ivil 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 1953
R J Kolah B Narayanaswamy and J B Dadachanji for the appellants
H M Seervai Advocate General for the State of Bombay and R H Dhebar for the respondents
December 20
The following Judgment of the Court was delivered by VENKATARAMA AIYAR J
The appellant is a 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 a sum of Rs 165731 1 0 under the heading Unclaimed wages 
This amount is made up of wages earned by the workmen in the factories but remaining undrawn by them and represents 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
In 1953 the Legislature of the State of Bombay enacted the Bombay Labour Welfare Fund Act Bum
XL of 1953 hereinafter referred to as the Act and it came into force on June 4 1953
We may at this 1125 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 section
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 section
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 section 7if of the  as the manager 
Sub section 10 defines  Unpaid accumulations  as meaning  all payments due to the employees but not made to them within a period of three years from the date on which they became due whether before or after the commencement of this Act including the wages and gratuity legally payable
Wages is defined in sub section
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 a person employed in respect of his employment or of work done in such employment 
Then there is section 3 which runs as follows 1
There shall be constituted a 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
The Fund shall consist of a all fines realised from the employees b all unpaid accumulations c any voluntary donations d any fund transferred under sub section 5 of section 7 and e any sum borrowed under section 1126 3
The sums specified in sub section 2 shall be collected 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 Section 71 provides that the Fund shall vest in and be held and applied by the Board as Trustees subject to the provisions and for the purposes of this Act
 Sub section 2 of section 7 is very material and is as follows Without prejudice to the generality of sub section 1 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 a social nature h cost of administering the Act including the salaries and allowances of the staff appointed for the purposes 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 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 IV of 1936 or any other law for the time being in force 
Section 11 provides for the appointment of an officer called the Welfare Commissioner and defines his powers and duties
Section17 enacts that  Any sum payable into the Fund under this Act shall without prejudice to any other mode of recovery 1127 be recoverable on behalf of the Board as an arrear of land revenue
 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 IV of 1936 to sub section 8 the following shall be added before the Explanation namely  but in the case of any factory or establishment to which the Bombay Labour Welfare Fund Act 1953 Bom
XL of 1953 applies all such realisations shall be paid into the Fund constituted under the said Act
 Rules were framed by the State of Bombay in exercise of the powers conferred by section 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 I 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 aall fines realised from the employees before the said date and remaining unutilized on that date and ball unpaid accumulations held by the employer on the aforesaid date
2The employer shall along with such payment submit a statement to the Welfare Commissioner giving full particulars 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 Welfare Commissioner on or before the 15th of April 15th of July  15th of October and 15th of January succeeding such quarter and a statement giving particulars of the amounts so paid shall be submitted by him along with such payment to the Welfare Commissioner 1128 4
Notice for payment of fines and unpaid accumu lations by Welfare Commissioner The Welfare Commissioner may after making such enquiries as he may deem fit and after calling for a report from the Inspector if necessary serve a notice on any employer to pay any portion of fines realised from the employees or unpaid accumulations held by him 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 section 1 1 of the impugned Act sent a 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 a reply on the same date impugning the validity of the Act as being in violation of the provisions of article 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 a test case
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 article 31 2
Tendolkar J hold 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 article 31 1
In the result the petition was dismissed
The learned Judgeshowever granted a certificate under article 132 and that is how the appeal comes before us 1129 The sole point for determination in this appeal is whether section 3 1 and sub cls
a and b of section 32 of the Act are void as contravening the provisions of the Constitution but to decide it we have to consider quite a number of questions which have been raised and discussed in the arguments before us
It will be convenient to deal with the two items fines realised  from the employees section 3 2 a and unpaid accumulations section 3 2 b separately as the issues involved in the determination of their validity are different
Taking first unpaid accumulations section 3 2 b the contention of Mr Kolah for the appellant is that s 3 1 is repugnant to article 31 2 inasmuch as it deprives the employers of moneys belonging to them without payment of any compensation merely on the ground that they represent wages due to the employees
Now money is undoubtedly property and it cannot be disputed that a person who has money does not cease 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 section 3 1 is to take away money belonging to it
Then the question is whether such a provision is hit by article 31 2 on the ground that it is acquisition or taking possession of property for a public purpose without payment of compensation
It is common ground that the taking is for a public purpose
The point in dispute is whether what is sought to be done under section 3 is acquisition or taking possession of property within article 31 2
Tendolkar J answered this question against the appellant because in his view article 31 2 would apply only if there was a transfer of title to or beneficial interest in the amounts to the State that section 3 1 effected neither that it did deprive the employers of 1130 oheir moneys but that fell under article 31 1 and not article 31 2 and that as that was done under the authority of law it could not be questioned
Subsequent to this decision this Court had occasion to consider the true scope of article 31 2 in relation to article 31 1 in The State of West Bengal vs Subodh Gopal Bose 1 and in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co Ltd 2
In The State Of West Bengal vs Subodh Gopal Bose1 the majority of the learned Judges took the view that
articles 31 1 and 31 2 were not mutually exclusive that it was not an essential requisite of acquisition under article 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 article 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 article 31 1 had reference to the  police power of the State article 31 2 dealt with the power of  eminent domain 
In Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co2 the majority of the Judges again reiterated the view expressed in The State of West Bengal vs Subodh Gopal Bose1 that articles 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 section 3 of the impugned Act is bad as infringing article 31 2 in that it deprives the appellant of its moneys without giving any compensation
Mr Seervai however resists this contention on the strength of article 31 2A which was introduced by the Constitution Fourth Amendment Act 1955
It is as follows  Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by the State it shall not be deemed to provide for the 1  2  1131 compulsory acquisition or requisitioning of property notwithstanding that it deprives any person of his property
 The argument is that the theory that acquisition in article 31 2 is not confined to cases of transfer of ownership to the State and that even deprivation of property would fall within it which is the basis of  the decisions in The State of West Bengal vs Subodh Gopal Bose 1 and in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co Ltd 2 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 article 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 accordance 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 State of West Bengal vs Subodh Gopal Bose 1 and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co Ltd 2 section 3 1 of the impugned Act would be obnoxious to article 31 2
This should be sufficient to conclude this question in favour of the appellant but the respondents contend that section 3 1 is not within the prohibi tion of article 31 2 because it operates only on money and money is not property for purposes of that Article
There is considerable authority in America that the power of eminent domain does not 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 therefore in substance it is a forced loan
In The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga3  this view was adopted by Mahajan 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 article 312 is the same as in America as the provision therein that either the 1  2  3 144 1132 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 The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga 1 a departure from the view held in earlier authorities that moneys and choses inaction could not be the subject of  eminent domain  and that in any case the principles of American law should not be applied in the interpretation of the provisions of our Constitution
If the contention of the respondents is to be accepted the question naturally arises what protection a person has in respect of moneys belonging to him if he can be deprived of them by process of legislation
The answer of Mr Seervai is that that protection is to be sought in article 191f that the word  property therein has a wider connotation than what it bears in article 312 and includes money and that the citizens have the right to hold money subject only to law such as is saved by article 195
In support of this position he relied on the decision in Bijay Cotton Mills Ltd vs
The State of Ajmer 2 in which this Court applied article 196 in pronouncing on the validity of the Minimum Wages Act XI of 1948 requiring the employers to pay wages at a rate not less than that to be fixed by the Government
Assuming that the correct position is what the res pondents contend it is the question that has still to be determined is whether the impugned Act could be supported under article 195
There was some discussion before us as to the scope of this provision the point of the debate being whether the words imposing reasonable restriction would cover a legislation which not merely regulated the exercise of the rights guaranteed by article 191f but totally extinguished them and whether a law like the present one which deprived the owner of his properties could be held to fall within that provision
It was argued that a law authorising 1 2  1133 the State to seize and destroy diseased cattle noxious drugs and the like could not be brought within article 195 if the word restriction  was to be narrowly construed and that accordingly the power to restrict must be held to include in appropriate cases the power to prohibit the exercise of the right
That view does find support in the observations of Lord Porter in Commonwealth of Australia vs Bank of New South Wales 1 but the present legislation cannot be sustained even on the above interpretation of the word restriction  as section 31 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 article 195
It appears to us that whether we apply article 312 or article 195 the impugned 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 sections 3 and 17 merely prescribe the mode 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 article 19 1f or article 312
It is those contentions that now fall to be considered
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 by legislation
What we have to see therefore is whether on the provisions of the statute it could be held that there is a statutory 1 1950 A C 235 311
1134 transfer of the wages earned by the workman to the Board
Section 5 of the Act vests the amounts mentioned in section 32 in the Board and section 31 directs that those amounts should be paid by the employer to the Board
Counsel for the appellant contends that there are in the Act no words of transfer of the debts to the Board and that there is only a provision for payment of the amounts
But this is taking too narrow a view of the true scope of those provisions
Looking at the substance of the matter we are of opinion that section 31 and section 51 do operate to transfer the debts due to the employees to the Board
It will be observed that the definition of unpaid accumulations  takes in only payments due to the employees remaining unpaid within a 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 a debt which is time barred can be the subject of transfer and if it can be how it can benefit the Board to take it over if it cannot be realised by process of law
Now it is the settled law of this country that the statute of Limitation only bars the remedy but does not extinguish the debt
Section 28 of the Limitation Act provides that when the period limited to a person for instituting a 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 property is incapable of possession as for example a debt the section has no application and lapse of time does not extinguish the right of a person thereto
Under section 253 of the Contract Act a barred debt is good consideration for a fresh promise to pay the amount
When a debtor makes a payment without any direction as to how it is to be appropriated the creditor has the right to appropriate it towards a barred debt
Vide section 60 of the Contract Act
It has also been held that a creditor is entitled 1135 to recover the debt from the surety even though a suit on it is barred against the principal debtor
Vide Mahant Singh vs U Ba Yi 1 Subramania Aiyar vs Gopala Aiyar 2 and Dil Muhammad vs Sain Das 3
And when a creditor has a lien over goods by way of security for a loan he can enforce the lien for obtaining satisfaction of the debt even though an action  thereon would be time barred
Vide Narendra Lal Khan vs Tarubala Dasi 4
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 vs White 5 and of Cotton L J in Curwen vs Milburn 6
In American Jurisprudence Vol
34 page 314 the law is thus stated   A majority of the courts 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 the 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 In Corpus Juris Secundum Vol
53 page 922 we have the following statement of the law   The general rule at least with respect to debts or money demands is that a statute of limitation bars or runs against the remedy and does not discharge the debt or extinguish or impair the right obligation or cause of action
 The position then is that under the law a debt subsists notwithstanding that its recovery is barred by limitation and no argument has been addressed to us by the appellant that the transfer of such a debt is invalid and indeed it could not be in view of the provisions in the impugned Act which release the debts 1 1939 L R 66 1
A 198
2 Mad
3 AIR 1927 Lah
4 Cal 817 823
5  672
6 24 434
1136 due to the employees from the bar of limitation
Section 31 provides that payment shall be made of the amounts specified in sub cl
2 notwithstanding anything contained in any other law for the time being in force
 A similar provision is again enacted in the second proviso to sub section
2 of section 5 that unpaid accumulations  and fines shall be paid to the Board notwithstanding anything contained in the  or any other law for the time being in force
 One of those laws is the law of limitation and the effect of these provisions is to suspend limitation in respect of the claims to which section 32 relates
To dispel any doubt as to whether it was competent to the Legislature of the Bombay State to modify the provisions of the Limitation Act it should be stated that limitation is a topic enumerated in the Concurrent List being Entry 13 in List III in Seventh Schedule to the Constitution and under article 2542 the State Legislature can enact a 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 Act 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 section 3 may be recovered as arrears of land revenue
This is a 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 valid it cannot be said to be bad by reason of this section
On the above analysis there cannot be any doubt that the effect of the relevant provisions of the Act is to transfer to the Board the debts due by the appellant to its employees free from the bar of limitation
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 the employee then the effect of section 31 is only to create in the Board a statutory creditor in 1137 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 article 191f 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
The real point for determination therefore is whether on payment of the amounts in accordance with section 31 of the Act the appellant gets a discharge of his obligations to the employees in respect of wages due to them
The Act does not contain any provision to that effect and the absence thereof has been strongly relied on by the appellant as showing that no substitution of creditors was intended
In answer to this contention Mr Seervai urges firstly that though the Act does not in terms provide for the discharge of the appellant on payment of the amount under section 31 that is the result of the provisions of the Act IV of 1936 hereinafter referred to as the Wages Act and secondly that the effect of section 31 of the Act is to render the contract of employment void under section 56 of the Contract Act and the appellant is thereby discharged from his obligations thereunder
We shall now examine both these contentions
To appreciate the first contention it is necessary to refer to the relevant provisions of the Wages Act
Section 2vi defines wages in terms which comprehend whatever falls within the definition of that word in section 211 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 periods which however are not to exceed one month
Under section 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 terminated within the second 1138 working day of such termination
Section 15 provides that where an unauthorised deduction has been made from the wages of an employed person or payment of wages has been delayed such person may apply to the authority appointed under the Act for a direction for payment of the amount deducted or the delayed wages as the case may be together with payment of compensation
Such application has to 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 Bombay Legislature the period of six months has been enlarged to one year
There is a proviso to this section that an application thereunder can be made after the period prescribed therein when the applicant satisfies the authority that he had sufficient cause for not making the application within such period
 Section 22d of the Act provides that No Court shall entertain any suit for the recovery of wage or of any deduction from wages in so far as the sum so claimed could have been recovered by an application under section 15 
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 section 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 section 31 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 1139 would include whatever are wages under the impugned Act
But section 16 limits the application of the Wages Act to wages which are below Rs 200 for a wage period
In respect of wages of Rs 200 or more it is the general law that would apply and the period of limitation is not one year under section 15 of the Wages Act but three years under article 102 of the Limitation  Act which period is capable of extension under the provisions of the Limitation Act beyond the three years mentioned in section 210 of the impugned Act
Then it is to be noted that under the proviso to section 151 the authority has the power to admit a 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 section 31 and the second proviso to section 52 they are to take effect notwithstanding anything contained in the Wages Act or any other law they override the power conferred by the proviso to section 151 of the Wages Act or the provisions of the Limitation Act
Even as regards section 22 of the Wages Act there is divergence of judicial opinion as to its true scope
In Simpalax Manufacturing Co Ltd vs Alla Ud Din 1 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 section 22
On the other hand it was held in Bhagwat Rai vs Union of India 2 that the jurisdiction of the Civil Court would be barred even if there was a bona fide dispute and that the bar under section 22d was absolute and certain observations in Modern Mills Ltd vs Mangalvedhekar 3 and A B Sarin vs B C Patil 4 were relied on as supporting this contention
Even if Mr Seervai is right in his contention that the law is correctly laid down in Bhagwat Rai vs Union of India 2 and that the decision in Simpalax Manufacturing Co Ltd vs Alla Ud Din1 is wrong the fact remains that claims in respect of unpaid wages to which the impugned Act applies must in view of section 16 of the Wages Act fall at least 1 AIR 1945 Lah
2 ILR 4 AIR 1951 BOM
3 AIR 1950 Bom
145 1140 in part outside the purview of that Act and the protection afforded by section 15 of that Act will not be available with reference thereto
It 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 section 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 section 15 of the Wages Act or the Limitation Act
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 form a distinct category and that this principle applies not only when a classification into distinct categories appears on the face of the law but also when it exists in fact
Now the doctrine of severability in application is well established in our law vide The State of Bombay vs F N Balsara 1 The State of Bombay vs
The United Motors India Ltdand R M D Chamarbaugwalla vs Union of Indiaand the principles applicable have been stated fullyin Chamarbaugwalla s Case 3
But assuming on the basis of the above autho 1  2 1953 SCR1069
31957 SCR 930
1141 rities that we can confine the operation of the impugned Act to those claims of unpaid wages which are barred by limitation the question still is whether the impugned Act gives a discharge to the employer even in respect of those claims for as already stated the operation of article 191f can be avoided only if it is established that there has been a substitution of creditors which can only be if and when the employer gets a discharge from 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 mentioned that when a debt becomes time barred it does not become extinguished but only unenforceable in a court of law
Indeed it is on that footing that there can be a statutory transfer of the debts due to the employees and that is how the Board gets title to them
If then a debt subsists even after it is barred by limitation the employer does not get in law a discharge therefrom
The modes in which an obligation under a contract becomes discharged are well defined and the bar of limitation is not one of them
The following passages in Anson s Law of Contract 19th Edition page 383 are directly in point  At Common Law lapse of time does not affect contractual rights
Such a right is of a permanent and indestructible character unless either from the nature of the contract or from its terms it be limited in point of duration
But though the right possesses this permanent character the remedies arising from its violation are withdrawn after a certain lapse of time interest reipub licae ut sit finis litium
The remedies are barred though the right is not extinguished And if the law requires that a debtor should get a dis charge 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
1142 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 falls within the purview of the Wages Act and an application under section 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 Ld
vs section M Modak 1 that section 22d of the Wages Act did not take away the power of the authorities to refer to a tribunal set up under the Industrial Disputes Act a claim which could be made under the Wages Act as that section had application only to suits and did not exclude other proceedings permitted by law for the enforcement of payment
If a tribunal appointed under that Act can direct an employer to make payment of wages it follows that the bar under section 15 of the Wages Act does not give an absolute protection to the employer and the same consequence must follow when the bar of limitation arises under the Limitation Act
The result therefore is that when an employer makes a payment under section 31 of the Act he gets no discharge from his obligation to the employees even when the enforcement thereof is barred by limitation
The contention based on the provisions of the Wages Act failing Mr Seervai falls back on section 56 of the Contract Act as furnishing a ground for holding that the employer is discharged
2 of section 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 section 3 of the impugned Act the performance of the contract by the employer has become impossible and the contract has thereby 1 1143 become void
Section 56 of the Contract Act embodies the law relating to frustration of contracts and the true scope of that section was considered by this Court in Satyabrata Ghose vs Mugneeram Bangur and Co The position was thus stated by Mukherjea J  In the large majority of cases however the doctrine of frustration is applied not on the ground that the parties themselves 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 purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected 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 a provision for discharge because the parties did not think about the matter at all nor could possibly have any intention regarding it
When such an event or change of circumstances occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a 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 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
 Counsel for the respondents relies on these obser vations and contends that when the contract of service was entered into between the employer and the employees they could not have contemplated I  323 1144 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 section 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 section 31 of the impugned Act
But assuming that that is the position what follows  The matter would then be governed by section 65 of the Contract Act which provides that when a contract becomes void any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it
Under this section the employer is liable to make compensation to the employee for the work done by him and that liability can be enforced against him in spite of the fact that he has paid the unclaimed wages to the Board under section 3 1 of the Act
We are therefore of opinion that even if the matter is governed by section 56 of the Contract Act the employer is no more discharged than by the operation of the bar of limitation under section 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 violation of either article 19 1 f or article 31 2 of the Constitution
A 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 article 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 article 31 2 even as regards the employees as choses 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 vs Maharajadhiraja 1145 Sir Kameshwar Singh of Darbhanga supra at pages 942 960 961 and 1015 to 1018
Now as the Act takes over the rights of the employees in respect of wages due to them even when they are not barred without making any provision for compensation of the same to them it must at least to that extent be held to be unconstitutional whether as contravening article 19 1 f or article 31 2 it is unnecessary to decide
It 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 a question as to the constitutionality of a statute can be raised only by a 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 unaffected by it
Let us assume that the appellant makes a payment to the Board under section 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
It remains to deal with the contention of the res pondents that the impugned legislation is in substance one in respect of abandoned property and that by its very nature it cannot be held to violate the rights of any person either under article 19 1 f or article 31 2
That would be the correct position if the character of the legislation is what the respondents claim it to be for it is only a person who has some interest in property that can complain that the 1146 impugned legislation invades that right whether it be under article 19 1 f or article 31 2 and if it is abandoned property ex hypothesi there is no one who has any interest in it
But can the impugned Act be held to be legislation with respect to abandoned property  To answer this question it is necessary to examine the basic principles underlying such a legislation and ascertain whether those are the principles oil which the Act is framed
The expression  abandoned property  or to use the more familiar term bona vacantia  comprises properties of two different kinds those which come in by escheat and those over which no one has a claim
In Halsbury s Laws of England Third Edition Vol 7 page 536 para
1152 it is stated that  the term bona vacantia is applied to things in which no one can claim a property and includes the residuary estate of persons dying intestate 
There is however this distinction between the two classes of property that while the State becomes the owner of the properties of a 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 vacantia
Vide Holdsworth s History of English Law Second Edition Vol 7 pages 495 496
In Connecticut Mutual Life Insurance Company vs Moore1 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 a law relating to abandoned 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 a 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 a time limited
There has been quite a number of laws on abandoned property in the American States and their validity I   546   869
1147 has been the subject of numerous decisions in the Supreme Court of United States
In Anderson National Bank vs Luckett 1 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 and that it merely substituted the State in the place of the Bank as their debtor
The Court also held that it was  within the Constitutional power of the State to protect the interests of depositors from the risks which attend long neglected accounts by taking them into custody when they have been inactive so long as to be presumptively abandoned 
In Connecticut Mutual Life Insurance Co vs 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 a period of seven years then it had to be advertised by the companies in the manner provided therein and if no claims were preferred 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 beneficiary 1   241   701 146 1148 In Standard Oil Company vs New Jersey 1 the law related to shares and unpaid dividends and provided for the State taking them over if they remained unclaimed for a period of 14 years
There was a provision for notice to the unknown owners by advertisement
It was held following Connecticut Mutual Life Insurance Company vs Moore supra that the law was valid
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 section 2 10 of the Act is merely the period of limitation mentioned in article 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 a presumption as to abandoment
A more serious objection to viewing the legislation as one relating to abandoned 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 a 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 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
In the result we are of opinion that section 31 in so far as it relates to unpaid accumulations in section 32b is unconstitutional and void
We have now to deal with the question as to the validity of section 31 and section 32a 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 employers is wholly 1    1149 different from what it is as regards unpaid accumulations
Section 8 of the Wages Act deals with the question of fines which could be imposed by the employer and it provides that they should be entered in a separate register and applied for the benefit of his employees
It is not denied by the appellant that under this provision the fines are constituted a trust  fund and that the employers are bare trustees in respect of such fund
Now the grievance of the appellant is that the Act deprives it of its rights as trustees and vests them in the Board and that further while the beneficiaries under section 8 of the Wages Act are its own employees under section 52 of the impugned Act they include otherpersons as well
There might have been substance in the complaint that the appellant had been deprived of its rights as trustee if it bad any beneficial interest in the fund
But admittedly it has none and it is therefore difficult to hold that there has been such substantial deprivation of property as will offend article 312 according to the decisions in The State of West Bengal vs Subodh Gopal Bose and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co Ltd supra or such unreasonable interference with rights to property as will infringe article 191f
It is argued with some emphasis that in enlarging the circle of beneficiaries the Act has encroached on the rights of the employees of the appellant
But then the trust is the creation not of 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 section 31 and section 32a of the impugned Act could be attacked as unconstitutional and they must accordingly be held to be valid
In the result we hold in modification of the order of the Court below that the provisions of the impugned Act are unconstitutional and void in so far as they relate to  unpaid accumulations but that they are valid as regards  fines  and an appropriate writ will 1150 issue against the respondents in the terms 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


Summary:
 Sub section 3 of section 11 of the Kerala Buildings Lease and Rent Control Act 1965 permits eviction of a tenant where the landlord bona fide needs the building for his own occupation
The second proviso thereto excepts the tenant depending for his livelihood mainly on business carried on in such building
Sub section
1 of section 17 interdicts conversion of a residential building into a non residential one or vice versa and division of such building into separate portions except with the permission of the Accommodation Controller
The proviso thereto makes the consent of the landlord necessary where such conversion involves structural alteration of the building
The premises in question was being used by the tenant for nonresidential purpose
The respondent landlord required it bona fide for his self occupation
The Rent Controller granted permission under section 113 for eviction of the tenant
The Appellate Authority and the District Judge in revision did not interfere with the concurrent findings of facts on the bonafide need of the landlord
In second revision the contention that since the requirements of the second proviso to section 113 had not been fulfilled the landlord was not entitled to eviction was rejected by the High Court on the ground that this was a question of fact and ail the courts had found in favour of the landlord
In the appeal by special leave it was contended for the appellant that since the building in question was used for non residential purpose by the tenant and the landlord required the same for a residential purpose such a need could not justify tenant s eviction by virtue of section 17 of the Act which prohibited such conversion
82 Dismissing the appeal  HELD l
The landlord is entitled to eviction
It is found as a fact that he bona fide needed the premises in question for his own use and occupation
Therefore section 113 has been complied with
84D E The prescriptions of section 17 are not attracted to the instant case
The conversion as contemplated by section 171 for which permission was required is conversion by the tenant and cannot be a conversion by the landlord
The use of expression such conversion in the proviso to section 17t indicates that in case of conversion by the tenant permission is required on the consent of the landlord
Further more the term convert therein does not denote a mere change in the mode of occupation but covers only alterations of the physical features
Putting to a different purpose the user of the building is not a conversion of the building as such
The building was used for non residential purposes and the purpose for which it was sought was for residential purpose
It has been found that the building has rooms which can be used as bed rooms sitting rooms etc
and it has a kitchen and dining hall
No alteration or conversion is required if the building is to be used for residential purpose
There was therefore no conversion of the building as such involved in the instant case but a change of user of the building
86A 85C F 86B Muhammed vs Abdul Rahiman and Das Naik vs Narayanan  approved
Since the appellants tenants have been in possession of the premises for sometime it was directed that the decree for eviction shall not be executed till 3091988 provided they pay arrears of rent if any within one month and undertake to hand over vacant and peaceful possession to pay future compensation month by month before 10th of every month and not to induct any other person86D G