Holding

Section 24 of the Cine Workers and Cinema Theatre Workers Act effectively enacted the required notification, making the Provident Funds Act applicable from 1 October 1984, but employers are not liable to pay the employees' share of contributions for the retrospective period because the scheme’s deduction provisions cannot be applied retroactively.

Summary

The District Exhibitors Association and other cinema theatre owners challenged a 30 April 1986 Government Notification that retrospectively extended the Employees' Provident Funds Scheme to cinema theatres employing five or more workers from 1 October 1984. They argued that the Notification was ultra vires, that the Act could not be applied to establishments not covered under Section 3(b), and that requiring employers to pay employees' share of contributions for the retrospective period violated Article 14. The Supreme Court held that Section 24 of the Cine Workers and Cinema Theatre Workers Act fulfilled the purpose of the required notification, making the Provident Funds Act applicable from 1 October 1984, and that employers were liable only for their own contribution, not for the employees' share for the period before the Notification. It further ruled that the scheme’s provisions on deduction of employees' contributions could not be applied retrospectively because no wages were payable under the scheme during that period, and the third proviso for deduction did not apply. Consequently, the Court set aside the High Court judgment and declared the appellants not liable to pay employees' contributions for the period 1 October 1984 to 30 April 1986.

Issues considered

The validity of the 30 April 1986 Notification under the Employees' Provident Funds Act.
Whether Section 24 of the Cine Workers and Cinema Theatre Workers Act can substitute for a separate notification under Section 1(3)(b) of the Provident Funds Act.
Whether employers are liable to pay the employees' share of provident fund contributions retrospectively from 1 October 1984.
Whether the deduction of employees' contributions from future wages is permissible for the retrospective period.

Legislation cited

Cine Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981s. 24
Employees' Provident Funds and Miscellaneous Provisions Act, 1952s. 1(3), s. 5, s. 6, s. 7

Subjects

Employees' Provident FundsRetrospective legislationEmployer liabilityDeduction of employee contributionSection 24NotificationArticle 14Cine Workers Act

Judgment

DISTRICT EXHIBITORS ASSOCIATION MUZAFFARNAGAR A
AND ORS.
v.
UNION OF INDIA AND ORS.

APRIL 25, 1991
B
[JAGANNATHA SHETTY AND YOGESHWAR DAYAL, JJ.]

Employees' Provident Funds Act, 1952/Employees' Provident
Scheme, 1952: Sections 1, 5, 6, 7/Paragraphs 30, 32-Cine workers
and Cinema theatre workers-Extension of benefits to-Notification-.
Issue of-Retrospective effect-Validity of-Employees' contribution C
for the retrospective period-Payment of-Whether employer is liable-
Deduction thereof from wages paya!>le to employees in future-Whether
permissible.

On 30.4.1986, a Notification was issued by the Government of
India amending the scheme under the Employees' Provident Funds and D
Miscellaneous Provisions Act, 1952 in conformity with Section 24 of the
Cine Workers and Cinema Theatre Workers (Regulation of Employ-
ment) Act, 1981, with retrospeciive effect from 1.10.1984~ The effect of
the amendment was to extend the benefit of iiie Provident Fuilds Act
and the Scheme thereunder to the Cine Workers and cfuemil theatre
workers. The appellants challenged the validity of the Noiltication E
before the High Court by way of Writ Petitions, contending that the
said Notification was ultra-vires the provisioru; of iiie Provident Ftlnd
Act since the Central Governmeni could not extent the scheme to an
establishment which is neither an industry nor a notified establishment
nnder Section 3(b) of the Act and there was no liabilit~ under the
scheme to make coniributiOn towards i'rovideni Fund in ~of the F
employees who ceased to be Cinema workers before 30.4. i986. It was
further contended that calling upon the empioyets to contribute arrears
from the date the schejne was made applicable led to hardship and -
injustice and hence violative of Article 14 of the Constitution oflndia.

The Writ Petitions were dismissed by the High Couri. In their G
appeals to this Court, the appellants contended thai so fong as the
Notification as required by the proviso to Section 1(3)(b) of the Provi-
dent Funds Act has not been issued, the Act cannot be made applicable
to them and even assuming that Section 24 of the Cinema Theatre
Workers Act takes the place of the required Notification, an express
notification under Section 5 wouid be required. if was also contended H

471
478 SUPREME COURT REPORTS (1991) 2 S.C.R.

A that under Section 6 of the Provident Funds Act the liability is fixed
only for employers' share of contribution and not the employees' share,
and since paragraph 30 of the Provident Fund Scheme was not made
applicable, there arose no liability of the employers to pay employees' -.J
share and as the appellants were being asked to pay the contribution of
the employees' share retrospectively without the corresponding right of
B employer to recover it from the wages of employees, it was harsh and
unjust.

On behalf of the Respondents, it was contended that it might be
possible for the appellants to make deduction from subsequent wages of -<
workmen with the consent of the Inspector as required under the third
proviso to pa.ra 32( 1) of the Provident Fund Scheme.
c
Partly allowing the appeals, this Court,

HELD: 1. Section 24 of the Cine Workers and Cinema Theatre
Workers (Regulation of Employment) Act, 1981 has fulf°Illed the
D purpose of the Notification which the Central Government could have
issued under Section 1(3)(b) of the Provident Funds Act read with the
proviso. Therefore, no further Notification as contemplated by Section
1(3)(b) of the Provident Funds Act was necessary. Section 24 has taken
the place of the Notification contemplated by Section 1(3)(b) of the
Provident Funds Act read with the proviso thereto. Therfore, the Provi-
E dent Funds Act became applicable to the theatres who employ five or
more workers with effect from 1st October, 1984. Again in view of
Section 6 of the Provident Funds Act, the employers became liable to ·~

pay their contribution to the fund as soon as the Act came into force i.e.
w .e.f. 1st October, 1984. [488B-D] "
F Mis. Orissa Cement Ltd. v. union of India,, (1962] (Suppl) 3 SCR
837 and M/s. Lohia Machines Ltd. v. Union of India and Ors., (1965] 2
SCR 686, distinguished.

2. It is only hy the Notification dated 30.4.1986 that the Provident

G
Funds Scheme was amended so as to be made applicable in respect of the
cinema theatres employing five or more persons. Without such a Notifi- ..,
cation the Scheme would not have become applicable. By the said
Notification the Scheme bas been made applicable to the cinema
theatres covered by the Notification with effect from 1st October, 1984.
This could be done in view of not only the provisions of Section 5(2) of
the Provident Funds Act bnt also in view of Section 7( 1) of the Provident
H Funds Act. Both these provisions confer express powers of making the
EXHIBITORS ASSCN. v. U.0.1. 479

Scheme applicable retrospectively. [ 488E-G l
A
3. It is obvious from paras 30 and 32 of the Provident Fonds
Scheme that the employer has to pay the contribution of the employee's
share, bot be has a right to recover that payment by dedncting the same
from the wages doe and payable to the employees. It is significant to
note that the deduction is not from the wages payable for any period, B
but only from the wages for the period in respect of which the contribu-
tion is payabl& and no deduction contd be made from any other wages
payable to the employees. In other words, the payment of employees'
contribution by the employer with the corresponding right to deduct the
_same from the wages of the employees could be onlr f'!r the current
period during which the employer has also to pay Im oonlribution. [489A-E)
c
4. In the instant case, for the period from lst October, 1984 up to
the date of the Notification i.e. 30th April 1986 the employer has paid
the full wages to the employees since during that period, there was no
scheme applicable to his establishment. By retrospectively applying the
scheme, he could not be asked to pay the employees' contribution for D
the peiliod antecedent to the notification. The Act and the Scheme
neither permit any sncb payment nor deduction. The employer cannot
be saddled with the liability to pay the employees' contribution for the
retrospective period, since he has no right to deduct the same from the
future wages payable to the employees. [4S9F-G I
E
5. The third proviso to paragraph 32( 1) of the Provident Funds
Scheme conld be taken advantage of by the employer only where no
deduction has been made from the wages of the employees due to acci-
dental mistake or clerical error when the scheme is operative. Such
deduction which has not been made by accidental mistake or clerical
error, could be made from the subsequent wages with the consen.t in F
writing of the Inspector concerned. The present case is not covered by
the third proviso. The employer conld not have made the deduction
prior to the notification dated 30th April, 1986 since the Scheme was
not applicable then. The Scheme has been given retrospective effect
w .e.f. lst October, 1984. The employer, therefore, cannot take the
benefit of the third proviso to para 32( 1) for deduct_ing the employees' G
contribution in their wages payable in future. [489H; 490A-C)

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 998-
999 of 1991.

From the Judgment and Order <lasted 1.3.1990 of the Allahabad H
480 SUPREME COURT REPORTS [1991) 2 S.C.R.

High Court in C.M.W.P. Nos. 11465 & 3085 of 1987.
A
Satish Chandra, and Prashant Bhushan for the Appellants.

V.C. Mahajan, S.D. Sharma, S.N. Terdol and Mrs. S. Suri for
the Respondents.
B
The J udgrnent of the Court was delivered by

YOGESHWAR DAYAL, J. I. Civil Appeal Nos. 998 and 999 of
1991 have been filed against the judgment of the Division Bench of the
Allahabad High Court dated 1st March, 1990 whereby the Allahabad
High Court dismissed the writ petitions filed by the District Exhibitors
c Association, Muzaffarnagar and others as well as some other Theatres
upholding the Notification dated 30th April, 1986 issued by the Cent-
ral Government under Section 5 read with sub-section ( 1) of Section 7
of the Employees' Provident Funds and Miscellaneous Provisions Act,
1952 (hereinafter referred to as 'the Provident Funds Act'). The main
D judgment was delivered by the High Court in the Civil Miscellaneous
Writ Petition filed on behalf of Shakti Theatre, Civil Lines, Bijnore,
which was followed in the petition filled by the District Exhibitors
Association Muzaffarnagar and others and some other writ petitions.
Before us also the Notification dated 30th April, 1986 of the Govern-
ment of India, Ministry of Labour, amending the Employees' Provi-
E dent Funds Scb.erne, 1952 (For short 'Scheme') issued under the Provi-
dent Funds Act has been challenged.
•
2. The Provident Funds Act came into force on 14th March,
1952.The preamble of the Act states that it is an Act to provide for the
institution of provident funds, family pension fund and deposit-linked
p insurance fund for employees in factories and other establishments.
The Act by Section 1(3) makes it applicable to every factory referred
to in clause (a) and also to any other establishment referred to in
clause (b) employing twenty or more persons or class of such establish-
ments which the Central Government may, by Notification in the Offi-
cial Gazette, specify in that behalf. The scheme under Section 5 along-
G with other schemes were issued in 1952. The Provident Funds Act by /
..
Notification of. the Government of India issued on 31st July, 1961,
under Section 1(3) was made applicable to cinema theatres employing
twenty or more persons.

3. The Cine-workers and Cinema Theatre Workers (Regulation
H of Employment) Act, 1981 (hereinafter referred to as 'the Cinema
EXHIBITORS ASSCN. v. U.O.l. [YOGESHWAR DAYAL, J.] 481

Theatre Workers Act) received the assent of the President on 24th A
December, 1981, and was published in the Gazette on the same day.
The Cinema Theatre Workers Act came into force with effect ftom 1st
October, 1984. The preamble of the Act says that it is to provide fot
the regulation of the conditions of employment of certain cine-workers
and cinema theatre workers and for matters connected therewith. Sec- B
tion 2(a) defines 'cinema theatre' to mean a place which is licensed
under Part III of the Cinematograph Act, 1952, or under any other Jaw
for the time being in force in a State for the exhibition of cinemato-
graph films. Section 24 enacts:

"The provisions of the Employees' Provident Funds and
Miscellaneouss Providions Act, 1952, as in force for the C
time being, shall apply to every cinema theatre in which
five or more workers are employed on any day, as if such
cinema theatre were an establishment to which the afore-
said Act had been applied by a notification of the Central
Government under the proviso to sub-section (3) of section 1 D
there.of, and as if each such worker were an employee
within the meaning of that Act."

4. The Notification of the Government of India amending the
Scheme under the Provident Funds Act was issued in conformity with
Section 24 of the Cinema Theatre Workers Act. The impugned Notifi-
E
cation dated 30th April, 1986 is being reproduced for facility of under-
standing the submissions made on behalf of the appellants:

"NOTIFICATION

G.S.R. In exercise of the powers conferred by Section 5 F
read with Sub-section (1) of Section 7 of the Employees'
Provident Funds and Miscellaneous Provisions Act, i952
(19 of 1952), the Central Government hereby makes the
following Scheme further to amend the Employees' Provi"
dent Funds Scheme, 1952 namely;

l. This Scheme may be called the Employees' Provident
a
Funds (Amendment) Scheme; 1986.

2. In the Employees' Provident Funds Scheme in para-
graph 1, in sub-paragraph (3), in clause (b) after item
(XOVII) the following item shall be added, namely: H
482 SUPREME COURT REPORTS [1991] 2 S.C.R.

A '(XOVII) as respect the Cinema Theatre employing 5 or
more workers as specified in Section 24 of the Cine Wor-
kers and Cinema Theatres Workers (Regulation of Emp-
loyment) Act, 1981 (50 of 1981) be deemed to have come
into force with effect from the 1st day of October, 1984'.
B
(No. S 35016/1/86-SSII)

Sd/-A.K. Bhattari
Under Secretary
30.4.1986"

C 5. A perusal of the Notification shows that the Scheme has been
retrospectively made applicable in respect of cinema theatres employ-
ing five or more workers as specified in Section 24 of the Cinema
Theatre Workers Act with effect from 1st October, 1984 though the
Notification was issued on 30th April, 1986. 1st October, 1984 is also
D the date of coming into force of Cinema Theatre Workers Act.

6. Before the High Court the main arguments raised by the
appellants were:

a) that the Notification dated 30th April 1986 was ultra
E vires of the provisions of the Provident Funds Act inas-
much as the Central Government could not extend the
scheme to an establishment which is neither an industry nor
a notified establishment under Section 3(b) of the Provi-
dent Funds Act;

F b) that there was no liability under the scheme framed by
the Central Government to make contribution towards the
provident fund in respect of the employees who ceased to
be a cinema employee before the Provident Funds Act
came into force from 30th April, 1986; and

c) that the demand of the Provident Funds Commissioner
G
from the employers a}Jout the arrears of contribution even
for prediscovery period i.e. the date from which the
scheme became applicable to employers, who were called
upon to pay contribution by notice, leads to hardship and
injustice and, therefore, violates Article 14 of the
H Constitution.
EXHIBITORS ASSCN. v. U.0.1. (YOGESHWAR DAYAL, J.] 483

7. The High Court while dealing with these submissions took the
A
view that Section 24 of the Cinema Theatre Workers Act has applied
the provisions of the Provident Funds Act to every cinema theatre in
which five or more workers were employed on any day, as "if such
~
cinema theatre were an establishment to which the provisions of the
Provident Funds Act had been applied by a Notification of the Central
Government under the proviso to clause (b) of sub-section (3) of B
Section 1 of the Provident Funds Act. The High Court, in view of the
averrnents made in the counter-affidavit filed on behalf of the respon-
dent as well as on the interpretation of the scheme, took the view that
only those employees who were in employment on 30th April, 1986
~-
and had not ceased working in a cinema in respect of whom the benefit
was being claimed, could be entitled to get the benefit of the scheme.
In the notice the demand of contribution was sought under the Scheme
c
in respect of the employees working on 30th April, 1986 with effect
from 1st October, 1984. The High Court took the view that since the
demand was made for the employers' contribution in respect of the
... employees who were working on 30th April, 1986, it was wrong to
argue that the scheme was being incorrectly applied. Those workers D
who had left the cinema and had ceased to be its workers on 30th
-~ April, 1986, would certainly not be entitled to any benefit under the
scheme. Regarding the challenge to the demand by the Provident
Fund Commissioner from the employers about the arrears of contribu-
tion, the High Court felt that there was no substance in that argument.
E
8. Before us Mr. Salish Chandra, learned counsel for the appel-
!ants submitted:
•
y i) that the Provident Funds Act would not be applicable so
long as the Notification as required by the proviso to
Section 1(3)(b) has PO! been issued; F

ii) even if we assume that Section 24 of the Cinema
Theatre Workers Act takes the place of a Notification
being issued as contemplated by the proviso to Section
1(3)(b) of the Provident Funds Act, an express Notification
"~ under Section 5 is required to make the scheme applicable G
to those establishments and without such a Notification the
scheme will not be applicable:

iii) that under Section 6 of the Provident Funds Act, the
liability is only fixed for employers' share of contribution
towards Provident Funds and there is no liability fixed to H
484 SUPREME COURT REPORTS [1991] 2 S.C.R. •

A
pay empoyees' share, and unless paragraph 30 of the
scheme is made applicable there is no liability of the
employers to pay employees' share;

iv) that the Notification is very harsh and unjust as the
appellants are being asked to pay the contribution of the
B employees share to the Provident Fund Account retrospec-
tively without the corresponding right of employer to
recover it from the wages of employees.

9. It may be mentioned that the vires of any of the provision of
the Provident Funds Act or the Scheme has not been challenged
before us. As would be seen from the preamble of the Provident Funds
c Act, the Act is intended for the benefit of the employees. It is also so
clear from its objects and reasons extracted below:

"The question of making some provision for the future of
the industrial worker after he retires or for his dependants
D in case of his early death, has been under consideration for
some years. The ideal way would have been provision
through old age and survivors' pensions as has been done in
the industrially advanced countries. But in the prevailing
conditions in India the institution of a pension scheme can-
not be visualised in the near future. Another alterantive
E may be for provision of gratuities after a prescribed period
of service. The main defect of a gratuity scheme, however,
is that amount paid to a worker or his dependants would be
small, as the worker, would not himself be making any
contribution to the fund. Taking into account the various
difficulties, financial and administrative, the most appro-
F priate course appears to be the institution compulsorily of
contributory provident funds in which both the worker and
the employer would contribute. Apart from other advan-
tages, there is the obvious one of cultivating among the
workers a spirit of saving something regularly. The institu-
tion of a provident fund of this type would also encourage
the stabilisation of a steady labour force in industrial __(
G
centres."

10. It is a legislation for the benefit of the worker sections of the
society and the beneficial legislation is made applicable to cinema
theatre if it employs five or more workers. The classification of cinema
H theatres as a separate class for purposes of coverage under the Provi-
EXHIBITORS ASSCN. v. U.0.l. [YOGESHWAR DAYAL, J.I 485

dent Funds Act has also not been challenged. A
11. Further no challenge has been made to any of the provision
~ of the Cinema Theatre Workers Act.

12. Before we deal with the submissions of learned counsel for
the appellants we may notice the relevant part of provisions of the B
Provident Funds Act and the Scheme. Section 1(3) of the Provident
Fuqds Act reads as follows:

"Subject to the provisions contained in Section 16, it
applies-

(a) to every establishment which is a factory engaged in
c
any industry specified in Schedule I and in which twenty or
more persons are employed, and
(b) to any other establishment employing twenty or more
persons or class of such establishments which the Central
Government may, by notification in the Official Gazette, D
specify in this behalf:
Provided that the Central Government may, after
giving not less than two months' notice of its intention so to
do, by notification in the Official Gazette, apply the provi-
sions of this Act to any establishment employing such E
number of persons less than twenty as may be specified in
the notification."

13. Section 5(1) and (2) provide as follows:
"5. Employees' Provident Fund Schemes-
F
( 1) The Central Government may, by notification in the
Official Gazette, frame a Scheme to be called the Emplo-
yees' Provident fund Scheme for the establishment of pro-
vident funds under this Act for employees or for any class
of employees and specify the establishments or class of
establishments to which the said Scheme shall apply and G
there shall be established as soon as may be after the
framing of the Scheme, a Fund in accordance with the pro-
visions of this Act and the Scheme.
(1-A)
(1-B) H
486 SUPREME COURT REPORTS [ 1991] 2 S.C.R.
(2) A Scheme framed under sub-section ( 1) may provide
A that any of its provisions shall take effect either prospecti-
vely or retrospectively on such date as may be specified in
this behalf in the Scheme."
14. The relevant part of Section 6 reads as follows:

B "6. Contributions and matters which may be provided for
in Schemes The contribution which shall be paid by the
employer to the Fund shall be eight and one third per cent
of the basic wages, dearness allowance and retaining allo-
wance, if any, for the time being payable to each of the
employees, whether employed by him directly or by or
through a contractor, and the employee's contributions
c shall be equal to the contribution payable by the employer
in respect of him and may, if any employee so desires, be
an amount exceeding eight and one-third per cent of his
basic wages, dearness allowance and retaining allowance, if
any, subject to the condition that the employer shall not be
D under an obligation to pay any contribution over and above
his contribution payable under this section."

15. Para 1(1) and relevant parts of paras 1(3)(a) and 1{3)(b) of
the Scheme read as follows:-

E "l. Short title and application-(!) This Scheme may be
called the Employees' Provident Funds Scheme 1952.
(2) .....
(3)(a) Subject to the provisions of Sections 16 and 17 of
the Act, this Scheme shall apply to all factories and other
F establishments to which the Act applies or is applied under
sub-section (3) or sub-section 4(1) of Section 1 or Section 3
thereof:

(b) Provisions of this Scheme shall-
G

(xcviii) as respect the cinema theatres employing 5 or more
workers as specified in Section 24 of the Cine-Workers and
Cinema Theatres Workers (Regulations of Employment)
Act, 1981 (50 of 1981) be deemed to have come into force
H with effect from the 1st day of October, 1984."
EXHIBITORS ASSCN. v. U.o.;. (YOGESHWAR DAYAL, J.] 487

16 . .The relevant parts of paras 30 and 32 of the Scheme read as
A
follows:

"30. Payment of contribution'-

(1) The employer shall, in the first instance, pay both the
contribution payble by himself in this Scheme referred to as B
the employer's contribution and also, on behalf of the
member employed by him directly or by or through a con- ·
tractor, the contribution payable by such member's in the
Scheme referred to as the member's contribution.
(2) ......
(3) It shall be the responsibility of the principal employer
c
to pay both the contribution payable by himself in respect
of the employees directly employed by him and also in
respect of the employees employed by or through a con-
tractor and also administrative charges.
D
Explanation
32. Recovery of a member's share or contribution

(1) 'The amount of a member's contribution paid by the
employer or a contractor shall, notwithstanding the provi-
sions in this Scheme or any law for the time being in force E
or any contract to the contrary, be recoverable by means of
deduction from the wages of the member and otherwise:

Provided that no such deduction may be made from any
wage other than that which is paid in respect of the period
or part of the period in respect of which the contribution is F
payable:

Provided further that where no such deduction has been
made on account of an accidental mistake or a clerical er-
ror, such deduction may, .with the consent in writing of the G
Inspector, be made from the subsequent wages.
(2)
(3) .......

17. A combined reading of Section 6 of the Provident Funds Act H
488 SUPREME COURT REPORTS [ 1991] 2 S.C.R.

and paras 30 to 32 of the Scheme is that the contribution to the Provi-
A
dent Fund is to be 121/2% of the basic wages and dearness allowance,
that is to be borne equally by the employer and the employee and that
the employer is to pay the whole of it, half on hi.s account, and the
other half on account of the employee and he is to recoupe himself by
deducting it from the wages of the employee.
B
18. A bare reading of Section 24 of the Cinema Theatre Workers
Act·shows that it has fulfilled the purpose of the Notification which the
Central Government could have issued under Section 1(3)(b) of the
Provident Funds Act read with the proviso. Therefore, no further
Notification as contemplated by Section 1(3)(b) of the Provident
Funds Act was necessary. Section 24 has taken the place of the Notifi-
c cation contemplated by Section 1(3)(b) of the Provident Funds Act
read with the proviso thereto. Therefore the Provident Funds"Act
became applicable to the theatres who employ five or more workers
with effect from 1st October, 1984. Again in view of Section 6 of the
Provident Funds Act, noticed earlier, the employers became liable to
D pay their contribution to the fund as soon as the Act came into force
i.e. w.e.f. 1st October, "1984.

19. It is also clear from reading of Section 5 of the Provident
Funds Act that before the Provident Funds Scheme can become appl-
icable, the Central Government has to frame a Scheme and also
E specify the establishment to which the said Scheme shall apply. Till the
impugned Notification dated 30th April, 1986 was published the
Scheme was not applicable to such cinema theatres who are employing
less than 20 employees and it became applicable to cinema theatres
employing five or more workers only when the impugned Notification
was issued under Section 5 of the Provident Funds Act. It is only by the
F impugned Notification that the scheme was amended so as to be made
applicable in respect of the cinema theatres employing five or more
persons. Without such a Notification the Scheme would not have
become applicable. The Notification on the face of it shows that the
Scheme has been made applicable to the cinema theatres covered by
the Notification with effect from 1st October, 1984. This could be done
G in view of not only the provisiops of Section 5(2) of the Provident
Funds Act but also in view of Section 7(1) of the Provident Funds Act.
Both these provisions confer express powers of making the Scheme
applicable retrospectively.

20. The question however, is whether by making the Scheme
H with retrospective operation, the employer could be saddled with the
EXHIBITORS ASSCN. v. U.0.1. iYOGESHWAR DAYAL, J.] 489

liability to pay employees' contribution w.e.f. 1st October, 1984 and if A
not from what other date? The answer to the question turns upon the
implementation of the Scheme and in particular the giving effect to
paras 30 and 32 of the Scheme. Para 30 provides that the employer
shall, in the first instance, pay both the contributions payable by him-
self and also the contribution payable by the employees. It shall be the
responsibility of the principal employer to pay both the contributions B
payable by himself and also in respect of the employees directly emp-
loyed by him and also in respect of the employees employed by him or
through a contractor. Para 32 confers upon the employer (he right to
recover the employees contribution that has been paid by him under
para 30. That could be recovered by the employer by means of deduc-
tion from the wage of the employees who are liable to pay. First C
proviso to para 32(1) however, limits that liability in expressly stating
that no such deduction may be made from any wage other than that
which is paid in respect of the period of which the contribution is
payable. It is obvious from paras 30 and 32 that the employer has to
pay the contribution of the employee's share but he has a right to
recover that payment by deducting the same from the wages due and D
•·-{ payable to the employees. It is significant to note that the deduction is
not from the wages payable for any period, but only from the wages for
the period in resped of which the contribution is payable and no
deduction could be made from any other wages payable to the emp-
loyees. In other words, the payment of employees contribution by the
employer with the corresponding right to deduct the same from the E
wages of the employees could be only for the current period during
• which the employer has also to pay his contribution. ,.

In the instant case for the period from 1st October, 1984 up to
the date of the impugned Notification the employer has paid the full
wages to the employees since during that period, there was no scheme F
applicable to his establishment. By retrospectively applying the
scheme, could he be asked to pay the employees contribution for the
period antecedent to the impugned notification. We think not. The
Act and the Scheme neither permit any such payment nor deduction.
He cannot be saddled with the liability to pay the employees' contribu-
tion for the retrospective period, since he has no right to deduct the G
same from the future wages payable to the employees.

21. Mr. Vikram Mahajan, learned counsel for the Central
Government submitted that it may be possible for the employers to
make deduction from subsequent wages of the workmen with the con-
sent in writing of the Inspector as required under the third proviso to H
490 SUPREME COURT REPORTS [ 1991] 2 S.C.R.

A para 32( I) of the Scheme. This submission cannot be accepted since
the third proviso could be taken advantage of by the employer only
where no deduction has been made from the wages of the employees
due to accidental mistake or clerical error when the scheme is opera-
tive. Such deduction which has not been made by accidental mistake or
clerical error, could be made from the subsequent wages with the
B consent in writing of the Inspector concerned. The case with which we
are concerned is not covered by the third proviso. It is not the case of
any body that the employer could not make deduction from the wages
of the employees by accidental mistake or clerical error. The employer
indeed could not have made the deduction prior to the impugned
notification dated 30th April, 1986 since the Scheme was not then
applicable. The Scheme has been 11iven retrospective effect w.e.f. 1st
c October, 1984. The employer therefore, cannot take the benefit of the
third proviso to para 32(1) for deducting the employees contribution in
their wages payable in future.

22. Reference was also made to the decisions of this Court in
b M/s. Orissa Cement Ltd. v. Union of India, (1962] (Suppl) 3 SCR 837
and in M/s. Lohia Machines Ltd. v. Union of India and Ors., (1965) 2
SCR 686 by learned counsel for the appellants in support of his conten-
tions. It will be noticed that the Supreme Court in Orissa Cement ltd.
[ 1962) (Suppl) 3 SCR 837 was concerned with the validity of certain
Notifications which were struck down as infringing Article 19(1)(g) of
E the Constitution. The decision, has no applicability to the facts of the
present case. Equally, the decision in Lohia Machines Ltd., [1965) 2
SCR 686 has also no applicability to the facts of the present case.

23. In the result and for the foregoing-reasons, we allow the
appeals as indicated above by setting aside the judgment of the High
F Court. We declare that the appellants are not liable to pay the emp-
loyees contribution for the period from 1st October, 1984 to 30th
April, 1986.

24. In the facts and circumstances of the case, however, we
make no order as to costs.

G.N. Appeals partly allowed.