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TMI Blog1957 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... 1880. The dispute in this appeal mainly relates to this amount. 2. In 1953, the Legislature of the State of Bombay enacted the Bombay Labour Welfare Fund Act (Bom. XL of 1953) (hereinafter referred to as the Act), and it came into force on June 4, 1953. We may, at this stage, refer to the relevant provisions of the Act, as it is their validity that is the main point for our determination in this appeal. The preamble to the Act recites that It is expedient to constitute a Fund for the financing of activities to promote welfare of labour in the State of Bombay and for conducting such activities . Section 2 is the definition section; sub-s. (2) defines an employee as meaning any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in an establishment . Employer is defined in sub-s. (3) as meaning any person who employs either directly or through another person either on behalf of himself or any other person, one or more employees in an establishment and includes - in a factory any person named under s. 7(i)(f) of the Factories Act, 1948, as the manager . Sub-section (10) defines Unpaid accumulations as meaning all payments due to the emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... npaid accumulations and fines shall be paid to the Board and be expended by it under this Act notwithstanding anything contained in the Payment of Wages Act, 1936 (IV of 1936), or any other law for the time being in force . 6. Section 11 provides for the appointment of an officer called the Welfare Commissioner, and defines his powers and duties. Section 17 enacts that Any sum payable into the Fund under this Act shall, without prejudice to any other mode of recovery, be recoverable on behalf of the Board as an arrear of land revenue. 7. Section 19 authorises the State Government to make rules to carry out the purposes of this Act. Section 23 provides that, In section 8 of the Payment of Wages Act, 1936 (IV of 1936), to sub-section (8) the following shall be added, before the Explanation, namely : but in the case of any factory or establishment to which the Bombay Labour Welfare Fund Act, 1953 (Bom. XL of 1953), applies, all such realisations shall be paid into the Fund constituted under the said Act. 8. Rules were framed by the State of Bombay in exercise of the powers conferred by s. 19, and they were published on June 30, 1953. The material rules are 3 and 4, which are as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that, on its true construction, the Act merely substituted the Board as a creditor in the place of the employees, that there was no taking of property, and that, in consequence, there was no contravention of Art. 31(2). Tendolkar, J., held that unpaid wages were unquestionably moneys which belonged to the employer and that he was being deprived of them, but there was no taking of possession or acquisition of property within Art. 31(2) of the Constitution but a deprivation of moneys, and as it was done under the authority of law, it fell within the protection of Art. 31(1). In the result, the petition was dismissed. The learned Judges, however, granted a certificate under Art. 132, and that is how the appeal comes before us. 11. The sole point for determination in this appeal is whether s. 3(1) and sub-cls. (a) and (b) of s. 3(2) of the Act are void as contravening the provisions of the Constitution; but to decide it, we have to consider quite a number of questions which have been raised and discussed in the arguments before us. It will be convenient to deal with the two items, fines realised from the employees, s. 3(2)(a) and unpaid accumulations, s. 3(2)(b) separately, as the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisition under Art. 31(2) that there should be a transfer of title to the State, that deprivation of property and substantial abridgement of the rights of the owner were also within Art. 31(2), and that a law which produced those results must, in order to be valid, satisfy the conditions laid down in that Article. Das, J. (as he then was), differed from this view, and held that the contents of the two provisions were distinct, that while Art. 31(1) had reference to the police power of the State, Art. 31(2) dealt with the power of eminent domain . In Dwarkadas Shrinivas of Bombay v. Sholapur Spinning and Weaving Co. [1954]1SCR674 the majority of the Judges again reiterated the view expression in State of West Bengal v. Subodh Gopal Bose [1954]1SCR587 that Arts. 31(1) and 31(2) covered the same ground, and that substantial interference with rights to property would be within the operation of Art. 31(2). 14. On these decisions, it should follow that s. 3 of the impugned Act is bad as infringing Art. 31(2), in that it deprives the appellant of its moneys without giving any compensation. Mr. Seervai, however, resists this contention on the strength of Art. 31(2A), which was introduced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which and the manner in which compensation is to be determined should be specified, involves that what is taken is not money. It is argued, on the other hand, for the appellant that the latest trends in American law show, as was observed by Das, J. (as he then was) at pages 984-985 in State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga [1952]1SCR889 , a departure from the view held in earlier authorities that moneys and choses in action could not be the subject of eminent domain ; and that, in any case, the principles of American law should not be applied in the interpretation of the provisions of our Constitution. If the contention of the respondents is to be accepted, the question naturally arises what protection a person has in respect of moneys belonging to him if he can be deprived of them by process of legislation. The answer of Mr. Seervai is that that protection is to be sought in Art. 19(1)(f), that the word property therein has a wider connotation than what it bears in Art. 31(2) and includes money, and that the citizens have the right to hold money subject only to law such as is saved by Art. 19(5). In support of this position, he relied on the decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds the first contention, the question is whether on a fair construction of the provisions of the impugned Act, it is possible to spell out a substitution of creditors. When an employee has done his work, the amount of wages earned by him becomes a debt due to him from the employer, and it is property which could be assigned under the law. If the employee had assigned the debt to the Board constituted under the Act, the latter would be entitled to recover it from the employer. And what could be done by act of parties can also be done legislation. What we have to see, therefore, is whether on the provisions of the statute it could be held that there is a statutory transfer of the wages earned by the workman to the Board. Section 5 of the Act vests the amounts mentioned in s. 3(2) in the Board, and s. 3(1) directed that those amounts should be paid by the employer to the Board. Counsel for the appellant contends that there are in the Act no words of the transfer of the debts to the Board, and that there is only a provision for payment of the amounts. But this is taking too narrow a view of the true scope of those provisions. Looking at the substance of the matter, we are of the opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D. 666 and of Cotton, L.J., in Curwen v. Milburn (1889) 42 Ch. D. 424. In American Jurisprudence, Vol. 34, page 314, the law is thus stated : A majority of the court adhere to the view that a statute of limitations, as distinguished from a statute which prescribes conditions precedent to a right of action, does not go to a substance of a right, but only to the remedy. It does not extinguish the debt or preclude its enforcement, unless the debtor chooses to avail himself of the defence and specially pleads it. An indebtedness does not lose its character as such merely because it is barred; it still affords sufficient consideration to support a promise to pay, and gives a creditor an insurable interest. 20. In Corpus Juris Secundum, Vol. 53, page 922, we have the following statement of the law : The general rule, at least with respect to debts or money demands, is that a statute of limitation bars, or runs against, the remedy and does not discharge the debt or extinguish or impair the right, obligation, or cause of action. 21. The position then is that under the law a debt subsists notwithstanding that its recovery is barred by limitation, and no argument has been addressed to us by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract of employment, and there can be no question of substitution. Mr. Seervai agrees that if the Act does not operate to discharge the employer from his obligations to the employees in respect of the wages due to them, then it must be held to be unconstitutional as infringing Art. 19(1)(f), because his contention that the effect of the Act was only to take the property of the employer in discharge of its obligations could not then be maintained. 23. The real point for determination, therefore, is whether on payment of the amounts in accordance with s. 3(1) of the Act, the appellant gets a discharge of his obligations to the employees in respect of wages due to them. The Act does not contain any provision to that effect, and the absence thereof has been strongly relied on by the appellant as showing that no substitution of creditors was intended. In answer to this contention, Mr. Seervai urges firstly that though the Act does not, in terms, provide for the discharge of the appellant on payment of the amount under s. 3(1), that is the result of the provisions of the Payment of Wages Act (Act IV of 1936), hereinafter referred to as the Wages Act, and secondly, that the effect of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing regard to the definition of unpaid accumulations as meaning all payments due to the employees but not made to them within a period of three years, the employer runs no risk of being called upon to pay to the employee what has been paid by him to the Board under s. 3(1), and that therefore a payment under the impugned Act gives him what is, for all practical purposes, a good discharge. This argument rests on the supposition that so far as unpaid wages are concerned, the operation of the Wages Act is co-extensive with that of the impugned Act. But that clearly is erroneous. It is true that wages as defined in the Wages Act would include whatever are wages under the impugned Act. But s. 1(6) limits the application of the Wages Act to wages which are below. Rs. 200 for a wage period. In respect of wages of Rs. 200 or more, it is the general law that would apply, and the period of limitation is not one year under s. 15 of the Wages Act but three years under Art. 102 of the Limitation Act, which period is capable of extension under the provisions of the Limitation Act beyond the three years mentioned in s. 2(10) of the impugned Act. Then, it is to be noted that under the proviso to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned Act should be upheld in respect of that portion of the unpaid wages the recovery of which by the employees is barred by limitation whether under s. 15 of the Wages Act or the Limitation Act. 28. The impugned Act, it should be noted, merely enacts that all unpaid accumulations should be paid to the Board. It makes no distinction between claims for unpaid wages which are barred by limitation and those which are not so barred. It is contended for the respondents that when the subject-matter of a law comprehends distinct matters as to some of which it is unconstitutional and bad, it should nevertheless be upheld as regards the others, if those others from a distinct category, and that this principle applies not only when a classification into distinct categories appears on the face of the law but also when it exists in fact. Now, the doctrine of severability in application is well established in our law (vide State of Bombay and Another v. F. N. Balsara [1951]2SCR682 . The State of Bombay v. The United Motors (India), Ltd. [1953]4SCR1069 , and R.M.D. Chamarbaugwalla v. Union of India [1957]1SCR930 , and the principles applicable have been stated fully in Chamarbaugwalla&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Wages Act and an application under s. 15 of that Act would be barred, it can nevertheless give rise to an industrial dispute in respect of which action can be taken under the provisions of the Industrial Disputes Act. It was held by the Federal Court in Shamnagore Jute Factory Co. Ltd. v. S. M. Modak [1949] F.C.R. 365 that s. 22(d) of the Wages Act did not take away the power of the authorities to refer to a tribunal set up under the Industrial Disputes Act a claim which could be made under the Wages Act, as that section had application only to suits and did not exclude other proceedings permitted by law for the enforcement of payment. If a tribunal appointed under that Act can direct an employer to make payment of wages, it follows that the bar under s. 15 of the Wages Act does not give an absolute protection to the employer, and the same consequence must follow when the bar of limitation arises under the Limitation Act. The result therefore is that when an employer makes a payment under s. 3(1) of the Act he gets no discharge from his obligation to the employees, even when the enforcement thereof is barred by limitation. 32. The contention based on the provisions of the Wages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law and as such comes within the purview of section 56 of the Indian Contract Act. 34. Counsel for the respondents relies on these observations, and contends that when the contract of service was entered into between the employer and the employees, they could not have contemplated that the Legislature would have intervened and required the employer to pay the arrears of wages to the Board, and that that is a supervening impossibility which brings s. 56 into play and renders the contract void. We are not satisfied that the performance of the contract of service has been rendered impossible by reason of s. 3(1) of the impugned Act. But assuming that that is the position, what follows ? The matter would then be governed by s. 65 of the Contract Act, which provides that when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it. Under this section, the employer is liable to make compensation to the employee for the work done by him, and the liability can be enforced against him in spite of the fact that he has paid the unclaimed wages to the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to recover the same amount from the appellant on the ground that the Act is unconstitutional ? It will be no answer to that claim to plead that the appellant has already paid the amount to the Board. The fact is that a statute which operates on a contract must affect the rights of all the parties to the contract, and if it is bad as regards one of them, it should be held to be bad as regards the others as well. It is unnecessary to pursue this question further, as we have held that the Act is unconstitutional even as regards the appellant. 37. It remains to deal with the contention of the respondents that the impugned legislation is, in substance, one in respect of abandoned property, and that, by its very nature, it cannot be held to violate the rights of any person either under Art. 19(1)(f) or Art. 31(2). That would be the correct position if the character of the legislation is what the respondents claim it to be, for it is only a person who has some interest in property that can complain that the impugned legislation invades that right whether it be under Art. 19(1)(f) or Art. 31(2), and if it is abandoned property, ex hypothesi there is no one who has any interest in it. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were to transfer them to the State. Claims to the deposits might be made to the Commissioner of Revenue, who was to determine on their validity, his decision being open to review by the Courts. The validity of this law was questioned on the ground that sufficient opportunity had not been given to the depositors to claim the deposits, and that as they could attack the law as unconstitutional, the Bank got no protection by payment to the State. In repelling this contention, the Supreme Court observed that the Act did not deprive the depositors of any of their rights, they being given ample opportunity to establish their rights, and that it merely substituted the State in the place of the Bank as their debtor. The Court also held that it was within the Constitutional power of the State to protect the interests of depositors from the risks which attend long neglected accounts, by taking them into custody when they have been inactive so long as to be presumptively abandoned . In Connecticut Mutual Life Insurance Company v. Moore (supra), the law was with reference to moneys payable on life insurance policies, which had matured. It provided that if those amounts had remained unclaimed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employees. So far as this item is concerned, the position of the employees is wholly different from what it is as regards unpaid accumulations. Section 8 of the Wages Act deals with the question of fines which could be imposed by the employer, and it provides that they should be entered in a separate register, and applied for the benefit of his employees. It is not denied by the appellant that under this provision the fines are constituted a trust fund, and that the employers are bare trustees in respect of such fund. Now, the grievance of the appellant is that the Act deprives it of its rights as trustees, and vests them in the Board, and that, further, while the beneficiaries under s. 8 of the Wages Act are its own employees, under s. 5(2) of the impugned Act they include other persons as well. There might have been substance in the complaint that the appellant had been deprived of its rights as trustee if it had any beneficial interest in the fund. But admittedly, it has none, and it is therefore difficult to hold that there has been such substantial deprivation of property, as will offend Art. 31(2) according to the decisions in The State of West Bengal v. Subodh Gopal Bose a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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