9911796707
TMI Blog1957 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ated, was about the year 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". Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of labour : Provided that the Fund shall not be utilized in financing 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". 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent appeal arises, it being treated by consent of parties as a test case. 10. The application was heard by Chagla, C.J., and Tendolkar, J., who held that the impugned Act was intra vires but on different grounds. The learned Chief Justice was of the opinion 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sholapur Spinning and Weaving Co. Ltd. [1954]1SCR674 . In The State of West Bengal v. Subodh Gopal Bose [1954]1SCR587 , the majority of the learned Judges took the view that Arts. 31(1) and 31(2) were not mutually exclusive, that it was not an essential requisite of acquisition 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, J., at pages 943-944, by Mukherjea, J., at page 961 and by Chandrasekhara Aiyar, J., at pages 1015 to 1018. It is argued for the respondents that the position under Art. 31(2) is the same as in America, as the provision therein that either the amount of the compensation should be fixed or the principles on 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in which the obligation is to be enforced and - that was the ground on which Chagla, C.J., based his judgment; and secondly, that the impugned legislation is one in respect of abandoned property, and it is not open to attack as contravening either Art. 19(1)(f) or Art. 31(2). It is those contentions that now fall to be considered. 18. As regards 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lien for obtaining satisfaction of the debt, even though an action thereon would be time-barred. Vide Narendra Lal Khan v. Tarubala Dasi (1921) I.L.R. 48 Cal. 817. That is also the law in England. Vide Halsbury's Laws of England (Hailsham's Edition), Vol. 20, page 602, para. 756 and the observations of Lindley, L.J., in Carter v. White (1883) 25 Ch. 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, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The question still remains whether there has been a substitution of creditors, and that can only be, if the debt due to the employee is discharged and in its place there is substituted the debt in favour of the Board. If, however, the employer is not released from his liability to that employee, then the effect of s. 3(1) is only to create in the Board a statutory creditor in addition to the creditor under the contract 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application under section 15. ..." 25. 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 limited by s. 15 of the Wages Act, which is one year in the State of Bombay, that if he fails to do so it becomes unenforceable, and a 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 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 W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reference 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led 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. 31. That this distinction is not purely academical but is of practical importance will be seen, when regard is had to the provisions of the Industrial Disputes Act. Under that Act, there is no period of limitation prescribed for referring a dispute for adjudication by a tribunal. Even when a claim for wages fails within the purview of the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from its own conclusion whether the changed circumstances destroyed altogether the basis of the adventure and its underlying object. This may be called a rule of construction by English Judges but it is certainly not a principle of giving effect to the intention of the parties which underlies all rules of construction. This is really a rule of positive 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved 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 unaffected by it. Let us assume that the appellant makes a payment to the Board under s. 3(1) of the impugned Act on the footing 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 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 abando ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin a time limited. 38. There has been quite a number of laws on abandoned property in the American States, and their validity has been the subject of numerous decisions in the Supreme Court of United States. In Anderson National Bank v. Luckett [321 U.S. 233, 241; (1943) 88 L. Ed. 692, the law related to Bank deposits. It provided that if moneys in deposit had not been demanded or operated on, for a period of 10 years in the case of demand deposits and 25 years in the case of non-demand deposits, they might be presumed to have been abandoned and the Banks 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, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it over only in the absence of such claims, a 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. 41. 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 unconstitutional and void. 42. 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 employers to hand over to the Board the fines realised from the 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 trust ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
