
Holdsworth's History of English Law, 2nd ed., vol. 7, pp. 495-6). The Sovereign
has a prerogative right to appropriate

771

bona vacantia. And abandoned property can be appropriated by the Sovereign as
bona vacantia.

Unpaid accumulations represent the obligation of the 'employers' to the
'employees' and they are the property of the employees. In other words, what is
being treated as abandoned property is the obligation to the employees owed by
the employers and which is property from the standpoint of the employees. No
doubt, when we look at the scheme of the legislation from a practical point of
view, what is being treated as abandoned property is the money which the
employees are entitled to get from the employers and what the Board takes over
is the obligation of the employers to pay the amount due to the employees in
consideration of the moneys paid by the employers to the Board. The State, after
taking the money, becomes liable to make the payment to the employees to the
extent of the amount received. Whether the liability assumed by the State to the
employees is an altogether new liability or the old liability of the employers
is more a matter of academic interest than of practical consequence.

When the moneys representing the unpaid accumulations are paid to the Board, the
liability of the employers to make payment to the employees in respect of their
claims against the employers would be discharged to the extent of the amount
paid to the Board and on such liability being transferred to the Board, the
debts or claims to that extent cannot thereafter be enforced against the
employer. We think that if unpaid accumulations are not claimed within a total
period of 7 years, the inactivity on the part of the employees would furnish
adequate basis for the administration by State of the unasserted claims or
demands. We cannot say that the period of 7 years allowed to the employees for
the purpose of claiming unpaid accumulations is an unreasonably short one which
will result in the infringement of any constitutional rights of the employees.
And, in the absence of some persuasive reason, which is lacking here, we see no
reason to think that the State will be, in fact, less able or less willing to
pay- the amounts when it has taken them over. We cannot also assume that the
mere substitution of the State as the debtor will deprive the employees of their
property or impose on them any unconstitutional burden. And, in the absence of a
showing of injury, actual or threatened, there can be no constitutional argument
against the taking over of the unpaid accumulations by the State. Since the
employers are the debtors of the employees, they can interpose no objection if
the State is lawfully entitled to demand the payment, for, in that case, payment
of the debt to the State under the statute releases the employers of their
liability to the employees. As regards notice, we are of the view that all
persons having property located within a state and subject to its dominion must
take note of its statutes affecting control and disposition of such property and
the procedure prescribed for these, purposes. The various modes of notice
prescribed in s. 6A are sufficient to give reasonable information to the
employees to come forward and claim the amount if they really want to do so. Be
that as it may, we do not, however, think it necessary to consider whether the
High Court was right in its view that the impugned pro-

772

visions violated the fundamental rights of the citizen- employers or employees,
for, it is a wise tradition with courts that they will not adjudge on the
constitutionality of a statute except when they are called upon to do so when
legal rights of the litigants are in actual controversy and as part of this rule
is the principle that one to whom the application of a statute in constitutional
will not be heard to attack the statute on the ground that it must also be taken
as applying to other persons or other situations in which its application might
be unconstitutional [see United States v. Rainas(1)].

       "A person ordinarily is precluded from challenging the constitutionality
of governmental action by invoking the rights of others and it is not sufficient
that the statute or administrative regulation is unconstitutional as to other
persons or classes of persons; it must affirmatively appear that the person
attacking the statute comes within the class of persons affected by it."

       (see Corpus Juris Secundum, vol. 16, pp. 236- 7).

We, however, proceed on the assumption that the impugned provisions abridge the
fundamental right of citizen- employers and citizen-employees under article
19(1) (f) in order to decide the further question and that is, whether, on that
assumption, the first respondent could claim that the law was void as against
the non-citizen employers or employees under article 13 (2) and further contend
that the non-citizen employers have been deprived of their property without the
authority of law, as, ex hypothesi a void law is a nullity.

It is settled by the decisions of this Court that a Corporation is not a citizen
for the purposes of article 19 and has, therefore, no fundamental right under
that article (see Tata Engineering and Locomotive Co. Ltd. v. State of Bihar and
others(2), R. C. Cooper v. Union of India(3). The same view was taken in Bennett
Coleman & Co. etc., etc. v. Union of India and Others(4)].

As already stated, the High Court found that the impugned provisions, in so far
as they abridged the fundamental rights of the citizen-employers and employees
under article 19(1) (f) were void under article 13(2) and even if the
respondent-company had no fundamental right under article 19(1) (f), it had the
ordinary right to hold and dispose of its property, and that the right cannot be
taken away or even affected except under the authority of a law. Expressed in
another way, the reasoning of the Court was that since the impugned provisions
became void as they abridged the fundamental right under article 19(1) (f) of
the citizen-employers and employees the law was void and non-est, and therefore,
the first respondent was entitled to challenge the notice issued by the Welfare
Commissioner demanding the unpaid accumulation as unauthorized by any law.

The first respondent, no doubt, has the ordinary right of every person in the
country to hold and dispose of property and that right, if

(1) 362 U.S. 17. (2) [1964] 6 S.C.R. 885, (3) [1970] 3 S.C.R. 530. (4) [1972] 2
S.C.C. 788. 773

taken away or even affected by the act of an Authority without the authority of
law, would be illegal. That would give rise to a justiciable issue which can be
agitated in a proceeding under article 226.

The real question, therefore, is, even if a law takes away or abridges the
fundamental right of citizens under article 19 (1) (f) I whether it would be
void and therefore non-est as respects non-citizens ?

In Keshava Madhava Menon v. State of Bombay(1) the question was whether a
prosecution commenced before the coming into force of the Constitution could be
continued after the Constitution came into force as the Act in question there
became void as violating article 19 (1) (a) and. 19 (2). Das, J. who delivered
the majority judgment was of the view that the prosecution could be continued on
the ground that the provisions of the Constitution including article 13(1) were
not retrospective. The learned judge said that after the commencement of the
Constitution, no existing law could be allowed to stand in the way of the
exercise of fundamental rights, that such inconsistent laws were not wiped off
or obliterated from the statute book and that the statute would operate in
respect of all matters or events which took place before the Constitution came
into force and that it is also operated after the Constitution came into force
and would remain in the statute book as operative so far as non-citizens are
concerned.

This decision is clear that even though a law which is inconsistent with
fundamental rights under article 19 would become void after the commencement of
the Constitution,, the law would still continue in force in so far as non-
citizens are concerned. This decision takes the view that the word 'void' in
article 1 3 (1) would not have the effect of wiping out pre-Constitution laws
from the statute book-, that they will continue to be operative so far as non-
citizens are concerned, notwithstanding the fact that they are inconsistent with
the fundamental rights of citizens and therefore become void under article 13
(1)

In Behram Khurshed Pesikaka v. State of Bombay(2 )the question was about the
scope of article 1 3 (1). This Court had held that certain provisions of the
Bombay Prohibition Act, 1949 (a pre-constitution Act), in so far as they
prohibited the possession, use and consumption of. medicinal preparations were
void as violating article 19(1) (f). The appellant was prosecuted under the said
Act and he pleaded that he had taken medicine containing alcohol. The
controversy was whether the burden of proving that fact was on him. It became
necessary to consider the legal effect of the declaration made by this Court
that s. 13 (b) of the said Act in so far as it affected liquid medicinal and
toilet preparations containing alcohol was invalid as it infringed article 19(1)
(f). At the first hearing all the judges were agreed that a declaration by a
Court that part of a section was invalid did not repeal or amend that section.
Venkatarama Aiyar, J. with whom Jagannadhadas, J. was inclined to agree, held
that a distinction must be made between unconstitutionality arising from lack of
legislative competence and that arising from a violation of constitutional
limitations on legislative

(1) [1951] S.C.R. 228. (2) [1955] 1 S.C.R. 613. 774

power. According to him, if the law is made without legislative competence, it
was a nullity; a law violating a constitutional prohibition enacted for the
benefit of the public generally was also a nullity; but a law violating a
constitutional prohibition enacted for individuals was not a nullity but was
merely unenforceable. At the second hearing of the case, Mahajan, J. after
referring to Madhava Menon's Case(1), said that for determining the rights and
obligations of citizens, the part declared void should be notionally taken to be
obliterated from the section for all intents and purposes though it may remain
written on the statute book and be a good law when a question arises for
determination of rights and obligations incurred prior to January 26, 1950, and
also for the determination of rights of persons who have not been given
fundamental rights by the Constitution. Das, J. in his dissenting judgment held
that to hold that the invalid part was obliterated would be tantamount to saying
covertly that the judicial declaration had to that extent amended the section.
At p. 659, the learned Judge observed :

       "It is beyond all dispute that it is for the Court to judge whether the
restrictions imposed by any existing law or any part thereof on the fundamental
rights of citizens are reasonable or unreasonable in the interest of the general
public or for the protection of the interests of any Schedulea Tribe. If the
Court holds that the restrictions are unreasonable then the Act or the part
thereof which imposes such unreasonable restrictions comes into conflict and
becomes inconsistent with the fundamental right conferred on the citizens by
article 19(1) (f) and is by article 13(1) rendered void, not in toto or for all
purposes or for all persons but 'to the extent of such inconsistency' i.e., to
the extent it is inconsistent with the exercise of that fundamental right by the
citizens. This is plainly the position, as I see it."

Mahajan, C.J. rejected the distinction between a law void for lack of
legislative power and a law void for violating a constitutional fetter or
limitation on legislative power. Both these declarations, according to the
learned Chief Justice, of unconstitutionality go to the root of the power itself
and there is no, real distinction between them and they represent but two
aspects of want of legislative power. In Bhikhaji Narain Dhakras v. State- of
M.P.(2) the question was whether the C.P. and Berar Motor Vehicles (Amendment)
Act, 1947, amended s. 43 of the Motor Vehicles Act, 1939, by introducing
provisions which authorized the Provincial Government to take up the entire
motor transport business in the Province and run it in competition with and even
to the exclusion of motor transport operators. These provisions, though valid
when enacted, became void on the coming into force of the Constitution, as they
violated article 19(1) (g) On June 18, 1951, the Constitution was amended so as
to authorize the

(1) [1951] S.C.R. 228.

(2) [1955] 2 S.C.R. 589.

775

State to carry on business "whether to the exclusion, complete or partial, or
citizens or otherwise". A notification was issued after the amendment and the
Court was concerned with the validity of the notification. The real question
before the Court was that although S. 43 was void between January 26, 1950, and
June 18, 1951, the amend- ment of the article 19(6) had the affect of removing
the constitutional invalidity of s. 43 which, from the date of amendment, became
valid and operative. After referring to the meaning given to the word 'void' in
Keshava Madhva Menon's Case(1), Das, Acting C.J. said for the Court : "All laws,
existing or future, which are inconsistent with the, provisions of Part III of
our Constitution are, by the express provision of article 13, rendered void 'to
the extent of such inconsistency'. Such laws were not dead for all purposes.
They existed for the purposes of pre-Constitution rights and liabilities and
they remained operative, even after the Constitution, as against non- citizens.
It is only as against the citizens that they remained in a dormant or moribund
condition" (at pp. 599-600).

In M. P. V. Sundararamaier v. State of A.P. (2), Venkatarama Aiyar, J. said that
a law made without legislative competence and a law violative of constitutional
limitations on legislative power were both unconstitutional and both had the
same reckoning in a court of law; and they were both unenforceable but it did
not follow from this that both laws were of the same quality and character and
stood on the same footing for all purposes. The proposition laid down by the
learned Judge was that if a law is enacted by a legislature on a topic not
within its competence, the law was a nullity but if the law was on a topic
within its competence but if it violated some constitutional prohibition. the
law was only unenforceable and not a nullity. In other words, a law if it lacks
legislative competence was absolutely null and void and a subsequent cession of
the legislative topic would not revive the law which was stillborn and the law
would have to be re-enacted; but' a law within the legislative competence but
violative of constitutional limitation was unenforceable but once the limitation
was removed, the law became effective. The learned judge said that the observa-
tions of Mahajan, J, in Pesikaka's case(3) that qua citizens that part of
s.13(b) of the Bombay Prohibition Act, 1949, which had been declared invalid by
this Court "had to be regarded as null and void"

could notin the context be construed as implying that the impugned law mustbe
regarded as non-est so as to be incapable of taking effect when thebar was
removed. He summed up the result of the authorities as follows : "Where an
enactment is unconstitutional in part but valid as to the rest, assuming of
course that the two portions are sever

able, it

       cannot be held to have been wiped out of the statute book as it
admittedly must remain there for the purpose of enforcement of the valid portion
thereof, and

(1) [1951] S.C.R 228. (2) [1958] S.C.R. 1422. (3) [1955] 1 S.C.R. 613.

776

       being on the statute book, even that portion which is unenforceable on
the ground that it is unconstitutional will operate proprio vigore when the
Constitutional bar is removed, and there is no need for a fresh legislation." In
Deep Chand v. State of U. P. and Others(t) it was held that a post-Constitution
law is void from its inception but that a pre-Constitution law having been
validly enacted would continue in force so far as non-citizens are concerned
after the Constitution came into force. The Court further said that there is no
distinction in the meaning, of the word 'void' in article 13(1) and in 13(2) and
that it connoted the same concept but, since from its inception the post-
Constitution lay is void, the law cannot be resuscitated without reenactment.
Subba Rao, J. who wrote the majority judgment said after citing the observations
of Das, Actg. C.J. in Keshava Madhava Menon's Case(supra): "The second part of
the observation directly applies only to a case covered by article 13(1), for
the learned Judges say that the laws exist for the purposes of pre-

       constitution rights and liabilities and they remain operative even after
the Constitution as against non-citizens. The said observation could not
obviously apply to post Constitu- tution laws. Even so, it is said that by a
parity of reasoning the post-Constitution laws are also void to the, extent of
their repugnancy and therefore the law in respect of noncitizens will be on the
statute-book and by the application of the doctrine of eclipse, the same result
should flow in its case also. There is some plausibility in this argument, but
it ignores one vital principle, viz., the existence or the non-existence of
legislative power or competency at the time the law is made governs the
situation" (p. 38).

Das, C.J. dissented. He was of the view that a post- Constitution law may
infringe either a fundamental right conferred on citizens only or a fundamental
right conferred on any person, citizen or noncitizen and that in the first case
the law will not stand in the way of the exercise by the citizens of that
fundamental right and therefore, will not have any operation on the rights of
the citizens, but it will be quite effective as regards non-citizens. In
Mahendra Lal Jaini v. The State of U.P. and Others(2), the Court was of the view
that the meaning of the word 'void' is the same both in article 13(1) and
article 13(2) and that the application of the doctrine of eclipse in the case of
pre-Constitution laws and not in the case of post- Constitution laws does not
depend upon the two parts of article 13; "that it arises from the inherent
difference between article 13(1) and article 13(2) arising from the fact that
one is dealing with pre-Constitution laws, and the other is dealing with post-
Constitution laws, with the result that in one case the laws being not still-
born the doctrine of eclipse will apply while in the other (1) [1959] Supp.2
S.C.R.8.(2) [1963] Supp. 1 S. C. R. 912. 777

case the law being still-born there will be no scope for the application of the
doctrine of eclipse."

If the meaning of the word 'void' in article 13(1) is the same as its meaning in
article 13(2), it is difficult to understand why a pre-Constitution law which
takes away or abridges the rights under article. 19 should remain operative even
after the Constitution came into. force as regards non-citizens and a post-
Constitution law which takes away or abridges them should not be operative as
respects noncitizens. The fact that pre-Constitution law was valid when enacted
can afford no reason why it should remain operative as respects noncitizens
after the Constitution came into force as it became void on account of its
inconsistency with the provisions of Part 111. Therefore, the real reason why it
remains operative as against non- citizens is that it is void only to the extent
of its inconsistency with the rights conferred under Article 19 and that its
voidness is, therefore, confined to citizens, as, ex hypothesis the law became
inconsistent with their fundamental rights alone. If that be so, we see no
reason why a post-Constitution law which takes away or abridges the rights
conferred by article 19 should not be operative in regard to non-citizens as it
is void only to the extent of the contravention of the rights conferred on
citizens, namely, those under article 19.

Article 13(2) is an injunction to the 'state' not to pass any law which takes
away or abridges the fundamental rights conferred by Part III and the
consequence of the contravention of the injunction is that the law would be void
to the extent of the contravention. The expression 'to the extent of the
contravention' in the sub-article can only mean, to the extent of the
contravention of the rights conferred under that part. Rights do not exist in
vacuum. They must always inhere in some person whether natural or juridical and,
under Part It, they inhere even in fluctuating bodies like a linguistic or
religious minorities or denominations. And, when the sub-article says that the
law would be void "to the extent of the contravention", it can only mean to the
extent of the contravention of the rights conferred on persons, minorities or
denominations, as the case may be. Just as a pre-Constitution law taking away or
abridging the fundamental rights under article 19 remains operative after the
Constitution came into force as respects non-citizens as it is not inconsistent
with their fundamental rights, so also a post-Constitution law offending article
19, remains operative as against non- citizens as it is not in contravention of
any of their fundamental rights. The same scheme permeates both,, the sub-
articles, namely, to make the law void in article 13(1) to the extent of the
inconsistency with the fundamental rights, and in article 13(2) to the extent of
the contravention of those rights. In other words, the voidness is not in rem
but to the extent only of inconsistency or contravention, as the case may be of
the rights conferred under Part 111. Therefore, when article 13(2) uses the ex-
pression 'void', it can only mean, void as against persons whose fundamental
rights are taken away or abridged by a law. The law might be 'still-born' so far
as the persons, entities or denominations whose fundamental rights are taken
away or abridged, but there is no reason

778

why the law should be void or 'still-born' as against those who have no
fundamental rights.

It is said that the expression "to the extent of the contravention" in the
article means that the part of the law which contravenes the fundamental right
would alone be void and not the other parts which do not so contravene. In other
words, the argument was that the expression is intended to denote only the part
of the law that would become void and not to show that the law will be void only
as regards the persons or entities whose fundamental rights have been taken away
or abridged.

The first part of the sub-article speaks of 'any law' and the second part refers
to the same law by using the same expression, namely, ,any law'. We think that
the expression 'any law' occurring in the latter part of the sub-article must
necessarily refer to the same expression in the former part and therefore, the
Constitution-makers, have already made it clear that the law that would be void
is only the law that contravenes the fundamental rights conferred by Part 111,
and so, the phrase 'to the extent of the contravention' can mean only to the
extent of the contravention of the rights conferred. For instance, if a section
in a statute takes away or abridges any of the rights conferred by Part III it
will be void because it is the law embodied in the section which takes away or
abridges the fundamental right. And this is precisely what the sub- article has
said in express terms by employing the expression 'any law' both in the former
and the latter part of it. It is difficult to see the reason why the
Constitution makers wanted to state that the other sections, which did not
violate the fundamental right, would not be void, and any such categorical
statement would have been wrong, as the other sections might be void if they are
inseparably knitted to the void one. When we see that the latter part of the
sub-article is concerned with the effect of the voilation of the injunction
contained in the former part, the words "to the extent of the contravention" can
only refer to the rights conferred under Part III and denote only the compass of
voidness with respect to persons or entities resulting from the contravention of
the rights conferred upon them. Why is it that a law is void under article 13
(2) ? It is only because the law takes away or abridges a fundamental right.
There are many fundamental rights and they inhere in diverse types of persons,
minorities or denominations. There is no ,conceivable reason why a law which
takes away the fundamental right of one class of persons, or minorities or
denominations should be void as against others who have no such fundamental
rights as, ex hypothesi the law cannot contravene their rights.

It was submitted that this Court has rejected the distinction drawn by
Venkatarama Aiyar, J. in Sundararamaier's case(1) between legislative incapacity
arising from lack of power under the relevant legislative entry and that arising
from a check upon legislative power on account of constitutional provisions like
fundamental rights and that if the law enacted by a legislature having no
capacity in the former sense would be void in rem, there is no reason why a law
passed by a legislature having no legislative capacity in the latter

(1) [1958] S.C.R. 1422.

779

sense is void only cua persons whose fundamental rights are taken away or
abridged.

It was also urged that the expression "the State shall not make any law" in
article 13(2) is a clear mandate of the fundamental law of the, land and,
therefore, it is a case of total incapacity and total want of power. But the
question is : what is the mandate ? The mandate is that the State shall not make
any law which takes away or abridges the rights conferred by Part 111. If no
rights are conferred under Part III upon a person, or, if rights are conferred,
but they are not taken away or abridged by the law, where is the incapacity of
the legislature ? It may be noted that both in Deep Chands Case (supra) and
Mahendra Lal Jain's case (supra), the decision in Sundaramaier's case (supra)
was not adverted to. If on a textual reading of article 13, the conclusion which
we have reached is the only, reasonable one, we need not pause to consider
whether that conclusion could be arrived at except on the basis of the
distinction drawn by Venkatarama Aiyar, J, in Sundararamaie's case(supra).
However, we venture to think that there is nothing strange in the notion of a
legislature having no inherent legislative capacity or power to take away or
abridge by a law the fundamental rights conferred on citizens and yet having
legislative power to pass the same law in respect of noncitizens who have no
such fundamental rights to be taken away or abridged. In other words, the
legislative incapacity subjectwise with reference to Articles 245 and 246 in
this context would be the taking. away or abridging by law the fundamental
rights under Article 19 of citizens.

Mr. H. W. R. Wade has urged with considerable force that the terms 'void' and
'voidable' are inappropriate in the sphere of administrative law(1). According
to him, there is no such thing as voidness, in an absolute sense, for, the whole
question is : void as against whom? And he cites the decision of the Privy
Council in Durayappah v. Fernando(2) in his support.

In Jagannath v. Authorised Officer, Land Reforms(3) this Court has said that a
post-Constitution Act-which has been struck down for violating the fundamental
rights conferred under Part III and was, therefore still-born, has still an
existence without re-enactment, for being put in the Ninth Schedule. That only
illustrates that any statement that a law which takes away or abridges
fundamental rights conferred under Part III is still-born or null and void
requires qualifications in certain situations. Although the general rule is that
a statute declared unconstitutional is void at all times and that its invalidity
must be recognized and acknowledged for all purposes and is no law and a
nullity, this is neither universally nor absolutely true, and there are many
exceptions to it. A realistic approach has been eroding the doctrine of absolute
nullity in all cases and for all purposes(4) and it has been held that such
broad statements must be

(1) See "Unlawful Administrative Action", 83 Law Quarterly Rev. 499, at 518.

(2) (1967) 3 W.L.R. 289. (3) [1971] 2 S.C.C. 893. (4) See Warring v. Colpoys,
122 F. 2d 642. 780

taken with some qualifications(1), that even an unconstitution..... statute is
an Operative fact(2) at least prior to a determination of constitutionality(1),
and may have consequences which cannot ignored(1). See Corpus Justice Secundum,
Vol. 16, p. 469).

       This is illustrated by the analysis given by kelsen(3) :

       "The decision made by the competent authority that something that
presents itself as a norm is null ab initio because it fulfils the conditions of
nullity determined by the legal order is a constitutive act; it has a definite
legal effect; without and prior to this act the phenomenon in question cannot,
be considered as null. Hence the decision is not 'declaratory', that is to say,
it is not, as it presents itself, a declaration of nullity; it is a true
annulment, an annulment ,with retroactive force. There must be something legally
existing to which this decision refers. Hence, the phenomenon in question

       cannot be something null ab initio, that is to say, legally nothing. It
has to be considered as a norm annulled with retroactive force by the decision
declaring it null ab initio. Just as everything King Midas touched turned into
gold, everything to which the law refers becomes law, i.e., something legally

       existing".

 We do not think it necessary to pursue this aspect further in this case. For
our purpose it is enough to say that if a law is otherwise good and does not
contravene any of their fundamental rights, noncitizens cannot take advantage of
the voidness of the law for the reason that it contravenes the fundamental right
of citizens and claim that there is no law at all. Nor would this proposition
violate any principle of equality before the law because citizens and non-
citizens are not similarly situated as the citizens have certain fundamental
rights which non-citizens have not. Therefore, even assuming that under article
226 of the Constitution, the first respondent was entitled to move the High
Court and seek, a remedy for infringement of its ordinary right to property, the
impugned provisions were not non-est 'but were valid laws: enacted by a
competent legislature as respects non-citizens and the first respondent cannot
take the plea that its rights to property are being taken away or abridged
without the authority of law.

Now, let us see whether the definition,of 'establishment' in s. 2(4) violates
the right under article 14 and make the impugned provisions void.

The High Court held that there was no intelligible differentia to distinguish
establishments grouped together under the definition of establishment' in S.
2(4) and establishments left out of the group and that in any event, the
differentia had no rational relation or nexus with the object sought to be
achieved by the Act and that the im- (1) See Chicot Country Drainage District v.
Baxter State Bank, Ark., 308 U.S. 371.

(2) See warring v. colpoys, 122 F. 2d 642. (3)See "General Theory of Law and
State", p. 161. 781

pugned provisions as they affected the rights and liabilities of employers and
employees in respect of the establishments defined in s. 2(4) were, therefore,
violative of article 14. The reasoning of the High Court was that all factories
falling within the meaning of s. 2(m) of the Factories Act, 1 948, were brought
within the purview of the definition of 'establishment' while establishments
carrying business or trade and employing less than fifty persons were left out
and that out of this latter class of establishments an exception was made and
all establishments carrying on the business of tramways or motor omnibus
services were :included without any fair reason and that, though Government
establishments which were factories were included within the definition of
'establishment', other Government establishments were excluded and, therefore,
the classification was unreasonable.

The definition of 'establishment includes factories, tramway or motor omnibus
services and any establishment carrying on business or trade and employing more
than 50 persons, but excludes all Government establishments carrying on business
or trade.

In the High Court, an affidavit was filed by Mr. Brahmbhatt, Deputy Secretary to
Education and Labour Department, wherein it was stated that the differentiation
between factories and commercial establishments employing less than 50 persons
was made for the reason that the turnover of labour is more in factories than in
commercial establishments other than factories on account of the fact that
industrial. labour frequently changes employment for a variety of reasons. The
High Court was not prepared to accept this explanation. The High Court said

       "It may that in case, of commercial establishment employing not more than
50 persons the, turnover of labour in commercial establishments being less the
unpaid accumula- tions may be small. But whether unpaid accumulation are small
or large, is an immaterial consideration for of enactment of the impugned
provisions. T the impugned provisions being to get at the unpaid accumu- lations
and to utilize them for the benefit of labour, the extent of the unpaid
accumulations with any particular establishment can never be a relevant
consideration."

According to the High Court, as an establishment carrying on tramway or motor
omnibus service would be within the definition of establishment even if it
employs less than 50 persons, or for that matter, even less than 10 persons, the
reason given in the affidavit of Mr. Brahmbhatta for excluding all commercial
establishments employing less than 50 persons from the definition was not.
tenable. The Courts was also of the view that when Government factories were
included in the definition of 'establishment' there was no reason for excluding
government establishments other than factories from the definition. The
affidavit of Mr. Brahmbhatt made it clear that there were hardly any
establishments of the Central or State Governments which carried

782

on business or trade or any work in connection with or ancillary thereto and,
therefore, the legislature did not think it fit to extend the provisions of the
Act to such establishments. No affidavit in rejoinder was filed on behalf of
respondents to contradict this statement. It would be an idle parade of familiar
learning to review the multitudinous cases in which the constitutional assurance
of equality before the law has been applied. The equal protection of the laws is
a pledge of the protection of equal laws. But laws may classify. 1 And the very
idea of1 classification is that of inequality. In tackling this paradox the
Court ha,,; neither abandoned the demand for equality nor denied the legislative
right to classify. It has taken a middle course. It has resolved the
contradictory demands of legislative specialization and constitutional
generality by a doctrine of reasonable classification.(1)

A reasonable classification is one which includes all who are similarly situated
and none who are not. The question then is what does the phrase 'similarly
situated' mean ? The answer to the question is that we must look beyond the
classification to the purpose of the law. A reasonable classification is one
which includes all persons who are similarly situated with respect to the
purpose of the law. The purpose of a law may be either the elimination of a
public mischief or the achievement of some positive public good.

A classification is under-inclusive when all who are included in the class are
tainted with the mischief but there are others also tainted whom the
classification does not include. In other words, a classification is bad as
under,-inclusive when a State benefits or burdens persons in a manner that
furthers a legitimate purpose but does not confer the same benefit or place the
same burden on others who are similarly situated. A classification is over-
inclusive, when it includes not only those who are similarly situated with
respect to the purpose but others who are not so situated as well. In other
words, this type of classification imposes a burden upon a wider range of
individuals than are included in the class of those attended with mischief at
which the law aims. Herod ordering the death of all male children born on a
particular day because one of them would sonic day bring about his downfall
employed such a classification.

The first question, therefore, is whether the exclusion of establishments
carrying on business or trade and employing less than 50 persons makes the
classification under- inclusive, when it is seen that all factories employing 10
or 20 persons, as the case may be, have been included and that the, purpose of
the law is to get in unpaid accumula- tions for the welfare of the labour. Since
the classification does not include all who are similarly situated with respect
to the purpose of the law, the classification might appear, at first blush, to
be unreas- onable. But the Court has recognised the very real difficulties under
which legislatures operate-difficulties arising out of both the nature

(1) See Joseph Tussman and Jacobus ten Brcek, "The Equal Protaction of the
Laws", 37 California Rev. 341. 783

of the legislative process and of the society which legislation attempts
perennially to re-shape--and it has refused to strike down indiscriminately all
legislation embodying classificatory inequality here under consideration. Mr.
Justice Holmes, in urging tolerance of under-inclusive classifications, stated
that such legislation should not be disturbed by the Court unless it can clearly
see that there is no fair reason for the law which would not require with equal
force its extension to those whom it leaves untouched (1). What, then, are the
fair reasons for non-extension ? What should a court do when it is faced with a
law making an under-inclusive classification in areas relating to economic and
tax matters ? Should it, by its judgment, force the legislature to choose
between inaction or perfection ?

The legislature cannot be required to impose upon administrative agencies tasks
which cannot be carried out or which must be carried out on a large scale at a
single stroke.

       "if the law presumably hits the evil where it is most felt. it is not to
be overthrown because there are other instances to which it might have been
applied. There

  is no

       doctrinaire requirement that the legislation should be couched in all
embracing terms."

       (see West Coast Hotel Company v. Parrish2). The piecemeal approach to a
general problem permitted by under inclusive classifications, appears justified
when it is considered that legislative dealing with such problems is usually an
experimental matter. It is impossible to tell how successful a particular
approach may be, what dislocations might occur, what evasions might develop.
what new evils might be generated in the attempt. Administrative expedients must
be forged and tested. Legislators, recognizing these factors, may wish to
proceed cautiously, and courts must allow them to (lo so (supra). Administrative
convenience in the collection of unpaid accumulations is a factor to be taken
into account in adjudging whether the classification is reasonable. A
legislation may take one step at a time addressing itself to the phase of the
problem which seems most acute to the legislative mind. Therefore, a legislature
might select only one phase of one filed for application or a remedy(3). It may
be remembered that article 14 does not require that every regulatory statute
apply to all in the same business : where size is an index to the evil at which
the law is directed, discriminations between the large and small are
permissible, and it is also permissible for reform to take one step at a time,
addressing itself to the phase of the problem which seems most acute to the
legislative mind. (1) See Missouri, R & T Rly., v. May (1904) 194 US 267, 269.
(2) 300 U.S. 379, 400.

(3) See Two Guys from Harrison-Allentown v. McGinley , 366 U.S. 582, 592.

784

A legislative authority acting within its field is not bound to extend its
regulation to all cases which it might possibly reach. The legislature is free
to recognize degrees of harm and it may confine the restrictions to those
classes of cases where the need seemed to be clearest [see Mutual Loan, Co. v.
Martell(1) ].

In short, the problem of legislative classification is a perennial one,
admitting of no doctrinaire definition. Evils in the same filed may be of
different dimensions and proportions requiring different remedies. Or so the
legislature may think [see Tigner v. Texas(2)]. ,Once an objective is decided to
be within legislative competence, however, the working out of classifications
has been only infrequently impeded by judicial negatives. The Courts attitude
cannot be that the state either has to regulate all businesses, or even all
related businesses, and in the same way, or, not at all. An effort to strike at
a particular economic evil could not be hindered by the necessity of carrying in
its wake a train of vexatious, troublesome and expensive regulations covering
the whole range of connected or similar enterprises.

Laws regulating economic activity would be viewed differently from laws which
touch and concern freedom of speech and religion, voting, procreation, rights
with respect to criminal procedure, etc. The prominence given to the equal
protection clause in many modern opinions and decisions in America all show that
the Court feels less constrained to give judicial deference to legislative
judgment in the field of human and civil rights than in that of economic
regulation and that it is making a vigorous use of the equal protection clause
to strike down legislative action in the area of fundamental human rights(3).
"Equal Protection clause rests upon two largely subjective judgments : one as to
the relative invidiousness of particular differentiation and the other as to the
relative importance of the subject with respect to which equality is sought" (4)
.

The question whether, under article 14, a classification is reasonable or
unreasonable must, in the ultimate analysis depend upon the judicial approach to
the problem. The great divide in this area lies in the difference between
emphasizing the actualities or the abstractions of legisla- tion. The more
complicated society becomes, the greater the diversity of its problems and the
more does legislation direct itself to the diversities. "Statutes are directed
to less than universal situations. Law reflects distinction that exist in fact
or at least appear to exist in the judgment of legislators-those, who have the
responsibility for making law fit fact. Legislation is essentially empiric. It
addresses itself to the more or less crude outside world and not to the neat,
logical models of the mind. Classification is inherent in legislation. To
recognize

(1) 56 L. Ed., 175,180

(2) 310 U.S. 141.

(3) See "Developments-Equal Protection". 82 Harv. Law Rev., 1065, at 1127

(4) See Cox, "The Supreme Court Foreward", 1966 Term, 80 Harv. Law Rev.

91-95.

785

marked differences that exist in fact is living law; to disregard practical
differences and concentrate on some abstract identities is lifeless logic"(1).

That the legislation is directed to practical problems, that the economic
mechanism is highly sensitive and complex, that many problems are singular and
contingent, that laws are not abstract propositions and do not relate to
abstract units and are not to be measured by abstract symmetry, that exact
wisdom and nice adaption of remedies cannot be required, that judgment is
largely a prophecy based on meagre and uninterpreted experience, should stand as
reminder that in this area the Court does not lake the equal protection
requirement in a pedagogic manner(supra).

In the utilities, tax and economic regulation cases, there are good reasons for
judicial self-restraint if not judicial deference to legislative judgment. The
legislature after all has the affirmative responsibility. The Courts have only
the power to destroy, not to reconstruct. When these are added to the complexity
of economic regulation, the uncertainty, the liability to error, the bewildering
conflict of the experts, and the number of times the judges have been overruled
by events--self-limitation can be seen to be the path to judicial wisdom and
institutional prestige and stability(supra).

We must be fastidiously careful to observe the admonition of Mr. Justice
Brandeis, Mr. Justice Stone and Mr. Justice Cardozo that we do not "sit as a
super-legislature" (see their dissenting opinion in

Colgate v. Harvey(2).

Let us look at the problem here in the light of the above discussion. The
purpose of the Act is to get unpaid accumulations for utilizing them for the
welfare of labour in general. The aim of any legislature would then be, to get
the unpaid accumulation from all concerns. So an ideal classification should
include all concerns which have 'unpaid accumulations'. But then there are
practical problems. Administrative convenience as well as the apprehension
whether the experiment., if undertaken as an all-embracing one will be
successful, are legitimate considerations in confining the realization of the
objective in the first instance to large concerns such as factories employing
large amount of labour and', with statutory duty to keep register of wages, paid
and unpaid, and the legislature has, in fact,, brought all factories, whether
owned by Government of otherwise, within the purview of the definition of
'establishment'. In other words, it is from the factories that the greatest
amount of unpaid accumulations could be collected and since, the factories are
bound to maintain records from which. the amount of unpaid accumulations could
be easily ascertained, the legislature brought all the factories within the
definition of 'establishment'. It then addressed itself to other establishments
but thought that establishments employing, less than 50 persons need not be
brought within the (1) See the observations of Justice- Frankfurter in Morey v.
Doud, 354 U.S. 457, 472.

(2) 296 U.S. 404, 441.

786

purview of the definition as unpaid accumulations in those establishments would
be less and might not be sufficient to meet the administrative expenses of
collection and as many of them might not be maintaining records from which the
amount of unpaid accumulations could be ascertained. The affidavit of Mr.
Brahmbhatt made it clear that unpaid accumulations in these establishments would
be comparatively small. The reason why government establishments other than
factories were not included in the definition is also stated in the affidavit of
Mr. Brahmbhatt, namely, that there were hardly any establishments run by the
Central or State Government. This statement was not contradicted by any
affidavit in rejoinder.

There remains then the further question whether there was any justification for
including tramways and motor omnibuses within the purview of the definition. So
far as tramways and motor omnibuses are concerned, the legislature of Bombay,
when it enacted the Act in 1953, must have had reason to think that unpaid
accumulations in these concerns would be large as they usually employed large
amount of labour force and that they were bound to keep records of the wages
earned and paid. Section 2(ii) (a) of the Payment of Wages Act, 1936, before
that section was amended in 1965 so far as it is material provided :

       "2. In this Act, unless there is anything repugnant in the subject or
context,-

       (ii) "industrial establishment" means any-- (a) tramway or motor omnibus
service".

       Rule 5 of the Bombay Payment of Wages Rules, 1937 provided

       "5. Register of Wages : A Register of Wages shall be maintained in every
factory and industrial establishment and may be kept in such form as the
paymaster finds convenient but shall include the following particulars : (a) the
gross wages earned by each person employed for each wage period;

       (b) all deductions made from those wages, with an indication in each case
of the clause of sub-section (2) of section 7 under which the deduction is made:

       (c) the wages actually paid to each person employed for each wage
period."

The Court must be aware of its own remoteness and lack of familiarity with local
problems. Classification is dependent on the peculiar needs and specific
difficulties of the community. The needs and difficulties of the community are
constituted out of facts and 'opinions beyond the easy ken of the court (supra).
It depends to a great extent upon an assessment of the local condition of these
concerns which the legislature alone was competent to make. Judicial deference
to legislature in instances of economic regulation is sometimes explained by the
argument that rationality of a classification may depend upon 'local conditions'
about which local

787

legislative or administrative body would be better informed than a court.
Consequently, lacking the capacity to inform it-,elf fully about the
peculiarities of a particular local situation, a court should hesitate to dub
the legislative classification irrational (see, Carmichnel v. Southern Coal and
Coke Co.(1). Tax laws, for example, may respond closely to local needs and
court's familiarity with these needs is likely to be limited.

Mr. S. T. Desai for the appellants argued that, if it is held that the inclusion
of tramways and motor omnibuses in the category of 'establishment' is bad, the
legislative intention to include factories and establishments employing more
than 50 persons should not be thwarted by striking down the whole definition. He
said that. the doctrine of severability can be applied and that establishments
running tramways and motor omnibuses can be excluded from the definition without
in the least sacrificing the legislative intention.

In Skinner v. Iklahoma ex rel Williamson (2) a statute providing for
sterilization of habitual criminals excluded embezzlers and certain other
criminals from its coverage. The Supreme Court found that the statutory
classification denied equal protection and remanded the case to the State Court
to determine whether the sterilization provisions should be either invalidated
or made to cover all habitual, criminals. Without elaboration, the State Court
held the entire statute unconstitutional, declining to use the severability
clause to remove the exception that created the discrimination. In Skinner's
case the exception may have suggested a particular legislative intent that one
class should not be covered even if the result was that none would be. But there
is no necessary reason for choosing the intent to exclude one group over the
intent to include another. Courts may reason that without legislation none would
be covered, and that invalidating the exemption therefore amounts to
illegitimate judicial legislation over the remaining class not previously
covered. The conclusion, then, is to invalidate the whole statute, no matter how
narrow the exemption had been. The reluctance to extend legislation may be
particularly great if a statute defining a crime is before a court, since
extension would make behaviour criminal that had not been so before. But the
consequences of invalidation will be unacceptable if the legislation is
necessary to all important public purpose. For example, a statute requiring
licensing of all doctors except those from a certain school could be found to
deny equal protection, but a court should be hesitant to choose invalidation of
licensing as an appropriate remedy. Though the test is imprecise-, a court must
weigh the general interest in retaining the statute against the court's own
reluctance to extend legislation to those no previously covered. Such an inquiry
may lead a court into examination of legislative purpose, the overall statutory
scheme, statutory arrangements in connected fields and the needs of the
public(,').

(1) 301 U.S. 495.

(2) 316 U.S. 535.

(3) See "Developments-Equal Protection", 82 Harv. Law Rev., 1065, ,it pp.
1136-7.

788

This Court has, without articulating any reason, applied the doctrine of
severability by deleting the offending clause which made classification
unreasonable [see Jalan Trading Co. v. Mazdoor Union(1) and Anandji & Co. v.
S.T.O.(2)]. Whether a, court can remove the unreasonableness of a classification
when it is under-inclusive by extending the ambit of the legislation to cover
the class omitted to be included, or, by applying the doctrine of severability
delete a clause which makes a classification over-inclusive, are matters on
which it is not necessary to express any final opinion as we have held that the
inclusion of tramway and motor omnibus service in the definition of
'establishment' did not make the classification unreasonable having regard to
the purpose of the legislation. In the result, we hold that the impugned
sections are valid and allow the appeals with costs. Hearing fee one set. V.P.S.

      Appeals allowed.

(1) [1967] 1 S.C.R. 15.

(2) [1968] 1 S.C.R.661.

789