Holding

The amendment is not retrospective; accrued infancy protection rights survive, and the appellants are entitled to the three‑year exemption.

Summary

Four jute mills filed writ petitions seeking a declaration that the 1998 amendment (Act 10 of 1998) removing clause (d) of Section 16 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 did not affect the "infancy protection" they had already accrued. The amendment eliminated the exemption that allowed newly set‑up factories to be exempt from the Act for three years. The Supreme Court examined whether the amendment operated retrospectively and thus extinguished vested rights, applying Section 6 of the General Clauses Act, 1897 and the principle that statutes are prima facie prospective unless expressly made retrospective. It held that the amendment did not intend to affect rights already accrued and therefore could not withdraw the protection. Consequently, the mills were entitled to the three‑year infancy exemption from the date of their establishment, and the High Court’s dismissal of the petitions was set aside.

Issues considered

Whether the 1998 amendment to Section 16 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 is retrospective and defeats the vested "infancy protection" rights of establishments that had already acquired them.
Whether Section 6 of the General Clauses Act, 1897 saves accrued rights from being affected by a repeal or amendment absent a clear legislative intent.
Whether the principle of prospective operation of statutes applies to the amendment in question.

Legislation cited

Subjects

infancy protectionvested rightsretrospective legislationGeneral Clauses ActEmployees Provident Fundstatutory interpretationamendmentSection 16

Judgment

i
'
-
-\"' S.L. SRINIVASA JUTE TWINE MILLS P. LTD. A
v.
• UNION OF INDIA AND ANR .

FEBRUARY 15, 2006

[ARIJIT PASAYAT AND R.V. RAVEENDRAN, JJ.] B

~·
Employees Provident Fund and Miscellaneous Provisions Act, 1952;
Section 16 with amendments:

Infancy protection to newly set up factories/establishments-Exemption c
clause-Removal of exemption clause by the amending Act of 1998-Effect of
amendment on the existing rights-Held: Every statute prima facie prospective
in effect unless legislature expressly or by necessary implication make it
retrospective in effect-Jn terms of the provisions of repeal in the General
Clauses Act unless different intention appears, the repeal shall not affect any D
rights/privilege or liability acquired/accrued or incurred under the enactment/
.... repeal/amendment-Since protection accrued to the factories/establishments
~ prior to amendment, in 1997, they are entitled to the protection-Hence,
Judgments of High Court indefensible-General Clauses Act, 1897-Section
6.
E
Legal Maxims:

Maxim 'nova constitutio futuris formam unponere debet non
practeritis'-Applicability of

Appellant mills filed writ petitions before the High Court praying F
__l for issuance of a writ of mandamus to declare that Act IO of 1998 which
was seeking to amend provisions of Section 16 of the Employees Provident
Fund and Miscellaneous Provisions Act, 1952, shall not apply to them and
they would continue to have the "infancy protection" for a period of 3
years starting from the date of establishment of the industries. The High
Court by the impugned judgment dismissed the writ petitions. Hence the G
~- present appeal.
' -~;..:--\
Appellants contented that the High Court has clearly erred in holding
that the accrued rights were in no way affected or altered by effecting
235 H
)

236 SUPRE\1E l'Ol:RT REPORTS (2006) 2 S.C.R.

A amendments in the Act since under the un-amended provisions they were '-.
entitled to the protection for the infancy period.

Respondents submitted that in public interest the amendment can
be done; and that keeping the ultimate welfare of the workers in view the
amendment in the provisions of law was made and the exemption was not
B granted to any category of establishment.

Allowing the appeals, the Court

HELD: I. In terms of Clause (c) of Section 6 of the General Clauses
Act, unless a different intention appears the repeal shall not affect any
C right, privilege or liability acquired, accrued or incurred under the
enactment repeal. The effect of the amendment in the instant case is the
same. (243-CI

2. It is a cardinal principle of construction that every statute is prima
D facie prospective in effect unless it is expressly or by necessary implication
made to have retrospective operation. Unless there are words in the statute
sufficient to show the intention of the Legislature to affect existing rights,
it is deemed to be prospective only 'nova constitutio faturis formam imponere
debet non praeteritis '. The judgments of the High Court are indefensible
and are set aside. The appellants shall be entitled to the protection as had
E accrued to them prior to the amendment in 1997 for the period of 3 years
starting from the date the establishment was set up irrespective of repeal
of the provision for such infancy protection. (243-D-E; 244-CI

Jayantilal Amratlal v. Union of India and Ors., AIR (1971) 1193;
Govinddas and Ors. v. Income Tax Officer and Anr., AIR (1977) SC 552;
F Magic Wash Industries (P) Ltd v. Assistant Provident Fund Commissioner,
Panaji and Anr., (1999) Lab. I.C. 2197; Keshvan Madhavan Memon v. State
of Bombay, AIR (1951) SC 128; Delhi Cloth Mills & General Co. Ltd v. CIT.
Delhi, AIR (1927) PC 242 and Amireddi Raja Gopala Rao v. Amireddi
Sitharamamma, AIR (1965) SC 1970, relied on.

G Reid v. Reid, (1886) 31 Ch D 402, referred to.

"Principles of Statutory Interpretation" by Justice G.P. Singh. (Tenth
Edition, 2006) at PP. 474, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6777 of2003.
H
S.L. SRINIVASA JUTE TWINE MILLS P LTD. 1'. U.0.1. [PASA VAT, J ] 23 7
.\./
' From the Judgment and Order dated 3.10.2002 of Andhra Pradesh High A
Court in Civil Writ Petition Nos. 33660,3199IJ1994 of 1998 and 13929 of
2000,

WITH

C.A. Nos. 6780, 6779 and 6778/2003. B
S.S. Rana, B. Rana, Vikrant Rana and Ms. Amaya Singh for the
Appellant.

K. Radhakrishnan, C.V. Subba Rao, Ajay Sharma, B.K. Prasad and
Mrs. Anil Katiyar for the Respondents. C
The Judgment of the Court was delivered by

ARIJIT PASAYA T, J. These four appeals involve common points of
law and, therefore, are disposed of by this judgment which shall .govern each
one of them. Appellant in each appeal has questioned correctness of the D
... '
judgment rendered by a Division Bench of the Andhra Pradesh High Court
dismissing the writ petitions filed before the High Court praying issuance of
a writ of mandamus to declare that Act 10 of 1998 seeking to amend provisions
of Section 16 of the Employees Provident Fund and Miscellaneous Provisions
Act, 1952 (in short the 'Act') shall not apply to the writ petitioners and they E
would continue to have the "infancy protection" for the period of 3 years
starting from the date of establishment of the industry. The High Court by the
impugned judgments dismissed the writ petitions holding that the amendment
was intended to take away certain benefits by way of necessary amendments
to Section 16 and the question as to whether any vested right are sought to
be affected would arise only when the provisions are given retrospective F
operation.

It was held that the real intention was to deal with the establishments
universally on equal footing under the provisions of the Act and, therefore,
no exemption whatsoever was intended to be provided in favour of any
establishment. On and from date of enforcement of the amended provisions G
all establishments including the establishments who had enjoyed the benefit
,, "· of exemption are brought within the purview of the operation of the Act and
they in no way alter any of the rights accrued in favour of the writ petitioners'
establishments.

H
)

238 SUPREME l'Ol.'RT REPORTS [2006] 2 S.C.R.

A The factual scenario needs to be noted in brief as the controversy is '+
whether the appellants are entitled to the protection as claimed.

At the time of enactment of the Act:

Name of the Sri Lakshmi Navya Jute Srinivasa Sitaram
appellant Srinivasa Mills Jute Mills Lakshmi
B Jute Mills

Civil Appeal No. 6777/20G3 6778/2003 6779/2003 6780/2003

Commencement of November April I, 1996 August 19, February 19,
infancy 17, 1995 1997 1997
c period/commercial
production

Expiry of infancy November March 31, August 20, February 18,
period as per 16, 1998 1999 2000 2000
Section 16( d) as
D claimed by appellanl

Date of Ordinance September September September September
No.17/1997 22, 1997 22, 1997 22, 1997 22, 1997

Date of omission of June 22, June 22, .lune 22, June 22,
E Section 16(d) (vide 1998 w.e.f. 1998 w.c.f. 1998 w.e.f. 1998 w.e.f.
Act 10/1998) 22.9.1997 22.9.1997 22.9.1997 22.9.1997

Balance infancy I year I year 2 year 2 year
period to be availed 1 month 6 month 10 month 5 month
24 days 8 days 28 days 26 days
F
Learned counsel for the appellants submitted that the High Court has
clearly erred in holding that the accrued rights were in no way affected or
altered. In fact, under the un-amended provisions the appellants were entitled
G to the protection for the infancy period as provided in the Act.

Learned counsel for the respondents on the other hand submitted that
in public interest the amendment can be done and this is a case where keeping ~ .
the ultimate welfare of the workers in view the amendment was made and the
exemption was not granted to any category of establishment. That according
H to learned counsel for the respondents meet the requirements of law and the
S.LSRINIVASAJUTETWINFMILLSP.LTD. "· U.0.1.!PASAYAT,J.] 239

-Y
judgment of the High Court is therefore not open to challenge. A
The position of Section 16 at different points of time can be noticed.
Section 16 as originally enacted read as follows:

"16. Act not to apply to factories belonging to Government or local
authority and also to infant factories. B
This Act shall not apply to-

"""' (a) any factory belonging to the government or a local authority, and

(b) any other factory established whether before or after the
commencement, of this Act unless three years have elapsed from its c
establishment.

Section 16 was amended by the Employees' Provident Funds
(Amendment) Act, 1958 and sub-section (!)of Section 16 of the Principal
Act was substituted as under:
D
"(!)This Act shall not apply to any establishment until the expiry of
three years from the date on which the establishment is, or has been
' set up.
~
Explanation: For the removal of doubts it is hereby declared that an
establishment shall not be deemed to be newly set up merely by E
reason of a change in its location".

Section 16(1) was once again amt;nded by the Employees' Provident
Funds (Amendment) Act, 1960 and sub-section (I) of Section 16 was
substituted as under:
F
~·~ "(I) This Act shall not apply:

(a) to any establishment registered under the Co-operative Societies
Act, 1912, or under any other law for the time being in force in any
State relating to Co-operative Societies, employing less than fifty
persons and working without the aid of power; or G
(b) to any other establishment employing fifty or more persons or
...~ twenty or more but less than fifty persons until the expiry of three
years in the case of the former and five years in the case of the latter,
from the date on which the establishment is, or has been, set up.
H
)
240 SUPREME COURT REPORTS j2006J 2 S.C.R.

A Explanation: For the removal of doubts, it is hereby declan:d that an
establishment shall not be deemed to be newly set up merely by
reason of a change in its location".

Section 16 was further amended by the Employees' Provident Funds
and Miscellaneous (Amendment) Act, 1988 with effect from 1.8.1988, and
B Clause (b) of sub-section (I) of Section 16 was substituted by clauses (b), (c)
and (d) and the said amendment to Section 16 is as under:

"(b) to any other establishment belonging to or under the control of
the Central Government or the State Government and whose employees
are entitled to the benefit of contributory provident fund or old age
c pension in accordance with any scheme or rule framed by the Central
Government or the State Government governing such benefit; or

(c) to any other establishment set up under any Central Provincial or
State Act and whose employees are entitled to the benefits of
contributory provident fund or old age pension in accordance with
D any scheme or rule framed under that Act govcming such benefits;
or

(d) tu any other establishment newly set up, untd the expiry of a
period of three years from the date on which such establishment is,
or has been set up. "
E
Thereafter, Section 16 was again amended by Employees' Provident
Funds and Miscellaneous Provisions (Amendment) Act, 1988, omitting clause
(d} with explanation in sub-section (1) of Section 16 with effect from
22.9.1997. (The said omission was initially carried out by Ordinance No.17/
F 1997 promulgated on 22.9.1997 followed by Ordinance No.25/1997 dated
25.12.1997 and Ordinance No.8of1998 dated 23.4.1998 followed by Act 10
of 1998.)

According to the appellants, the un-amended provisions as it stood
after the amendment in 1988 under clause( d), apply to their cases and they
G were entitled to the protection regarding non-application of the Act for a
period of 3 years from the date on which such establishment was set up.
According to the High Court, as clause (d) was deleted with effect from
22.9.1997, the Act had application to every establishment and no exemption ,. .
or 'infancy period' whatsoever was available from 22.9.1997.

H The crucial question therefore is the effect of the amendment on the
S.L. SRJNIVASA JUTE TWINE MILLS P LTD. r. U.0.1. (PASAYAT. J ) 24 J

In Jayantilal Amralla/ v. Union of India and Ors., AIR (1971) SC A
1193, it has been laid down as under :

"In order to see whether the rights and liabilities under the repealed
law have been put to an end by the new enactment, the proper approach
is not to enquire if the new enactment has by its new provisions kept
alive the rights and liabilities under the repealed law but whether it B
has taken away those rights and liabilities. The absence of a saving
clause in a new enactment preserving the rights and liabilities under

- the repeated law is neither material nor decisive of the question."

In Govinddas and Ors. v. Income Tax Officer and Anr., AIR (1977) SC
552, it was laid down that: C
"Now it is well settled rule of interpretation hallowed by time and
sanctified by judicial decisions that unless the terms of a statute
expressly so provide or necessarily require it, retrospective operation
should not be given to a statute so as to take away or impair an
existing right o· create a new obligation or impose a new liability D
I .
otherwise than as regards matters of procedure. The general-rule as
stated by HALSBURY in Vol. 36 of the LAWS OF ENGLAND (3rd
Edn,) and reiterated in several decisions of this Court as well as
English Courts is that all statutes other than those which are merely
declaratory or which relate only to matters of procedure or of evidence E
are prima facie prospective and retrospective operation should not be
given to a statute so as to affect, alter or destroy an existing right or
create a new liability or obligation unless that effect cannot be avoided

- without doing violence to the language of the enactment. If the
enactment is expressed in language wqich is fairly capable of either
interpretation, it ought to be construed as prospective only." F
A Division Bench of Bombay High Court while considering the earlier
amendment to Section 16(1)(d) curtailing the infancy period from 5 years to
3 years, held thus, in Magic Wash Industries (P) Ltd v. Assistant Provident
Fund Commissioner, Panaji and Anr., (1999) Lab.LC. 2197):
G
"There is no doubt that the vested rights or benefits under the
legislation could be retrospectively taken away by legislation, but
then the statute taking away such rights or benefits must expressly
reflect its intention to that effect. The infancy period prior to the
amended provision Section 16(1 )( d) was five years in the case of H
)

242 SUPREME COl 'R r RLPOR rs [2006] 2 S.C.R.

A establishments employing 20 to 50 workers and in the event this
infancy benefit was to be withdrawn. it was necessary that the intention
of the Legislature should have been clearly reflected in the amended
provision itself that the rights and benefits which had already accrued
stood withdrawn. The amended clause 16( I )(d) came on the statute
book on June 2, 1988, when it was assented by the President of India
B but the amended Section 16 was put into operation only with effect
from August I, 1988, which empowered the Central Government to
appoint different dates for the coming into force of different provisions
of the Act. We find it difficult in the circumstances, to conclude that
the intention of the Legislature was to take away the benefit of infancy
C period which had already accrued to the existing establishments and
this benefit has not been expressly taken away or by implication by
the amended provision Section 16( I )(d). In the circumstances, we are
of the opinion that the infancy period benefit of the p.:titioner for a
period of five years with effect from May 26, 1986, is not taken away
by the amended provision Section (l){d) of the Act; and the petitioner
D could continue to enjoy the said infancy benefit for a period of five
years till Mdy, 199 l. Therefore, the demand made by respondent I
for the period up to May, 1991, has to be quashed. The petitioners are
complying with the provisions of the Act with effect from June,
1991."
E The matter can be looked at from another angle. Section 6 of the
General Clauses Act, 1897 (in short 'General Clauses Act') deals with effect
of repeal. The said provision so far relevant reads as follows:

"6. Effect of repeal. - Where this Act, or any (Central Act) or
Regulation made after the commencement of this Act, repeals any
F
enactment hitherto made or hereafter to be made, then, unless a
different intention appears, the repeal shall n<'t -

(a) revive anything not in force or existing at the time at which the
repeal takes effect; or
G (b) affect the previous operation of any enactment so repealed or
anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation or liability acquired, accrued t •
or incurred under any enactment so repealed; or
(d) affect any penalty, forfeiture or punishment incurred in respect
H
S.L. SRINIVASA JUTE TWINE MILLS r. LTD. '" U.0.1. [PASA YAT. l] 243
, of any offence committed against any enactment so repealed; or A
-r (e) affect any investigation, legal proceeding or remedy in respect of
any such right, privilege, obligation, liability, penalty, forfeiture
or punishment as aforesaid;

and any such investigation, legal proceeding or remedy may be B
instituted, continued or enforced, and any such penalty, forfeiture or
punishment may be imposed as if the repealing Act or Regulation
had not been passed."

In terms of Clause (c) of Section 6 as quoted above, unless a different
intention appears the repeal shall not affect any right, privilege or liability C
acquired, accrued or incurred under the enactment repeal. The effect of the
amendment in the instant case is the same.

It is a cardinal principle of construction that every statute is prima facie
prospective unless it is expressly or by necessary implication made to have
retrospective operation.(See Keshvan Madhavan Memon v. State of Bombay, D
AIR (1951) SC 128. But the rule in general is applicable where the object of
\ . the statute is to affect vested rights or to impose new burdens or to impair
existing obligations. Unless there are words in the statute sufficient to show
the intention of the Legislature to affect existing rights, it is deemed to be
prospective only 'nova constitutio futuris formam imponere debet non
praeteritis'. In the words of LORD BLANESBURG, "provisions which touch E
a right in existence at the passing of the statute are not to be applied
retrospectively in the absence of express enactment or necessary intendment."
(See Delhi Cloth Mills & General Co. Ltd. v. CIT, Delhi, AIR (1927) PC
242). "Every statute, it has been said", observed LOPES, L.J., "which takes
away or impairs vested rights acquired under existing laws, or creates a new p
obligation or imposes a new duty, or attaches a new disability in respect of
transactions already past, must be presumed to be intended not to have a
retrospective effect."(See Amireddi Raja Gopala Rao v. Amireddi
Sitharamamma, AIR ( 1965) SC 1970). As a logical corollary of the general
rule, that retrospective operation is not taken to be intended unless that intention
is manifested by express words or necessary implication, there is a subordinate G
rule to the effect that a statute or a section in it is not to be construed so as
to have larger retrospective operation than its language renders necessary.
(See Reid v. Reid, (1886) 3 I Ch D 402). In other words close attention must
be paid to the language of the statutory provision for determining the scope
of the retrospectivity intended by Parliament. (See Union of India v. Raghubir H
244 SUPREME COURT REPORTS (2006 I 2 S.C.R.

A Singh AIR (1989) SC 1933). The above position has been highlighted in
"Principles of Statutory Interpretation" by Justice G.P. Singh. (Tenth Edition,
2006) at PP. 474 and 475)

In The Stale ofJammu and Kashmir v. Shri Triloki Nath Khosa & Ors.,
[1974] I SCC 19 and in Chairman, Railway Board & Ors. v. C.R.
B Rangadhamaiah & Ors., [1997] 6 sec 623), this Court held that provision
which operates to affect only the future rights without affecting the benefits
or rights which have already accrued or enjoyed, till the deletion, is not
retrospective in operation.

Above being the legal position, the judgments of the High Court are
C indefensible and are set aside. The appellants shall be entitled to the protection
as had accrued to them prior to the amendment in I997 for the period of 3
years starting from the date the establishment was set up irrespective of
repeal of the provision for such infancy protection.

D The appeals are accordingly allowed. No costs.

S.K.S. Appeals allowed.

'.