State of Gujarat v. Shri Ambika Mills (1974) 4 SCC 656
Author: Gulzar Hashmi • Location: India • Published:
Slug: state-of-gujarat-v-shri-ambika-mills-1974-4-scc-656
Quick Summary
This case explains three things: who can attack a law under Part III, how unpaid wages can be handled by the State, and when a size-based classification is fair. The Court said Article 19 belongs only to citizens. A law that hurts Article 19 may be void for citizens, but it can still work against non-citizens. The Welfare Fund scheme and size cut-offs were upheld as reasonable.
Issues
- Standing & Article 19: Could the company attack the law using the Article 19(1)(f) rights of citizen employers/employees?
- Equality: Did the definition of “establishment” in Section 2(4) violate Article 14?
- Voidness: If parts were void for citizens, were they void against non-citizens under Article 13(2)?
Rules
- Article 19 rights are for citizens. Companies and non-citizens cannot claim them.
- A law inconsistent with Part III is void only to the extent of the inconsistency and only for those who hold that right.
- Reasonable classification is allowed. Step-by-step reform and size-based lines can be valid.
- Unpaid accumulations may be treated as bona vacantia; the State can take and route them lawfully.
Facts (Timeline)
Arguments
Appellant (State/Board)
- Unpaid accumulations are abandoned; the State can take them as bona vacantia.
- Size-based and sector-based lines are practical and reasonable.
- Company is not a citizen; Article 19 plea is not open to it.
Respondent (Shri Ambika Mills)
- Transfer to the Board deprives employers/employees of property without due authority.
- Definition of “establishment” is unequal and arbitrary.
- If the law is void for citizens, it should be void for all, including non-citizens.
Judgment
The Supreme Court upheld the Welfare Fund scheme. The State can appropriate unpaid accumulations and channel them through the Board. On deposit, the employer’s liability ends; employees get a fair window to claim. The classification lines (like excluding very small units or specific government set-ups) were accepted as policy choices backed by practicality. Article 19 could not be used by a company; voidness under Part III is not in rem.
Ratio Decidendi
Article 19 is confined to citizens; companies cannot invoke it. A statute can be partly void only for the protected class. Reasonable classification allows phased reforms and size cut-offs when linked to the evil targeted. Unpaid accumulations may be taken over by the State as bona vacantia with due safeguards.
Why It Matters
- Clarifies who can plead Article 19 and how Article 13 operates.
- Approves practical, step-by-step social welfare measures.
- Guides drafting of labour welfare laws and cut-off thresholds.
Key Takeaways
- Article 19 → citizens only; companies cannot claim it.
- Voidness is targeted, not universal; laws may still bind non-citizens.
- Reasonable classification can use size and sector to fix the main problem.
- State may take unpaid wages as bona vacantia and pay rightful claimants.
Mnemonic + 3-Step Hook
Mnemonic: “CITIZEN-CLASS-COLLECT”
- CITIZEN: Article 19 belongs to citizens only.
- CLASS: Reasonable classification is allowed for reform.
- COLLECT: State can collect unpaid accumulations lawfully.
IRAC Outline
Issue
Standing under Article 19, equality of definition in Section 2(4), and effect of “void” laws on non-citizens.
Rule
Rights in Part III are person-specific; voidness is limited; reasonable classification is valid; bona vacantia applies.
Application
Company cannot use Article 19; welfare design is practical; deposit ends employer liability; claim period is reasonable.
Conclusion
Scheme sustained; classification upheld; Article 19 plea rejected; voidness not in rem.
Glossary
- Bona Vacantia
- Ownerless property that the State may take over by law.
- Reasonable Classification
- Permitted grouping if it has a clear goal and a fair connection to that goal.
- Voidness (Art. 13)
- A law can be void for those protected but still work against others.
FAQs
- CASE_TITLE: State of Gujarat v. Shri Ambika Mills (1974) 4 SCC 656
- PRIMARY_KEYWORDS: Ambika Mills case, Article 13, Article 14, Article 19
- SECONDARY_KEYWORDS: unpaid accumulations, bona vacantia, reasonable classification, Labour Welfare Fund
- PUBLISH_DATE: 2025-10-24
- AUTHOR_NAME: Gulzar Hashmi
- LOCATION: India
- SLUG: state-of-gujarat-v-shri-ambika-mills-1974-4-scc-656
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