Court Rules Retrospective Bonus Payments Constitutional, Citing Public Welfare and Extensive Deliberations
In a significant ruling, the Delhi High Court, comprising Justices C. Hari Shankar and Om Prakash Shukla, has upheld the constitutional validity of the retrospective application of the Payment of Bonus (Amendment) Act, 2015. The amendment, effective from April 1, 2014, was challenged by Aviva Life Insurance Company India Ltd and the Indian Sugar Mills Association, who argued against its retrospective impact on bonus liabilities for the fiscal year 2014-2015.
The bench dismissed the petitions, affirming the amendment's alignment with constitutional provisions, particularly Articles 14, 19(1)(g), 20(1), and 300-A. The court emphasized that the retrospective application serves a public welfare purpose, benefiting the working class. "The measure that the impugned Amendment Act puts in place is clearly beneficial to the working class and, therefore, serves an eminent public purpose," stated the judgment.
The petitioners contended that the retrospective application imposed an undue fiscal burden, requiring reworking of accounts for already closed financial periods. They argued that this infringed upon their property rights under Article 300-A, as it altered their financial surplus post statutory liabilities. However, the court rejected these claims, clarifying that the right to property is not inviolable and can be divested by lawful authority, especially when serving public interest.
The court highlighted the extensive deliberations preceding the enactment, including tripartite meetings with stakeholders and considerations of increased living costs. It acknowledged that while fiscal levies can impose hardships, such challenges do not render them unconstitutional. "Retrospective imposition of a fiscal liability, by legislation, is perfectly permissible," the judgment noted, referencing prior Supreme Court rulings.
Addressing concerns about potential criminal liability under Section 28 of the Payment of Bonus Act for non-compliance, the court assured that no criminal liability would apply given the provision for extending compliance time under Section 19(b). The government agreed to an extension, allowing petitioners eight months from the judgment date to discharge the additional bonus liabilities.
The decision underscores judicial support for legislative measures aimed at equitable distribution of industrial profits, reinforcing the socialist framework of the constitutional democracy. The court's ruling provides clarity on the legislative power to impose retrospective fiscal measures, reinforcing legal precedent on the subject.
Bottom line:-
Constitutional validity of retrospective application of the Payment of Bonus (Amendment) Act, 2015 upheld. The retrospective application for one year deemed neither confiscatory nor expropriatory and serves a public welfare purpose.
Statutory provision(s): Payment of Bonus Act, 1965 Sections 1(2), 2(13), 12; Constitution of India Articles 14, 19(1)(g), 20(1), 300-A
Aviva Life Insurance Company India Ltd. v. Union of India, (Delhi)(DB) : Law Finder Doc id # 2912999
