# BOMBAY DYEING & MANUFACTURING CO., LTD. D mbry that acquisition in Art. 31(2) 2'Aa Blah ~ is not confined to cases of transfer of ownership to the State, 8°""'°11 ~ IAer, and that even deprivation of property would fall within it, Ve",!'; 14';."~ which is the baisis of the deoisions in The State of West Ben1JG gai v. Subodh Gopal Bose(') and in Dwarkadas Slirinivas of Bombay v. The Sholapur Spinning and Weaving Co. Ltd.(') can, in view of the above amendment, no longer be accepted as correct, and that those decisions therefore require to be reconsidered in the light of the new Art. 31(2A). But-it is not disputed that this provision has no retrospective operation and that the rights of the parties must. be decided in accord· ance with the law as on the date of the writ application, and that on the provisions of the Constitution as they stood on that date and as interpreted in The Staie of West Bengal v .. Subodh Gopal Bose(') and Dwarkadas Shrinivas of Bombay v. The Sholapur Spinning and Weaving Co. Ltd.( 1), s. 3 (l) of the impugned Act would be obnoxious to Art. 31(2). This should be sufficient to conclude this question in favour of the appellant, but the respondents contend that s. 3(1) is not within the prohibition of Art. 31(2), because it operates only on money, and money is not property for purposes of that Article. There is considerable authority in America that the power .of eminent domain does nt>t extend to the taking of money, the reason being that compensation which is to be · paid in respect of money can only be money, and that, therefore, in substance it is a forced loan. In The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbl!angu('), this view was adopted by Mahajan J. at pages 943-944, by Mukherjea J. at page 961 and by Chandrasekhara Aiyar J. at pages 1015 to 1018. It is airgued for the respondents that the position under Art. 31 (2) is the same as in America, as the (') [1954] S.C.R. 587. (') (1954] S.C.R. 674. (') [1952] S.C.R. 889. . ll32 SUPRE:\IE COURT HEPOHTS [1958] 195? proV1S10n therein that either the amount of the compensa11ombt>y Dyeing .r. tion should be fixed or the principles on which and the manMan•Jaduri"11 ner in which compensation is tt> be determined should be co., Lid., specified, involves that what is taken is not money. It is arr1,. s;;. of gued, on the other hand, for the appellant that the latest .B""'""Y allci Otlltr•trends in American law show, as was observed by Das J. (as Ve...tala••ma he then was), at pages 984-985 in The State of Bihar v. Maha- .Aiyur J. ra;adhirai Sir Kameshwar Singh of Darbhanga('), a departure from the view held in earlier authorities that moneys and choses in action could not be the subject of "eminent domain"; and that, in any case, the principles of American law should not be applied in the interpretation of the provisions of our Constitution. If the contention of the respbndents 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 bf them by process of legislation. The answer of Mr. Seervai is that that protection is to be sought in Art. 19(1)(f), that the word "property" therein has a wider connotation that what it bears in Art. 31(2) and includes money, and that the citizens have the right to hold tr.oney subject only to law such as is saved J?y Art. 19(5). In support bf this position, he relied on the decision in Bijay Cotton Mills Ltd. v. The State of Aimer(') in which this Court applied Art. 19(6) in pronouncing on the validity of the Minimum Wages Act (XI of 1948) requiring the employers to pay wages at a rate not less than that to be fixed by the Government Assuming that the correct position is what the respbndents contend it is, the question that has still to be determined is whether the impugned Act could be supported under Art. 1905. There was some discussion before us as to the scope of this provision, the point of the debate being whether the words "imposing reasonable restriction" would cover a legislation, which not merely regulated the exercise of the rights guaranteecl by Art. 19(l)(f) but totally extinguished them, and whether a law like the present one which deprived the owner bf his properties could be held to fall within that provision. It was argued that a law authorising the State to (') [1952] S.C.R. 889. (') [1955) 1 S.C.R. 752. S.C.R. SUP.REY.IE COURT REPORTS 1133 seize and destroy diseased cattle, noxious -Orugs and the like, I96T could not be brought within Art. 19(5) if the word 'restric- Bombay Du•ing "' tion' was to be narrowly construed, and that accordingly the ~an•'facJZ:J"fl power to restrict must be held to include, in appropriate o., v. · cases, the power to prohibit the exercise of the right. That BO:/:,,.~ ::::f" 01°/.,,. view does find support in the observations of Lord Porter - - . Venkatasa1111J lll Commonwealth of Austraira v. Bank of New South Aiyar J. Wales('); but the present legislation cannot be sustained even on the above interpretation of the word 'restriction', as s. 3( l) of the Act deals with moneys and money cannot be likened to diseased cattle or noxious drugs so as to attract the exercise of police power under Art. 19(5). It appears to us that whether we apply Art. 31(2) or Art. 19(5), the 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 ss. 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 impugn~d legislat!on is one in respect of abandoned property, and it is not open to attack as contravening either Art. 19(l)(f) or Art. 31(2). It is those oontentions that now fall to be considered. As regards the first contention, the question is whether on 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 h!s 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 ( 1) (1950] A.C. 235, 311. 1134 SUPRKME COURT REPORTS [1958) 1957 there is a statutory transfer of the wages earned by the workBomba D ei"fl "' man to the Board. Section 5 of the Act vests the amounts menM•~uJdituring tioned in s. 3(2) in, the Bo11rd, and s. 3(1) directs that those Oo., £14, amounts should be paid by the employer to the Board. CounTh• slate of sel for the appellant contends that there are in the Act no Bombay and OtMra words of transfer of the debts to the Board, and that there is only a provision for pavment of the amounts. But this is Vtnbitarama J .Aiyar J. taking tbo narrow a view of the true scope of those provisions. Looking at the substance of the matter, we are of opinion that s. 3(1) and s. 5(1) do operate to transfer the debts due to the employees, to the Board. It will be observed that the definition of "unpaid 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, end 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 Lim;tation only bars the remedy but does not extinguish the debt. Section 28 of the Limitation Act provides that when the period limited to 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 extingu'sh the right of a person thereto. Under s. 25(3) cf 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 now it is to be appropiated, the creditor has the right to appropriate it towards a barred debt. (Vi de s. 60 of the O>ntract Act). It has also been held that a ~reditor is entitled to recover the debt from 8.C.R. SUPRE~IE COURT Rl~PORTS 1135 the surety, even though a suit on it is barred against the 1967 principal debtor. Vide Mahant Singlt v. U. Ba Yi('), Subra· Bombay Dyeing " m~ia Aiyar v. Gopala Aiyar('), and Dil Muhammad v. Saiti ~:~~~J,~;.ng Das('). And when a creditor has a lien over goods by way of v. · 1 h f h J' e... b · • 'l'lie State of ·security for a oan, e can en orce t e 1en tvr o taming Bolllbay and Ol!it.r• satisfaction of the debt, even though an action thereon would be time-barred. Vide Narendra Lal Khan v. Tarubala Dasi('). That is also the law in England. Vide Halsbury's . Laws of England (Hailsham's Edition), Vol. 20, page 602,. para. 756 and the observa~ions of Lindley L.J. in Carter v. White(') and of Cotton L. J. in Curwen v. Milburn('). In American Jurisprudence, Vol. 34, page 314, the Jaw is thus stated. · "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 lM::tion, 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 suffi- ·cient consideration to suppbrt 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 bf the provisions in the impugned Act, which re- ( ') (1939) L.R. 66 I.A. 198. (') (1910) I.L.R. 33 Mad. 308. (: 1 ) A.LR. 1927 Lah. 396. (') 192~\ I.LR 48 Cal, 817, 823 {') (1883,) .25 Ch. D. 666. 672. (') (1889) 42 Ch. D. 424, 434. 1136 SUPHK\IE COl;RT Rl sub-s. (2) of s. 5 that "unpaid accumulations" and fines shall V nl:nla.rama .Aiyar J, be paid to the Board .. notwithstanding anything contained in the Payment of Wag~s Act, 1936, or any other law for the time being in force." One of those laws is the law of limitation, and the effect of these provisions is to suspend limitation in respect of the claims to which s. 3(2) relates. To dispel any doubt as to whether it wa·s competent to the Legislature of the Bombay State to modify the provisions of the Limitation Act. it should be stated that limitation is •I topic enumerated in the Concurrent List, being Entry 13 in List III in Seventh Schedule to the Constitution, and under Art. 254(2). the State Legislature can enact 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 Aot, there is one other provision therein to which reference must be made. Section 17 provides that without prejudice to other modes of recovery, the sums payable to the fund under s. 3 may be 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 vMid, it cannot be said to be bad by reason of this section. On the above analysis, there oannot be any doubt that the effect of the relevalllt provisions of the Act is to 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 debts in favour of the Board. If, however, the employer is not relea!sed from his liability to the employee, then the effect of s. 3(1) is omy to create in the Board a statutory S.C.H. ·SUPREME COURT REPORTS 1137 creditor in addition to the creditor under the contract of em11JJ1 ployment, and there can be no question of substitution. Mr.Bombay Dyei1'il Seervai ·agrees that if the Act does not operate to discharge Manufacturing . . Go., Ltd. the employer .from his obligations to the employees in respect ,v. f h d h h · b h Id b The !:!late of o t e wages ue to t em, t en tt must e e to e uncon~ BoinJJav a7id Otloera stitutional as infringing Art. 19(1 )(0, because his contention · · l 'enkataram.o. that the effect of the Act was only to take the property of the Aiyar j. employer in discharge of its obligations could not then be maintained. The real point for determination, therefore, is whether on payment of the amounts in accorda!nce with s.3(1) of the Act, the appellant gets a discharge of his obligation to the employees in respect of wages due to them. The Act does not contain any provision to that effect, and the abs6nce thereof has been strongly relied on by the appellant as showing that no substitu•ion of creditors was intended. In answer to this contention, Mr. Seervai urges firstly that though the Act does not, in terms, provide for the discharge of the appellant on payment of the amount under s. 3(1), that is the result of the provisions of the Payment of Wages Act (Act IV of 1936). hereinafter referred to as the Wages Act, and secondly, that the effect of s. 3(1) of the Act is to render the contract of empl<>yment void under s. 56 of the Contract Act, and the appel· lant is thereby discharged from his obligations thereunder. We shall now examine both these conten,ions. To appreciate the first contention, it is necessary to refer to the relevant provisions of the Wages Act. Section 2(vi) defines "wages" in terms which comprehend whatever falls within the definition of that word in s. 2(11) of the impugned Act. Section 3 casts on the employer the responsibility for payment of wages to persons employed by him. Section 4 provides for the fixing of wage per;ods, which, however, are not lo exceed one month. Under s. 5, the wages have to be paid before the expiry of ten days after the last day of the wage period in case of employees who continue in service and in the case of those whose employment has been terminated, within· the second working day of such termination. 11as SUPIU<:ME COURT REPORTS [1958] in:;1 Section J 5 provides that where am unauthorised deduction iBombay Dyoing 4' has been made from the wages of an employed person or pay. Manufacluring ment of wages has been delayed, such person may apply to Oo.,Ltd. m •· the authority appointed under the Act for a direction for pay- ~ ht Statg o/ Bomliay ,..d 01,,.,,. ment of the amount deducted or the delayed wages, as the V enb:Haranet1 Aiyar J. case may be, together with payment of compensation. Such application has ro be made within six months from the date on which the deductions were made or the date on which the payment of wages became due, and by Act No. 62 of 1953 of the Bomb~ Legislature, the period of six months has been enlarged to one year. There is a proviso ro this section that an application thereunder can be made after the period prescribed therein "when the applicant satisfies the authori· ty that he had sufficient cause for not making the application within such "period." Section 22(d) of the Act provides that. "No Court shall entertain any suit for the recovery of wage of any deduction from wages in so far as the sum so ·claimed could have been recovered by an application under ·section J 5 ...... " Now, the argument of the respondents is that under the provisions aforesaid, an employee has to prosecute his claim for unpaid wages before the authority within the time limit· ·ed bys. 15 of the Wages Act. which is one year in the State of Bombay, that if he fails to do so it becomes uncnforce· able, and 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 with· 'in a period of three years, the employer runs no risk of being called upon to pay to the employee what has been paid by him to the Board under s. 3(1), and that therefore a payment under the impugned Act gives him what is, for all practical purpOses, a good discharge. This argument rests on the supposi· tion that so far as unpaid wages are concerned, the operation of the Wages Act is co-extensive with that of the impugned Act. But that clearly is erroneous. It is true that wages as S.C.R. SUPREME COURT REPORTS 1139 . d h 1957 defined in the Wages Act would mclu e w atever are wages _ under the impugned Act. But s. 1(6) limits the application o'l.Bomb11y Dyeing .r. h. I Rs ?OQ f .Manufacturing the Wages Act to wages w 1ch are be ow . - or a co., Ltd. wage period. In respect of wages of Rs. 200 ?r more'. i~ is 'I'M 8~ of the general law that would apply, and the period of hm1ta-Bom00y and Otha-a tion is not one year under s. IS of the Wages Act but three Vtnl.;ntarama years under Art. 102 of the Limitation Act, which period is Aiyar J. capable of extension under the provisions of the Limitation Act beyond the three years mentioned in s. 2(10) of the impugned Act. Then, it is tq be noted that under the proviso to s. 15(1), 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 s. 3(1) and the second proviso to s. 5(2) they are to take effect notwithstanding anything contained in the Wages Act or any other law, they override the power conferred by the proviso to s. 15(1) of the Wages Act or the provisions of the Limitation Act. Even as regards s. 22 of the Wages Act. there is divergence of judicial opinion as to its true scope. In Simpalax Manufacturing Co. Ltd. v.