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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 ..... against the Opponents who are a manufacturing 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 Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , has made the present reference in view 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tness of particulars stated in any return referred to in Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er matter which is required or allowed by this Act to be prescribed by the State Government ". 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me topic as is mentioned in Section 78(2), viz., the procedure to be followed in proceedings before an Employees' Insurance Court. The procedure mentioned 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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the cause of action arose or the argument, for, it is clear that a rule of law does not become a part of the procedure to be "followed" by a Court merely because it tells the Court of 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 Employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trated by the authorities on which reliance was placed by Mr. Nariman. In Velu Pillai v. Sevuga Perumal AIR1958Mad392 , it was held that the rule making powers of the High Court under Sections. 122 and 128 of the Civil Procedure Code enable the High 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 presenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt had the power under Clause 27 of the Letters Patent to make a rule prescribing a period of limitation in respect of appeals from orders made by that Court in the exercise of its original jurisdiction to a Division Bench that the rule was "a special law" within the meaning 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with Section 76(2). The State Government's power under Section 96(1)(h) is not relevant in considering the validity of Rule 17. 15. We are accordingly of the view that the terms of section 96(1)(b) are unambiguous and that they do not confer any right on the State Government to prescribe a period of limitation 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 Prades ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary in order to entitle an insured person to the cash benefits (i.e. benefits other than medical benefit), there is little proportion between the contributions actually paid in respect of a person and the amount of the benefit received by him. This must be so, for the scheme of the Act is after all a scheme of insurance. An employer 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods of limitation as they though fit for the recovery of contributions. 20. Then there are some provisions in the Act which are inconsistent with the Legislature having intended to confer such a right on the State Government . Section 94 provides that the amount due in respect of any contribution shall be included in the category 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, no period of limitation has been provided in the Act, but it has been laid down in Section 80 that an Employees' Insurance Court shall not direct the payment of any benefit to a person unless he has made to the Corporation a claim for such benefit within twelve months after the claim for such benefit within twelve months 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be derived by referring to other rules made by the same authority. The principle relied upon by Mr. Nariman has been thus stated in Craies on Statute Law, 6th Edition (page 157). "Where the language of an Act is ambiguous and difficult to construe the Court may for assistance in its construction refer to rules made under the provisions of the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation Act of 1963 which provides a period of limitation of three years from the time when the right to apply accrues. Section 2(b) of the Limitation Act of 1963 says that an "application" includes a petition. Article 137 of the new Act covers all applications for which no period of limitation is provided by the other Articles in the Act. Hence our reply to the second question submitted by the Bombay Employees' Insurance Court will be that applications filed by the Corporation before 1st January 1964 are not subject to any period of limitation, and that those filed thereafter are subject to the period prescribed in the Article 137 of the Limitation Act of 1963. 28. Under the circumstances of the case there will be no order as to costs of this reference. 29. Mr. Jani for the opponents applies for leave to appeal to the Supreme Court from this decision. Mr. Bhabha for the Corporation opposes the application. As stated above, High Courts have differed on the main point at issue. Moreover, the Employees' Insurance Court, Bombay has stated in the reference that the questions submitted to us have arisen in a large number of pending cases. We are accordingly of that ..... 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