K.A. Nayar, J.@mdashIt is agreed that the question arises for consideration in all these Writ Petitions are the same and that relates to the constitutional validity of Section 4 of the Kerala Fishermen''s Welfare Fund Act, 1985 (for short ''the Act''). If Section 4 of the Act is declared unconstitutional, the other provisions of the Act, being integrally connected with Section 4, will not survive. Therefore, the sole question is whether the challenge against Section 4 of the Act can be upheld. Even though there are minor variations in facts in these petitions, it is agreed that for the purpose of disposal of these cases, the facts in O.P. 7787/88 alone need be referred to. That means, the disposal of O.P. 7787/88 will have the effect of disposal of all the cases in this batch of cases.
2. The Petitioner is engaged in fishing operations using mechanised boats of different tonnage. Petitioner is owner of mechanised fishing boats and in that capacity they are owner of nets of the boats as well. He is also a dealer in fish. Hence, it is submitted that even though Petitioner is a boat owner, he has to pay contribution in different capacities as an owner of fishing boats, owner of fishing nets, as a dealer in fish and as a fisherman catching fish etc. The fund so collected from the Petitioner at varying rates will not be used for the benefit of the Petitioner or for the benefit of the employees of the Petitioner. Hence, the short question posed in all these petitions is Section 4 of the Act cannot be justified under any of the provisions of the Constitution, for if it is to be justified as a tax, then there should be a specific taxing entry giving power to levy and collect tax. Without a specific power for taxation, the State cannot impose any tax on the Petitioner. If it is to be justified as a fee, then it has to come under legislative entry relating to fee. But, then, there must be quid pro-quo for collection of fee and, there being no quid pro-quo, it is submitted that the collection cannot be justified as a fee also. If the Government do not purport to justify the Act as a fee Section 4 of the Act will have to be struck down. On the other hand, if it is to be considered as a social welfare measure introduced for the welfare of the employees, then as the employees of the Petitioners are not benefited at all, the Act cannot be justified under any of the entries in the Concurrent List also. Hence, the Act cannot be justified under any of the entries in List II or List III of the VII Schedule of the Constitution and, therefore, the Act has to be struck down as unconstitutional is the contention of the Petitioners.
3. Before examining the contentions in details, I will refer to the scheme of the Act itself. The Kerala Fishermen Welfare Fund Act, 1985 was enacted for promoting the Welfare of Fishermen in the State of Kerala. Section 3 of the Act provides that the Government may, by notification in the official gazette, frame a scheme to be called as Kerala Fishermen Welfare Fund Scheme for the welfare of fishermen and the fund shall be established after framing of the scheme in accordance with the provisions of the Act. Section 3 provides that the fund shall be credited with the contribution prescribed in Section 4, fee levied under the scheme, damages realised u/s 21, grants or loans or advances made by the Government of India or the State Government, voluntary donations, penalty levied under the provisions of the Kerala Marine Fishing Regulation Act, 1980, and any amount raised by the Board from other sources to augment the resources of the Board. Sub-section (3) of Section 3 says that the fund shall vest in and be administered by the Board. Sub-section (4) of Section 3 is most important and it enumerates the purposes for which the fund may be utilised. The fund is to be utilised for providing distress relief to fishermen in times of natural calamities, for payment of financial assistances to fishermen who suffer permanent or temporary disablement; for payment of loan/grant to fishermen to meet the expenses for the marriage of children or expenses in connection with disease or death of dependants or any unexpected expenditure or the day to day expenditure during loan months; to provide for the fishermen and the members of their families education, vocational training and part-time employment, social education centres including reading rooms and libraries, sports and games and medical facilities, nutritious food for children and employment opportunities to the handicapped; for payment of financial assistance to fishermen who suffer loss of houses or fishing implements or any other damage due to natural calamities or other unexpected causes; to provide old age assistance to fishermen and for the implementation of any other purpose specified in the scheme. Other purposes are also specified in the scheme. Under Sub-section (5) of Section 3, every fisherman who is a member of a Fishermen''s Welfare Society constituted u/s 4 of the Kerala Fishermen Welfare Societies Act shall be a member of the fund. Section 4 of the Kerala Fishermen''s Welfare Societies Act provides for constitution of Fishermen''s Welfare Societies having perpetual succession and common seal and every fisherman who permanently reside in the fisheries village or carries on fishing operations from or within the fisheries village and who has attained 18 years of age shall be deemed to be a member of the society. Pursuant to Section 5(2) of the Kerala Fishermen''s Welfare Societies Act, 1980 rules have been framed and the Kerala Government has notified 225 villages as fisheries villages and formed welfare societies. The entire coastal area of the State has been formed into 225 villages and all the marine fishermen in the area are included in the welfare societies. The fishermen employed in the mechanised boats owned by the Petitioner are also residents of the marine villages listed in 225 villages. The main contribution for the fund is provided for in Section 4 of the Act against which the main attack of the Petitioner is directed to. The fishermen have to contribute 3 per cent of the value of the fish caught by him during a year or three per cent of the wages earned by him in a year. A dealer has to contribute every year to the fund one per cent of his sale proceeds in the year. The owner of a fishing vessel has to contribute every year an amount calculated at varying rates as prescribed in the Act. For traditional crafts like catamaran (non-motorised), catamaran (motorised), country craft upto 9 metre size (non-motorised), country craft upto 9 metre size (motorised) country craft above 9 metre size (non-motorised), country craft of above 9 metre size (motorised), mechanised boats below 15 GRT, mechanised boats of 15 GRT and above but below 25 GRT, mechanised boats of 25 GRT and above upto 35 GRT and mechanised boats above 35 GRT, different rates have been prescribed in the Act. The owner of a fishing net shall contribute to the fund one rupee per net per month for nine months every year. The owner of a prawn filtration area or a fish farm has to contribute every year to the fund two per cent of the value of the prawn and other fish caught from the prawn filtration area or the fish farm during the year. A person who employs a fisherman in a fishing vessel shall be liable to pay under Sub-section (7) the contribution payable by that fishermen after deducting that amount from the wages or other remuneration due to such fisherman.
4. One of the main attack of the Petitioner is, the same person has been directed to pay contribution in different capacities at varying rates. For instance, it is contended, the owner of a boat will have to pay contribution as owner of the boat, as a dealer in fish and then as the owner of the fishing net, etc. But this is only an apprehension of the Petitioner as will be seen from the counter affidavit of the 1st Respondent. The first Respondent in his counter affidavit has stated that the Petitioners are not being levied contribution in a dual capacity as boat owners or as net owners. The contribution from net owners is the contribution from owners of China net, stake net or free net. Therefore, the argument that a person has been made to pay contribution in different capacities and, therefore, the Act offends Article 14 of the Constitution being arbitrary is based on pure imagination and baseless.
5. It is also contended that the Petitioners'' employees cannot be considered as fishermen. But fisherman has been defined in Section 2(e) of the Kerala Fishermen Welfare Societies Act, 1980 to mean any person engaged mainly in fishing operations for his livelihood, and fishing operations include fishing by any means, mechanical or otherwise, sale of marine products by members of families of fishermen, by transporting them to different places by head-load or cycle-load. Similarly, the word ''Dealer'' has been defined to mean any person who carried on within the State of Kerala the business of buying and selling fish or processing fish for export or domestic marketing and includes a commission agent, a broker, or any other merchants le agent by whatever name called; and a non-resident dealer or an agent of a non-resident dealer or a local branch of a firm or company or association situated outside the State of Kerala. The Act covers all fishermen and the fishermen employed by the Petitioners also are covered for the purpose of the benefits of the fund. The benefits conferred on the fishermen under the Act, in due course, will benefit the Petitioners also. The fishermen being the back-bone of the industry, their welfare and progress are always in the larger interest of the industry itself. The benefits conferred under the Act subserve the common good of the fishing industry. It is stated that the Petitioners are benefited by the hard labour of the fishermen and the liability to pay contribution is the principal employer of the fishermen directly or indirectly, will benefit the employer as well. Fishermen employed in the industry is not always identifiable. There can be persons directly employed by the principal employer, viz., the boat owner and persons employed by or through an inter-mediate employer or persons whose services are temporarily lend or let on hire to the principal employer. Hence, it was found safe for the legislature to fix the liability for contribution on the principal employer, viz., the boat owner.
Since the rate has been fixed on the basis of their capacity to earn, the charging section cannot be considered as arbitrary. The norm fixed for contribution has been made taking into consideration the earning capacity of each category. It is found that the per capita production in mechanised and non-mechanised sectors show that the output for fishermen in mechanised sector is 7.19 tons whereas in non-mechanised sector it is only 1.29 tons. It is so averred in the counter affidavit of the first Respondent. Therefore, it is stated that the fixation of a higher rate of contribution on the mechanised boats cannot be considered arbitrary. Further, it is seen that the returns for mechanised boats are higher with reference to the motorised country crafts since costly varieties of fish like prawns, lobsters, etc., are landed by mechanised boats whereas only cheaper varieties of fish are landed by motorised country crafts. According to the Petitioner, the minimum investment, operational expenses and cost of maintenance being higher in the case of mechanised fishing boats, the prescription of higher rate of contribution is unreasonable. But it is stated by the Respondent that the minimum investment of new motorised country crafts will be less than Rs. 35,000 whereas that of a mechanised boat will be about Rs. 2 lakhs. The fuel and other maintenance cost put forward by the Petitioner, it is stated, are not based on any reliable facts or figures and the maintenance cost and the fuel charges are proportionate to the cost of investment. It is stated that it is after considering all the relevant aspects of the matter, the rate has been fixed at varying levels, and therefore, the same cannot be considered arbitrary or violative of Article 14 the Constitution of India. The classification of the boats in different categories is stated to be for the purpose of making them contribute on a reasonable basis. The country crafts are usually operated by sixteen fishermen and the country crafts are mostly in the joint ownership. The mechanised bots are grouped according to the tonnage of the vessel. Unlike in the case of country crafts, the crew of the fishing boats have no ownership in the boat and profit of the fishing is not distributed equally among the fishermen. They are paid only the coolie charges. This fact also has been taken into account in fixing the rate of contribution. The norm thus prescribes for collecting contirbution based on income derived by each category of contributors and their per capita income.
6. It is common knowledge that mechanised boats including trawlers employ vastly superior technology in comparison to the country traditional boats, whether motorised or not. Mechanised boat operations are on the increase in the state as more and more fishermen, who can afford to do so, are leaving the traditional methods of fishing to the financially more viable mechanised boat operations. The investment of a fishing boat is between Rs. 5 to 9 lakhs, as stated in the counter affidavit of the 2nd Respondent. The mechanised boats employ less number of persons in comparison to country crafts and they are operating on diesel and hence they are more economical in the longer run than the traditional motorised country crafts which are run on a mixture of petrol and kerosene. The country boats which costs about Rs. 2.5 lakhs, have very short life of about three years, their rate of depreciation being very high. Mechanised fishing boats employ highly advanced technology and are either trawlers or gill netters. In the case of trawlers, trawling net of large size is dragged along the bottom of the sea or along predetermined levels of depth controlled by the judicious use of floats and sinkers. They sweep the entire area and harvest huge quantities of fish in a single catch. The gill netters, it is stated, employ gill nets where a wall of net is set a float on the sub surface and the fish get entangled in the net. Unlike the country crafts, not only is the range of operation is larger, but most of the fishing is of high price varieties such as prawn, lobsters, squids, scuttle fish etc. It is stated that the mechanised fishing boats operate in a distance of about 20-25 kms. from the shore as against the maximum distance of about 3 kms. in the case of country boats. The fishing time of mechanised boats is also stated to be higher as they have storage facilities unlike the traditional crafts. The country boats have to return to the shore immediately after every catch as otherwise the catch will get deteriorated. The catch of mechanised fishing boats will of four to five times higher than the country crafts as will be seen from the counter affidavit of the 2nd Respondent and the value they get is also substantially higher for they catch rare and exotic varieties. The size of the net also is comparatively bigger in mechanised boats. It is also stated that a mechanised fishing boat can operate during all periods except during the 1 1/2 months ban on trawling during the monsoon.
7. The above facts gathered from the affidavit of the 2nd Respondent also justify the classification of the Petitioners and imposing contribution at varying rates.
8. The Petitioner challenges the legislative competency of the Act with respect to the Constitutional entry. Petitioner contends that the legislation will have to fall under one or other of the entries in the VII Schedule of the Constitution of India. Of list I of the VII Schedule I am not concerned as the Act in question is only a State enactment. Entry No. 21 in List II of the VII Schedule relates to fisheries and the taxing power cannot be exercised under the general entry aforementioned is the connection. It is stated that the power of legislation must be traced to a specific taxing entry if the levy is to be justified as a tax. Reference was made to the decision reported in
9. The next contention is that if it is not a tax, then it has to be justified as a fee. If it is a fee, quid pro quo is required. Counsel referred to the decisions reported in Sreenivasa General Traders v. State of A.P. AIR 1983 S.C. 1245 ,
10. Then it is submitted that even though the Act has not specifically referred the levy a tax, the effect of the impugned Act if considered it will be seen that the levy is masquerading as a tax. It is the impact of the legislation on the fundamental rights of the citizen that is determinative of the real character of the Act. Counsel referred to the decisions reported in
11. Then it is submitted with reference to the counter affidavit filed, that the levy is being justified by the State under entries 23 and 24 of List III of the VII Schedule of the Constitution, viz., social security and social insurance; employment and unemployment; welfare of labour including conditions of work, provident funds, employers liability, workmen''s compensation, invalidity and old age pensions and maternity benefits. It is also submitted that the State may seek support of Article 31-C of the Constitution for the legislation. Counsel referred to the decision reported in
4. Amendment of Article 31-C.- In Article 31-C of the Constitution, for the words, brackets, letters and figures "the principles specified in Clause (b) or Clause (c) of Article 39", the words and figures ''all or any of the principles laid down in Part IV'' shall be substituted.
He referred to the decision reported in
39. Certain principles of policy to be followed by the State.- The State shall, in particular, direct its policy towards securing-
(a) * * *
(b) that the ownership and control of the material resources of the community are so distributed as best to subserve ihe common good;
(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment;
* * *
In this connection counsel also referred to the decisions reported in
13. In Kesavananda Bharati''s case, the Court expressly ruled that Article 31-C as it stood at that time was constitutionally valid. No doubt, the protection of Article 31-C was at that time confined to laws giving effect to the policy of the Clauses (b) and (C) of Article 39. By the Constitution Forty-Second Amendment Act, the protection was extended to all laws giving effect to all or any of the principles laid down in Part IV. The dialectics, the logic and the rationale involved in upholding the validity of Article 31-C when it confined its protection to laws enacted to further Article 39(b) or Article 39(c) should, uncompromisingly lead to the same resolute conclusion that Article 31-C with extended protection is also constitutionally valid. No one suggests that the nature of the Directive Principles enunciated in the other Articles of Part IV of the Constitution is so drastic or different from the Directive Principles in Clauses (b) and (c), of Article 39, that the extension of constitutional immunity to laws made to further these principles would offend the basic structure of the Constitution. In fact, no such argument appears to have been advanced in the
On the basis of the above decision, the Supreme Court took the view that the protection of Article 31-C from the challenge of violation of Articles 14 and 19 of the Constitution can be extended to every enactment giving effect to all or any of the principles laid down in Part IV of the Constitution.
12. The learned Additional Advocate General Sri V.K. Beeran, appearing on behalf of the Respondents submitted that the law laid down by the Supreme Court in
Article 31-C gives protection in respect of a law giving effect to the policy of the State relating to all or any of the principles laid down in Part IV of the Constitution.
Admittedly, Article 31-C as originally stood gave protection only to enactment giving effect to the principles specified in Clauses (b) and (c) of Article 39 of the Constitution. That was amended by Section 4 of the Constitution (Forty-second Amendment) Act by which, "all or any of the principles laid down in Part IV" was substituted in the place of "the principles specified in Clause (b) or Clause (c) of Article 39". Thus, originally only the enactments giving effect to the principles laid down in Clauses (b) and (c) of Article 39 were protected from the challenge of violation of Articles 14 and 19 of the Constitution. Only by Section 4 of the Constitution (Forty-Second Amendment) Act, the protective umbrella is extended to the legislation giving effect to all the Directive Principles. Section 4 of the 42nd amendment Act was struck down by the Supreme Court by the decision in
Section 4 of the Constitution 42nd Amendment Act is beyond the amending power of the Parliament and is void since it damages the basic or essential features of the Constitution and destroys its basic structure by a total exclusion of challenge to any law on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by Article 14 or Article 19 of the Constitution, if the law is for giving effect to the policy of the State towards securing all or any of the principles laid down in part IV of the Constitution
Then it is submitted on behalf of the Petitioner that the observations made in
Judicial propriety, dignity and decorum demand that being the highest judicial tribunal in the country even obiter dictum of the Supreme Court should be accepted as binding declaration of law by that Court even if it be only by the way has to be respected.
Apart from the fact that the obitor dicta of the Supreme Court is binding on this Court, he also stated that the Full Bench decision of this Court is certainly binding on this Court, and that whatever the Single Judge or the Division Bench of this Court or any other High Court has held, this Court is bound by the decision of the Full Bench. If I am to base my decision on this aspect alone, I would have referred the matter for consideration by a fuller Bench. But in this case, I do not think it necessary to refer the matter to a larger Bench.
13. Sri M.I. Joseph, Counsel appearing for the Petitioners also submitted that the protection under Article 31C cannot be claimed in this case as Presidential assent has not been obtained as required by Article 31C, acid he referred to the decision reported in
...The assent of the President under Article 254(2) of the Constitution is not a matter of idle formality. The President has, at least, to be appraised of the special reason why his assent is sought if there is any reason for doing so. If the assent is sought and given in general terms so as to be effective for all purposes, different considerations may legitimately arise. But if, as in the instant case, the assent of the President is sought to the Law for a specific purpose, the efficacy of the assent would be limited to that purpose and cannot be extended beyond it.
Counsel explained that in so far as the President''s assent to the legislation will deprive the citizen of their fundamental rights, under Articles 14 and 19, specific assent of the President ought to have been obtained and in so far as the same has not been secured in this case, the legislation must be held to be void. As stated already, this question needs consideration only if the Act cannot be sustained without the protection of Article 31-C of the Constitution. I am of the view that in this case the validity of the Act can be upheld even without recourse to the provisions of Article 31-C of the Constitution.
14. Learned Additional Advocate General further submitted that it is not necessary in this case to rely on the protection under Article 31-C of the Constitution of India as the Act is a legislation under entries 20, 23 and 24 in List HI of the VII Schedule of the Constitution. For this he referred to the decision in New Woodlands Hotel v. Varkey 1974 KLT 867 ,
...Entry 24 in List III speaks of Labour including conditions of work, provident funds, employers'' liability workmen''s compensation, invalidity and old age pensions and maternity benefits. The Act is for the welfare of labour. It is not an Act for industries. The true nature and character of the legislation shows that it is for enforcing better conditions of labour amongst those who are engaged in the manufacture of beedis and cigars.
The Supreme Court further held:
...Entries 22 to 24 in list III are wide enough to cover this piece of labour welfare measure. Entry 22 deals with labour welfare. Entry 23 deals with social security, employment and unemployment. Entry 24 deals with welfare of labour including conditions of work, provident funds, employer''s liability, workmen''s compensation, invalidity and old age pensions and maternity benefits. The Act is valid and falls within Entries 22, 23 and 24 of List III.
In
...The payment of contribution by an employer towards premium (what else is it ?) of an employee''s compulsory insurance under the Employees'' State Insurance Act falls directly within entries 23 and 24 of List III and it is wholly unnecessary to seek justification for it by recourse to entry 97 of List I or entry 47 of List III in any circumlocutous fashion. We see no reason to brand or stamp the contribution as a tax or fee in order to seek to legitimise it. Legitimation need not be sought fictionally from entry 97 of List I or entry 47 of List III when legitimation is directly derived for the charge from entries 23 and 24 of List III.
The Supreme Court further held in that case that the contribution can be justified as a fee as well, as services and benefits are indeed meant to be and are bound to be conferred on the employees and through them to the employer in due course. Since I have already held Welfare fund is for the benefit of the fishermen community who are all employees including that of the Petitioner, the levy can be justified as a social welfare measure. In Chellappan v. State of Kerala 1990 (1) KLT 254 a Division Bench of this Court held that Toddy Workers Welfare Fund Act Sr. 1969 is a legislation coming under entry 24 of List III which deals with welfare of labour including conditions of work, Provident Fund, employer''s liability, workmen''s compensation etc. This Court held:
This Act is intended to provide for the constitution of a fund to promote the welfare of toddy workers in the State of Kerala''. The Act provides a scheme be framed and directs contribution to be made by the employer to the Fund at certain rates to each of the employees and also, in addition to the contribution, to contribute as gratuity an amount equal to five per cent of the wages for the time being payable to each of the employees. The scheme has been framed and is in force. The Act, therefore, follows the general pattern of welfare legislations and according to us, falls directly under entry 24 of List III which deals with "welfare of labour including conditions of work, provident funds, employer''s liability, workmen''s compensation, invalidity and old age pensions and maternity benefits.
Kerala Fishermen''s Welfare Fund Act, 1985 is also an Act which provide for constitution of welfare fund for promoting the welfare of the fishermen in the State of Kerala and for matters incidental thereto. Its benefits, in effect, extend to all fishermen employed by the Petitioners. The fund is utilised to provide distress relief to fishermen in times of natural calamities, for extending financial assistance to fishermen suffering from permanent or temporary disablement, for extending welfare amenities to fishermen, to grant loans and grants to meet the social needs of the fishermen community, etc., and, therefore, the Act neatly come under entries 23 and 24 of List III of the VII Schedule.
15. There is no discrimination involved in this case and the Petitioners have not been taxed in a dual capacity. The contribution payable is fixed on the basis of the income earned and hence the basis for levy is also reasonable. The legislation comes as a welfare measure and it is not a tax or a fee. Hence, there is no need to justify the same with quid pro quo or under any taxing entry. The Act can be justified under entries 20, 23 and 24 of List III of the VII Schedule of the Constitution. Even though the Additional Advocate General elaborated. the law laid down by the Supreme Court and this Court under Article 3 of the Constitution with reference to
16. Counsel for the 2nd Respondent also referred to the per capita production of fish by the boat owners and by owners of other crafts and stated that there is no arbitrariness involved in this case. it is submitted that the benefit of the fishermen is the prime motive behind the enactment and the fact that all the fishermen in the area scattered in 225 fisheries villages are covered by the fund will show that the Petitioner is also benefited. He further submitted that there is no demand from the Petitioners in dual capacity as boat owners and owners of fishing net and that the demand from net owners is meant only to cover the stake net and China nets and the boat owners, even though they own fishing nets for the boat, they are not made to pay contribution on that basis or as owner of the nets withal.
17. In the circumstances, in view of the fact that the contribution is demanded for the welfare of the fisheritien community which includes the Petitioners� employees as well. I find that the Act is a legislation coming under entries 20, 23 and 24 of List III of the VII Schedule of the Constitution of India, and as a legislation under those entries, the Act is also not violative any of the rights under Articles 14 and 19 of the Constitution of India. I make it clear that I have not held that the Act is entitled to protection under Article 31C of the Constitution as I hold that the Act is valid even without the aid of Article 31C of the Constitution.
In the circumstances, I find no merit in the Original Petitions. The Original Petitions are, therefore, dismissed.
