Cinematograph Exhibitors' Association Of India And Another v. Union Of India And Others

Dr. B.P Saraf, J.:— By this writ petition, the petitioners, the Cinematograph Exhibitors' Association of India, a representative body of exhibitors and owners of Cinema theatres and one of its members Creseant Exhibitors have challenged the validity of section 24 of the Cine Workers & Cinema Theatre Workers (Regulation of Employment) Act, 1981 (“Cine Theatre Workers Act”) and Notification dated 30th April, 1986 issued by the Government of India, Ministry of Labour. By section 24 of the above act, which came into force with effect from 1st October, 1984, the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (“Provident Funds Act”) were made applicable to employees of cinema theatres in which five or more persons are employed. The validity of this section has been challenged as arbitrary and discriminatory and violative of Article 14 of the Constitution of India. This challenge is based on the ground that though the Provident Funds Act applies to industrial establishments employing twenty or more persons, it has been made applicable to cinema theatres employing five or more persons. According to the petitioners, there is no rational basis or justification for such discrimination between industrial establishments and cinema theatres. The challenge to Notification dated 30th April, 1986, by which the Employees' Provident Funds Scheme was amended in conformity with section 24 of the Cine Theatre Workers Act, is on the ground that it has been given retrospective effect from 1st October, 1984, the date on which section 24 of the Act came into force.

2. To appreciate the merits of the challenge, it would be expedient to briefly refer to the scheme of the Cine Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981. This Act was enacted by the Parliament to provide for the regulation of the conditions of employment of certain cine workers and cinema theatre workers and matters connected therewith because it was felt that the existing laws did not provide necessary safeguards to low paid artistes and technicians engaged in the production of feature films with regard to their terms and conditions of employment, payment of wages and provision of other facilities and the employees of cinema theatres were generally not provided with facilities, such as gratuity and provident fund. It was, therefore, decided, inter alia, to make the provisions of the Provident Funds Act and the Payment of Gratuity Act, 1952 applicable to employees of cinema theatres in which five or more persons were employed. This was done by enacting sections 24 and 25 of the Act. Though the above Act received the assent of the President on 24th December, 1981, it was brought into force by Notification issued under section 1(3) of the Act with effect from 1st October, 1984. We are concerned in this writ petition with section 24 of the said Act which provides:

“24. Application of Act 19 of 1952. — The provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, as in force for the 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 aforesaid Act had been applied by a Notification of the Central Government under the proviso to sub-section (3) of section 1 thereof, and as if each such worker were an employee within the meaning of that Act.”

(Emphasis supplied)

3. Prior to the coming into force of the above section, by virtue of Notification of the Government of India issued on 31st July, 1961 under section 1(3) of the Provident Funds Act, the Provident Funds Act was applicable only to cinema theatres employing twenty or more persons. Though with the coming into force of the above section, the provisions of the Provident Funds Act became applicable to cinema theatres employing five or more workers with effect from 1st October, 1984, the Notification of the Government of India amending the Employees' Provident Funds Scheme, 1952 (Provident Funds Scheme) in conformity with the above amendment was issued only on 30th April, 1986. The said Notification, so far as relevant, reads:

“Notification

G.S.R 347. — In exercise of the powers conferred by section 5 read with sub-section (i) of section 7 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the Central Government hereby makes the following Scheme further to amend the Employees' Provident Funds Scheme, 1952 namely:

1. This Scheme may be called the Employees' Provident Funds (Amendment) Scheme, 1986.

2. In the Employees' Provident Funds Scheme in paragraph 1, in sub-paragraph (3), in clause (b) after item (xcvii) the following item shall be added, namely:

‘(xcviii) as respect the cinema theatre employing five or more workers as specified in section 24 of the Cine Workers and Cinema Theatre Workers (Regulation of Employment) Act, 1981 (50 of 1981), be deemed to have come into force with effect from the first day of October, 1984.’

(No. S. 35016/1/86-ESII).

A.K Bhattari

Under Secretary.

April 30, 1986.”

4. Obviously, the above amendment of the Provident Funds Scheme was given retrospective effect from 1st October, 1984, the date of coming into force of section 24. The petitioners have challenged the validity of both section 24 of Cine Theatre Workers Act and the Notification set out above.

5. So far as the controversy in regard to the validity of the Notification is concerned, Mr. C.U Singh, learned counsel for the petitioners, fairly stated before us that it is no more res integra in view of the decision of the Supreme Court in District Exhibitors Association v. Union of India, (1991) 3 SCC 119. We have carefully perused the above decision. There also, the Supreme Court was called upon to decide the very same controversy. The Supreme Court considered section 24 of the Cine Theatre Workers Act and section 6 of Provident Funds Act and held (at p. 127):

“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 Notification 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 October 1, 1984. Again in view of section 6 of the Provident Funds Act, notified earlier, the employers became liable to pay their contribution to the fund as soon as the Act came into force i.e w.e.f October 1, 1984.”

(Emphasis supplied)

6. The Supreme Court also upheld the amendment of the Provident Funds Scheme with retrospective effect in view of the provisions of sections 5(2) and 7(1) of the Provident Funds Act. It was held (at p. 127)

“It is also clear from reading of section 5 of the Provident Funds Act that before the Provident Funds Scheme can become applicable, the Central Government has to frame a Scheme and also specify the establishment to which the said Scheme shall apply. Till the impugned Notification dated April 30, 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 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 October 1, 1984. This could be done in view of not only the provisions 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.”

(Emphasis supplied)

7. The Supreme Court also examined the question whether by making the Provident Funds Scheme applicable with retrospective effect, the employer could also be saddled with the liability to pay the employees' contribution with retrospective effect. For this purpose, the Court took into consideration paras 30 and 32 of the Provident Funds Scheme and observed:

“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 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 respect of which the contribution is payable and no deduction could be made from any other wages payable to the employees. In other words, the payment of employees' contribution by employer with the corresponding right to deduct the same from the wages of the employees could be only from the current period during which the employer has also to pay his contribution.”

8. It was further observed:

“In the instant case, for the period from October 1, 1984 upto the date of impugned Notification 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, could he be asked to pay the employees' contribution for the period antecedent to the impugned Notification. We think not.”

9. Accordingly, it was held:

“He (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.”

10. In view of the above, the Supreme Court declared that the appellants (employers) were not liable to pay the employees' contribution for the period from 1st October, 1984 to 30th April, 1986.

11. It is thus clear that though the cinema theatres employing five or more persons would be liable to pay their own contribution to the provident fund with effect from 1st October, 1984, the date section 24 of the Cine Workers Act came into force, they would not be liable to pay the employees' contribution for the period from 1st October, 1984 to 30th April, 1986. The liability to pay such contribution would arise only from 1st May, 1986.

12. We are now left with the challenge to the validity of section 24 of the Cine Theatre Workers Act which has made the Provident Funds Act applicable to cinema theatres employing five or more workers. We asked Mr. Singh, learned counsel for the petitioners, whether he was seriously pressing this challenge in view of the above decision of the Supreme Court. His answer was in the affirmative because, according to him, the Supreme Court did not examine the constitutional validity of section 24 of the Cine Theatre Workers Act because that was not the subject matter of challenge in the case before it. In support of this contention, our attention was drawn to the following observations in paras 10 and 11 of the judgment:

“10. … The classification of cinema theatre as a separate class for the purpose of coverage under the Provident Funds Act has also not been challenged.

11. Further no challenge has been made to any of the provisions of the Cinema Theatre Workers Act.”

13. The above observations, according to Mr. Singh, clearly go to show that the Supreme Court did not go into the question of the validity of the classification of cinema theatres as a separate class for the purposes of coverage under the Provident Funds Act.

14. We have perused the judgment of the Supreme Court. In our view, the observation of the Supreme Court in para 10 of the judgment referred to above cannot be read out of context. To appreciate the true import of this observation, it is necessary to know the context in which it appears. In para 9 of the judgment, the Supreme Court mentioned that the vires of any of the provisions of the Provident Funds Act or the Scheme had not been challenged before them. The Supreme Court thereafter referred to the preamble of the said Act and said that it was intended for the benefit of the employees. The Supreme Court also referred to the statement of objects and reasons in support of its above conclusion. In para 10, it summed up its opinion thus:

“10. It is a legislation for the benefit of weaker 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 theatres as a separate class for purposes of coverage under the Provident Funds Act has also not been challenged.”

15. It is clear from a reading of the above paragraphs that the Supreme Court was of the clear opinion that the Provident Funds Act was a legislation for the benefit of the weaker sections of the society and the said beneficial legislation had also been made applicable to cinema theatre if it employs five or more workers. In this context, it is clear that the observation that “the classification of cinema theatres as a separate class for purposes of coverage under the Provident Funds Act has also not been challenged” was made as a casual observation to justify the applicability of the Provident Funds Act to cinema theatres employing five or more workers and for no other purpose.

16. However, as desired by Mr. Singh, we heard him on the question of constitutional validity of section 24 of the Cine Theatre Workers Act. According to him this section creates a hostile discrimination between owners of cinema theatres and other establishments which fall under the coverage of the Provident Funds Act only if they employ twenty or more workers. This classification of cinema theatres employing five or more workers for the purpose of coverage under the Provident Funds Act, according to the counsel for the petitioners, is arbitrary and discriminatory. There is no basis or justification for treating the cinema theatres differently than other establishments. Such discrimination, counsel submits, amounts to hostile discrimination which is violative of Article 14 of the Constitution.

17. We have given our careful consideration to the above submissions of the counsel for the petitioners. We, however, do not find any merit in the same. It is now well-settled that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order to pass the test of permissible classification, two tests must be satisfied. First, that the classification on which it is founded is based on an intelligible differentia which distinguishes persons or things grouped together from others left out of the group. Second, that the differentia in question must have a reasonable relation to the object sought to be achieved by the statute. In other words, there must be a reasonable nexus between the basis of the classification and the object of the Act. It is also well-settled that there is a presumption in favour of constitutionality of enactment. The burden is upon him who attacks it to show that the impugned statute is based on discrimination and that such discrimination is not referable to any classification which is rational and which has nexus with the object sought to be achieved by the impugned statute. As observed by the Supreme Court in Kerala Education Bill In re, AIR 1958 SC 956, the Courts must presume that the Legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. On questions of economic regulations and related matters, there are good reasons for judicial self-restraint. In fact in such matters, as observed by the Supreme Court in Hoechst Pharmaceuticals Ltd. v. State of Bihar, (1983) 4 SCC 45 : AIR 1983 SC 1019, the Court must defer to the legislative judgment.

18. We may examine the validity of section 24 of the Cine Theatre Workers Act in the light of the above principles. The object of the Cine Theatre Workers Act is to regulate the conditions of employment of certain cine workers and cinema theatre workers. This enactment was necessitated because the existing laws were not found to be adequate to provide the necessary safeguards to such workers. It was noticed that the employees of cinema theatres were generally not provided with facilities, such as gratuity and provident fund. It was felt desirable to make provision for gratuity and provident fund for such employees. With that object in view, by section 24 of the Act, the provisions of the Provident Funds Act were made applicable to every cinema theatre in which five or more workers are employed. Similarly, by section 25, the provisions of the Payment of Gratuity Act, 1972 were also made applicable to such cinema theatres. Obviously, the object of section 24 of the Cine Theatre Workers Act was to extend the benefit of the Provident Funds Act, which is a beneficial legislation for the benefit of the weaker sections of the society, to employees of cinema theatres who employ five or more workers. This classification of cinema theatres as a class for the purpose of coverage under the Provident Funds Act has a clear nexus with the object sought to be achieved i.e amelioration of the conditions of employment of the workers employed in such cinema theatres. The classification is reasonable. It is based on an intelligible differentia having a nexus with the object sought to be achieved. Such a classification cannot be held to be discriminatory or violative of Article 14 of the Constitution.

19. We are supported in our above conclusion by a decision of the Kerala High Court in M. Viswanath Pai v. R.P.F Commissioner, 71 FJR 505.

20. Accordingly, the challenge to the validity of section 24 of the Cine Theatre Workers Act fails. So also challenge to Notification dated 30th April, 1986 fails, save and except that the cinema theatres shall not be required to pay the employees' contribution for the period from 1st October, 1984 to 30th April, 1986.

21. This writ petition is disposed of accordingly. In the facts and circumstances of the case, there shall be no order as to costs.

Order accordingly.