# [1972] 1 S.C.R. 867

- **Citation:** [1972] 1 S.C.R. 867
- **Court:** Supreme Court of India
- **Decided:** 1971-09-23
- **Case number:** Civil Appeal No. 563 of 1967
- **Bench:** C. A. Vaidial!Ngam, P. Jaganmohan Reddy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1972-1-s-c-r-867-5481
- **Pages:** 16

## Headnote

Employees' Seate Insurance A.ct, 1948, s. 96(1) (b)-Power to prescribe by rules "the procedure to be followed in proceedings he/ore the
court''-lf includes power to prescribe period of lin1itation
fol claims
under s. 75.
Litnitation, Statutes of-Nature.
In exercise of the power conferred bys. 96(1) (I>)· of the Employe""
State Insurance Act, 1948, to "Prescribe by rule
the procedure
to be
followed in proceedings" before the Insurance Court, the State Government made r. 17 prescribing a period of limitation of twelve month.'\ for
every application to the Court. The Employees' State Insurance Corporation filed an application before the Court claimin11 payment of the contribution due from the appellant.
The appellant took the plea that the
application was barred as it was not presented within the period prescribed. The High Court, on a reference, held thats. 96(1)(b) did not grail!
power to Gov._,mment to make a rule prescribing a period of limitation o•
claims enumerated in s. 75(2) and, therefore, r. 17 was ultra vires
the
rule making power under s. 96(1). On the question whether the power
to prescribe a period of limitation 'for initiating proceedings before
the
court is a part of, and is included in, the power to prescribe "the procedure to be followed in proceedings" before such courts,
HELD: The power under s. 96(1) (b) does not empower the government to prescribe by rule a period of limitation for claims under s. 75.
(i) The law of limitation appertains to remedies, because, the rule is
that claims in respect of rights cannot be entertained if not commenced
within the time prescribed by the statute in respect of that right.
The
object of the statutes of limitation is to compel a person to exercise his
right to take action \Vithin a reasonable time, as also, to discourage and
suppress stale, fake and fraudulent claims. While this is .lo, there are two
aspects of the statutes of limitation, the 0:1e concerns the extin&uishment
of the right if a claim or action is not commenced
\Vithin a particula~i
time; the other merely hars the claim without affecting the right which
either remains merely a moral obligation or can be availed of to furni~h
the consideration for fresh enforceable obligation.
\Vhere a statute prescribing limitation extinguishes the right it affects substantive rights, while,
that which- purely pertains to the commencement of action without touching the right is procedural. The statement that substantive Jaw determin~
rights and procedural law deals with remedies is not wholly valid,
for,
neither the entire Jaw of remedies belongs to procedure, because, rights arc
hidden even in the "interstices of procedure".
There is, therefore, no
clear cut division between the two. [872 G, 873 C-E, 874 BJ
(ii) There is difference between the manner in whiqh jurisprudential
lawyers consider the question and the way in which
judges view
the
matter. Where a question of limitation arises, the present tendency
j5
towards the view that statutes of limitation may not prove to be a determining factor.
But, what has to be considered
is whether the statute
t
868
SUPREME COURT REPORTS
[l 972 J 1 S.C.R.
extinguishes merely the remedy, or extinguishes the substantiye right 'as
well as the re·medy.
The safest course would be to examine each case
on its own facts and circumstances and determine, for iilstance, whethe'r
it affects substantive tights and extinguishes them, whether it merely concerns a procedural rule only dealing with remedies, whether -the intendment to prescribe limitation is discernible in the scheme of the Act, or
whether it is inconsistent with the rule-making power. [876 HJ
'
(iii) Apart from· the implfcations inherent in the term "Procedure''
appearing in s .. 96( 1) the woTd' in furnishes a clue, to .the controversy,
that the procedure must be in relation to the proceedings in court after it
has ta~en seisin of ~he. ma~r. 1'hercfore, the application by which the
court IS asked to ad1ud1cate a matter c9vered by s.

## Text

_Characters 0–39,694 of 45,676. This is a partial read: ask again with offset=39694 for what follows._

867
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BHARAT BARREL & DRUM MFG. CO. LTD. A ANR.
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c
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E
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H
v.
EMPLOYEES STATE INSURANCE CORPORATION
September 23, 1971
[C. A. VAIDIAL!NGAM AND P. JAGANMOHAN REDDY, JJ.]
Employees' Seate Insurance A.ct, 1948, s. 96(1) (b)-Power to prescribe by rules "the procedure to be followed in proceedings he/ore the
court''-lf includes power to prescribe period of lin1itation
fol claims
under s. 75.
Litnitation, Statutes of-Nature.
In exercise of the power conferred bys. 96(1) (I>)· of the Employe""
State Insurance Act, 1948, to "Prescribe by rule
the procedure
to be
followed in proceedings" before the Insurance Court, the State Government made r. 17 prescribing a period of limitation of twelve month.'\ for
every application to the Court. The Employees' State Insurance Corporation filed an application before the Court claimin11 payment of the contribution due from the appellant.
The appellant took the plea that the
application was barred as it was not presented within the period prescribed. The High Court, on a reference, held thats. 96(1)(b) did not grail!
power to Gov._,mment to make a rule prescribing a period of limitation o•
claims enumerated in s. 75(2) and, therefore, r. 17 was ultra vires
the
rule making power under s. 96(1). On the question whether the power
to prescribe a period of limitation 'for initiating proceedings before
the
court is a part of, and is included in, the power to prescribe "the procedure to be followed in proceedings" before such courts,
HELD: The power under s. 96(1) (b) does not empower the government to prescribe by rule a period of limitation for claims under s. 75.
(i) The law of limitation appertains to remedies, because, the rule is
that claims in respect of rights cannot be entertained if not commenced
within the time prescribed by the statute in respect of that right.
The
object of the statutes of limitation is to compel a person to exercise his
right to take action \Vithin a reasonable time, as also, to discourage and
suppress stale, fake and fraudulent claims. While this is .lo, there are two
aspects of the statutes of limitation, the 0:1e concerns the extin&uishment
of the right if a claim or action is not commenced
\Vithin a particula~i
time; the other merely hars the claim without affecting the right which
either remains merely a moral obligation or can be availed of to furni~h
the consideration for fresh enforceable obligation.
\Vhere a statute prescribing limitation extinguishes the right it affects substantive rights, while,
that which- purely pertains to the commencement of action without touching the right is procedural. The statement that substantive Jaw determin~
rights and procedural law deals with remedies is not wholly valid,
for,
neither the entire Jaw of remedies belongs to procedure, because, rights arc
hidden even in the "interstices of procedure".
There is, therefore, no
clear cut division between the two. [872 G, 873 C-E, 874 BJ
(ii) There is difference between the manner in whiqh jurisprudential
lawyers consider the question and the way in which
judges view
the
matter. Where a question of limitation arises, the present tendency
j5
towards the view that statutes of limitation may not prove to be a determining factor.
But, what has to be considered
is whether the statute
t
868
SUPREME COURT REPORTS
[l 972 J 1 S.C.R.
extinguishes merely the remedy, or extinguishes the substantiye right 'as
well as the re·medy.
The safest course would be to examine each case
on its own facts and circumstances and determine, for iilstance, whethe'r
it affects substantive tights and extinguishes them, whether it merely concerns a procedural rule only dealing with remedies, whether -the intendment to prescribe limitation is discernible in the scheme of the Act, or
whether it is inconsistent with the rule-making power. [876 HJ
'
(iii) Apart from· the implfcations inherent in the term "Procedure''
appearing in s .. 96( 1) the woTd' in furnishes a clue, to .the controversy,
that the procedure must be in relation to the proceedings in court after it
has ta~en seisin of ~he. ma~r. 1'hercfore, the application by which the
court IS asked to ad1ud1cate a matter c9vered by s. 75(2) is outside the
scope of the· rule-making power. [877 DJ
(iv) ·The pro"isions ·of the Act clearly indi~atc that the whole -Scheme
is dependent upon ,the contributions made by the employer not only in
respect of the amounts payable by him but also in respect of those payable by the employee.
No· !imitation has been fixed for the recovery- of
thes.;; amounts by the, Corporation from the employer; on the other hand
:i;. 68 empoweb the Corporation to resort to coercive process.
If any
such steps are pi"oposed .to be taken by the. Corporation and· tl;ie employee
i• aggrieved he has a right to file and apply to the lnsuranc~ Court and
ha:ve his 1 claim adjudicated by it in the same way as the Corporation can
prefer a cl'aim in a case where the liability to pay is: disputed.
Section
75(2) (cj) clearly ·envisages this course when it provides that the claim
ii.gainst a principal employer under s. 68 shall be decided by the Insurance
Court.
The fact that
neither s. 75(2) (d)
nor s. 68, nor s. 77 which
cleats with the commencement of the proceedings, prescribe any reriod of
limitation, while a period of limitation is provided in the case o a claim
by an employee for the j>ayn1ent of any benefit under the
regulations,
clearly shov.:s that the legislatures did not intend to fetter the claim under
s. 75(2) (d). Where the legislature clearly intends to provide specifically
the perjod of limitation in respect of claims arising thereunder, it cannot
be co.,sidered to have le'ft such matters in respect of claim under some
similar provisions to be provided for by the rules to be made by government uridcr its dele~ted powers to prescribe the procedure to be followed in proceediqgs befo,e sμch co~rt. [878 H-879 C, 880 FJ
(v) Nor does s. 78(2) delegate
any power to the government
to
make rules.
The section only requires the Insurance Court' to· follow
"such procedure as may be prescribed by ·fules made· by the Stnte Govcrnrne.,t".
And these rules can only be made tinder s. 96 of the
Act.
[882 DJ
.
(vi) Further, the nature of the rule bars the claim itself and extinguishes the ri~ht which is not in the pnlc of procedure.
A provision by
\Vhich an employee .loses his right to receive ·payme"'nt of any benefit con~
:ferred by the Act, if he does not file a11 application within 12 months after
the claim has become due, affects substantive rights, and must, therefore,
be dealt with by the legislature itself and is not to be inferred from the·
rule-making power conferred !for regulating the procedure unless that is
specific:i.Jly. provided .for. The legislature ·Qoes not part with the power
to prescribe limitation which it jealously retains to it~elf unless it intends
to dO so i11 clear ·and unambiguous terms or by necessary intendment.
[881 B-FJ
.
Employees' State Jnsurdnce Corporation. v. ·Madhya Pradesh Government & Ors., A.I.R,. 1964 (51) M.P. 75,.M/s. Solar Works, Madras v.
Employees' State Insurance Corporation, Madras A. I. R. 1964 (51) Mad.
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BHARAT BARREL co. v. E.S.I.C. (Jaganmohan Reddy, J.)
869
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376, United India Timber Works, Yamunagar & Anr. v. Employees' Stat•
Insurance Corporation, Amritsar A.LR. 1967 (54) Punjab, 166 (FB) ane
E.S.L.C. Hyderabad v. A.P. State Electricity Board, Hyderabad, 1970 Labour & Industrial cases 921, approved.
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View contra in M/s. A. K. Brothers v. Employees' State
Insurance
Corporation, A.I.R. 1965 (52) All. 410, disapproved.
Roshan Industries Pvt. Ltd., Yamunagar v. En1p/oyees' State Insurance·
Corporation, A.I.R. 1968 (55) Punjab 56 (SB). Manoel Francism Lonez
& Ors. v. Lieut. Godoluliin James Burs/em, (1843) JV M.l.A. 300, Ruckmaboye v. Lul/oobhoy Mottic/1u11d, (1849-54) V M.l.A. 234, Sennimalai
Goundan v. Pa/ani Gonndan & Anr. A.LR .. 1917 Madras 957, Krfaluwmachariar v. Sriranf?ammal & Ors., l.L.R. 47 Madras 824, Bendredas y.
Thakurdev, I.LR. 53 Born. 453,
Ve/u Pillai v. Sevu11a Perumal Pillai,
A.LR. 1958 Madras 392, Narsingh Salwi v. Sheo Prasad, [191811.L.R. 40
All 1 (FB), Ch uni/al Jethabhai v. Dhyabhai Amu/akh,
[1908] I.LR. 93
Ilom. 14(FB). Union ofindiav. Ram Kanwar & Ors .. [1962] 3 S.C.R.
313, Punjab Cooperative Bank J..,td. v. Official Liquidators Punjab Cotton
Press Companv Ltd. (in Liquidation), A.LR. 1941 Lah. 57 (FB),
and
East & West Steaniship Co1npany, George Town,·--i\1adras v. S. K. Ra111aJingam Chettiar, [1960] 3 S.C.R. 820, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 563 of
1967.
Appeal from the judgment and order dated September 15, 16.
19, 1966 of the Bombay High Court in Civil Reference No. 8 of
1964.
G. B. Pai, Bhuvanesh Kumari
and 0. C. Mathur, for the
appellants.
L. M. Singhvi, Ram Panjawani and S. P. Nayar, for the
respondent.
The Judgn1ent of the Court was delh,~red by
P. Jaganmohan Reddy, J.
In exercise of the powers under
Sec .. 96(1)(b) of the
Employees
State Insurance Act 1948
(hereinafter referred to as 'the Act') relating to "the procedure to
be followed in proc'eedings before such Courts and the execution
of orders made by such Courts", the Government of Bombay made
the following Rule;
G "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 applicaH
tion 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.
870
SUPREME COURT REPORTS
[1972] 1 S.C.R.
(2) Subject as aforesaid the provisions of Part II
and III of the Indian Limitation Act, 1908 (IX of
( 19(f8), shall so far as may be applied to very such
application".
The vires of this Rule was challenged by the Employees State
Insurance Corporation (hereinafter referred to as 'the Corporation') when it filed an application on 7th October 1963 against
A
B
the Appellant in the Employees Insurance Court (hereinafter referred to as 'the Insurance Court') claiming payment of the contributions due from it for the period 1st September 1957 to 31st
Juiy 1963.
In those proceedings the Appellant had taken the
pl.ea that the application was barred under Rule 17 as it was not
presented within twelve months from the date when the cause of
C
action arose or as the case may be when the amount became due.
As the plea raised before it was important the Insurance Court
made a reference under Section 81 of the Act on the following
question for the decision of the High Court of Bonibay :-
( 1) Whether rule 17 of the Employees' State Insurance Rule is ultra vires the rule making power of the
State Government 1'nder Sec. 96 ( 1) of the Employees
State Insurance Act ?
D
( 2) If yes, what, if any, limitation applies to applications filed by the Corporation to the Employees' Insurance Court ?
E
The High Court of Bombay having considered the several cases
and the conten1ions and submissions made before it held that the
clear and unambiguous terms of s. 96(1) (b) exclude the grant of
the power to any State Government to make a rule prescribing a
period of limitation on claims ennumerated in Sec. 75(2). It was
F
further of the view that where two interpretations of the terms of
Sec. 96 ( 1) (b) were possible that interpretation should be accepted
which excludes the gram of such a power, because it appeared to
it clear from the scheme of the Act and the provisos 1hereof that
the legislature did not intend to confer such power on the State
Governments.
It therefore answered the firnt question in affinnaG
tive namely that Rule 17 is ultra vires the rule making power of the
State Government under Sec. 96(1) (b) of the Act.
On the
second question it held that an application filed in a Couvt before
1-1-1964 for P~lief under Sec. 75 of the Act was not subject to any
period of limitation, but an application filed on or after 1-1-64,
would, however, be covered by Art. 13 7 of the Limitation Act of
1963. which provides a limita1ion of 3 years from the date when the
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right to apply accrues.
This appeal has been filed against that
~ecisi<m by certificate under Art. 13 3 (1 )( c) of the Cons!Vtution.
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BHARAT BARREL co. V. E.S.I.C. (Jaganmohan Reddy, J.) 87{
This question has been the subject mat1'~r of the-decisions in :
Employees' State Insurance Corporation v. Madhya Pradesh Government & Ors.(1) M/s Solar Works, Madras v. Employees State
Insurance Corporation, Madras & Anr.( 2 ) M/s. A. K. Brothers v.
Employees' State Insurance Corporation,(') United India Timber
Works, Yamunanagar & A nr. v. Employees State Insurance Corporation, Amritsar,(4 ) Roshan Industries Pvt. Ltd. Yamunanagor
v. Employees' State Insurance Corporation( 5 ), E.S.L.C. Hyderabad v. A. P. State Electricity Board, Hyderabad( 6 ). Ali the High
Courts in these cases except 1hat of Allahabad held that the rule is
ultra vires the powers conferred on the State Government under
Sec. 96 (1) (b) inasmuch as i'I is not empowered to make rules prescribing periods of limitation for applications to be fil·~d before the
Court, thou~h in Madhya Pradesh case it was also said that :
"Even if it be taken that clause (b) of Sec. 96(1),.
as it is worded, is wide enough to cover a rule of limitation, that cannot authorize the Government to frame
a rule regulating limitation for 'the recoyo~ry of contributions .. ........... ''
because according to it the validity of 'the rule does not necessarily
depend on the ascertainment of "whether it confers rights or
merely regulates proo~dure, bu'I by determining whether it is in
conformity with foe powers conferred by the statute and whether
it is consistent with the provisions of the statute". These decisions
also held that the scheme of the Act was such that the Legislature
~id nat and could not have intended to confer any power upon t~
Sta~~ Government to make rules prescribing a period of limitation
for application under Sec. 75(2).
The question which directly confronts us is whether the power
to prescribe p_eriods of limitation for initiating proceedings before
the Court is a part of, and is included, in the power to prescribe
"the proceduf\~ to be followed in proceedings before such Courts".
The answer to this question would involve the determination of
the further question whether the law relating to limita'lion is procedural or subsfantive or partly proc.~dural and partly substantive.
ff it is procedural law does it make any difference wheth~r it relates
to the time of filing application for initiation of proceedings before the Court or whether it relates to interlocutory applications
or other statements filed before it after the initiation of such proceedings.
Th·~ con'lention on behalf of 1he Appellant is that the
law relatl_ng to limita!~on is merely procedural, as such it makes
(1) AIR 196' (Vol. 51) Mi lhya Pradesh 75. (2) AIR 1964 (Vol, 5\) Madras 376.
(J) AIR 1965 (Vol. 52) Allahabad 410.
(4) AIR t 967 (Vol. 54) Punjab 166 (FB).
(5) AIR 1968 (Vol. 55) Punjab 56 (SB).
· (6) 1970 Labour & Industrial cases 921.
'872
SUPREME COURT REPORTS
[l 972] l S.C.R.
no difference whether it relates to the time of filing an application
or it deals with the time for filing interlocutory applications or
other statements. There is also it is submitted no indication in
the scheme of the Act that it is otherwise or that there is any impediment for the Government to prescribe under the rule making
authority the period of limitation for applications under Sec. 7 5 ( 2).
Beforn we consider the scheme of •the Act rt may be necessary to
examine the scope and ambit of the terms 'procedure' as used in
Sec. 96(l)(b).
The topic of proc.~dure has been the subject of .academic debate and scrutiny as well as of judicial decisions over a long period
A
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but in spite of it, it has defied the formulation of a logical test or
C
definition which enables us, to determine and demarcate the
bounds where procedural law ends and substantive law begins, or
in oth·~r words it hardly facilitates us in distinguishing in a given
case whether the subject of controversy concerns procedural law
or substantive law. The reason for this appears to be obvious, because substantive law deals with right and is fundamental while . o
procedure is concerned with legal process. involving ac1ions and
remedies, which Salmond defines "as that branch of law which
governs the process of litigation", or to put it in 'another wey,
substantive law is that which we enforce while procedure deals
with rules by which we enforce it.
We are temP'ted in this regard
to cite a picturesque aphorism of Therman Arnold when he says
"Substall'tive law is canonised procedure. Procedure is unfrocked E
sub5tantive law(')".
The manner of this approach may be open to the criticism of
having over simrilified the distinction, but nonetheless this will
enable us to grasp the ess-~ntial requisites of each of the concepts
which at any rate "has been found to be a workable concept to
point out the real and valid difference between the rules in which
stability is of prime importance and 1those in which flexibility is a
more important value(')".
Keeping these basic assumptions in
view it will be appropriate to examine whether the topic of limitation belongs to the Branch of procedural law or is outside it. If
'it. is a part of the procedure whether the entire topic is covered by
it or only a part of it and if so what part of it and the tests for
ascertaining them. The law of limitation appertains to remedies
because the rule is that claims in respect of rights cannot be entertained if not commenced within the time prescribed by the statute
in respect of that right. Apart from Legislative action prescribing
the time, there is no period of limit<rtion recognised under the
general law and therefore any time fixed by the statute is neces-
(t) XLV Harvard Law Journal-617 & 645.
(2) A'lrniCln Jurispru1ence-Vol. 5t (Second Edn.) 605.
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BHARAT BARREL co. v. E.s.r.c. (Jaganmohan Reddy, J.) 873
sarily to be arbitrary.
A statute prescribing limitation however
does nat confer a right of action nor spea.Klng generaily does it
confer on a person a right to relid which has been barred by eJlux
of time prescribed by the law. The .necessity for enacting periods
of limitallon is to ensure that actions are commenced within a
particular period, firstly to assure the availability of evidence documentary as well as oral 'to enable the defendant 'lo contest the
clallll against him; S>.x:ondly to give effect to the principle that law
does not assist a person who is inactive and sleeps over his iigh'ts
by allowing them when challenged or disputed to remain dormant
without asserting them in a COUI't of law.
Th~ principle which
forms the basis of this rul•;i is expressed in the maxim vigi/antibus,
non dormientibus, jura subveniunt (the Jaws give help to those
who are watchful and not to those who sleep).
Therefore the
object of the statutes of limitations is to compel a peison
to
exercise his right to action within a reasonable itime as also to discourage and suppress stale, fak•;i or fraudulent claims. While
this is so there are two aspects of the statutes of limitation the
one concerns the extinguishment of the right if a .claim or action
is not commenced with a particular time and the other merely bars
the claim wjthout affecting the right which either remains merely
as a moral obligation or can be availed of to furnish 'the consideration for a fresh
enforceable oblig::ition.
Where a statute p1 escribing the limitation extinguishe> the right, it affects substantive
rigMs while that which purely pertains to the commencement of
action without touching the right is said to be procedural. According to Salmond the law of procedure is that branch of 'the law
of actions which governs the process of litigation, both Civil and
Criminal.
"All 'the residue" he says "is substantive law, and
relates not to the process of litigation but to its purposes and subject matter". It may be stated _that much water has flown under
the bridges since the original English theory justifying a statute
of limitation on the ground that a debt long overdue was presumed to have been paid and discharged or that such· statutes are
merely procedural.
Historically there was a period when substantive law was ineidricably intermix.~ with procedure; at a later
period procedural law seems to have reigned supreme when fonns
of action ruled. In the words of Maine "So great is the ascendancy of the Law of Actions in the infancy of Courts of Justice,
!hat su)Jstant!ve law has at first 1th~ look of being gradually secreited
m the mters!Jces of procedure(')' . Even after the fonns of action
were abolished Maitland in his Equity was still able to say "The
forms of action we hav·~ buried but they still rule us from their
graves", to ~hich Salmond added "In their life they were powers
of evil and even in death they have not wholly ceased from ttoubling(2) ".
Oli»;ir Wenda! Holmes had however observed in "The
(1) \hin" Early Law and Custom 389.
4-Lll9Sop.(Cl)/72
(2) 21 L.Q.R. 43.
814
StTPIU!M! COURT lll!POllTS
[l972J l S.C.il.
Common Law", "wherever we trace a leading doctrine of subA
stantive law far enough back, we are likely to find some forgotten
circumstance of p1ocedure at its source". It does not therdore
appear that the statement that substantive Jaw detenn.nes rights
and procedural law c!eals with remedies is wholly valid, for neither
the entire Jaw of remedies belongs to procedure nor are rights
merely confined to substantive Jaw, tixause as already noticed
B
rights are hidden even "in the interstices of procedure", There is
therefore no clear cut division between the two.
A large number of decisions have been referred before us both
English and Indian some of antiquity in support of the proposi·
tion that the law prescribing the time within which an action call
be commenced is purely procedural and therefore when a statute
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empowers the Govt. to make rules in respect of procedure it confers upon it also the rights to prescribe lirnitati;in. To this end
!rave been cited the cases cl Manoe/ Francisco Lopez & Ors. v.
Lieut. Godo/nhon James Burs/em('), and Ruckmaboye v.
Lul/oobhoy Mottichund( 2 ). An examination of these cases would
show '!hat what was being considered was whether the law of D
limitation was part of the lex fori which foreigners and persons
not domiciled in the country have to follow if they have to have
recouI"£e to actions in that country. In the latter case the Privy
Council observed at page 265 :-
"The arguments in support of the plea are founded
upon the legal character of a law of limitation or preI:.
scription, and it is insisted, and the Committee ar>~ of
opinion, correctly insisted, that such legal character of
the law of prescription has been so much considered and
cli<cus<ed among writers uoon iurisorudence, and has
been so often the subject of legal decision in the courts
of law of this and other countnes, that it is no longer
f
subject to doubt and uncertainty.
In truth, it has be·
come almost an axiom in jurisprudence, that is law of
prescriP'lion,. or law of limitation, which is meant by
that denomination, is a law relating to procedure having
reference only 110 the lex fori".
These observations as well as those in the earlier case must
G
be understood in the light of the principles governing conflict of
laws.
What was in fact being examined was whether they are
part of the procedural law in the sense that the Municipal laws
will be applicable on the question of limitation for the commence·
ment of actions because if limitation was pUrely a question of substantive law that would be governed by the law of the country of the
H
(1) (1843}-IV Moore Indian Appeals 300.
(2) (1849-54HV·Moore Indian Appeals 234).
'JffL\lAT BMUlBL co. v. £:SJ:c. {Jaganmslum Reddy, I.) 115
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domicile of the pernon who is having recourse to the Courts of
th~ other country. In other words the substantive rights of the
parties to an action are governed by a foreign law while all matters
pertaining to procedure are governed exclusively by the lex fori.
The cases cited at the Bar, of the various High Courts in this
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country show that they were construing the rules prescribing
limitation in respect of proceedings in Court i.e. proceedings after
the institution of the suit or filing c{ the Appeal. In Sennima/af
Goundan v. Pa/ani Goundan & Anr.( 1), the question was
whether the High Court by framing a rule under Sec. 122 Civil Procedut>~ Code could make Section 5 of the Limitation Act applicable
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to applications under sub-rule ( 2) of Rule 13 of Order IX. While
holding that it could, Coutts-Trotter, J as he then was made
this pertinent observation :
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"Whatever may be the case of the statute prescribing say 3 years for an action to be brought I am quite
clear that the Articles in the Act limiting applications
of this nature which are almost entirely interlocutory
deal clearly with matters of procedure .......... "
This was also the view of the Full Bench in Krishnamachariar
v.
Srirangammdl & Ors.(2), which was followed by the Bombay High Court in Banilredas v. Thakurdev('). It was contended
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in Velu Pillai v. Sevuga Perumal Pfllai('), that rule 41
(A)
(2) of the Appellate side Rules of the Madras High Court providing for the presentation of a petition to the High Court within
90 days from the date of the order passed in an execution proceedings was ultra vires, because the High Courts were not en-.
titled by rules to regulate or enlarge the periods in the LimitaF
tion Act in respect of the proceedings to which the Limitation
Act apply.
This contention was negatived on the ground that
such a power was inherent in Sec. 122 of the Civil Procedure
Code. The argument of the petitioner that he had a vested right
to go up in revision at any time and that the decision of the Full
Bench in Krishnamachariar v. Srirangammal & Ors. (2) does not
affect his right, was rejected on the ground that Sec. 122 Civil
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Procedure Code empowers the High Courts to make rules regulating their own procedure and the procedure of the subordinate
Courts subject to their superintendence.
There were earlier decisions of the Allahabad High Court
and Lahore High Court as also a decision of the Bombay High
ff Court rendered under Sec. 602 of the old Civil Procedure Code
I A 'R 1917 Madras957.
(3) ILR 53 Bombay 4S3.
(2) !LR 47 Madras 824.
( 4) AIR 1958 Madras 392.
'876
SUPREME COURT REPORTS
[1972}1 S;C.R.
referred to by Krishnan, J., in his referring order in
KrishnaA
machariar's case which took the view that the High Court· has
not the power by rule under Sec. 122 or the corresponding Sec.
602 of the old Civil Procedure Code to make rules for ai.enng
the period of limitation prescribed by the Indian Limitation Act,
-see Narsingh Sahai
v.
Sheo Prasad(1 ), and Chunila/ Jetha·
bhai v.
Dahvabhai Amulakh( 2 ).
Again a similar question
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arose as to whether clause 2 7 of the Letters Patent of the Lahore
High Court (there are similar clauses in the Letters Patent of
the other High Courts) could validly empower the meking of
rule 4 prescribing a period for filing an appeal under Clause. IO
of the Letters Patent. Clause 27 of the Letters Patent empowered the High Court from time to time to make rules and orders c
for regulating the practice
of the Court etc.
This Court in
Union of India v.
Ram Kanwar & Ors. (3), approved the view
of a Full Bench of the Punjab High Court in Punjab Cooperative
Bank Ltd. v. Official Liquidators Punjab Cotton Press Company
Ltd. (in liquidation) (4 ), where it was held that rule 4 is a special
law within the meaning of Sec. 29(2) of the Limitation
Act.
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Subba Rao, J., as he then was said at page 320 :
"Rule 4 is made by the High Court in exercise of
the legislative power conferred
upon the said High
Court under cl. 27 of the Letters Patent. As the said
rule is a law made in respect of special cases covered
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by it, it would certainly be a special law within the
meaning of S. 29(2) of the Limitation Act".
In that case no question was raised as to whether rule 4 was
dealing with a procedural matter or dealt with a substantive right.
These cases are of little assistanc.~ and if at all rthey lay down the
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principle that inter-locutory proceedings before the Court do not
deal with substantive rights and are concerned with mere procedure and can be dealt with by rules made under the powers
conferred on the High Court to regulate the procedure.
It is
therefore· apparent that whether the
fulfilment of a particular
formality as a condition of enforceability of a particular right is
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procedural or substantive has not been,
as we had already
noticed free from difficulty.
What appears to be a self-evident
principle will not become so evident when we begin .to devise
tests for distinguishing procedural rule from substantive
law.
It appears to us that tliere is a difference between the manner in
which the jurisprudential lawyers consider the question and the
ivay in which the Judges view the matter. The present tendency
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(I) [19181!LR40 All. 1 (FB).
(2) [1908] !LR 32, Born. 14 !FB).
(l) [1962] (3) SCR 313.
(4) AIR 1941 Lah. 57 (FB).
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BHARA'f llARREL co. v. E.S.I.C. (Jaganmohan Reddy, J.) 877
is that where a question of limitation arises, the distinction between so-called substantive and procedural statutes of limitation
may not prove to be a determining factor but what has to be
considered is whether the statute extinguishes merely the remedy
or extinguishes the substantive right as well as the remedy. Instead of generalising on a principal the safest course would be
to examine each case on its own facts and circumstances and
determine for instance whether it affects substantive rights and
extinguishes them or whether it merely concerns a procedural
rule only dealing with remedies or whether the intendment to
prescribe limitation is descernible from the scheme of the Act oc
is inconsistent with the rule making power etc.
Apart from the implications inherent in the term procedure
appearing in Sec. 96(1) (b) the power to prescribe by rules any
matter falling within the ambit of the term must be the "procedure to be followed in proceedings be.fore such Court".
The
word 'in', emphasised by us, furnishes a clue to the controversy
that the procedure must be in relation to proceedings in Court
after it has taken decision of the matter, which obviously it takes
when moved by an application presented before it.. If such be
the meaning the application by which the Court is asked to ad"
judicate on a matter covered by Sec. 7 5 ( 2) is outside the scope
of the rule making power conferred on the Government.
In the 'I;:ast & West Steamship
Company,
George Town,
Madras v.
S. K. Ramalingam Chettiar(1), one of the questions
that was considered by this Court was whether the clause that
provides for a suit to be brought within one year after the delivery of the goods or the date when the goods should have been
delivered, only prescribes a rule of limitation or does it also
provide for the extinction of the right to compensation after
certain period of time. It was observed by Das Gupta, J, at page
836:
"The distinction between the extinction of a right
and the extinction of a remedy for the enforcement
of that right, though fine, is of great importance. The
legislature could not but have been conscious of this
distinction when using the words "discharged from all
liability" in an article purporting to
prescribe rights
and immunities of the shipowners.
The words are apt
to express an intention of total extinction of the liability
and should,
specially in
view of the
international
character of the legislation, be construed in that sense.
(ll [1960] (3) SCR 820.
878
SUPREME COURT REPORTS
[1972] l S.C.R.
It is hardly necessary to add that once the liability
is extinguished under this clause, there is no scope of
any acknowledgement of liability thereaf,er".
What we have to consider is, apart from the question that
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the Government on the terms of Sec. 96(1 )(b)
is not empowered to fix periods of limitation for filing applications under
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Sec. 7 5 ( 2) to move the Court, whether on an examination of
the Scheme of the Act, rule 17 affects substantive rights by extinguishing the claim of the Corporation to enforce the liability
for contributions payable by the Appellant.
An examination of the purpose and intendment of the Act
and the scheme which it effectuates, leaves no doubt that it was
enacted for the benefit of the employees and their dependents,
in case of sickness, maternity and 'employment injury', as also
to make provision for certain other matters. Sec. 40 makes the
employer liable in the first instance to pay the contributions of
the employer as well as the employee to the Corporation subject
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to the recovery from the employee of the amount he is liable to
contribute. This liability on the employer is categorial and D
mandatory.
He is further required under Sec. 44 to submit to
the Corporation returns as specified therein.
Chapter V comprised of Sections 46 to 73, deals with the benefits which includes
among others, sickness and disablement benefit of the employee,
his eligibility for receiving payments and the compensation payable to his dependents. If the employee fails or neglects to pay
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the contributions as required, the Corporation has the right to
recover from him under Sec. 68, the amounts specified in that
Section as an arrear of land revenue. Sec. 94 provides that the
contributions due to a corporation are deemed to be included in
the debts under the Insolvency Acts and the Company's Act, and
•re given priority over other debts in the distribution of the proF
perty of the insolvent or in the distrjl;mtion of the assets of a
Company in liquidation.
Chapter VI deals with adjudication
of disputes and claims, of which Sec. 74 provides for he Constitution of the Insurance Court; Sec. 74 specifies the matters to be
decided by that Court; Sec. 76 and Sec. 77 deal with the institution and commencement of proceedings and Sec. 78 with the
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powers of the Insurance Court.
Sec. 80 deals with the non-admissibility of the claim, if not made within twelve months after
the claim is due while Sec. 82 (3) prescribes the period within
which an appeal should be filed against the order of the Insurance Court. These provisions in our view unmistakabJv indic1te
that the whole scheme is dependent upon the contributions made
by the employer not only with respect to the amounts payable
by him but also in respect of those payable by the employee.
No limitation has been fixed for the recovery of these amounts
H
BHARAT BARREL co. v. E.s.1.c. (Jaganmohan Reddy, J.) 879
A by the Corporation from the employer; on the other hand Sec.
68 empowers 1he Corporation to resort to coercive process. If
any such steps are proposed to be taken by the Corporation and
the employer is aggrieved he has a right to file and apply to the
Insurance Court and have his claim adjudicated by it in the same
way as the Corporation can prefer a claim in a case where the
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liability to pay is disputed.
Sec. 7 5 ( 2 )( d) clearly envisages
this course when it provides that "the claim against a principal
employer under Sec. 68" shall be decided by the Employees Insurance Court. It may be useful to read Sec. 68 and 75(2)(d)
which are given below :
Sec. 68
'
( 1) If any principal employer fails or neglects to
pay any contribution which under this Act he is liable
to 'pay in respect of any employee and by reason thereof such person becomes disentitled to any benefit or
entitled to a benefit on a lower scale, the Corporation
should have been paid by the principal employer, pay
to the person the benefit at the rate to which he would
have been paid by the principal employer, pay to the
ptrson the benefit at the rate to which he would have
been entitled if the failure or neglect had not occurred
and the Corporation shall be entitled to recover from
the principal employer either-
(i) the difference between the amount of benefit
which is paid by the Corporation to the said
person and the
amount of the benefit which
would have been payable on the basis of th,e
contributions which were in fact paid by the
employer; or
(ii) twice the amount of the contribution which
the employer failed or neglected to pay; whichever is greater.
(2) The amount recoverable under this
Section
may be recovered as if it were on arrear of land revenue.
Sec. 75(2)
The following claim shall be decided by the Employees' Insurance Court, namely :-
*
•
*
*
*
( d) Claim against a principal employer under
Section 68;
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It is contended by the learned Advocates for the Appellant that
Sec. 68 is a crucial provision as it indicates that the right of the
Corporation to enforce its claim !'or payment has been preserved
880
SUPREME COURT REPORTS
[1972) 1 S.C.R.
subject to the provision that the omission or neglect
by the
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principal employer to make contribution deprives the employee
of any benefit either totally or at a reduced scale. It is only in
these circumstances he submits that the Corporation can recover
the amount by coercive process but in any other case the Corporation's claim to recover by an application to the Insurance
Court can be made subject to a period of limitation by a rule
made under Sec. 96 ( 1 )( b).
We are unable to appreciate the
logic of this submission because the benefit of an employee can
be negatived or partially admitted for instance either by reason
of the employer not showing him in the return as an employee
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of his or showing him as drawing a lesser wage than what he is
entitled -to or as it may happen mostly, when he fails to make
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the payments even according to the returns made by him. In all
these cases the employee's benefits will be affected because the
basis of the scheme of conferring b~nefit on the employee is the
contribution of both the employer and the employee. It is clear
therefore that the right of the Corporation to
recover
these
amounts by coercive process is not restricted by any limitation
nor could the Government by recourse to the rule making power
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prescribe a period in the teeth of Sec. 68.
What Sec. 75(2) is
empowering is not necessarily the recovery of the amounts due
to the Corporation from the employer by recourse to the Insurance Court but also the settlement of the dispute of a claim by
the Corporaiion against the principal employer which implies
that the principal employer also can. where he disputes the claim
made and action is proposed to be taken against him by the Corporation under Sec. 68 to recover the amounts said to be due
from him. While this is so there is also no impediment for the
Corporation itself to apply to the Insurance Court to determine
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a dispute against an employer where it is satisfied that such a
dispute exists. In either case neither Sec. 68 nor Sec. 75(2)(d)
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prescribes a period of limitation. It may also be mentioned that
Sec. 77 which deals with the commencement of the proceedings,
does not provide for any limitation for filing an application to
the Insurance Court even though it provides under sub-sec. (2) of
that Section that every such application shall be in such form and
shall contain such particulars and shall be accompanied by such
fee, if any, that may be prescribed by rules made by the State
Government in consultation with the Corporation.
This was
probably an appropriate provision in which the legislature if it
had intended to prescribe a time for such applications could have
provided.