FUTURE-LAWS

The Article 13(2) of Indian Constitution prohibits the state from making any law which takes away or
abridges any of the rights conferred by Part III. This clause was further discussed in the case
proceedings of Ambica Mills Vs State of Gujarat.

Ambica Mills Vs State of Gujarat:

FACTS

The facts of the case are that in the year 1953, Bombay welfare fund act was enacted to form
a fund for the welfare of labor in the state. The fund would collect all unpaid accumulations
that are due to the employees but not paid to the employee within three years of the said
date. 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 Sub-section (2) shall, subject to the provisions of
Sub-section (4) and Section 6A be paid in to the fund.

This act was challenged in the case of Bombay Dyeing vs State of Bombay and the court held
that provisions S3(1) and S3(2)(b) invalid as they violated fundamental rights of employer under article
19(f)(1). The court’s reasoning was that the provisions of this act did not discharge the liability of the
employer to the employee and the state sought to justify by saying that the provisions re relating to
abandoned property but the court did not accept the contentions of the state.

In the year 1961 this act was amended to extend it to the state of Gujarat and Section-3 is
retrospectively amended to provide a fund and a new S6A was introduced in act with Sub sections 1
and 2 that state all paid accumulation to be deemed to be abandoned property and discharging the
employer from the liability to the extent of the amount paid to board

KEY ISSUES

1. If the legislation is violative of Art. 19(1)(f) of the Constitution?

Even if the law were void for being violative of Art. 19(1)(f), would it remain applicable for
non-citizens?

2. Is the legislation violative of Article 14 of the Constitution for the discrimination in its
definition of ‘establishment’?

HELD

The court in this case held that the sovereign has the prerogative right to appropriate the bona
vacantia and in this case the state has the right to appropriate the unpaid accumulations. The money
to be paid are property for both the employer and employee but still the state can appropriate the
property and distribute it to employees. On payment of the sum to board the employer will lose the
liability to pay and the recognition of government as the debtor will not create unconstitutional
burden on the employee or won’t deprive them of property. Moreover, the employee won’t lose the
right over property if he claims it within 7Years which is a reasonable period of limitation.

Assuming that the impugned provisions abridge the fundamental rights of the citizen employers or
the employees under Article19(1)(f) the corporation cannot claim for the nullity of the law as in the
case of Tata Engineering and locomotive vs State of Bihar it was held that a corporation cannot be
considered a citizen for the purposes of article 19 and in this case the corporation Is a Non-Citizen
employer. So as per the rights conferred in Article 13(2), void can only mean to those citizens whose
fundamental rights are abridged and not to the non-citizens.

Also in the cases of Deep Chand vs State of UP and Mahendra Lal vs state of UP the court held that
doctrine of eclipse is applicable only with respect to pre constitutional laws and thus only pre
constitutional laws which are violative of fundamental rights will be applicable to the non-citizens and
the court’s reasoning behind this is that pre constitutional laws were existent and can be eclipsed and
the post constitutional laws are still not born and thus there is no scope for applicability of doctrine of
eclipse

The appellants also argued that the act was violative of article 14 of the constitution as there was no
equality as there was no justification for considering factories under establishments but exempting
establishments with less than 50 employees from the purview of the definition but the court in this
argument said that an act is violative of article 14 only if there is an inequality between the equals and
in the given case the factories in the purview of the definition of establishments can amount to huge
unpaid accumulations whereas the establishments with less than 50 employees almost have zero
unpaid accumulations . so, we can’t compare both of them to be equal and this makes the act
constitutional.

The 5 Judge Bench in this case unanimously held that the act was not violative of article 19(1)(f) and
also reiterated that if a post constitutional statute is void because it infringes the rights of the citizens
then that doesn’t mean that the law is void for Non-Citizens in present day.