THE STATE OF GUJARAT AND ANOTHER versus SHRI AMBICA MILLS LTD., AHMEDABAD, ETC.

Citation: [1974] 3 S.C.R. 760 · Decided: 26-03-1974 · Supreme Court of India · Bench: A.N. RAY · Disposal: Appeal(s) allowed

Cited by 21 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

160 
THE STATE OF GUJARAT AND ANOTHER 
A 
v. 
SHRI AMBICA MILLS LTD., AHMEDABAD, ETC. 
March 26, 1974 
[A. N. RAY, C.J., H. R. KHANNA.t K. K. MAmEW, Y. V. 
B 
CHANDRACHUD AND A. ALAGIRISWAMI, JJ.] 
Consritution of India, 1950, Art. 13-Legislation void in relalion to citi· 
~c11s as violating Art. 19-Jf corporation, a non-citizen, can contend that Jaw 
u 11011-e:St. 
Bombay Labour Welfare Fund .Act, 1953, liS amended by Guiarat Amend-
C 
mmt Act, 1961 s. 2(4)-'Establishmellt' d!!jirlition of-if violates Art, 14. 
After the State of Bombay was bifurcated the legislature of the State of 
Gujarat enact~d the Bombay Labour Welfare Fund (Gujarat Extension and 
Am~ndment) Act, 1961, mak:ing various amendments in the Bombay Labour 
Welfare Fund Act, 1953. 
The 1953-Act was passed with a view t\) provide 
for the constitution of a· fund for financing activities for promoting the wel· 
fare of labour in the State of Bombay. Section 3 as amended, provides that 
the State Government shall constitute a fund called the Labour Welfare Fund 
D 
and that the. f;md shall consist of. among other things, all unpaid accumula-
tions. Sec. 2 (1 0} defines unpaid accumulations as meaning all payments due 
to the employees but not made to them within a period of three years from 
the date on which they became due whether before or after the commence-
m~nt of the Act including wages and gratuity legally payable. Sec. 6A(l) 
provides that \1Dpaid accumulations shall be deemed to· be abandoned property 
anti that the Board, constituted under the Act, shall take them over. As soon 
:1s the Board takes over the unpaid accumulations, notice as provided in the 
E 
section, will haw to be published and claims invited. Sub-section 3 to 6 pro-
vide for notice and sub-ss. 7 to 11 lay down the machinery for adjudication of 
t:l:lims which might be received in response to the notice. It is only if no 
clnim is made for a veriod of four years from the date of the publication of 
the first no tic~. or if a claim is made but rejected wholly or in part, that the 
St:He approp1 i:aes the unpaid accumulation, as borra mea/Ilia. 
Section :!(4) of the Act defines 'establishment' and the definition includes 
F 
f:1ctories, tramway or motor omnibus services and any establishment carrying 
on business or 'trade and employing more than SO persons; but excludes 
nil 
government establishments carrying on business or trade. 
De1r.and for 
the 
parment of the unpaid accumulations having been made the respondents filet! 
p~titions in th~ High Court challenging various provisions of the Act and the 
High Court held that s. 3(1). in so tar as it relates to unpaid accumulations 
specified in s. 3 (:!) (b), 3 ( 4) and 6A of the Act, and rules 3 and 4 of the 
ral~s made ther~under nre unconstitutional and void on the grounds : (i) that 
the impugned provisions violated the fundamental rights of citizen-employers 
G 
nnd employees under Art. 19(1)(0 and therefore were voi~ under Art. 13(~} 
:-tnd hence ti1er~ \\':IS no law and the demands were thus wtthout the :mthonty 
of bw; and l~) that discrimination was writ large in the definition of 'estab-
l i,;hment'. 
Allowing the nppeal to this Court, 
HELD : ( 1 )(a) Unpaid accumulations represent the 
obligations or the 
employers to the employees and they are the property of the employe~s. In 
H 
o:hc-r words, what is being treated as abandoned property. 
u~der fiA ts 
the 
C't,ligation to the employees owed by the employers and Y!htch IS property from 
the standpoint of the emplo)·ees. 
[771A-BJ 
A 
B 
c 
D 
E 
F 
G 
H 
GUJARAT v. AMBICA MlLLS LTD. (Mathew, /.) 
761 
(b) At common law, abandoned personal property could not be tho subject 
of escheat. It could only be appropriated as bona vacantia. 
Under the Act, 
though unpnid accumulations are deemed to be abandoned. property under 
s. 6A(l) they are appropriated as bona vacantia only after claims are invited 
and disposed of, l770G.711A] 
(c) lf unpaid accumulations are not claimed within a total 
period of 7 
years the inactivity on the part of the employees would furnish adequate basis. 
for the administration by the State of the unasserted claims or demands. It 
cannot be said that the period of 7 years allowed to the employees for 
the 
purpose cf claiming unpaid accumulations is an unreasonably short one which 
will result in the infringement of any constitutional rights of the employees. 
[771EJ 
(d) There is no reason to think that the State will be, in fact less able

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