# MOHMEDALLI AND OTHERS v. UNION OF INDIA AND ANOTHER

- **Citation:** [1963] Supp. 1 S.C.R. 993
- **Court:** Supreme Court of India
- **Decided:** 1961-05-16
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mohmedalli-and-others-v-union-of-india-and-another-2759
- **Pages:** 16

## Headnote

I S.C.R.
SUPREME COURT REPORTS
MOHMEDALLI AND OTHERS
v.
UNION OF INDIA AND ANOTHER
\B. P. SINHA, c. J., P. B. GAJENDRAGADKAR,
K. N. WANCHOO, K. C. DAB GUPTA and
J.C. SHAH, JJ.)
993
Provident Fund-Constitutional validity of enactment and
scheme framed thereunder-Employees' Provident Funds Act,
1952 (19 of 1952) as amended by Act 46 of 1960, ss. 1(3)
(b), 16, 17-Gonstitution of India, Art. 14.
By a notification issued by the Central Government under
s. I (3) (b) of the Employees' Provident Funds Act, 1952 the
petitioners' restaurant was brought under the Act. By a further notification under s. 5 read with s. 7 (I) of the Act,
the Employees' Provident Fund (Second Amendment) Scheme,
1961, was introduced. The petitioners challenged the constitutional validity of the said scheme and the sections under
which it was made and applied to their restaurant. It was
urged that s. I (3) (b) of the Act conferred uncontrolled and
uncanalised power on the Government, that the Act had application only to wage-earners and not to salaried employees as
those employed in the petitioners' restaurant and that the
scheme was discriminatory and therefore hit by Art. I 4 of the
""'
Constitution.
l
Held,
that
whether or not a particular
piece of
legislation suffers from excessive
delegation
jias to
be
judged on a consideration of
the
facts
and circumstances
that led to
the
enactment of
the impugned
statute.
If the Act and its preamble do not clearly indicate the underlying principles or the criteria for its application, the inevitable
conclusion must be that the delegate is entrusted not merely
with the function of applying the law, but substantially with
the legislative power itself. So judged, it could not be said
that the power entrusted to Central Government to bring by
notification such establishments as it thought fit within the
purview of the impugned Act was uncontrolled or uncanalised.
The Edward Mills Go. Ltd.
Beawar v. The State of
Ajmer, [1955] I S. C.R. 735, Vasantlal Maganbhai Sanjanwala, [1951] 1 S. C.R. 341 and Hamdard Dawakhana (Wakf)
Lal Kuan, Delhi v. Union of India, [1960] 2 S. C. R. 671,
referred to.
1962
Novtmber, 9.
1962
Mohmedal/i
v.
Un;on of India
Sinha, C. J.
994 SUPREME COURT REPORTS [1963] SUPP.
I
.T~e Act ma~es no distinction between wages and salary.
In prmc1ple there is no difference between the two and it was
not c?rrect to say that. the Att was not intended to apply to
salaried employees, if by salary was meant fortnightly or
monthly wages running into hundreds per month.
The Act wa~ not discriminatory and did not infringe
Art. 14. It apphed to all establishments since s. 16 was
amended by Act 46 of 1960 except those registered under
the Co-operative Societies Act, 1912; and those newly set up
till the expiry of three or five years. As was held by this
Court co-operative societies stood on a different footing from
other establishments. Exemption under s. 17 also could not
be said to be discrimimtory. The petitioners' establishment,
which came within the notification, was not therefore, discriminated against.
0RIGINALjURISDICTION: Petition No. 56 of
1962.
(Under Article 32 of the Constitution of India
for the enforcement of Fundamental Rights).
N. 0. Ohatterji, S. K. Kapur and K. K. Jain,
for the Petitioners.
H. N. Sanyal, Additional Solicitor General of
India, M. S. K. Saatri and R. H. Dhebar, for the
Respondents.
1962. November 9. The Judgment of the Court
was delivered by
SINHA, C. J.-This petition, under Art. 32 of
the Constitution, challenges the vires of certain provisions of the Employees' Provident Funds Act (19
of 1952) which hereinafter. will be referred to as the
Act, and the scheme framed thereunder. The respondents to this petition I are the Union of India and the
Regional Provident Fund Commissioner.
The petition is founded on the following allegations. The petitioner;;, 5 in n~ber, are citiz~ of
India and are carrymg on busmess of runnmg a
restaurant and general stores under the name and
style of "Messrs Geo

## Text

I S.C.R.
SUPREME COURT REPORTS
MOHMEDALLI AND OTHERS
v.
UNION OF INDIA AND ANOTHER
\B. P. SINHA, c. J., P. B. GAJENDRAGADKAR,
K. N. WANCHOO, K. C. DAB GUPTA and
J.C. SHAH, JJ.)
993
Provident Fund-Constitutional validity of enactment and
scheme framed thereunder-Employees' Provident Funds Act,
1952 (19 of 1952) as amended by Act 46 of 1960, ss. 1(3)
(b), 16, 17-Gonstitution of India, Art. 14.
By a notification issued by the Central Government under
s. I (3) (b) of the Employees' Provident Funds Act, 1952 the
petitioners' restaurant was brought under the Act. By a further notification under s. 5 read with s. 7 (I) of the Act,
the Employees' Provident Fund (Second Amendment) Scheme,
1961, was introduced. The petitioners challenged the constitutional validity of the said scheme and the sections under
which it was made and applied to their restaurant. It was
urged that s. I (3) (b) of the Act conferred uncontrolled and
uncanalised power on the Government, that the Act had application only to wage-earners and not to salaried employees as
those employed in the petitioners' restaurant and that the
scheme was discriminatory and therefore hit by Art. I 4 of the
""'
Constitution.
l
Held,
that
whether or not a particular
piece of
legislation suffers from excessive
delegation
jias to
be
judged on a consideration of
the
facts
and circumstances
that led to
the
enactment of
the impugned
statute.
If the Act and its preamble do not clearly indicate the underlying principles or the criteria for its application, the inevitable
conclusion must be that the delegate is entrusted not merely
with the function of applying the law, but substantially with
the legislative power itself. So judged, it could not be said
that the power entrusted to Central Government to bring by
notification such establishments as it thought fit within the
purview of the impugned Act was uncontrolled or uncanalised.
The Edward Mills Go. Ltd.
Beawar v. The State of
Ajmer, [1955] I S. C.R. 735, Vasantlal Maganbhai Sanjanwala, [1951] 1 S. C.R. 341 and Hamdard Dawakhana (Wakf)
Lal Kuan, Delhi v. Union of India, [1960] 2 S. C. R. 671,
referred to.
1962
Novtmber, 9.
1962
Mohmedal/i
v.
Un;on of India
Sinha, C. J.
994 SUPREME COURT REPORTS [1963] SUPP.
I
.T~e Act ma~es no distinction between wages and salary.
In prmc1ple there is no difference between the two and it was
not c?rrect to say that. the Att was not intended to apply to
salaried employees, if by salary was meant fortnightly or
monthly wages running into hundreds per month.
The Act wa~ not discriminatory and did not infringe
Art. 14. It apphed to all establishments since s. 16 was
amended by Act 46 of 1960 except those registered under
the Co-operative Societies Act, 1912; and those newly set up
till the expiry of three or five years. As was held by this
Court co-operative societies stood on a different footing from
other establishments. Exemption under s. 17 also could not
be said to be discrimimtory. The petitioners' establishment,
which came within the notification, was not therefore, discriminated against.
0RIGINALjURISDICTION: Petition No. 56 of
1962.
(Under Article 32 of the Constitution of India
for the enforcement of Fundamental Rights).
N. 0. Ohatterji, S. K. Kapur and K. K. Jain,
for the Petitioners.
H. N. Sanyal, Additional Solicitor General of
India, M. S. K. Saatri and R. H. Dhebar, for the
Respondents.
1962. November 9. The Judgment of the Court
was delivered by
SINHA, C. J.-This petition, under Art. 32 of
the Constitution, challenges the vires of certain provisions of the Employees' Provident Funds Act (19
of 1952) which hereinafter. will be referred to as the
Act, and the scheme framed thereunder. The respondents to this petition I are the Union of India and the
Regional Provident Fund Commissioner.
The petition is founded on the following allegations. The petitioner;;, 5 in n~ber, are citiz~ of
India and are carrymg on busmess of runnmg a
restaurant and general stores under the name and
style of "Messrs George Restaurant and Stores" at
•
i
1 s.c.R.
SUPREME COURT REPORTS
995
20,
Appollo
Street,
Fort,
Bombay-1,
since
September, 1958. They are running this business as
a partnership firm, registered under the Indian
Partnership Act. The firm employs 43 persons,
including cooks, waiters, tea;makers, bill clerks and
two store-clerks. Besides paying salary to their
employees, the petitioners give them free food and
other personal allowances, which it is not necessary
to set out in detail. In exercise of the powers conferred bys. 1(3)(b) of the Act, the General Government issued the notification No. G.S.R. 704, dated
May 16, 1961, in- the followting terms :
"G.S.R. 704-In exercise of the powers conferred by Clause (b) of sub-section 3 of Section
1 of the Employees' Provident Fund Act, 1952
(19 of 1952), the Central Government hereby
directs that with effect from June 30, 1961,
the said Act shall apply to the following
classes of establishments, in each of which
twenty or more persons are employed, namely :
i. Hotels.
ii. Restaurants."
As a result of the notification aforesaid, the operation
of the Act has been extended to hotels and restaurants,
including the one run by the petitioners. Subsequently, the Central Government issued a notification under
s. 5, read with s. 7(1), of the Act, the relevant portions of which are in these terms :
"G.S.R. 783.-In exercise of the powers conferred by section 5 read with sub-section (1) of
section 7, of the Employees' Provident Funds
Act, 1952 (19 of 1952), the Central Government
hereby makes the following Scheme further to
amend the Employees' Provident Fund Scheme,
1952, namely:-
1. This Scheme may be called the Employees'
1962
Mohmedalli
v.
Union of Ind~
Sinha, C.J.
<
1952
Mohmedlllli
v.
Union of India
Sinh4, c. h
996 SUPREME COURT REPORTS [1963] SUPP.
Provident
Funds
(Third Amendment)
Scheme, 1961.
2. In the Employees' Provident Fund Scheme,
1952, in clause (b) of sub-paragraph (3) of
paragraph 1, sub-clause (xvii) shall be renumbered as sub-clause (xix) thereof and
the following shall be inserted as sub-clauses
(xvii) and (xviii), namely:-
"(xvii) as respects hotels and restaurants covered
by the notification of the Government of India
in the Ministry of Labour and Employment No.
G.S.R. 704 dated May 16,1961 come into force
on the, 30th day of June 1961 ; ... "
The said notification introduced the scheme known
as the Employees' Provident Funds (Third Amendment) Scheme,· 1961. The petitioners challenge the
constitutionality of the scheme aforesaid, and the
section of the Act in pursuance of which it was
brought into existence. The petitioners pray for a
writ or order or direction quashing the said notifications and for issue of a mandamus to the respondents
not to apply the said scheme to the petitioners establishment.
Before dealing with the specific grounds of
attack raised in support of the petition, it is necessary
to set out briefly the relevant provisions of the Act.
The Act applies to every establishment which is a
factory engaged in any industry specified in Schedule
1 and in which 20 or more persons are employed, and
to any other establishment employing 20 or more
persons or class of such establishments which the
Central Government may, by notification in the
Official Gazette, specify in this behalf. 'Employee'
has been defined ins. 2(f) as follows :
" 'employee' means any/erson who is employed
for wages in any kin
of ·work, .manual or
!
i
l
'
1 S.C.R. SUPREME COURT REPORTS
997
otherwise, in or in connection with the work of
an establishment, and who gets his wages
directly or indirectly from the employer, and
includes any person employed by or through a
contractor in or in connection with the work of
the establishment."
Section 5 authorises the Central Government to frame
a scheme to be called the Employees' Provident Fund
Scheme, for the establishment of provident funds
under the Act for employees or any class of employees
and establishments or class of establishments to which
the scheme may be applied, by notification in the
Official Gazette. The contribution of the employer
to the fund shall be 6!% of the basic wages and
dearness allowance and retaining allowance, if any,
and the employees contribution shall be equal to the
employer's contribution, subject to his contribution
being raised
to the maximum of 6!%, if the
employee so desires and the scheme so provides.
Dearness allowance for the purposes of contribution
shall be deemed to include also the cash value of any
food concession allowed to the employee. Section 7
authorises the Central Government to add to, amend
or vary any scheme framed under the Act. Bys. 16
it is provided that the Act -shall not apply to any
establishment registered under
the Co-operative
Societies Act of 1912, or to any other establishment
employing 50 or more persons or 20 or more but less
than 50 persons until the expiry of 3 years in the case
of the former and 5 years in the case of the latter,
from the date on which the establishment is set up.
Section 17 empowers the appropriate Government,
by notification in the Official Gazette, to exempt
from the operation of all or any of the provisions of
any scheme any establish.nent to which the Act
applies, if in the opinion of the Government the rules
of its provident fund with respect to the rates of
contribution are not less favourable than those speci·
fied in s. 6 and the employees are also in enjoyment
1962
Mo/imdalli
••
Union of India
Sinfla, G. I.
1962
Moh,,,.dalli
••
Union of India
Sioha, C. J;
998 SUPREME COURT REPORTS (1963] SUPP.
/
of other provident fund benefits which on the whole
are not less favourable to the employees than the
henefi~s provided under this Act; as also any establishment 1f the employees of such establishment are in
enjoyment of benefits in the nature or provident fund,
pension or gratuity, which on the whole are not less
favourable to such employees. Section 19 provides
for delegation of powers.
It has been contended (1) thats. 1(3)(h) under
which the notification including restaurants and
hotels were brought under the operation of the· Act,
is invalid because it confers uncontrolled and uncanalised power on the Government; (2) that the Act was
intended to apply to mere wage earners and not to
salaried people and that, therefore, the two notifications as a result of which the petitioners' employees
have been brought within the purview of the Act are
bad inasmuch as they are salaried employees and not
mere wage-earners; and (3) · that the scheme is bad
under Art. 14 of the Constitution because it is discriminatory.
In our opinion there is no substance in any one
of these contentions. It cannot he asserted that the
powers entrusted to the Central Government to bring
within the purview of the Act suciI establishments or
class of establishments as the !]ovemment may by
notification in the Official Gazette specify is uncontrolled and uncanalised. The whole Act is directed
to institute provident funds for the benefit of
employees in factories and other establishments, as
the preamble indicates. The institution of provident
fund for employees is too well-established to admit of
any doubt about its. uti~ity as a !lleasure of ~~ial
justice. The underlymg idea behind the prov1S1ons
of the Act is to bring all kinds of employees wi!11in
its fold as and when the Central Government might
think fit, after reviewing the circumstances of each
class of establishments. Schedule I to the Act contains a list of a large variety of industries engaged in
J
...
,
I S.C.R.
SUPREME COURT REPORTS
999
the manufacture of diverse commodities, mentioned
therein. To all establishments which are factories
engaged in the industries enumerated in Schedule I,
the Act has been made applicable of its own force,
subject to the provisions of s. 16, which has indicated
the establishments to which the Act shall not apply.
The Schedule is liable to be added to or modified so
as to include other categories of industries not already
included in Schedule I.
So far as establishments
which do not come within the description of factories
engaged in industries, the Central Government has
been vested with the power of specifying such esta·
blishments or class of establishments, as. it might determine, to be brought within the purview of the Act.
The Act has given sufficient indication of the policy
underlying its provisions, namely, that it shall apply
to all factories engaged in any kind of industry and to
all other establishments employing 20 or more persons.
This Court has repeatedly laid it down that where the
discretion to apply the provisions of a particular
statute is left with Government, it will be presumed
that the discretion so vested in such a high authority
will not be abused. The Government is in a position
to have all the relevant and necessary information in
relation to each kind of establishment enabling it to
determine which of such establishments can bear the
additional burden of making contribution by way of
provident fund for the benefit of its employees. The
power to exempt given to the appropriate Government
under s. 17 is not uncanalised because both els. (a)
and (b) of that section postulate that the exemption
would be granted on the ground that the employees
of those est~blishments are alrea?y in the enjoyment
of benefits m the nature of provident fund, pension or
gratuity not less favourable to them than under the
Act .. Sub-section (3) of s. 1 lays down the general
rule m these terms as regards the applicability of the
Act:
"(3) Subject· to the provisions contained in
1962
Mohmtdalli
v.
Union of India
Sinha, C. J.
1962
Mohmetlalli
v.
Union of India
Si11ha, C. J.
1000 SUPREME COURT REPORTS [1963] SUPP.
section 16, it applies-
( a) to every establishment which is a factory
engaged in 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
Gaze1te, 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 provision
of this Act to any establishment employing
such number of persons less than twenty
as may be specified in the notification."
The term 'industry' used in the sub-section, quoted
above, is defined in s. 2(i), as follows :
" 'industry' means any industry specified in
Schedule I, and includes any other industry
added to the Schedule by notification under
section 4."
By s. 4, the Central Government has been authorised
to add to the Schedule any other industry in respect
of the employees whereof it is of opinion that a provident fund scheme should be framed under the Act,
and when such a notification is is~ued, the industry
so added shall be deemed to be an industry specified
in the Schedule.
The general rule as to the application of the Act has been laid down in that sub-section.
By way of exception to that general rule, the Appropriate Government has been authorised by s. 17 to
exempt from the opera ti on of all or any of the provisions of any scheme framed under the Act. The
scheme is to be framed by the Central Government,
under s. 5.. for the establishment of provident fund
(
1 S.C.R.
SUPREME COURT REPORTS
1001
l
under the Act for employees or any class of employees,
in persuance of the provisions of the Act.
And the
scheme in question in this case, as already indicated,
has actually been framed and is under challenge in
this case. The relevant provisions of s. 17 are in
these words :
"17. Power to exempt.-(1) The appropriate
Government may, by notification in the Official
Gazette, and subject to such conditions as may
be specified in the notification, exempt from
the operation of all or any of the provisions of
any Scheme-
(a) any establishment to which this Act applies
if, in the opinion of the appropriate
Government, the rules of its provident fund
with respect to the rates of contribution
are not less favourable than those specified
in section 6 and the employees are also in
enjoyment of other provident fund benefits
which on the whole are not less favourable
to the employees than the benefits provided
under this Act or any Scheme in relation
to the employees in any other establishment
of a similar characters ; or
(c) any establishment if the employees of such
establishment are in enjoyment of benefits
in the nature of provident fund, pension or
gratuity and the appropriate Government
is of opinion that such benefits, separately
or jointly are on the whole not less favourable to such employees than the benefits
provided under this Act or any scheme in
relation to employees in any other establishment of a similar character."
It would appear from the terms of the relevant
portion of s. 17 that the exemption to be granted by
1962
Moluneialli
v.
Union of"/ndia
Sinha, C. J.
1962
Mohm1dalli
v.
Union of India
Sinha, C. J.
1002 SUPREME COURT REPORTS [1963] SUPP.
J
the appropriate Government is not in the nature of
completely absolving the establishments from all
liability to provide the facilities contemplated by the
Act.
The exemptions are to be granted by the
appropriate Government only if in its opinion the
exempted establishment has provisions made for provident fund, in terms at least equal, if not more
favourable, to its employees. In other words, the
exemption is with a view to avoiding duplication and
permitting the employees concerned the benefit of the
pre-existing scheme, which presumably has been
working satisfactorily, so that the exemption is not
meant to deprive the employees concerned of the
benefit of a provident fund but to ensure to them the
continuance of the benefit which at least is not in
terms less favourable to them.
As the whole scheme
of provident fund is intended for the benefit of employees, s. 17 only saves pre-existing schemes of provident fund pertaining to particular establishments.
Hence, the provisions of sub-s. (3) of s.
1, read
alongwith those of s. 17, quoted above,
cannot
be said
to have conferred
uncontrolled and
uncanalised power on
the appropriate Government.
In
this
connection.
the
decision
of
this
Court
in
The
Edward Mills Co.
Ltd.,
Beawar v. The State of Ajmer(1)
may be referred to.
In that case, the provisions of s. 27
of the Minimum
Wages
Ac.t
(11
of 1948)
were
questioned as having
given
uncanalised
power.
The provisions of that Act run more
or less
on
parallel
lines
to
those
of
the
Act
impugned in this case.
The
Schedule
attached to
the Minimum Wages Act gave
a
list of the employments in respect of
which
minimum
wages
were
to
be fixed.
Under
s. 27 of that Act, power had been !(iven to the
"appropriate Government" to add to the Schedule
any employment in respect of which it was of the
opinion that minimum wages should be fixed.
Those
provisions were attacked as lacking in legislative
{I) [1953] I S.C.R. 735.
)
•.
1 S.C.R.
SUPREME COURT REPORTS 1003
p9licy according to which a particular employment
shall be chosen for being included in the schedule.
The contention in that case that no principles had
been prescribed and no standards laid down which
could furnish an intelligent guide to the executive
authority in making the selection of employments
was repelled by this Court. A similiar question was
raised in this Court in the case of Vasan tlal Jlfaganbhai Sanjanwala
v.
'l'he State
of Bombay (1)
challenging the vires of s. 6 (2) of the Bombay
Tenancy and Agricultural Lands Act (Born. 67 of
1948), which read as follows :
"The Provincial Government may, by notification in the Official Gazette, fix a lower rate of
the maximum rent payable by the tenants of
lands situate in any particular area or may fi:i:
such rate on any other suitable basis as it thinks
fit."
This Court, on a consideration of the preamble of
the statute and its relevant provisions came to the
conclusion that the power delegated to the Provincial
Government by s. 6 (2) was not vitiated by excessive
delegation. It will be noticed that the terms of the
section quoted above had given much wider powers
to the executive. But the Court pointed out that the
legislature enuneiated its policy and laid down the
principle for the guidance of the delegate in clear
terms, and that, therefore, the impugned provisions
of the Act in that case did not suffer from the vice
of excessive delegation.
But strong reliance was placed on behalf of the
petitioners on the decision of this Court in Hamdard
Dawakhana (Wakf) Lal Kuan, Delhi v.
Union of
India (').
In that case the provisions of cl. ( d) of
s. (3) of the Drugs and Magic Remedies (Objectionable Advertisements) Act, 195,1 (21 of l!J54) were
(I) [l961J I s.c.R. 341.
(2) (1960] 2 S.C.R. 671.
1962
Mo/mudolli
v.
Union of fndia
Sinha, C. J.
1962
Mohm1da1Ji
v.
Uni .. of/ndi4
Sin1'o, C. J.
1004 SUPREME COURT REPORTS [1963] SUPP.
J
struck down as having conferred uncanalised and uncontrolled power on the executive. In that case, the
whole Act had been challenged as having infringed
the fundamental rights of a citizen under Art. 19 ( 1 \
(a) & (g). This Court upheld the constitutionality
of the Act as a whole, in view of the scope and
object of the Act, which was not to interfere with
the right of freedom of speech but had reference to
trade and business.
This Court held that the provisions attacked on those grounds were reasonable
resirictions on the rights of a citizen to carry on any
trade or business. But this Court held further that
the words "or any other disease or condition which
may be specified in the rules made under this Act"
in cl. (d) of s. 3, which empowered the Central Government to add to the list of diseases falling within the
mischief of s. 3 suffered from the vice of excessive
delegation. This Court struck down that ,portion of
the sub-section as, in its opinion, the words impugned
were vague and Parliament had not established any
criteria nor laid down any standards nor prescribed
any principle on which a particular disease or condition was to be specified in the Schedule. It is clear
that the last mentioned case illustrates the rule that
the question whether or not a particular piece of
legislation suffers from the vice of excessive delegation must be determined with reference to the facts
and circumstances in the back-ground of which
the
provisions
of
the statute
impugned
had
been
enacted.
If, on a review
of all
the
facts
and circumstances and
of the relevant
provisions of the statute, the
Court is in a
position to say that the legislature had clearly
indicated the underlying principle of the legislation
and laid down criteria and proper standards but had
left the application of those principles and standards
to individual cases in the hands of the executive, it
cannot be said that there was excessive delegation
of powers by the legislature. On the other hand,
if a review of all those facts and circumstances and
)
(
I S.C.R.
SUPREME COURT REPORTS 1005
the provisions of the statute, including the preamble,
leaves the Court guessing as to the principles and
standards, then the delegate has been entrusted not
with the mere function of applying the law to individual cases, but with a substantial portion of legislative
power itself. Applying those principles which are
now well ·established by quite a number of decisions
of this Court, can it be said in the instant case that
the legislature had not indicated clearly the principles
underlying the legislation and the standards to be
applied ? In our opinion, the answer must be an
emphatic "No".
It was next contended that the Act was intended by Parliament to apply to employees who were
mere wage-earners and not to salaried servants, and
that in the instant case, the employees of the petitioners were not mere wage-earners. It is a little
difficult to appreciate the distinction sought to be
made. Both 'Salary' and 'Wages' are emoluments
paid to an employee by way of recompense for his
labour. Neither of the two terms is a 'term of art'.
The Act has not defined wages; it has only defined
"basic wages" as all emoluments which are earned
by an employee while on duty or on leave with
wages in accordance with the terms of the contract of
employment and which are paid or payable in cash to
him, but does not include ...... "(s. 2(b)). (Exclusions
are not relevant for our present purposes and, therefore, need not be read.) 'Salary', on the other hand,
is remuneration paid to an employee whose period of
engagement is more or less permanent in character,
for other than manual or relatively unskilled labour.
The distinction between skilled and unskilled labour
itself is not very definite and it cannot be argued, nor
has it been argued, that the remuneration for skilled
labour is not 'wages'. The Act itself has not made
any distinction between 'wages' and 'salary'. Both
may be paid weekly, fortnightiy or monthly, though
remuneration for the day's work is not ordinarily
1962
Mohmtdalli
v.
Uniun of India
Sinha, C. J.
1962
Mohmtdalli
v.
Union of Intlia
Sinha, C. J.
1006 SUPREME COURT REPORTS [1963] SUPP.
_,
termed 'salary'. Simply
because wages for the
month run into hundreds, as they very often du now,
would not mean that the employee is not earning
wages, properly so called.
A clerk in an office may
earn much less than the monthly wages of a skilled
labourer. Ordinarily he is said to earn his salary .
.But, in principle there is no difference between the
two.
It is. therefore, not established that the Act
was not intended to apply to salaried employees, if
by salary is meant fortnightly or monthly wages
running into hundreds per month. It is manifest
that there is no force in this contention.
It now remains to consider the third and the
last contention raised on behalf of the petitioners,
namely, that the Act suffers from the vice of discrimination and, therefore, infringes Art. 14 of the
Constitution. It is even more difficult to understand
this contention, because, as already pointed out, the
Act applies to all establishments, except those recited
in s. 16, which before its amendment by Act
46 of 1960, exempted establishments belonging to
Government or to a local authority.
.But whatever
vice there may have been in that provision has been
removed by amending the section, which stands after
y
the amendment as under:
"16 ( 1) 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
J
employing less than fifty persons and working
without the aid of power; or
(b) to any other establishment employing fifty
or more persons or twenty or more but less
than fifty persons until the expiry of three
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1 S.C.R.
SUPREME COURT REPORTS 1007
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"
Explanation.-For the removal of doubt it is
hereby declared that an establishment shall not
be deemed to be newly set up merely by reason
of a change in its location."
Clause (a) of s. 16, as it now stands, has exempted
establishments registered under
the Co-operative
Societies Act, because it is well ·known that it is the
settled policy of the Government to foster co-operative
societies with a view to their development and growth
in the interest of the community. It is not necessary
to cite instances where this Court has held that cooperative societies stand on a special footing which
distinguishes them from other establishments or corporations. Clause (b) has reference to establishments
which have been in existence for less than 3 years or
5 years, as the case may be. That is an understandable classification with a view to save newly started
establishments from the additional burden of making
contribution to provident fund in respect of its employees. It is clear that the exemption is a short· lived
one because with the efflux of 3 or 5 years' period,
they will automatically come under the scheme framed under the Act. The operation of s. 17 has
already been discussed,
and it has already been
indicated that an establishment coming under the
exemptions granted or to be granted under s. 17 does
not mean _that the establishment bears less burden of its share of contribution to the fund. It has
not been contended before us that ·the petitioners'
establishment does not come within the general rule
laid down in s. 1 (3) of the Act or within the scope
of the scheme framed under s. 5. It is equally clear
that all hotels and restaurants come within the scope
of the . notification impugned in this case.
Hence,
there 1s absolutely no reason for complaint that the
1962
MCJhmulalli
••
Union of India
Sinha, C. J.
1962
Mohm~dal/i ·
v.
Union qf India
Sinha, 0, J.
1008 SUPREME COURT REPORTS [1963] SUPP.
,.1
petitioners' establishment of that class has been chosen
for hostile discrimination.
As all the contentions raised on behalf of the
petitioners fail, the petition is dismissed with costs.
Petition dismissed.
•
y
)
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