BOMBAY DYEING & MANUFACTURING CO. LTD. versus THE STATE OF BOMBAY AND OTHERS

... mb<riO.

BOMBAY DYEING & MANUFACTURING CO., LTD. v.

THE STATE OF BOMBAY AND OTHERS

(BHAGWATI, VEN1'ATARAMA AIYAR, s. K. DAS, K. SARKAR and VIVIAN BOSE JJ.)

Labou-r Welfare-Law creating fund for welfare activities ..,ompanies called upon to pay fines realised from employees and unpaid accumulation of wages-Constitutional validity-9ombay Labour Welfare Fund Act (Bom. XL of 1953), ss. 3(1) 3(2)(a)(b)-Constitution of India. Arts, 31(2) 19(1)(f).

The Bombay Labour Welfare Fund Act (Born. XL of 1953) was enacted by the State Legislature with the object of consti-tuting fund for the financing of activities for the welfare of labour ands. 3(1) of the Act provided as follov.;s :-

"There shall be constituted fund called the Bombay Labour Welfare Fund and, notwithstanding anything contained in any other law for the time being in force, the sums specified. in sub-section (2) shall be paid into the Fund.11

Section 3(2) provided, inter alia, as follows:-

"The Fund shall consist of: -

(a) all fines realised from the employees;

(b) all unpaid accumulation;"

Notices were served on the appellant's company as also on other companies similarly situated, ty the Welfare Commis-sioner, appointed under the Act, calling upon them to remit to him the fines and unpaid accumulations in their custody. The appellant in reply questioned the validity of the Act on the ground that it contravened Art. 31(2) of the Constitution ar.d, thereafter, filed Writ petition, out of which the present appeal arises, which was treated by consent of parties as test case. The Judges of the Divi8ion Bench who heard the matter held that the impugned Act was intra vires, though on different grounds, and dismissed the petition. The sole point for deter-mination in the appeal v.·•as whether s. 3(1) and sub-els. (a), and (b) of s. 3(2) of the Act were void as being violative of Art. ~I (2) of the Constitution:

Held, that the unpaid accumulation of wages remaining with the appellant company was its own property and s. 3(1) of the impugned Act in so far as it directs the payment of it under 3(2)(b) of the Act contravenes Art. 31(2) of the Constitution and must be invalid. Article 31(2A) of the Constitution has no retrospective effect and cannot apply and the matter must be decided on the law as it 'toad at the date of the Writ petition.

The State of West Bengal v. Subodh Gopal Bose, [1954] S.C.R. 587 and Dwarkadas Shrinivas of Bombay v. Sholapur Spinning anrL Weaving Co. Ltd., [1954] S.C.R. 674, applied.

Bombay Dyeing 4J Maniifactnring Oo., ;td.

Assuming that money w1as not property within the ~eaning of Art. 31(2) and Art. 19(1)(~) applied that Article also would The sU.te of be of no help to the respondent as the Act could not be sup- Bombay a"'l Ollle't-' ported under Art. 19(5) of the Constitution.

Commonwealth of Australia v. Bank of New South Wales, [1950] A.C. 235, held inapplicable.

The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga, [1952] S C.R. 889, considered.

The impugned Act had not the effect of substituting the Board as the creditor in place of the employee nor could it be said to be legislation in respect of abandoned property.

Altho4gh by defining 'unpaid accumulation' in the way it did the Legislature ol:viously intended that only such wages of . the employees as were time-barred should be taken by the State, it being well settled that the law of limitation only bars the remedy but does not extinguish the debt, SS. 3q}, 5(2} and 17 of the Act must be held to have the effect of transferring to the Board the debts due by the appellant to its employees free from the bar of limitation.

Such transfer can be valid only if it gives complete dis-charge to the employer from the debts. If it does not, the Act must be held to infringe Art. 19(l)(f) of the Constitution. The· Act contains no provision granting discharge to the debtor. The bar of limitation prescribed either by s. 15 of the Payment of Wages Act (Act IV of 1936) or Art. 102 of the Limitation Act or the provisions of s. 56 of the Contract Act, assuming they applied, could not give such discharge.

Where the· Statute deals w'ith rights arising out of a· con-tract and interferes with the rights of one of the parties to it, it must affect those of the other parties to it as well. Conse-quently, the impugned Act wh'ich takes over the rights of the employees in respect of wages due to them without compen-sation and is, therefore unconstitutional, as contravening Art. 19(l)(f) or Art. 31(2)' of the Constitution, would l:e unconstitu-tional as regards the appellant as w~ll.

The purpose of legislation relating to abandoned property must be, in the first instance, to safeguard the property in the interest of the true owner and thereafter, in absence of any claim, the taking over of it by the State. The impugned Act which vests the property absolutely in the State w'ithout any regard for the claims of the true owner cannot be said to be a. law relating to abandoned preperty.

Connecticut Mutul Life Insurance Company v. Moore, 333 U.S. 541, Anderson National. Bank v. I.tuckett, 321 U.S. 233 and Standard Oil Company v. New Jersey, 341 U.S. 428, referred to.

j[J.51 BamiAy Dyeillfl J, MaunfatJiu,rlnf Co., Lid. v. TM.~lal• of

v. As regards the fines mentioned in s. 3(2)(a) of the Act the TM.~lal• of appellant must be held to be bare trustee under s. 8 of the l!om/my rind Other• Wages Act having no beneficial interest in fund created by that Act, and, consequently, ss. 3(1) and 3(2)(a) of the Act can-not contravene Art. 31 (2) or Art. 19(l)(f) of the Constitution.

Nor could it be said that the Act by extending the circle of beneficiaries had encroached on the rights of the employees of the appellant. These sections must, therefore, be held to be constitutionally valid.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 167 of 1954.

Appeal from the Judgment and decree dated September 14, 1953, of the Bombay High Court in Misc. Application No. 267 of I 953.

R. J. Ko/ah, B. Narayanaswamy and J. B. Dadachanji, for the appellants.

H. M. Seervai, Advocate General for the State of Bom·

bay and R. H. Dhebar, for the respondents.

1957. December 20. The following Judgment of the Court

was delivered by

..... 1n.... .,

VENKATARAMA AIYAR J.-The appellant is limited

Company incorporated under the Indian Companies Act, 1879. It is carrying on business in the manufacture of textiles, and owns three factories called Spring Mills, Textile Mills and Bombay Dye Works, all of which are situate in Bombay. In its balance sheet for the year 1951, it has shown as one of its liabilities sum of Rs. 1,65,731-1-0 under the heading "Unclaimed wages". This amount is made up of wages earn-ed by the workmen in the factories but remaining undrawn by them, and reJ?resents accumulations from year to year ever since the formation of the Company which, it is stated. was about the year 1880.'The dispute in this appeal mainly relates to this amount

Aili"' J.

In 1953, the Legislature of the State of Bombay enacted

the Bombay Labour Welfare Fund Act (Born. 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 t11e main point for our determination in this appeal. The preamble to the Act recites that "It is expedient to constitute Fund for the financing of: activities to promote ~elfare of la~~u.r !~ the State of Bombay and for conductmg such act1v1tqes . Section 2 is the definition section; sub-s. (2) defines an "em-ployee" 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 factory any person named under s. 7(i)(f) of the Factories Act. 1948, as the manager". Sub-seetion (10) defines "Unpaid accumulations" as meaning "all payments due to the employees but not made to them within period of three years from the date on which they became due whe-ther before or after the commencement of this Act including the wages and gratuity legally payable". "Wages" is defined in sub-s. (11) as meaning "all remuneration capable of being expressed in terms of money which would, if the terms of the contract of employment, express or implied were fulfilled. be payable to person employed in respect of his employ-ment or of work done in such employment: ........... ".

1[9]s; DtJ.<,.g ~':.~f::.'""' TlleB~ttof 11nd OtAtrt Venkatarama .A.iyar J.

as 1s; point for our determination in this appeal. The preamble to BombQy DtJ.<,.g '*

the State of Bombay and for conductmg such act1v1tqes . Born/Jay 11nd OtAtrt

Then, there is s. 3, which runs as follows:

(l 1. "There shall be constituted fund called the Bom-

bay Libour Welfare fund and, not withstanding anything con-tained in any other law for the time being in force, the sums specified in sub-section (2) shall be paid into the Fund.

~1. The Fund shall consist of-

la) all fines. realised from the employees;

U,J all unpaid accumulations;

(c) any voluntary donations;

(d) any fund transferred under sub-section (5) of sec-

. tion 7; and

<e) any sum borrowed under section 8.

(3). The sums specified in sub-section (2) shall be co11ect. ed by such agencies and in such manner and' the accounts of the Fund shall be maintained and audited in such manner as may be prescribed."

Bcmobuy v_qdng &. ed by such agencies and in such manner and' the accounts of

Manufacrnri"'J Oo., Ltd. v.

JJo•~'/,:Y ~":J,' f/,h.,., Section 7~1) provides that "the Fund shall v~st in and be hel~

and apphed by the Board as Trustees sub1ect to the prov1-sions and for the purposes of this Act."

Venkatarama .'l•!JU·f' J.

. . . .

Sub-section . (2) of s. 7 1s . very matenal, and . 1s . as follows:

"Without prejudice to the generality of sub-section (I) the moneys in the Fund may be utilized by the Board to defray expenditure on the following:

(a) community and social education centres including reading rooms and libraries;

(b) community necessities;

(c) games and sports;

(d) excursions, tours and holiday homes;

(e) entertainment and other forms of recreations;

(f) home industries and subsidiary occupations for women and unemployed persons;

(g) corporate activities of social nature;

(h) cost of administering the Act including the salaries and allowances of the staff appointed for the pur-poses of the Act; and

(i) such other objects as would in the opinion of the State Government improve the standard of living and ameliorate the social conditions of labour:

Provided that the Fund shall not be utilized in financ-ing any measure which the employer is required under any law for the time being in force to carry out;

Provided further that unpaid 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".

Section 11 provides for the appointlnent 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 recover-

able on behalf of the Board as an arrear of land revenue."

Section 19 authorises the State Government to make rules Bo;/'ay tyeinv &: to carry out the purposes of this Act, Section 23 provides o:~ ~~"nu ~~"nu ~ ~

o:~ ~~"nu ~~"nu ~ Tlie State "f anJ OtkuB OtkuB ve.;;;;;rama Aiyar J.

"In section 8 of the Payment of Wages Act, 1936 (IV Brm1bay anJ OtkuB OtkuB of 1936), to sub-section (8) the following shall be added, be-ve.;;;;;rama fore the Explanation, namely: Aiyar J.

"but in the case of any factory or establisl).ment to which the Bombay Labour Welfare Fund Act, 1953 (Born. XL of 1953), applies all such realisations shall be paid into the Fund constituted under the said Act."

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 Nos. 3 and 4, which are as follows :

3. "Payment of fines and of unpaid accumulations by

·employer-(1) Within fifteen days from the date on which the Act shall come into force in any area, every employer in such area shall pay by cheque, money order or cash to the Welfare Commissioner-

(a) all fines realised from the employees before the said

date and remaining unutilized on that date; and

(b) all unpaid accumulations held by the employer on

the aforesaid date.

(2) The employer shall along with such payment submit

statement to the Welfare Commissioner giving full parti-culars of the amounts so paid.

(3) Thereafter, all fines realised from the employees and

all unpaid accumulations during the quarters ending 31st March. 30th June, 30th September and 31st December shall be paid by the employer in the manner aforesaid to the Wel-fare Commissioner on or before the 15th of April, 15th of July. 15th of October and 15th of January succeeding such quarter and statement giving particulars of the amo.unts so paid shall be submitted by him along with such payment to the Welfare Commissioner.

1957 4. Notice for payment of fines and unpaid accumulations Bomwy Dyeing <bbY Welfare Commi.lsioner-The Welfare Commissioner may, 1~':{";i~rlng after making such enquiries as he may deem fit, and after v. calling for report from the Inspector, if necessary, serve Bombay and Others Th£ Blatt. of nol!ce on any emp oyer to pay any portion o • 1 . fi nes rea 1· 1se Venhltarama from the employees or unpaid accumulations held by him Aiyar J. which the employer has not paid in accordance with rule 3. The employer shall comply with the notice within 14 days of the receipt thereof."

On July 7, 1953, the Welfare Commissioner, Bombay

appointed under s. 11 of the impugned Act, sent notice to the appellant· and other companies similarly situate, inviting their attention to the relevant provisions of the Act and of the rules and calling upon them to remit the fines and unpaid accumulations remaining with them. in accordance with the directions contained therein. To this. the appellant sent reply on the same date impugning the validity of the Act as being in violation of the provisions of Art. 31(2), and followed it up by filing the writ petition out of which the present appeal arises. it being treated by consent of parties as test case.

The application was heard by Chagla C. J. and Tendolkar J. who held that the impugned Act was intra vires but on difierent grounds. The learned Chief Justice was of the opinion that, on its true construction, the Act merely substituted the Board as creditor in the place of the! employees, that there was not" 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 deprivation of moneys, and as it was done under the authority of law, it fell within the protection of Art. 31 (!). In the result, the petition was dismissed. The learned Judges. however, granted certificate under Art. 132. and that is how the appeal comes before us.

The sole point for. determination in this appeal is whe-19.;7 ;ther s. 3 (1) and sub-els. (a) and (b) of s. 3 (2) of the Act are JJ0111bay Dy~lno a. void as contravening the provisions of the Constitution; but Jto~~;ac'u'ti'J~ to decide it, we have to consider quite number of questions v. . . d' . th ts Tlt.e State of which have een raised an iscusse m argumen e- Bombay and 011,er• fore us. It will be convenient to deal with the two items, fines r enL-alarama realised from the employees, s. 3(2)(a) and unpaid accumu-A;yar J. Jations, s. 3(2) (b) separately, as the issues involved in the de-.termination of their validity are different.

Taking first unpaid accumulations, s. 3(2) (b), the con-tention of Mr. Kolah for the appellant is that .s. 3(1) is repug-nant to Art. 31 (2) inasmuch as it deprives the employers of moneys belonging to them without payment of any compen-sation merely on the ground that they represent wages due to the employees. Now, money is undoubtedly property, and it cannot. be disputed that person who has money does not -0ease to be its owner merely by reason of the fact that he owes debts in satisfaction of which it may have to be applied. Until the creditor takes appropriate proceedings under the law for the realisation of his debt and the title of the debtor is extinguished in those proceedings, the title to the property continues in the debtor. Mr. Kolah is therefore clearly right in . his contention that the liability of the appellant to pay wages to the employees does not ipso facto extinguish its title to the moneys belonging to it even pro tanto, and that the effect, therefore, of s. 3(1) is to take away money belonging to it. Then, the question is whether such provision is hit by Art. 31(2) on the ground that it is acquisition or taking possession of property for public purpose without payment of compen-sation. It is common ground that the taking is for public purpose. The point in dispute is whether what is sought to be done under s. 3 is acquisition or taking possession of pro-perty within Art. 31(2). Tendolkar, J., answered this question against the appellant, because, in his view, Art. 31(2) would apply only if there was transfer of title to or beneficial in-terest in the amounts to the State, that s. 3(1) effected neither, L/P(D)3SOI-7that it did deprive the employers of their moneys, but that fell under Art. 31 (I) and not Art. 31 (2), and that as that was done under the authority of law, it could not be questioned.

Bombay Dyeing "' fell under Art. 31 (I) and not Art. 31 (2), and that as that was

M0:~'.ftrng v. The SW. of Bombay and Other. Venkatarama .Aiyar J.

Subsequent to this decision, this Court had occasion t<l' consider the true scope of Art. 31(2) in relation to Art. 31(1) in The State of West Bengal v. Subodh Gopal Bose(') and in Dwarkadas Shrinivas of Bombay v. T~ SholafJJ'& Sl!inning and Weaving Co. Ltd('). In The State of West Bengal v. Subodh Gopal Bose('), the majority of the learned Judges took the view that Arts. 31 (!) and 31(2l were not mutually exclusive, that it was not an essential requisite of acquisition under Art. 31(2) that there should be transfer of title to the State, that deprivation of property and substantial ab-ridgement of the rights of the owner were also within Art. 31(2), .and that 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 (I) had reference to the "police power" of the State, Art. 31(2) dealt with the power of "eminent do-main". In Dwarkadas Shrinivas of Bombay v. The Sholap,ur Spinning and Weaving Co.(') the majority of the Judges again reiterated the view expressed in The State of West Bengal v. Subodh Gopal Bose(') 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).

On these decisions, it should follow that s. 3 of the im-pugned Act is bad as infringing Art. 31(2), in that it deprives the appellant of its moneys without giving any compensa-tion. Mr. Seervai, however, resists this contention on the strength of Art. 3 H2A), which was introduced by the Consti-tution (Fourth Amendment) Act, 1955. It is as follows.

"Where law does not provide. for the transfer of the ownership or right to possession of any property to the State or to corporation owned or controlled by the State, it shall ('l [19!i4] S.C.R. 587. I') [1954) S.C.R. 674.

not be deemed to provide for the compulsory acquisition or 1as1 requisitioning of property, notwithstanding that it deprives Bornbo11 -ii~;ng ~ any person of his property." · Jla••Jaeturing

Jla••Jaeturing Oo. Ltd., 2'Aa Blah .... ~ °""'°11 ~ IAer, Ve",!';14';."~

The argument is that the thet>ry that acquisition in Art. 31(2) 8is not confined to cases of transfer of ownership to the State, and that even deprivation of property would fall within it, which is the baisis of the deoisions in The State of West Ben-gai v. Subodh Gopal Bose(') and in Dwarkadas Slirinivas of Bombay v. The Sholapur Spinning and Weaving Co. Ltd.(') can, in view of the above amendment, no longer be accepted as correct, and that those decisions therefore require to be reconsidered in the light of the new Art. 31(2A). But-it is not disputed that this provision has no retrospective operation and that the rights of the parties must. be decided in accord· ance with the law as on the date of the writ application, and that on the provisions of the Constitution as they stood on that date and as interpreted in The Staie of West Bengal v .. Subodh Gopal Bose(') and Dwarkadas Shrinivas of Bombay v. The Sholapur Spinning and Weaving Co. Ltd.(1), s. 3 (l) of the impugned Act would be obnoxious to Art. 31(2). This should be sufficient to conclude this question in favour of the appellant, but the respondents contend that s. 3(1) is not within the prohibition of Art. 31(2), because it operates only on money, and money is not property for purposes of that Article.

2'Aa Blah ~ 8°""'°11 ~ IAer,

14';."~ ';."~ 1JG

There is considerable authority in America that the power .of eminent domain does nt>t extend to the taking of money, the reason being that compensation which is to be · paid in respect of money can only be money, and that, there-fore, in substance it is forced loan. In The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbl!angu('), this view was adopted by Mahajan J. at pages 943-944, by Mu-kherjea J. at page 961 and by Chandrasekhara Aiyar J. at pages 1015 to 1018. It is airgued for the respondents that the position under Art. 31 (2) is the same as in America, as the (') [1954] S.C.R. 587. (') (1954] S.C.R. 674. (') [1952] S.C.R. 889. .

ll32 SUPRE:\IE COURT HEPOHTS

195? proV1S10n therein that either the amount of the compensa-11ombt>y Dyeing .r. tion should be fixed or the principles on which and the man-Man•Jaduri"11 ner in which compensation is tt> be determined should be co., Lid., specified, involves that what is taken is not money. It is ar-r1,. s;;. of gued, on the other hand, for the appellant that the latest .B""'""Y allci Otlltr•trends in American law show, as was observed by Das J. (as Ve...tala••ma he then was), at pages 984-985 in The State of Bihar v. Maha-.Aiyur J. ra;adhirai Sir Kameshwar Singh of Darbhanga('), depar-ture 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 provi-sions of our Constitution. If the contention of the respbndents is to be accepted, the question naturally arises what protec-tion person has in respect of moneys belonging to him if he can be deprived bf 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 wider connotation that what it bears in Art. 31(2) and includes money, and that the citizens have the right to hold tr.oney subject only to law such as is saved J?y Art. 19(5). In sup-port bf this position, he relied on the decision in Bijay Cot-ton Mills Ltd. v. The State of Aimer(') in which this Court applied Art. 19(6) in pronouncing on the validity of the Minimum Wages Act (XI of 1948) requiring the employers to pay wages at rate not less than that to be fixed by the Government

Assuming that the correct position is what the respbn-dents contend it is, the question that has still to be determin-ed is whether the impugned Act could be supported under Art. 1905. There was some discussion before us as to the scope of this provision, the point of the debate being whe-ther the words "imposing reasonable restriction" would cover legislation, which not merely regulated the exercise of the rights guaranteecl by Art. 19(l)(f) but totally extinguished them, and whether law like the present one which deprived the owner bf his properties could be held to fall within that provision. It was argued that law authorising the State to (') [1952] S.C.R. 889. (') [1955) 1 S.C.R. 752.

SUP.REY.IE COURT REPORTS

seize and destroy diseased cattle, noxious -Orugs and the like, I96T could not be brought within Art. 19(5) if the word 'restric- Bombay Du•ing "' tion' was to be narrowly construed, and that accordingly the ~an•'facJZ:J"fl power to restrict must be held to include, in appropriate o., v. · cases, the power to prohibit the exercise of the right. That BO:/:,,.~ ::::f" 01°/.,,. view does find support in the observations of Lord Porter - -. Venkatasa1111J lll Commonwealth of Austraira v. Bank of New South Aiyar J. Wales('); but the present legislation cannot be sustained even on the above interpretation of the word 'restriction', as s. 3( l) of the Act deals with moneys and money cannot be likened to diseased cattle or noxious drugs so as to attract the exercise of police power under Art. 19(5). It appears to us that whether we apply Art. 31(2) or Art. 19(5), the im-pugned Act cannot be upheld, and it must be struck down. unless we accept the other contentions which have been urged for the respondents in support of its validity. Those contentions are firstly. that the Act merely substitutes the Board as the creditor in the place of the employees, and that ss. 3 and 17 merely prescribe the mode in which the obliga-tion is to be enforced and-that was the ground on which Chagla C. J. based his judgment; and secondly, that the im-pugn~d legislat!on is one in respect of abandoned property, and it is not open to attack as contravening either Art. 19(l)(f) or Art. 31(2). It is those oontentions that now fall to be considered.

As regards the first contention, the question is whether on fair construction of the provisions of the impugned Act, it is possible to spell out substitution of creditors. When an employee has done h!s work, the amount of wages earned by him becomes debt due to him from the employer, and it is property which could be assigned 'under the law. If the em-ployee had assigned the debt to the Board constitUted under the Act, the latter would be entitled to recover it from the em-ployer. And what could be done by act of parties can also be done by legislation. What we have to see, therefore, is whether on the provisions of the statute it could be held that

( [1]) (1950] A.C. 235, 311.

1957 there is statutory transfer of the wages earned by the work-Bomba ei"fl "' man to the Board. Section 5 of the Act vests the amounts men-M•~uJdituring tioned in s. 3(2) in, the Bo11rd, and s. 3(1) directs that those Oo., £14, amounts should be paid by the employer to the Board. Coun-Th• slate of sel for the appellant contends that there are in the Act no Bombay and OtMra words of transfer of the debts to the Board, and that there Vtnbitarama is only provision for pavment of the amounts. But this is J .Aiyar J. taking tbo narrow view of the true scope of those provi-sions. Looking at the substance of the matter, we are of opi-nion that s. 3(1) and s. 5(1) do operate to transfer the debts due to the employees, to the Board.It will be observed that the definition of "unpaid ac-cumulations" takes in only payments due to the employees remaining unpaid within period of three years after they become due. The intention of the Legislature obviously was that claims of the employees which are within time should be left to be enforced by them in the ordinary course of law, and that it is only when they become time-barred and useless to them that the State should step in and take them over. On this, the question arises for consideration whether debt which is time-barred can be the subject of transfer, end if it can be, how it can benefit the Board to take it over if it can-not be realised by process of law. Now. it is the settled law of this country that the statute of Lim;tation only bars the remedy but does not extinguish the debt. Section 28 of the Limitation Act provides that when the period limited to person for instituting suit for possession of any property has expired, his right to such property is extinguished. And the authorities have held-and rightly, that when the pro-perty is incapable of possession, as for example, debt, the section has no application, and lapse of time does not ex-tingu'sh the right of person thereto. Under s. 25(3) cf the Contract Act, barred debt is good consideration for fresh promise to pay the amount. When debtor makes pay-ment without any direction as to now it is to be appropiat-ed, the creditor has the right to appropriate it towards barred debt. (Vi de s. 60 of the O>ntract Act). It has also been held that ~reditor is entitled to recover the debt from

the surety, even though suit on it is barred against the 1967 principal debtor. Vide Mahant Singlt v. U. Ba Yi('), Subra· Bombay Dyeing " m~ia Aiyar v. Gopala Aiyar('), and Dil Muhammad v. Saiti ~:~~~J,~;.ng Das('). And when creditor has lien over goods by way of v. ·security for oan, can en orce · 1 t J' 1en tvr o taming e... e... · • Bolllbay 'l'lie State and 'l'lie State and and Ol!it.r• of of satisfaction of the debt, even though an action thereon would be time-barred. Vide Narendra Lal Khan v. Tarubala Dasi('). That is also the law in England. Vide Halsbury's . Laws of England (Hailsham's Edition), Vol. 20, page 602,. para. 756 and the observa~ions of Lindley L.J. in Carter v. White(') and of Cotton L. J. in Curwen v. Milburn('). In American Jurisprudence, Vol. 34, page 314, the Jaw is thus stated. ·

1en tvr o taming e... e... · • Bolllbay 'l'lie State and 'l'lie State and and Ol!it.r• of of

"A majority of the courts adhere to the view that statute of limitations, as distinguished from statute which prescribes conditions precedent to right of lM::tion, does not go to the substance of 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 charac-ter as such merely because it is barred; it still affords suffi-·cient consideration to suppbrt promise to pay, and gives creditor an insurable interest."

, 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 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."

The position then is that under the law debt subsists notwithstanding that its recovery.is barred by limitation, and no argument has been addressed to us by the appellant that the transfer of such debt is invalid; and indeed it could' not be, in view bf the provisions in the impugned Act, which re-( ') (1939) L.R. 66 I.A. 198. (') (1910) I.L.R. 33 Mad. 308. (:1) A.LR. 1927 Lah. 396. (') 192~\ I.LR 48 Cal, 817, 823 {') (1883,) .25 Ch. D. 666. 672. (') (1889) 42 Ch. D. 424, 434.

1967 lease the debts due to the employees from the bar of limita-Bom/Jay Dyeing ,, tion. Section 3( [) provides that payment shall be made of the-Ma0:("°£':i."!l amounts specified in sub-cl. (2) "notwithstanding anything 'v. contained in any other law for the time being in force." B~y 1;::::; 0;'l,. similar provision is again enacted in the second proviso te> sub-s. (2) of s. 5 that "unpaid accumulations" and fines shall V nl:nla.rama .Aiyar J, be paid to the Board .. notwithstanding anything contained in the Payment of Wag~s Act, 1936, or any other law for the time being in force." One of those laws is the law of limita-tion, and the effect of these provisions is to suspend limita-tion in respect of the claims to which s. 3(2) relates. To dis-pel any doubt as to whether it wa·s competent to the Legisla-ture of the Bombay State to modify the provisions of the Limitation Act. it should be stated that limitation is •I topic enumerated in the Concurrent List, being Entry 13 in List III in Seventh Schedule to the Constitution, and under Art. 254(2). the State Legislature can enact law modifying the Central Act, provided it is reserved for consideration by the President and assented to by him, and that has been done in the present case. Coming to the impugned Aot, there is one other provision therein to which reference must be made. Section 17 provides that without prejudice to other modes of recovery, the sums payable to the fund under s. 3 may be re-covered as arrears of land revenue. This is provision which is generally made when amounts are due and payable to the· State, and Mr. Kolah concedes, that if the impugned law is otherwise vMid, it cannot be said to be bad by reason of this section. On the above analysis, there oannot be any doubt that the effect of the relevalllt provisions of the Act is to trans-fer to the Board the debts due by the appellant to its em-ployees free from the bar of limitation.

The question still remains whether there has been sub-stitution of creditors,. and that can only be, if the debt due to the employee is discharged and in its place there is substi-tuted the debts in favour of the Board. If, however, the em-ployer is not relea!sed from his liability to the employee, then the effect of s. 3(1) is omy to create in the Board statutory

creditor in addition to the creditor under the contract of em-em-11JJ1 ployment, and there can be no question of substitution. Mr.Bombay Dyei1'il 'il Seervai ·agrees that if the Act does not operate to discharge . . Manufacturing Go., Go., Ltd. the employer .from his obligations to the employees in respect ,v. o t wages ue to t em, t en tt must · Id to uncon~ BoinJJav The The !:!late a7id a7id of stitutional as infringing Art. 19(1 )(0, because his contention · l 'enkataram.o. that the effect of the Act was only to take the property of the Aiyar j. employer in discharge of its obligations could not then be maintained.

of em-em-11JJ1 Mr.Bombay Dyei1'il 'il Manufacturing Go., Go., Ltd. ,v. to uncon~ BoinJJav The The !:!late a7id a7id Otloera of l 'enkataram.o. · · Aiyar j.

The real point for determination, therefore, is whether on payment of the amounts in accorda!nce with s.3(1) of the Act, the appellant gets discharge of his obligation to the employees in respect of wages due to them. The Act does not contain any provision to that effect, and the abs6nce thereof has been strongly relied on by the appellant as showing that no substitu•ion 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. 3(1) of the Act is to render the contract of em-pl<>yment void under s. 56 of the Contract Act, and the appel· lant is thereby discharged from his obligations thereunder. We shall now examine both these conten,ions.

To appreciate the first contention, it is necessary to refer to the relevant provisions of the Wages Act. Section 2(vi) de-fines "wages" in terms which comprehend whatever falls within the definition of that word in s. 2(11) of the impugned Act. Section 3 casts on the employer the responsibility for payment of wages to persons employed by him. Section 4 provides for the fixing of wage per;ods, which, however, are not lo exceed one month. Under s. 5, the wages have to be paid before the expiry of ten days after the last day of the wage period in case of employees who continue in service and in the case of those whose employment has been termi-nated, within· the second working day of such termination.

SUPIU<:ME COURT REPORTS

Section J 5 provides that where am unauthorised deduction has been made from the wages wages of an employed person or pay. ment of wages has been delayed, such person may apply to the authority appointed under the Act for direction for pay-ment of the amount deducted or the delayed wages, as the case may be, together with payment of compensation. Such application has ro be made within six months from the date on which the deductions were made or the date on which the payment of wages became due, and by Act No. 62 of 1953 of the Bomb~ Legislature, the period of six months has been enlarged to one year. There is proviso ro this section that an application thereunder can be made after the period prescribed therein "when the applicant satisfies the authori· ty that he had sufficient cause for not making the application within such "period." Section 22(d) of the Act provides that.

iBombay Dyoing 4' has been made from the wages wages of an employed person or pay.

Manufacluring Oo.,Ltd. m •· ~ ht Statg o/

~ ht Statg o/ Bomliay ,..d 01,,.,,. ment of the amount deducted or the delayed wages, as the

V enb:Haranet1 Aiyar J.

"No Court shall entertain any suit for the recovery of wage of any deduction from wages in so far as the sum so ·claimed could have been recovered by an application under ·section J 5 ...... "

Now, the argument of the respondents is that under the

provisions aforesaid, an employee has to prosecute his claim for unpaid wages before the authority within the time limit· ·ed bys. 15 of the Wages Act. which is one year in the State of Bombay, that if he fails to do so it becomes uncnforce· able, and suit with respect thereto under the general law is also barred: The result is, it is contended, that having regard to the definition of "unpaid accumulations" as meaning all payments due to the employees but not made to them with· 'in 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 payment under the impugned Act gives him what is, for all practical pur-pOses, good discharge. This argument rests on the supposi· tion 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 mclu w atever are wages . _ 1957 under the impugned Act. But s. 1(6) limits the application o'l.Bomb11y Dyeing .r. the Wages Act to wages w h1ch [. ]are be ow I Rs . -?OQ or .Manufacturing co., Ltd. wage period. In respect of wages of Rs. 200 ?r more'. i~ is 'I'M 8~ of the general law that would apply, and the period of hm1ta-Bom00y and Otha-a tion is not one year under s. IS of the Wages Act but three Vtnl.;ntarama years under Art. 102 of the Limitation Act, which period is Aiyar J. capable of extension under the provisions of the Limitation Act beyond the three years mentioned in s. 2(10) of the im-pugned Act. Then, it is tq be noted that under the proviso to s. 15(1), the authority has the power to admit petition even beyond the period mentioned there, if sufficient cause is shown therefor. To this, the reply of the respondents is that as on the terms of s. 3(1) and the second proviso to s. 5(2) they are to take effect notwithstanding anything contained in the Wages Act or any other law, they override the power con-ferred by the proviso to s. 15(1) of the Wages Act or the pro-visions of the Limitation Act.

Even as regards s. 22 of the Wages Act. there is diver-gence of judicial opinion as to its true scope. In Simpalax Manufacturing Co. Ltd. v. Alla-Ud-Din('), it was held that if there was any bona fide dispute as to the amount payable, the jurisdiction of the Civil Court was not barred by s. 22. On the other hand, it was held in Bhagwat Rai v. Union of India(') that the jurisdiction of the Civil Court would be barred, even if there was bona fide ~spute, and that the bar under s. 22(d) was absolute, and certain observations in Modern Mills Ltd. v. Mangalvedhekar(') and A. R. Sarin v. B. C. Patil(') were relied on. as supporting this contention. Even if Mr. 'Seervai is right in his contention that the law is corre9tly laid down in Bhagwat Rai v. Union of India(') and that the deci-sion in Simpalax Manufacturing Co. Ltd. v. Alla-Ud-Din(') jg wrong, the fact remains that claims in respect of unpaid wages to which the impugned Act applies must, in view of :s. 1(6) of the Wages Act, fall at least in part outside the pur-(1) A.I.R. 1945 Lah. 195. f'), I.L.R. 1953 Nag. 433. (') A.I.R. 1950 Bom. 342, 145. (') AI.R. 1951 Bom. 423.

view of that Act, and the protection afforded by s. 15 of that

Bombay Dy,ing & Act will not be available with reference thereto .

.Mantif1icturinr; Oo., LUI.

lt is next contended that even if the impugned Act does [[not protect the employer in respect of unpaid wages which ]]fall outside the Wages Act, it should be upheld in so far as it relates to those claims which fall within the purview of that Act, as the bar of limitation under s. 15 of that Act is sufficient safeguard to the employer against being made liable at the instance of the employees for wages which had been paid. to the Board. And it is also contended that even with refer-ence to claims for unpaid wages which fall outside the Wages Act the impugned Act should be held to be valid if such claims are barred under the provisions of the Limitation Act. In other words, the contention is that 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 cf the Wages Act or the Limi-tation Act.

7[•]1[., ][State of ][[not protect the employer in respect of unpaid wages which ]]Bombay and 011 .. ,. fall outside the Wages Act, it should be upheld in so far as

Venkatarama Aiya' J.

The impogned 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 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 form distinct category, and that this principle applies not only when 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 The State of Bombay v. F. N. Balsara('). The State of Bombay v. The United Motors (India) Ltd.('), and R.M.D. Chamar-baugwalla v. Union of India('), and the principles applicable have been stated fully in Chamarbaugwalla's Case('). But as-suming on the basis of the above authorities that we can con-(') (1951] S.C.R. 682. (') (1953] S.C.R. 1069. (") [1957] S,C.R. 930.

fine the operation of the impugned Act to those claims of un-1957 paid wages which are barred by limitation, the question still Bombay Dr1eing "' 1s . w et l 1er t . 1mpugne ct gives . d' 1sc arge o t th emp I o-JlanufrLcturing oo., Ltd. yer even in respect of those claims; for, as already stated, the T v; operation of Art. 19(l)(f) can avoided on . I y t . 'f 1t . . ts esta bl' 1- Bombay lie rmd .Slate 011ierof 8 shed that there has been substitution of creditors, which I' enkatara111a can only be if and when the employer gets discharge from Aiyar J. those obligations to the employees. The point to be decided therefore is whether the effect of the bar of limitation is to discharge the employer from liability to the employees.

It has been already mentio~ed that when debt becoltJes time-barred it does not become extinguished but only unen-forceable in court of law .. Indeed, it is on that footing that there can be statutory transfer .of the debts due to the em-ployees, and that is how the Board gets title to them. If then debt subsists even after-it is barred by limitation, the em-ployer does not get,-in law, discharge therefrom. The modes in which an obligation under contract becomes dis-·charged are well-defined, and the bar of limitation is not one of them. The following passages in Anson's Law of Con-.tract, 19th Edition, page 383, are directly in point:

"At Common Law lapse of time does not affect contrac-tual rights. Such right is of permanent and indestructible character, unless either from tile nature of tile contract, or from its terms, it be limited in point of duration.

"But though the right possesses this permanent charac-ter, the remedies arising from its violation are withdrawn after certain lapse of time; interest reipublicae ut sit finis litium. The remdies are barred, though the right is not ex-tinguished."

And if the law requires that debtor should get discharge before he can be compelled to pay, that requirement is not satisfied if he is merely told that in the normal course he is not likely to be exposed to action by the creditor.

That this distinction is not purely academical but is of practical importance will be seen, when regard is had to the

1951 Bombay Dy1dng d1 Manufacturing Oo., Lid. v. The State of Bombay and 0th"' Vinkatarama _.Aiyar J.

provisions of the Industrial Disputes Act. Under that Act, there is no period of limitation prescribed for referring dis-pute for adjudication by tribunal. Even when claim for wages falls within the purview of the Wages Act and an ap-plication 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 Indus-trial Disputes Act. It was held by the Federal Court in Sham· nagore Jute Factory Co. Ltd. v. S. M. Modak(') that s. 2'.t(d) of the Wages Act did not take away the power of the autho-rities to refer to tribunal set up under the Industrial Dis-putes Act 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 enforce-ment of payment If 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 abso-lute protection to the employer, and the same consequence must follow when the bar of limitation arises under the Limi-tation Act. The result therefore is that when an employer makes payment under s. 3(1) of the Act he gets no discharge from his obligation to the employees, even when the enforce-ment thereof is barred by limitation.

The contention based on the provisions of the Wages Act failing, Mr. Seervai falls back on s. 56 of the Contract Act as furnishing ground for holding that the employer is discharged. Para. (2) of s. · 56 provides that,

"a contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful."

It is argued that by operation of s. 3 of the impugned Act, the performance of the contract by the employer has become impossible, and the contract has thereby become void. Section (') [1949] F.C.R. 365.

56 of the Contract Act embodies the law relating to frustra-

1961 Bonibay Dyei .,, Manufacturing 0<>., Ltd. y, 'l'Ae S/,a1e of Bombay ond 01/itra Vn.l:alarania .Aiyar J.

tion of contracts, and the true scope of that section was con- Bonibay Dyei .,, sidered by this Court in Satyabrata Ghose v. Mugneeram Manufacturing Bangur and Co.('). The ppsition was thus stated by Mukher-0<>., Ltd. • J y, 1ea · : 'l'Ae S/,a1e of

"In the large ma1onty of cases however the doctrme of • • . frustration is applied not on the ground that the parties them· selves agreed to an implied term which operated to release them from the performance of the contract. The relief is given by the court on the ground of subsequent impossibility when it finds that the whole purpcse or basis of contract was frustrated by the intrusion or occurrence of an unexpect· ed event or change of circumstances which was beyond what was contemplated by the parties at the time when they' entered into the agreement. Here there is no question of finding out an implied term agreed to by the parties embodying provi-sion for discharge, because the parties did not think about the matter at all nor could possibly have any intention re· garding it. When such an event oi' change of circumstances occurs which is so fundamental as to be regarded by law as striking at the root of the contract as whole, it is the court which can pronounce the contract to be frustrated and at an end. The court undoubtedly has to examine the contract and the circumstances under which it was made. The belief, knowledge and intention of the parties are evidence, but evidence only on which the court has to form its own conclu-sion whether the changed circumstances destr.ayed altogether the basis of the adventure and its underlying. object. This may be called rule of construction by English Judges but it is certainly not principle of giving effect to the intention of the parties which underlies all rules of construction. This is really rule of positive law and as such comes within the purview of section 56 of the Indian Contract Act."

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 {') [1~54] S.C.R. 310, 323.

.Bomb('!I J1111·ing d: _\f 1J·1<'11f'1,.J.uring Co .. Lid. ,.

Tiu: Stafo G/ Bombay and (.llic,rs

V ~nka.~1ram4i Aiyar J.

not have contemplated that the Legislature would have in-tervened and required the employer to pay the arrears of wages to the Board, and that that is supervening impossi-bility which brings s. 56 into play and renders the contract void. We are not satisfied that the performance of the con-tract of service has been rendered impossible by reason of s. 3(1) of t·he impugned Act. But assuming that that is the posi-tion. what follows? The matter would then be governed by s. 65 of the Contract Act. which provides that when con-tract becomes void, any person who has received any ad-vantage 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 that liability can be enforced against him in spite of the fact that he has paid the unclaimed wages to the Board under s. 3(1) of the Act. We are therefore of ()pinion that even if the matter is governed by s. 56 of the Contract Act, the employer is no more discharged than by the operation of the bar of limitation under s. 15 of the Wages Act, or the provisions of the Limitation Act. In this view, it must be held that the provisions of the impugned Act are unconstitutional, in that they take away the property of the appellant in viola-tion of either Art. 19 (I) (f) or Art. 31(2) of the Constitution. contention was also raised on behalf of the appellant that even if the impugned Act did not encroach on any of the Constitutional rights of the appellant, it clearly violated the rights of the employees in that it deprives them of their right to wages earned by them, that it was therefore void as against them as being in contravention of Art. 31 (2), and being void against them, it was void against the appellant as well. For the respondents. it is contended that the Act cannot be held to infringe Art. 31 (2) even as regards the employees, as cho-ses in action equally with money are outside the operation of that Article, and reliance is placed on the observations already referred to in The State of Bihar v. Maharajadhi-

n1;a Sir, Kameshwar Singh of Darbhanga (supra) at pages 1967 942, 960-961 and 1015 to 1018. Now, as the Act takes over BombayDyeing <11 the rights of the employees in respect of wages due to them Manu/actnri"il Co.,W. even when they are net barred without making any provision vf . . The tale" 8. for compensation of the same to them, it must at least to Bombay and OtJ.er4 that extent be held to ·be unconstitutional, whether as con· Venkatarama travening Art. 19(1) (f) or Art. 31(2) it is unnecessary to de- . Aiyru·J. cide.

lt is then argued that this is an objection open only to the employees, and that the appellant can make no grievance of it. It is no doubt true that question as to the constitu-tionality of statute can be raised only by person who is aggrieved by it; but here, the statute deals with rights arising out of contract, and that presupposes the existence of at least two parties with mutual rights and obligations, and it is difficult to see how when the rights of one party to it are interfered with, those of the other can remain unaffect-ed by it. Let us assume that the appellant makes payment to the Board under s. 3 (1) of the impugned Act on the foot-ing that the law is not unconstitutional as against him. What is there to prevent the employee from suing 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 statute which operates on con-tract must affect the rights of all the parties to the contract, and if it is bad as regards bne of them, it should be held to be bad as regards the others as well. It is unnecessary to pur-sue this question further, as we have held that the Act is unconstitutional even as regarqs the appellant.

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 can-not be held to violate the rights of any person either under Art. I 9(1) <0 or Art. 31(2). That would be the correct posi-tion if the character crf the legislation is what the respon-dents claim it to be, for it is only person who has some in-terest in property that can complain that the impugned legis-L/P(DJ SCl--8

1967 lation invades that right whether it be under Art. 19\IJ (fl or Bombay Dyeing"' Art. 31(2), and if it is abandoned property ex llvpo1/1es1 Jlanufacluring there is no one who has am· interest in it But can .the 1·m-Uo. Lill. ·· · ~. pugned Act be held to be legislation with respect to aban-Tbc Stal< of Stal< of of I ., T h. . . . JJ,,m;,, 11 11 and Otlwn Otlwn < one property' o answer t IS question, 1t JS necessary to Venkalara.:ma examine the basic principles underlying such legislation. Aiyar J. and ascertain whether those are the principles on which the Act is frsmed. The expression "abandoned property" or to use the more familiar term '"bona vacamia" comprises proper-ties of two different kinds, those which come in by escheat and those over which no one has claim. In Halsbury's Laws of England, Thlrd Edition, Vol. 7 page 536, para. 1152. it is stated that "the term bona vacalllia is applied to thlngs in· which no one can claim property and includes the residuary estate of persons dying intestate". There is, however, this dis-tinction between the two classes of property that while the State becomes the owner of the properties of person who dies intestate as his ultimate heir, it merely takes possession of property which is abandoned. At common law, abandoned personal property could not be the subject of escheat. It could only be appropriated by the Sovereign as bona vacan-tia. Vide Holdsworth's History of English Law. Second Edi-tion, Vol. 7, pages 495-496. In Co1111ectic111 Mutual Life Insurance Company v. Moore\'.!. the principle behind the law was stated to be that "the State may. more properly, be custodian and beneficiary of abandoned property than any other person." Consistently with the principle stated above. law relating to abondoncd property enacts firstly provisions for the State conserving and safeguarding for the benefit of the true owners property in respect of which no claim is made for specified and reasonable period, and secondly. for those properties vesting in the State absolutely when no claim is made with reference thereto by the true owners within time limited.

Tbc Stal< of Stal< of of JJ,,m;,, 11 11 and Otlwn Otlwn < one

There has been quite number of laws on abandoned property in the American States, and their validity has been (') 333 U.S. 541, 546; (1947)) 92 L. Ed. 863. 869.

the subject of numerous decisions in the Supreme Court of 195~ United States. In Anderson National Bank v. Luckett('), the BombavD11dng--.1J law related to Bank ·deposits. It provided that if moneys in . M~1,~11u deposit had not been demanded or operated on, for period The 8iats of of 10 years in the case of demand deposits and 25 years in Btntt6at1 and Othera the case of non-demand deposits, they might be presumed Vellialaramn to have been abandoned and the Banks were to transfer .Aiynr J. 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 estab-lish their rights, and that it metely substituted the State in the place of the Bank as their debtor. The Court also held that it was "within the Coostitutional 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 aban-doned". In Connecticut Mutual Life Insurance Co. 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 for period of seven years, then it had to be advertised by the companies in the manner provided therein, and if no claims were pre· ferred thereafter, the amounts were to be paid to the State Comptroller for care and custody. In holding that the law was valid. the Court observed.

"There is ample provision for notice to beneficiaries and for administrative and judicial hearing of their claims and payment of same. There is no possible injury to any bene-ficiary."

(') 321 U.S. 233, 241; (1943) 88 L. Ed. 692, '101.

1961 In Standard Oil Company v. New Jersey('), the Jaw related R·n•wy Dye;49 "' to shares and unpaid dividends, and provided for the State .1t.nufa<turing taking them over, if they remained unclaimed for period r.•n., Lid. of 14 years. There was provision for notice to the un-7'1"' .~;.,.of known owners by advertisement. It was held following Con-Botnb"Y and Olhers necticut Mutual Life Insurance Company v. Moore (supra) V••""""'ma that the law was valid.

.1t.nufa<turing r.•n., Lid. 7'1"' .~;.,.of and Olhers V••""""'ma A.Jyt1r J.

In the light of the above discussion, there cannot be any reasonable doubt that the impugned Act cannot be regarded as one relating to abandoned property. The period of three years mentioned in s. 2(10) of the Act is merely the period of limitation mentioned in Art. 102 of the Limitation Act, and even taking into account the class of persons whose claims are dealt with in the Act, as counsel for respondents would have us do, the period cannot be regarded as adequate for raising presumption as to abandonment. more serious objection to viewing the legislation as one relating to aban-doned claims is that there is no provision made in the Act for investigating the claims of the employees or for payment of the amounts due to them, if they established their claims. The purpose of legislation with respect to abandoned property being, in the first instance, to safeguard the property for the benefit of the true owner and the State taking it over only in the absence of such cla~ms, law which vests the property absolutely in the State without regard to the claims of the true owners cannot be considered as one relating to abandoned property. This contention of the respondents must also be rejected.

In the result, we are of opinion that s. 3(1) in so far as it relates to unpaid accumulations in s. 3(2)(b) is unconstitu-tional and void.

We have now to deal with the question as to the validity

of s. 3(1) and s. 3(2) (a) of the Act, which require the emplo-yers to hand over to the Board the fines realised from the em-ployees. So far as this item is concerned, the position of the (') 341 U.S. 428; (1950) 95 L.Ed. 1078.

employers is wholly different from what it is as regards un-paid accumulations. Section 8 of the Wages Act deals with the question of fines which could be imposed by the em-ployer, and it provides that they should be entered in sepa-rate register, and applied for the benefit of his employees. It is not denied by the appellant that under this provision the fines are constituted 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 trus-tees, and vests them in the Board, and that, further, while the beneficiaries under s. 8 of the Wages Act are its own em-ployees, under s. 5(2) of the impugned Act they include other persons as well. There might have been substance in the com-plaint that the appellant had been deprived of its rights as trustee if it had any beneficial interest in the fund. But admit-tedly, 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 and Dwarkadas Shri-nivas of Bombay v. The Sholapur Spinning and Weaving Co. Ltd. (supra) or such unrea~onable interference with rights to property, as will infringe Art. 19(1)(f). It is argued with some emphasis that in en.larging the circle of beneficiaries, the Act has encroached o-n the rights of the employees of the appel-lant. But then, the trust is the creation not 9f the appellant but of the Legislature, which gave the. employees certain rights which they did not have before, and what it can give, it can also take away or modify, and we do not see how the employers are aggrieved by it. We are of opinion that no valid grounds exist on which s. 3(1) ands. 3(2)(a) of the impug· ned Act could be attacked as unconstitutional, and they-must accordingly be held to pe valid.

In the result. we hold, in modification of-the order of the Court below, that the provisions of the impugned Act are un· constitutional and void in so far as they relate to _"unpaid ac-cumulations", but that they are valid as regards "fines"; and an appropriate writ will issue against the respondents in the terms

Bo-mbay J.lyei11!1 ,r,

M ®u/adwring Oo., Ltd. v. 'J'lie tJlale o/ Bomba!! or,d Of!tuw Venkataramo Aiyar J.

1967 Bombay Dyri!SQ <b MtJ/nujar.Mdinq .co.1W. \". The State o/ Bum.bay umd Ol/u:r8

V~nkaWama Aiytn' J.

stated above. The appeal succeeds in part, but as it is stated that "unpaid accumulations" form by far the most substantial portion of the claim, we direct the respondents to pay half the costs of the appellant here and in the Court below.

Appeal allowed in part.

1968 JanVGry 22.

RAJA GANGA PRATAP SINGH

THE ALLAHABAD BANK LTD., LUCKNOW \S. R. DAS C. J., VENKATARAMA AIYAll, B. P. SINHA, J. L. KAPUR and A. K. SARXAll JI.)

Statute, Constitutional validity of-Whether question of inteTPretation of the Conltitution-Severabilitl/, if 1hottld be considered before deciding question of validitv-Dutii of Court -Code of Civil Procedure (V of 1908), s. 113 proviso-Con1Utu-tion of India, An. 228.

The respondent, scheduled bank, sued the appellant for recovery of money under mortgage. The appellant claimed reduction of the debt under the Uttar Pradesh Zamlndari Debt Reduction Act, 1953. An advance or debt due to scheduled bank was excluded from the definition of "debt" lliven In the Act. The appellant contended that the definition In so far as It excluded certain debts offended Art. 14 of the Constitution as it made an arbitrary distinction between several cluses of debton. The appellant applied to the court under the proviso to 1. 113 of the Code of Civil Procedure prayinc that case be stated for the opinion of the High Court as to the validity of the im-pugned portion of the definition. The Court rejected the applica-tion. The appellant made an application in revision to the High Court and also an application under Art. 22.8 of the Constitu-tion for withdrawing the case for decision of the question of the validity of the definition. The Higb Court dismiased the aP-plications. The Courts below held that in eitber view of the question as to the validity of the impu&ned portion of the defini-tion, the appellant would be left without the remedy which he sought, because that portion of the definition was not severable from the rest and the whole definition would have to be exclud-ed and therefore it was not necessary to decide that question to dispose of the case :