A division bench comprising Justice Partha Sarthy and K. Vinod Chandran of the Patna High Court in the case of M/s Magadh Sugar and Cenergy Ltd vs. the Union of India held that the retrospective operation is only for one financial year and the beneficial, welfare legislation cannot be termed to be unduly oppressive or confiscatory.
Thus, the provisions of the Payment of Bonus Amending Act, 2015 cannot be said to be either unreasonable or such that it creates an unforeseeable financial burden for the past period.
Brief Facts:
The Petitioner has challenged the validity and especially the retrospective applicability of the Payment of Bonus (Amendment) Act, 2015.
Contentions of the Petitioner:
The learned counsel for the Petitioner contended that the enactment creates an additional financial liability that has retrospective effect. It was furthermore contended that it is an ultra vires the Article 14 of the constitution and it takes away the right accrued in the favour of the dealers and the petitioner is entitled to the refund.
The learned counsel also relied upon the judgment titled Jayam and Company versus Assistant Commissioner and another.
Contentions of the Respondent:
The learned counsel appearing on behalf of the Respondent contended that when reading Articles 245 and 246 of the Constitution together with Article 43, it becomes clear that the Parliament has the authority to pass legislation that guarantees living wages sufficient to maintain a respectable quality of living, including the authority to do so retroactively. It was furthermore contended that the Amendment Act, 2015 was enacted to protect the interest of the workers in the scheduled employment.
Observations of the court:
The Hon’ble Court observed that the Payment of Bonus Act, of 1965 was enacted to determine the question of payment of bonuses based on profits to employees employed in establishments and to make recommendations to the Government, and the Act was later amended from time to time.
It was furthermore observed that there is no dispute regarding the Union of India's legislative power in bringing about the amendment, nor can it be argued that doing so is irrational or in violation of any Constitutional provisions.
It was noted that the earnings or productivity realized in the business, which are solely due to and directly related to the labour performed by the employee, are what the employer is held liable for financially. The beneficial welfare legislation cannot be deemed to be excessively oppressive or confiscatory because the retrospective operation only lasts for one fiscal year. Therefore, it cannot be stated that the provisions of the Amending Act, 2015 are either illogical or such that they impose an unforeseen financial burden for the previous period.
Based on these considerations, the court was of the view that the petitioner has not made out any case for interference in the Payment of Bonus (Amendment) Act, 2015 and to hold the same as ultra virus the Constitution of India.
The decision of the Court:
With the above direction, the court dismissed the application.
Case Title: M/s Magadh Sugar and Cenergy Ltd vs. The Union of India
Coram: Hon’ble Mr. Justice Partha Sarthy and Hon’ble Mr. K. Vinod Chandran
Case No.: Civil Writ Jurisdiction Case No.15379 of 2017
Advocate for the Petitioner: Mr. Ashish Giri, Advocate
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