Nainar Sundaram, J.
1. These two writ appeals are directed against the order of the learned single Judge of this Court in W.P. No. 2343 of 1981. The pronouncement of the learned single Judge of stands reported in Sabanayagam K. v. The Secretary to Government of Tamilnadu. Housing Department and others : (1984)ILLJ87Mad . Writ Appeal No. 196 of 1983 is by the Tamil Nadu State Housing Board, hereinafter referred to as 'the Board', if occasion therefore arises, which was the second respondent in the writ petition. Writ Appeal No. 199 of 1983 is by the State of Tamil Nadu, the first-respondent in the writ petition. The petitioner in the writ petition is the first respondent in these two writ appeals. We propose to refer to the persons as they stood arrayed in writ petition. The petitioner projected the following prayer in the writ petition :
'For the reasons stated in the accompanying affidavit, it is humbly prayed that this Honourable Court may be pleased to issue a writ of Mandamus directing the second-respondent, Tamil Nadu State Housing Board, to pay bonus as per the provisions of the Payment of Bonus Act to the employees who are defined as such employees under Section 2(c) of the Payment of Bonus Act for the years commencing from the sixth accounting year from the date of the coming into existence of the second-respondent and render justice.'
Before the learned single Judge, who heard the writ petition, there was a statement on behalf of the petitioner by his learned counsel that the prayer can be confined only from the accounting year 1978-79 onwards and the prayer, as made in the writ petition, need not be granted in full. As we could see from the prayer in the writ petition, the claim is for payment of bonus from the date of coming into existence of the second-respondent under the Payment of Bonus Act, 21 of 1965, hereinafter referred to as 'the Act'. The main contention of the second-respondent to negative the claims of the petitioner was, and even today is, that it is a social welfare institution, established not for purposes of profit and hence it should fall within the ambit of Section 32(v)(c) of the Act and the Act would not apply to it. This contention of the second-respondent has been and is being counter-acted by the petitioner by pointing out that the second-respondent all along proceeded on the basis that the Act not apply to it and it only chose to apply for exemption under Section 36 of the Act and this position, admitted, acquiesced in and accepted by the second-respondent will preclude it from raising the present plea that it will not come within the ambit of the Act. The learned single Judge, after referring to the various proceedings, which emanated from the second-respondent, found a position that the second-respondent admitted, acquiesced in and accepted the application of the Act to it, both on factual and legal basis, and it only wanted an exemption from the Act on that basis and hence it is not open to the second-respondent to raise a plea that the Act would not apply to it. Of course, there are observations in the pronouncement of the learned single Judge to indicate that even factually the second-respondent could not be stated to be a social welfare institution, established not for purposes of profit. Accordingly, the learned single judge allowed the writ petition and directed that the decision regarding payment of bonus should be arrived at as expeditiously as possible, at any rate not later than 31st March 1983, and that minimum bonus that has to be paid under the Act will be from the accounting year 1978-79 onwards. That is how these writ appeals have come to be preferred by the respondents.
2. The first contention, put forth by Mr. K. Doraiswamy, learned counsel for the second-respondent, is that the second-respondent will not at all come within the purview of the Act, it being a social welfare institution, not established for purposes of profit, within the meaning of Section 32(v)(c) of the Act. Learned counsel for the second-respondent would submit that if the test of dominant purpose of establishing, as countenanced by pronouncements, is applied, the second-respondent will certainly has to be accepted as a social welfare institution, established not for purposes of profit, as set out in Section 32(v)(c) of the Act and hence the Act itself would not apply to the second-respondent. Learned counsel for the second respondent wants to press into service, in support of this argument, among other pronouncements, a pronouncement of one of us in T.W.A.D. Board Administrative Staff Association, Madras-5 and others v. The State of Tamil Nadu (W.P. Nos. 7406 of 1983, etc. Batch, Order dated 15th November 1984).
3. In answer, Mr. B. R. Dolia, learned counsel for the petitioner, would submit that the question as to whether an institution is a social welfare institution, established not for purposes of profit is purely a factual one; and if the very institution has conceded the position that such is not the case and on the other hand, has all along admitted, acquiesced in and accepted the position that the Act would apply to it and on that basis has been seeking for exemption under Section 36 of the Act, certainly it would not lie in the mouth of the institution to advance a theory contrary to what it has been advancing all along. Learned counsel for the petitioner submits that the case on hand will come within the principles of acquiescence by the second-respondent to a factual position with regard to the applicability of the Act and it is not open to the second-respondent to resile from it and put forth a contrary position.
4. Section 32 of the Act says that the Act shall not apply to certain classes of employees. Clause (v) (c) of Section 32 speaks about employees employed by institutions (including hospitals, chambers of commerce and social welfare institutions), established not for purposes of profit. The attempt on the part of the second-respondent is to bring itself within the ambit of this clause. As rightly contended by the learned counsel for the petitioner this is a factual aspect. If there is an admission and acceptance, directly or indirectly, that the second-respondent would not come within the purview of the above provision and on the other hand, the Act would apply to it, and the second-respondent acted on that basis seeking for exemption from time to time, certainly it is not open to it to turn volte face and advance a totally contrary position. It is only in this behalf, various proceedings of the second-respondent have to be, and in fact have been, taken note of by the learned single Judge.
5. On 28th February 1978, as we could see from the Minutes of the Special Board Meeting of the second-respondent, the budget-estimate for 1978-79 was the subject matter of discussion under item No. 186 and under the heading C. Contingencies - Item 5', this is what has been recorded :
'The Board took note of an additional provision of Rs. 30.00 lakhs during 1978-79 on Pay Commission recommendation (Rs. 20 lakhs) and Bonus (Rs. 10 lakhs) approximately.'
6. On 4th May 1979, under item No. 277, the Note for the Board of the second-respondent by its Chairman reads as follows :
'ITEM No. 277 :
TAMIL NADU HOUSING BOARD NOTE FOR THE BOARD
SUB : Establishment - Tamil Nadu Housing Board - Payment of Bonus to the employees of the Tamil Nadu Housing Board - Proposals submitted :
According to the present position, only the following units of the Tamil Nadu Housing Board attract the provisions of the Industrial Disputes Act and the Payment of Bonus Act.
1. Cellular Concrete Plant of TNHB
2. Wood Working Unit.
The employees working in the above two units were also paid bonus for the year 1978-79. The Tamil Nadu Housing Board was exempted from the provisions of the Payment of Bonus Act under Section 36 of the Act for temporary periods upto the end of 1973-74. This exemption had necessarily to be obtained for the reason that the Tamil Nadu Housing Board is governed under the Industrial Disputes Act according to the orders issued in G.O. Ms. No. 9139, H.U. III/2/69-2, dated 14th March 1969 (copy appended herewith). When the Housing Board is governed under the Industrial Disputes Act, the applicability of the Bonus Act is not obligatory but it is statutory. As the financial position of the Board in the past was not sound enough, the payment exemption was previously sought for by the Board. But, orders to that effect were not issued.
In this connection, a kind reference is invited to G.O. Ms. No. 1045. Finance, dated 1st November 1977 (copy appended herewith) wherefrom it may be seen that the statutory Board should sanction to its staff any bonus or exgratia payment or any other form of lump sum concession without the prior approval of the Government. But, the Government now want to know whether automatic exemption under Section 32(v)(c) of the Act was ever considered in the past. This question was never considered previously, because of the fact that the Hosing Board which is covered by the Bonus Act, was engaged in finding out ways and means to make payment. It is also brought to the kind notice of the Board that the employees of the Tamil Nadu Housing Board are pressing for payment of bonus.
In this connection, it is submitted that automatic exemption can be availed of only if the Housing Board can be named as 'Social Welfare Organisation' serving the public without profit motive. Though the Tamilnadu Housing Board, which is a statutory Body, is being run on 'no profit and no loss basis', it cannot be stated that the Board does not make a profit at all in its transactions on the development of plots and construction of houses. It can also be stated that the introduction of various schemes financed by the HUDCO, an element of profits is added in most of the HIG flats with a small subsidy of H.W.S. Such subsidy is only a fraction of the profit made under the H.I.G. However, the Board borrows money from various sources at different rates of interest for the execution of the various schemes. The Board's borrowing rate of interest ranges from 6% to 11%. Such loans received are not spent for specific projects. But, in case of hire purchase allotment, a uniform rate of interest is charged on the allottees 1% above the highest borrowing interest, except in the case of HUDCO schemes where the rate of interest committed is changed. Thus, it may be seen from the above that good amount of profit is earned to the Housing Board. This can be substantiated by referring to the revenue position of the Board as on 31st March 1978 which indicates a surplus of Rs. 196.93 lakhs taking into account the arrears due from the various allottees to the tune of Rs. 100 lakhs. If the Bonus is declared, the commitment of the Board would be approximately Rs. 10 lakhs per year. The annual cost of establishment is approximately Rs. 120 lakhs exclusive of allowances.
Under the rules, the payment of minimum bonus will be 8-1/3% of the pay for persons who are drawing less than Rs. 1600/- per month, subject to maximum of Rs. 750/- per annum. Presently, the West Bengal Housing Board and Gujarat Housing Board are paying bonus for their employees. It is also ascertained from the Government of West Bengal that they are making payment of bonus to their employees at the rate of 8-1/3% treating the Board as an 'Industry' under the Industrial Disputes Act. The payment is made by them from their revenues only, which they are able to earn by adding different profits as in the sale of buildings by public auctions etc. On the same analogy, the Housing Board may also derive income in the near future and there may not be any difficulty in meeting this expenditure in this regard from its available funds. Besides, the Housing Board with its assets and liabilities is earning more and more every year. The income derived by way of rental, leasing of shops and stalls, etc., will undoubtedly go towards profit to certain extent.
In the circumstances, it appears not necessary to seek for the exemption of the Government from the payment of minimum bonus of 81/3% which is a statutory right as per the orders issued in G.O.Ms. No. 1045, Finance, dated 1st November 1977. The Government have also directed that when payment of bonus to the employees of the public sector undertakings is strictly in accordance with the provisions of the Bonus Act, such cases need not be referred to the Government for approval. No deviation from the Bonus Act should normally be made. However, if any deviation is proposed to be made by way of payment of ex-gratia or any other incentive in cash or any kind, then only it should carry the prior approval of the Government.
In the circumstances and in view of the above facts, that the payment of bonus is statutory, the Board is requested to take a decision as to the grant of payment of bonus to the employees of the Tamil Nadu Housing Board as admissible under the rules for the year 1978-79. The Government may be informed thereafter of the decision taken by the Board.
A. E. Chelliah. Chairman - 4th May 1979.'
7. On 18th October 1979, what transpired before the Board of the second-respondent as item No. 477 and the note that was put up thereafter have been taken note of by the learned single Judge as follows :
'The Board in its Resolution dated 2nd November, 1978 approved the proposal for the payment of Bonus to the workers and staff of the Wood Working Unit for the year 1977-78 at 8.33% of annual wages according to which the payment was made as bonus.
It was therefore proposed to pay bonus at 8.33% of annual wages to the workers and staff of the Wood Working Unit for the necessary payment has already been made, as the workers were pressing for the payment before Deepavali.
The Board is requested to ratify the action of the Chairman for the payment of the bonus for the year 1978-79.
Thereafter a note was put up by the Board to the following effect :
The Government in their G.O.Ms. No. 2018, Housing and Urban Development Department, dated 31st October, 1979 (copy enclosed) have issued notification exempting the Tamil Nadu Housing Board from all the provisions of the Payment of Bonus Act, 1965 for a further period upto the accounting year 1977-78. The union representing the various categories of employees of the Housing Board have been representing and pressing for the payment of atleast minimum bonus to all the employees of the Board from the year 1978-79 onwards, as granted by the Board to the employees working in the Wood Working Unit and the Cellular Concrete Plant.
The reasons urged for declaration of bonus are that the Housing Board has been earning profit in the disposal of plots as well as flats, that the employees and the Board are governed by the provisions of the Industrial Disputes Act and that the Housing Boards in other states have granted bonus to their employees. The Unions have, however, represented that they will not press for bonus for the years upto 1977-78. The probable expenditure that may have to be incurred if minimum of 8.33% is declared as bonus would be about Rs. 14 lakhs every year.
The matter is therefore place before the Board for taking a decision in the matter and recommending to Government.'
8. A theory advanced before the learned single Judge and again advance before us by the learned counsel for the second-respondent is that there cannot be stopped against statute. Such theory, in our view, is a misconception. The such of an institution or a body like the second respondent, coming within the exception clause, as we have already stated, is one of fact. If there could be an admission of, acquiescence in and acceptance of, the factual position by the very same institution or body, then there is no element of estoppel against statue coming in, in such contingency. It is simply a case of admitting, acquiescing in and accepting the factual position and state of affairs. The admitted and accepted position can certainly be taken note of on the factual question. It is not as if there could not be and should not be an admission or acquiescence in, or acceptance by an institution or a body like the second-respondent on this factual aspect. In the proceedings of the second-respondent, referred to by us above, it is admitted that the applicability of the Act is not obligatory, but it is statutory. There is the statement that the question of automatic exemption under Section 32(v)(c) of the Act was never considered, because of the fact, the second-respondent, which is covered by the Act, was engaged in finding out ways and means to disburse bonus. There is reference to the financial position of the second-respondent and the justification for paying bonus. It is not claimed, and it could not be claimed, that there was a misconception of the factual position as to the application of the Act to the second-respondent. We are in agreement with the learned singe Judge that it is not open to the second-respondent to contend that the Act would not apply to it. It is true that at one place of his pronouncement, the learned single Judge has opined that it is open to the second-respondent to waive the benefit. But, we view the matter form a slightly different angle, as per our discussion supra. It is a case of the second-respondent admitting, acquiescing in and accepting a factual position that it is not covered by the execution clause, as now claimed, and on the other hand, it is covered by the Act and only on that basis the second-respondent has been applying for exemption all along. The admission or acquiescence or acceptance is only with reference to the factual basis and it is not a case of giving up any enumerated legal benefit, specifically conferred on the second-respondent by the statute and over which there is no factual dispute. Hence, we eschew the first contention, put forth by Mr. K. Doraiswamy, learned counsel for the second-respondent. In the above view of the case, taken by us, there is no need to further probe into the factual controversy as to whether the second-respondent is a social welfare institution not established for purpose of profit, within the meaning of Section 32(v)(c) of the Act. Its own admission of acquiescence in, acceptance of and acting upon the factual basis has concluded the issue and that must stand.
9. To view the matter from any other angle, as coveted by the learned counsel for the second-respondent, would be not only inequitable, unfair and unjust, but totally unwarranted on principle. On the basis that the Act would apply to it only, the second-respondent has been seeking for exemption under Section 36 of the Act from time to time and obtained one such exemption by G.O.Ms. No. 2018, Housing and Urban Development Department, dated 31st October 1979, covering the period upto the accounting year 1977-78, which Notification alone seems to have been brought to the notice of the learned single Judge, when he heard the matter. The seeking or exemption under Section 36 of the Act pre-supposes the applicability of the Act to the second-respondent. By the very force of Section 32 the Act, the employees set out therein will not to covered by the Act. But, Section 36 contemplates the case of any establishment or class of establishments, covered by the Act, to be accorded exemption having regard to the financial position and other relevant circumstances, from all or any of the provisions of the Act for specified period, and subject to such conditions as may be imposed. If the Act does not apply at all, there would be no question of getting exemption under Section 36.
10. The second contention, put forth by Mr. K. Doraiswamy, learned counsel for the second-respondent, is that assuming that the Act applies, yet the first-respondent has issued two Notifications of exemption, one Notification was even before the pronouncement of the learned single Judge, covering the period from 1978-79 upto 1982-83 and the other Notification covering the period 1983-84 has come to be issued after the pronouncement of the learned single Judge. The said Notifications are as follows :
(1) G.O.Ms. No. 1033, Housing and Urban Development Department, dated 23rd November 1982; and
(2) G.O.Ms. No. 691, Housing and Urban Development Department, dated 31st March 1983.
It must be noted that the first Notification was not at all brought to the notice of the learned single Judge, even though it was very much there, when the matter was argued before him. But, on this ground, we do not want to shut our eyes to the existence of the said Notification and in fact, submissions were made by Mr. B. R. Dolia, learned counsel for the petitioner, attacking both the Notifications of exemption on specified grounds.
11. The Notifications are one issued under Section 36 of the Act. Section 36 read as follows :
'Power of exemption :- If the appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subjects to such condition as it may think fit to impose, such establishment or class of establishments such from all or any of the provisions of this Act.'
The first ground of attack on the Notification G.O.Ms. No. 1033, Housing and Urban Development Department, dated 23rd November 1982, put forth by the learned counsel for the petitioner, is that it comes within the vice of giving effect to the exemption retrospectively without sanction for it in law. The power to issue the exemption Notification under Section 36 of the Act is a power of subordinate Legislation. Unless the Act has expressly empowered the body conferred with the power to give exemption to exercise the power with retrospective effect, it cannot be permitted to do so. This is a fundamental proposition. Courts have always declared retrospective rules invalid unless the authority making them has power to do so under the parent statute.
12. Francis Bennion on Statutory Interpretations (1984 Edition) deals with 'Retrospective Operation of Enactments' in the following terms :
'Retrospective Operation of Enactments
Retrospective operation : general presumption against : Unless the contrary intention appears, an enactment is presumed not to be intended to have a retrospective operation.
The essential idea of legal system is that current law should govern current activities. Elsewhere in this work a particular Act is likened to a floodlight switched on or off (see pp. 90-93 above), and the general body of law to the circumambient air (See p. 491 below). Clumsy though these images are, they show the inappropriateness of retrospective laws.
If we do something today, we feel that the law applying to it should be the law in force today, not tomorrow's backward adjustment of it. Such, we believe, is the nature of law. Dislike of ex post facto law is enshrined in the United States Constitution (Art I's 9(3) and in the Constitutions of many American States, which forbid it.
The true principle is that lex prospicit non respicit (law looks forward, not back) (Jenk Cent 284. See also 2 Co Inst 292). As Willes, J. said, retrospective legislation is - '... contrary to the general principle that legislation by which the conduct of mankind is to be regulated ought, when introduced for the first time, 'to deal with future acts, and ought not to change the character of past transactions carried on upon the faith of the then existing law.' Phillips v. Eyre (1870) L.R. 6 QB 1. See also Re Athlumney, Wilson (1898) 2 QB 547.
Retrospectivity is artificial, deeming a thing to be what it was not. Artificiality and make-believe are generally repugnant to law as the servant of human welfare. (For the desire of courts to avoid an artificial result see s. 325 of this Code).
So it follows that the courts apply the general presumption that an enactment is not intended to have retrospective effect. As always, the power of Parliament to produce such an effect where it wishes to do so is nevertheless undoubted (For the doctrine of parliamentary sovereignty see s. 31 of this Code). The general presumption therefore applies only unless the contrary intention appears.
The general presumption is stated in Maxwell on the Interpretation of Statutes in the following emphatic terms : 'It is a fundamental rule of English law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication.'
(12th Edn. 1969 p. 215).
This statement has received frequent judicial approval. (See e.g. Carson v. Carson (1964) 1 WLR 511. It is however too dogmatically framed, and describes as rule what (for reasons stated in s. 115 of this Code) is really no more than a presumption which, in the instant case, may be outweighed by other factors. (As to the weighing of interpretative factors to arrive at the true legal meaning, see Part VII of this Code).
Where, on a weighing of the factors, it seems that some retrospective effect was intended, the general presumption against retrospectivity indicates that this should be kept to as narrow a compass as will accord with the legislative mention (Lauri v. Benad (1892) 3 Ch. 402 ; Skinner v. Cooper (1979) 2 AER 836).
Apart from the general presumption itself, the question of retrospectivity is relevant to the application of various other guides to legislative intention. We have just mentioned one of them, namely, the presumption against an artificial result.'
13. Section 36 of the Act, as we could see from the extract, has not specifically empowered the appropriate Government to give exemption retrospectively. When we take note of the well accepted proposition on the question of retrospective operator of enactments, we have to agree with the learned counsel for the petitioner that the Notification G.O.Ms. No. 1033, Housing and Urban Development Department, dated 23rd November 1982, when it chose to give retrospective operation to the exemption to the second-respondent from 1978-79 onwards, has to be frowned upon as totally incompetent, and having no sanction of law.
14. The common attack on both the Notifications is from the angle that they have come to be passed without hearing the parties to be affected and, in fact, affected. The fact remains that before the two Notifications came to be passed, there was no hearing of the employees individually or though any representative body on the question of granting the exemption. The Act is means to confer the benefit of bonus to persons employed in the establishments covered by the Act. If the said persons are to be denied that benefit by virtue of the accord of exemption, certainly they must be heard before the stamp of exemption is given to the establishment. This admittedly did not happen in the case of the two Notifications which are being put forth in answer to the claims of the employees. By the factum of the application of the Act to the second-respondent, the employees under it are entitled to bonus under the Act. Section 36 of the Act, which confers the power of exemption, enjoins upon the appropriate Government to the consider relevant factors before it chooses to accord exemption. The appropriate Government has to exercise its mind before it comes to the conclusion that there should be accord of exemption. Certainly, it involves rights of parties. Those rights are not only that of the employer, but also that of the employees. The power to grant exemption, if exercised, will deprive the employees the benefit of bonus conferred by the Act. That there should be a hearing before a person, conferred with the benefit under a statute, is to be deprived of the same can be taken to be a well accepted proposition. We cannot belittle the aspect of the employees being heard on the question of exemption under the Act. On the principle of audi alteram partem, Mr. B. R. Dolia, learned counsel for the petitioner, draws our attention to the following pronouncements : Smt. Maneka Gandhi v. Union of India and another : [1978]2SCR621 and Swadeshi Cotton Mills, etc. v. Union of India etc. : [1981]2SCR533 . Once it is to be held that the exemptions were granted without the employees of the second-respondent being heard on the question, then the contention of the learned counsel for the petitioner that such proceedings are a nullity require acceptance.
'Failure to grant a hearing renders the decision void.
Breach of natural justice necessarily involves excess of jurisdiction and therefore nullity.
A quasi-judicial act, in violation of the principles of natural justice, is void.
Breach of the audi alteram partem rule goes to jurisdiction or is akin to a jurisdictional defect and renders an order or determination void.
When a competent Court holds an official act or order invalid, it operates from nativity and that is the impugned act or order was never valid.'
The above are propositions that could be culled out from various well accepted authorities.
15. The result is these Notifications will have to stand ignored as totally without jurisdiction and void and they cannot be put forth as an answer to the claims of the petitioner. We must record that in the appeal, preferred by the first-respondent, W.A. No. 199 of 1983, arguments, same as those advanced by the learned counsel for the second-respondent, the appellant in W.A. No. 196 of 1983 were put forth by Mr. P. Samuel, learned Government Advocate, appearing for the first-respondent. For all these reasons, these two writ appeals fail and they stand dismissed. We make no order as to costs.