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TMI Blog1966 (9) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... turing company for the recovery of the employees' contributions payable under Employees' State Insurance Act, 1948 for the period from 1st September 1957 to 31st July 1963. The application was filed on 7th October 1963. Rule 17 of the Bombay Employees' Insurance Courts Rules, 1959 made by the Government of Bombay in exercise of the powers conferred by section 96(1) of the said Act purports to prescribe, a period of limitation for every application which may be filed in the Employees' Insurance Courts. Rule 17 is in these terms: 17 Limitation: (1) Every application to the Court, shall be brought within twelve months from the date on which the cause of action arose or as the case may be the claim became due: Provided that the Court may entertain an application after the said period of twelve months if it is satisfied that the applicant had sufficient reasons for not making the application within the said period. (2) Subject as aforesaid the provisions of Parts II and III of the Indian Limitation Act 1908 (IX of 1908), shall so far as may be apply to every such application. This rule barred the claim of the Corporation in respect of the contribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of this conflict of decisions, and because the question has arisen in a great number of cases pending in that Court. 3. In order to appreciate the arguments advanced before us it is necessary to notice some aspects of the scheme of the Employees' State Insurance Act, 1948 (hereinafter referred to as the Act). The object of the Act, as stated in its preamble, is to provide for certain benefits to employees in case of sickness, maternity and employment injury . It will be recalled that much before this Act provisions had been made for the protection of female employees in cases of maternity by the Maternity Benefits Acts passed by various provincal legislatures, and provision had also been made for granting compensation for employment injury by the Workmen's Compensation Act. The purpose of the present Act was to insure employees against sickness for the first time and to include in the same scheme appropriate provisions for ensuring them in respect of maternity and employment injury. In the three contingencies covered by the Act - sickness, maternity and employment injury the Act confers two benefits on the insured persons, one of periodical cash payments and the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 44 or for the purpose of Ascertaining whether any of the provisions of the Act has not been complied with. Sections 46 to 59 read with Schedules I and II, make elaborate provisions in respect of the cash payments and the medical treatment to which the insured persons are entitled. Chapter VI of the Act, which comprises of Sections 74 to 83, deals with adjudication of disputes and claims . Section 74 empowers State Governments to constitute Employees' Insurance Courts for different local areas. Sub-sections (1) and (2) of Section 75 enumerate the questions and claims which are to be decided by the Employees' Insurance Courts and sub-section (3) of that section lays down that no Civil Court shall have jurisdiction to decide or deal with any question or dispute or to adjudicate on any liability which by or under this Act is to be decided by an Employees' Insurance Court. Section 76 deals with the territorial jurisdiction of Employees' Insurance Courts. Sub-section (1) of Section says that the proceedings before an Employees' Insurance Court shall be commenced by application, and sub-section (2) of that Section lays down that the form and particulars of such ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sub-section (3) of Section 95 and sub-section (2) of Section 96 provide that the rules made under Section 95 and 96 by the Central Government and the State Governments respectively shall be published in the Official Gazette and shall thereupon have effect as if enacted in the Act. 4. We have heard at length the arguments of Mr. Bhabha, who appeared for the Corporation and contended that Rule 17 is ultra vires the rule making powers of the State Government, and Mr. Nariman for the Opponents and the learned Government Pleader for the State of Maharashtra who claimed that the said rule is valid. The validity of the rule depends upon whether the power of the State Government to make rules under Section 96(1)(b) in regard to the procedure to be followed in proceedings before the Courts (Employees' Insurance Court ) covers the power to make a rule prescribing a period of limitation for applications filed before an Employees' Insurance Court. The question must be decided on a proper construction of the terms of S. 96(1)(b). In case those terms are found to be ambiguous the intention of the legislature may be gathered from the other relevant provisions of the Act and the schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Section 78(2) is clearly in respect of matters subsequent to the commencement of a proceeding, and it is on those matters that the State Government are empowered to make rules by Clause (b) of Section 96(1). That is also the plain meaning of Clause of Section 96(1), even if it is not read with Section 78(2). The impugned Rule 17 relates to a stager anterior to the commencement of a proceeding. The rule cannot be held to pertain to the procedure to be followed in proceedings before the Court and is thus outside the scope of Section 96(1)(b). 6. Mr. Nariman for the Opponents and the learned Government Pleader for the State argued that the law of limitation is a procedural law, and that the impugned Rule 17 must therefore be held to be a procedural rule which the State Government was empowered to make by the terms of Section 96(1)(b). There can be no dispute that the law of limitation is a procedural or adjectival law and is not a part of substantive law. It is procedural or adjectival, because it regulates the manner in which substantive rights can be enforced by judicial action. In that sense the impugned Rule 17 is clearly a procedural rule. That does not, however, mean th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how a certain case should be decided. Rules of substantive law also serve the same purpose. One such rule, of instance, tells the Court )to use Mr. Nariman's language) that a claim for damage for breach of contract should not be awarded against a party unless the party is proved to have committed the breach. The rule obviously is not a procedural rule, much less a part of the procedure to be followed by the Court. The decision of a case may involve the application of procedural as well as substantive law. In deciding a case, the Court may have to decide such procedural issues as jurisdiction, limitation and res judicata, and also substantive issues of various kinds. The procedure followed by the Court in deciding such issues comprises such matters as the hearing of parties, recording of evidence and giving of judgment; it does not comprise the legal principles, whether procedural or substantive, which determine what the decision shall be. It follows that if an Employees' Insurance Court were to dismiss an application on the ground that it is barred by the impugned Rule 17 the provision contained in that rule is not a part of the procedure followed by the Court, although ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court to make a valid rule providing a period within which a party shall file an application in revision. Sections 122 and 128 enable the High Court to make rules, not inconsistent with the provisions in the body of the Code , regulating its own procedure and the procedure of Civil Courts subject to its superintendence. In upholding the rule the learned Judge who decided the case relied upon an earlier decision and observed : The decision shows that the Court has power by rules framed by it to regulate or enlarge the time relating to procedural matters. One of the earlier cases referred by the learned Judge was Sennimalai v. Palani Air 1917 Mad 957. In that case Coutts-Trotter I., held that a High Court acting under Section 122 of the Civil Procedure Code can frame a valid rule making the provisions of Section 5 of the Indian Limitation Act of 1908 applicable to the period of limitation prescribed by that Act for presenting an application under O. 9 Rule 13 of the Civil Procedure Code to set aside an ex parte decree. In his judgment Coutts-Trotter J. made a distinction between Articles of the Limitation Act which prescribe periods of limitation for filing suits and Ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning of Section 29 (2) of the Indian Limitation Act, 1908, and that an appeal filed within 30 days as provided by that rule was not time barred. The decision was cited by Mr. Nariman for the purpose of showing that a power to make a rule of limitation is covered by the general power to make rules and orders for regulating the practice of a Court. 13. It will be noticed that in each of these cases the rule of limitation which was held to be valid was in respect of a step which a party had taken after a proceeding had already commenced and during the course of that proceeding. No instance was cited by Mr. Nariman where an authority empowered to make rules regulating the procedure to be followed in Courts had made a valid rule prescribing a period of limitation for the institution of an original suit or proceeding. The most ample powers to make procedural rules are founding Section 129 of the Civil Procedure Code which empowers a High Court to make such rules, not inconsistent with the Letters Patent or any other law which established the High Court, to regulate its own procedure in the exercise of its original civil jurisdiction . The rules made by a High Court under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the filing of an application in an Employees' Insurance Court under Section 75 of the Act. 16. Supposing, however, that the terms of Section 96(1)(b) are ambiguous and capable of two interpretations, we find from the other provisions of the Act and from the scheme of the Act as a whole that the legislature did not intend to confer on State Governments the power of prescribing a period of limitation for filing a application under Section 75 and that an interpretation of Section 96(1)(b) which excludes the grant of such a power accords with the intention of the legislature. 17. An examination of the general scheme of the Act shows that the success of the scheme depended very largely on the collection of contributions from the whole body of employers covered by the Act. In this connection certain observations made in the aforesaid decision of the Madhya Pradesh High Court (1963)IILLJ230MP were shown by Mr. Nariman not to be strictly accurate. The Madhya Pradesh High Court observed that according to Section 46 of the Act an insured person and his dependants are entitled to get benefits mentioned therein, and that an insured person has been defined in Section 2 (14) as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployer who pays contributions in respect of his own employees does not pay merely for the insurance of those employees, the contributions paid by him go into a Fund which is designed to insure all the employees and their dependants covered by the Act for the contingencies of sickness maternity and employment injury, Proper and full collection of contributions from all employers who are liable to pay them is thus necessary for the success of the scheme. 18. What is more, the scheme of the Act makes it clear that the legislature intended that the Employees' State Insurance Fund should rapidly swell, so that the benefits under the Act, can be enhanced and made available to larger categories of employees and their dependants. Sub-section (3) of Section 1 empowered the Central Government to bring different parts of the Act into force on different dates in different parts of the country. What was done by the Central Govt. under this provision is indicative of the intention of the legislature. By successive Notifications, Chap. IV of the Act, which relates to the payment of contribution was brought into force in most parts of the country. This enabled contributions to the collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of priority debts under Section 49 of the Presidency Towns Insolvency Act, 1909, Section 61 of the Provincial Insolvency Act, 1920, and Section 230 of the Indian Companies Act, 1913. It does not seem likely that the legislature having thus placed the dues of the Corporation in a preferential position, intended that the right of the Corporation to recover them should be subject to such period of limitation as may be prescribed by the State Governments. The impugned Rule 17 actually places the Corporation in a position of inferiority as compared to other creditors of an insolvent or a Company in liquidation, because the dues of the Corporation became unplayable much sooner that the dues of other creditors. 21. Another relevant provision is Clause (4) of Section 40. It provides that any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted. By the terms of this clause the principal employer has been made an express trustee of the amounts deducted by him from the wages of employees for the purpose of paying their contributions to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onths after the claim became due. A proviso to section 80 enables the Court to condone the delay in making a claim in appropriate cases. It is possible that the legislature did not think that any provision , besides the one contained in section 80 was necessary for limiting the right of an employee or his dependants from applying under Section 75 for the recovery of any benefit admissible under the Act. A reference may be made in this connection to an observation of the Supreme Court in the Bombay Gas Co. Ltd v. Gopal Bhiva, (1963)IILLJ608SC Commenting on the omission of the legislature to provide a period of limitation for an application under Section 33C(2) of the Industrial Disputes Act 1947 the Supreme Court said: The failure of the legislature to make any provision for limitation cannot, in our opinion, be deemed to be an accidental omission. In the circumstances, it would be legitimate to infer that legislature deliberately did not provide for any limitation under Section 33C(2) . In the present case also it appears to us that the omission of the legislature to provide for limitation for applications under S.75(2) was deliberate. In any case it seems clear that the legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, especially where such rules are by the statutes authorising them directed to be read as part of the Act. The learned author then goes on to say: But too much stress cannot be rested upon rules, inasmuch as they may be questioned as being in excess of the powers of the subordinate body to which Parliament has delegated authority to make them. In the present the Bombay Government made the impugned rule 17 because according to the Government the power to make such a rule was conferred upon it by Section 96( ) of the Act. The question before us is whether that view of the Government was correct, and no assistance in deciding that question can be derived from other rules which might have been made by the same authority on the same understanding of the scope of its rule-making powers. 26. We are accordingly of the view that the clear and unambiguous terms of Section 96(1)(b) exclude the grant of any power to the state Governments to make a rule prescribing a period of limitation on claims enumerated in Section 75(2). We are further of the view that supposing two interpretations were possible of the terms of Section 96(1)(b) that interpretation should be accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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