Welfare exemption under bonus law requires employee rebuttal material before government grants relief.

An exemption notification issued on 23 November 1982 was held not to operate retrospectively for earlier accounting years, because its language extended only prospectively up to 1982-83. The Housing Board could not claim statutory exclusion from the bonus legislation for the relevant years, as it had consistently proceeded on the basis that the Act applied and had itself sought exemption. Exemption under section 36 was invalid because the affected employees were not given an opportunity to place rebuttal material before the Government; where a welfare exemption deprives employees of accrued statutory benefits, both sides' material must be considered before the exemption is granted.

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Issues: (i) whether the exemption notification dated 23 November 1982 could operate retrospectively for earlier accounting years; (ii) whether the Housing Board was outside the bonus legislation by virtue of statutory exclusion; (iii) whether exemption under section 36 could be granted without affording the affected employees an opportunity to place rebuttal material before the Government.

Issue (i): whether the exemption notification dated 23 November 1982 could operate retrospectively for earlier accounting years

Analysis: The notification, by its language, granted exemption only for a further period up to accounting year 1982-83 from the date of issue. It did not state that it was to govern earlier accounting years that had already expired. The broader question whether section 36 permitted retrospective exemption was therefore unnecessary to decide.

Conclusion: The notification did not retrospectively cover the earlier accounting years.

Issue (ii): whether the Housing Board was outside the bonus legislation by virtue of statutory exclusion

Analysis: The statutory exclusion applied only to institutions established not for purposes of profit. The record showed that the Board had consistently proceeded on the footing that the bonus legislation applied to it and had itself sought exemption under section 36. That consistent stand amounted to waiver of any factual claim to statutory exclusion for the relevant years, and the Board could not simultaneously rely on exemption and exclusion.

Conclusion: The Board was not entitled to assert statutory exclusion under section 32(v)(c) for the relevant accounting years.

Issue (iii): whether exemption under section 36 could be granted without affording the affected employees an opportunity to place rebuttal material before the Government

Analysis: Section 36 was treated as conditional legislation operating on objective criteria, including financial position and other relevant circumstances. Because the exemption would deprive employees of a statutory monetary benefit already accrued under the Act, the decision-making process had to be informed by material from both sides. In such cases, the affected employees were entitled at least to an to submit rebuttal material before the Government formed its opinion; the procedure adopted by the State did not satisfy that requirement.

Conclusion: The exemption orders under section 36 were invalid for want of the required procedure.

Final Conclusion: The appeals could not succeed. The statutory bonus liability of the Housing Board for the relevant years remained enforceable, and the impugned exemption orders were not sustainable.

Ratio Decidendi: Where a statutory exemption under a welfare legislation operates on objective criteria and deprives an existing beneficiary class of accrued statutory benefits, the authority must consider relevant rebuttal material from the affected class before granting exemption; otherwise the exercise is invalid.

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