JUDGMENT
Dr. [ENTITY]. J.
1. 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 M/s. Crescent Exhibitors, have challenged the validity of [SECTION] of the [ACT] ("[ACT]") and notification dated 30th April, 1986 issued by the Government of India, Ministry of Labour. By [SECTION] of the above Act, which came into force with effect from 1st October, 1984, the provisions of the [ACT] ("[ACT]") were made applicable to employees of Cinema Theatres in which 5 or more persons are employed. The validity of this section has been challenged as arbitrary and discriminatory and violate of [SECTION] of the [ACT]. This challenge is based on the ground that though the [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 Fund Scheme was amended in conformity with [SECTION] of the [ACT], is on the ground that it has been given retrospective effect from 1st October, 1984, the date on which [SECTION] 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 [ACT]. 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 artists and technicians engaged in the production of feature films with regard to their terms and conditions of employment, payment of wages and provisions of other facilities, and the employee 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 [ACT] and the [ACT] applicable to employees of cinema theatres in which five or more persons were employed. This was done by enacting [SECTION] and [SECTION] 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] of the Act with effect from 1st October, 1984. We are concerned in this writ petition with [SECTION] of the said Act which provides.
"24. Application of Act 19 of 1952. - The provisions of the [ACT], 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 [SECTION] thereof, and as if each such worker were an employee within the meaning of that Act".
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] of the [ACT], the [ACT] was applicable only to cinema theatre employing twenty or more persons. Though with the coming into force of the above section, the provisions of the [ACT] become applicable to cinema theatres employing 5 or more workers with effect from 1st October, 1984, the notification of the Government of India amending the [ACT], ("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 GSR 347. - In exercise of the powers conferred by [SECTION] of the [ACT], the Central Government hereby makes the following scheme further to amend the [ACT] namely :
1. This Scheme may be called the [ACT].
2. In the Employees' Provident Fund Scheme in paragraph 1, in sub-paragraph (3), in clause (b) after item (xcvii) the following item shall be added, namely :
"(xcvii) as respect the cinema theatre employing five or more workers as specified in [SECTION] of the [ACT] be deemed to have come into force with effect from the first day of October, 1984'.
([CASE NUMBER] Sd/- [ENTITY] Under Secretary April 30, 1986".
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]. The petitioner have challenged the validity of both [SECTION] of [ACT] and the notification set out above.
3. So far as the controversy in regard to the validity of the notification is concerned. Mr. [ENTITY], 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 II CLR 1[SECTION]. 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] of the [ACT] and [SECTION] of [ACT] and held (at p. 127) :
"A bare reading of [SECTION] of the [ACT] shows that it has fulfilled the purpose of the notification which the Central Government could have issued under [SECTION] of the [ACT] read with the proviso. Therefore, no further notification as contemplated by [SECTION] of the [ACT] was necessary. [SECTION] has taken the place of the notification contemplated by [SECTION] of the [ACT] read with the proviso thereto. Therefore, the [ACT] become applicable to the theatres who employ five or more workers with effect from October 1, 1984. Again in view of [SECTION] of the [ACT], notified earlier, the employers become liable to pay their contribution to the fund as soon as the Act came into force i.e., w.e.f. October 1, 1984".
The Supreme Court also upheld the amendment of the Provident Funds Scheme with retrospective effect in view of the provisions of [SECTION] and [SECTION] of the [ACT]. It was held (at p. 127) :
"It is also clear from reading of [SECTION] of the [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 become applicable to cinema theatres employing five or more workers only when the impugned notification was issued under [SECTION] of the [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] of the [ACT], but also in view of [SECTION] of the [ACT]. Both these provisions confer express powers of making the Scheme applicable retrospectively".
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 the 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".
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. ".
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".
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.
It is thus clear that through the cinema theatre 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] of the [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.
4. We are now left with the challenge to the validity of [SECTION] of the [ACT] which has made the [ACT] applicable to Cinema Theatre employing five or more workers. We asked Mr. [ENTITY], 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] of the [ACT] because that was not the subject matter of challenge in the case before it. In support of this connection, 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 [ACT] has also not been challenged.
11. Further no challenge has been made to any of the provisions of the [ACT]".
The above observations, according to Mr. [ENTITY], clearly go to show that the Supreme Court did not go into the question of validity of the classification of cinema theatres as a separate class for the purposes of coverage under the [ACT].
5. We have perused the judgment of the Supreme Court. In our view, the observations 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 [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 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 [ACT] has also not been challenged".
It is clear from a reading of the above paragraphs that the Supreme Court was of the clear opinion that the [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 [ACT] has also not been challenged" was made as a causal observation to justify the applicability of the [ACT] to cinema theatres employing five or more workers and for no other purpose.
6. However, as desired by Mr. [ENTITY], we heard him on the question of constitutional validity of [SECTION] of the [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 [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 [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 [SECTION] of the [ACT].
7. 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 [SECTION] forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order to pass the test of permissible classification, two test 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 he object sought to be achieved by the impugned statute. As observed by the Supreme Court in Kerala Education Bill in re, [PRECEDENT], 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 discrimination are based on adequate grounds. On questions of economic regulations and related matter, there are good reasons for judicial self-restraint. In fact in such matters, as observed by the Supreme Court in [PRECEDENT] , the Court must defer to the legislative judgment.
8. We may examine the validity of [SECTION] of the [ACT] in the light of the above principles. The object of the [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] of the Act, the provisions of the [ACT] were made applicable to every cinema theatre in which five or more workers are employed. Similarly, by [SECTION], the provisions of the [ACT] were also made applicable to such cinema theatres. Obviously, the object of [SECTION] of the [ACT] was to extend the benefit of the [ACT], which is a beneficial legislation for the benefit of the weaker section 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 [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 [SECTION] of the [ACT].
9. We are supported in our above conclusion by a decision of the Kerala High Court in [PRECEDENT].
10. Accordingly, the challenge to the validity of [SECTION] of the [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.
11. This writ petition is disposed of accordingly. In the facts and circumstances of the case, there shall be no order as to costs.