PETITIONER: <ORG> LTD. Vs. RESPONDENT: THE STATE OF BOMBAY AND OTHERS DATE OF JUDGMENT: 20/12/1957 BENCH: <NAME>, T.L. VENKATARAMA BENCH: <NAME>, T.L. VENKATARAMA BOSE, VIVIAN BHAGWATI, NATWARLAL H. DAS, S.K. SARKAR, A.K. CITATION: 1958 AIR 328 1958 SCR 1122 ACT: Labour Welfare-Law creating a fund for welfare activities Companies called upon to pay fines realised from employees and unpaid accumulation of wages-Constitutional validity -Bombay Labour Welfare Fund Act (Bom.XL of 1953), ss. 3(1), 3(2)(a)(b)-Constitution of India, Arts. 31(2),19(1)(f). HEADNOTE: The Bombay Labour Welfare Fund Act (Bom. XL of 1953) was enacted by <ORG> with the object of constituting a fund for the financing of activities for the welfare of labour and S. 3(1) of the Act provided as follows:- "There shall be constituted a fund called <ORG> and, notwithstanding anything contained in any other law for the time being in force, the sums specified in subsection (2) shall be paid into the Fund." Section 3(2) provided, inter alia, as follows "The Fund shall consist of :- (a) all fines realised from the employees; (b) all unpaid accumulation;" Notices were served on the appellant's company as also on other companies similarly situated, by the Welfare Commissioner, appointed under the Act, calling upon them to remit to him the fines and unpaid accumulations in their custody. The appellant in reply questioned the validity of the Act on the ground that it contravened Art. 31(2) Of the Constitution and, thereafter, filed a Writ petition, out of which the present appeal arises, which was treated by consent of parties as a test case. The Judges of <ORG> who heard the matter field that the impugned Act was intra vires, though on different grounds, and dismissed the petition. The sole point for determination in the appeal was whether s. 3(I) and sub-cls. (a) and (b) Of S. 3(2) Of the Act were void as being violative of Art. 31(2) Of the Constitution: Held, that the unpaid accumulation of wages remaining with the appellant company was its own property and S. 3(1) of the impugned Act in so far as it directs the payment of it tinder 3(2)(b) of the Act contravenes Art. 31(2) Of the Constitution and must be invalid. Article 31(2A) of the Constitution has no retrospective effect and cannot apply and the matter must be decided on the law as it stood at the date of the Writ petition. 1123 <CITATION> ,  S.C.R. 587 and <CITATION> .,  S.C.R. 674, applied. Assuming that money was not property within the meaning of Art. 31(2) and Art. 19(1)(f) applied that Article also would be of no help to the respondent as the Act could not be supported under Art. 19(5) Of the Constitution. <ORG> v. <ORG>,  A.C. 235, held inapplicable. <CITATION> ,  S.C.R. 889, considered. The impugned Act had not the effect of substituting the <ORG> as the creditor in place of the employee nor could it be said to be a legislation in respect of abandoned property. Although by defining 'unpaid accumulation' in the way it did the <ORG> obviously intended that only such wages of the employees as were time-barred should be taken by the <ORG>, it being well settled that the law of limitation only bars the remedy but does not extinguish the debt, ss. 3(I), 5(2) and 17 of the Act must be held to have the effect of transferring to the <ORG> the debts due by the appellant to its employees free from the bar of limitation. Such a transfer can be valid only if it gives a complete discharge to the employer from the debts. If it does not, the Act must be held to infringe Art. 19(1)(f) of the Constitution. The Act contains no provision granting a discharge to the debtor. The bar of limitation prescribed either by s. 15 Of the Payment of Wages Act (Act IV Of 1936) or Art. 102 of the Limitation Act or the provisions of S. 56 of the Contract Act, assuming they applied, could not give such a discharge. Where the Statute deals with rights arising out of a contract and interferes with the rights of one of the parties to it, it must affect those of the other parties to it as well. Consequently, the impugned Act which takes over the rights of the employees in respect of wages due to them without compensation and is, therefore unconstitutional, as contravening Art. 19(1)(f) or Art- 31(2) of the Constitution, would be unconstitutional as regards the appellant as well. The purpose of a legislation relating to abandoned property must be, in the first instance, to safeguard the property in the interest of the true owner and thereafter, in absence of any claim, the taking over of it by the <ORG>. The impugned Act which vests the property absolutely in the <ORG> without any regard for the claims of the true owner cannot be said to be a law relating to abandoned property. I43 1124 <ORG> v. <NAME>, 333 U.S 541, <ORG> v. <NAME>, 321 U.S. 233 and <ORG> v. New Jersey, 341 U.S. 428, referred to. As regards the fines mentioned in s. 3(2)(a) of the Act the appellant must be held to be a bare trustee under s. 8 of the Wages Act having no beneficial interest in fund created by that Act, and, consequently, ss. 3(I) and 3(2)(a) of the Act cannot contravene Art. 31(2) Or Art. 19(1)(f) of the Constitution. Nor could it be said that the Act by extending the circle of beneficiaries had encroached on the rights of the employees of the appellant. These sections must, therefore, be held to be constitutionally valid. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 167 of 1954.

Appeal from the Judgment and decree dated September 14, 1953, of <ORG> in Misc. Application No. 267 of 1953.

<NAME>, <NAME> and <NAME>, for the appellants.

<NAME>, Advocate General for the State of Bombay and <NAME>, for the respondents. 1957. December 20. The following Judgment of the Court was delivered by <NAME> 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 <ORG>,, <ORG> and <ORG>, 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. 1,65,731-1-0 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, <ORG> 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 stage, refer to the relevant provisions of the Act, as it is their validity that is the main point for our determination in this appeal. The preamble to the Act recites that " It is expedient to constitute a Fund for the financing of activities to promote welfare of labour in the State of Bombay and for conducting such activities ". Section 2 is the definition section; sub-s. (2) defines an " employee " as meaning " any person who, is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in an establishment".

Employer " is defined in sub-s. (3) as meaning " any person who employs either directly or through another person either on behalf of himself or any other person, one or more employees in an establishment and includes-in a factory any person named under s. 7(i)(f) of the Factories Act, 1948, as the manager ". 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-s. (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 s. 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.

(2). 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

(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 7(1) provides that "the <ORG> shall vest in and ,be held and applied by the <ORG> as Trustees subject 'to the provisions and for the purposes of this Act." Sub-section (2) of s. 7 is very material, and is as follows: "Without prejudice to the generality of sub-section (1) the moneys in the <ORG> may be utilized by the <ORG> 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 <ORG> 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 Payment of Wages Act , 1936 (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. Section.17 enacts that, " Any sum payable into the Fund under this Act shall without prejudice to any other mode of recovery, be recoverable on behalf of the <ORG> as an arrear of land revenue."

Section 19 authorises <ORG> to make rules to carry out the purposes of this Act. Section 23 provides that, "In section 8 of the Payment of Wages Act, 1936 (IV of 1936), to sub-section (8) the following shall be added, before the Explanation namely:

" but in the case of any factory or establishment to which the Bombay Labour Welfare Fund Act, 1953 (Bom. XL of 1953), applies all such realisations shall be paid into the Fund constituted under the said Act."

Rules were framed by the State of Bombay in exercise of the powers conferred by s. 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-

(a)all fines realised from the employees before the said date and remaining unutilized on that date; ,and

(b)all unpaid accumulations held by the employer on the aforesaid date.

(2)The 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,

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 s. 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 Art. 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 <NAME> and <NAME> 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 <ORG> as a creditor in the place of the employees, that there -was no taking of property, and that, in consequence, there was no contravention of Art. 31 (2). <NAME> 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 Art. 31 (1). In the result, the petition was dismissed. The learned Judges,however, granted a certificate under Art. 132 , and that is how the appeal comes before us, The sole point for determination in this appeal is whether s. 3 (1) and sub-cls. (a) and (b) of s. 3(2) of the Act are void as contravening the provisions of the Constitution; but to decide 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, s. 3 (2)

(a) and unpaid accumulations, s. 3 (2) (b) separately, as the issues involved in the determination of their validity are different.

Taking first unpaid accumulations, s. 3 (2) (b), the contention of Mr. <NAME> for the appellant is that s 3 (1) is repugnant to Art. 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. <NAME> 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 s. 3 (1) is to take away money belonging to it. Then, the question is whether such a provision is hit by Art. 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 s. 3 is acquisition or taking possession of property within Art. 31 (2). <NAME>, J., answered this question against the appellant, because, in his view, Art. 31 (2) would apply only if there was a transfer of title to or beneficial interest in the amounts to the <ORG>, that s. 3 (1) effected neither, that it did deprive the employers of oheir moneys, but that fell under Art. 31 (1) and not Art. 31 (2 ), and that as that was done under the authority of law, it could not be questioned.

Subsequent to this decision, this <ORG> had occasion to consider the true scope of Art. 31 (2) in relation to Art. 31 (1) in <CITATION> (1) and in <CITATION> (2). <CITATION> (1), the majority of the learned Judges took the view that. Arts. 31 (1) and 31 (2) were not mutually exclusive, that it was not an essential requisite of acquisition under Art. 31 (2) that there should be a transfer of title to the <ORG>, that deprivation of property and substantial abridgement of the rights of the owner were also within Art. 31 (2 ), and that a law which produced those results must, in order to be valid, satisfy the conditions laid down in that Article. <NAME>, J., (as he then was) differed from this view, and held that the contents of the two provisions were distinct, that while Art. 31 (1) had reference to the " police power" of the <ORG>, Art. 31 (2) dealt with the power of " eminent domain ". <CITATION> .(2) the majority of the Judges again reiterated the view expressed in <CITATION> (1) that Arts. 31 (1) and 31 (2) covered the same ground, and that substantial interference with rights to property would be within the operation of Art' 31 (2). On these decisions, it should follow that s. 3 of the impugned Act is bad as infringing Art. 31 (2 ), in that it deprives the appellant of its moneys without giving any compensation. Mr. <NAME>, however, resists this contention on the strength of Art. 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 <ORG> or to a corporation owned or controlled by the <ORG>, it shall not be deemed to provide for the (1) [1954] S.C.R. 587.

(2) [1954] S.C.R. 674.

compulsory acquisition or requisitioning of property,: notwithstanding that it deprives any person of his property."

The argument is that the theory that acquisition in Art. 31 (2) is not confined to cases of transfer of ownership to the <ORG>, and that even deprivation of property would fall within it, which is the basis of' the decisions in <CITATION> (1) and in <CITATION> . (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 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 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 <CITATION> (1) and <CITATION> . (2), s. 3 (1) 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 prohibi- tion 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 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. <CITATION> (3 ), this view was adopted by <NAME> at pages 943-944, by <NAME> at page 961 and by <NAME> at pages 1015 to 1018. It is argued for the respondents that the position under Art. 31(2) is the same as in America, as the provision therein that either the (1)  S.C.R. 587. (2)  S.C.R. 674. (3)  S.C.R. 889.

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 <NAME> (as he then was), at pages 984-985 in <CITATION> (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. <NAME> is that that protection is to be sought in Art. 19(1)(f ), that the word " property" therein has a wider connotation than what it bears in Art. 31(2) and includes money, and that the citizens have the right to hold money subject only to law such as is saved by Art. 19(5). In support of this position, he relied on the decision in <CITATION> (2) in which this <ORG> 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 res- pondents contend it is, the question that has still to be determined is whether the impugned Act could be supported under Art. 19(5). 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 Art. 19(1)(f) 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)  S.C.R. 889.

(2) [1955] 1 S.C.R. 752.

the <ORG> to seize and destroy diseased cattle, noxious drugs and the like, could not be brought within Art. 19(5) 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 <NAME> in <ORG> v. <ORG> (1); but the present legislation cannot be sustained even on the above interpretation of the word 'restriction', as s. 3(1) 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 <ORG> 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 <NAME> based his judgment; and secondly, that the impugned legislation is one in respect of abandoned property, and it is not open to attack as contravening either Art. 19 (1)(f) or Art. 31(2). It is those contentions that now fall to be considered. 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 <ORG> 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)  A-C. 235, 311.

<NAME>

transfer of the wages earned by the workman to the <ORG>. Section 5 of the Act vests the amounts mentioned in s. 3(2) in the <ORG>, and s. 3(1) directs that those amounts should be paid by the employer to the <ORG>. Counsel for the appellant contends that there are in the Act no words of transfer of the debts to the ;<ORG>, 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 s. 3(1) and s. 5(1) do operate to transfer the debts due to the employees, to the <ORG>.

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 <ORG> 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 <ORG> 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 <ORG> 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 s. 25(3) 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 s. 60 of the Contract Act). It has also been held that a creditor is entitled to recover the debt from the surety, even though a suit on it is barred against the principal debtor. <CITATION> (1), <CITATION> (2), and <NAME> v. <NAME> (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. <NAME> v. <NAME> (4). That is also the law in England. <NAME> Laws of England (<ORG>), Vol. 20, page 602, para. 756 and the observations of <NAME> in <NAME> v. <NAME> (5) and of <NAME> in <NAME> v. <NAME> (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) (1910) I.L.R. 33 Mad. 308.

(3) A.I.R. 1927 Lah. 396.

(4) (1921) I.L.R. 48 Cal. 817, 823.

(5) (1883) 25 Ch. D. 666, 672.

(6) (1889) 42 Ch. D. 4 24, 434.

<NAME>

due to the employees from the bar of limitation. Section 3(1) 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-s. (2) of s. 5 that "unpaid accumulations " and fines shall be paid to the <ORG> "notwithstanding anything contained in the Payment of Wages 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 was competent to the <ORG> of the Bombay <ORG> 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 Art. 254(2 ), the <ORG> <ORG> 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 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 <ORG>, and Mr. <NAME> 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 <ORG> 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 <ORG>. If, however, the employer is not released from his liability to the employee, then the effect of s. 3(1) is only to create in the <ORG> a statutory creditor in addition to the creditor under the contract of employment, and there can be no question of substitution. Mr. <NAME> agrees that if the Act does not operate to' discharge the employer from his obligations to the employees in respect of the wages due to them, then it must be held to be unconstitutional as infringing Art. 19(1)(f ), because his contention that the effect of' the Act was only to take the property of the employer in discharge of its obligations could not then be maintained.

The real point for determination, therefore, is whether on payment of the amounts in accordance with s. 3(1) of the Act, the appellant gets a discharge of his obligations to the employees in respect of wages due to them. The Act does not contain any provision to that effect, and the absence thereof has been strongly relied on by the appellant as showing that no substitution of creditors was intended. In answer to this contention, Mr. <NAME> 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 employment void under s. 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 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 periods, which, however, are not to 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. 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 <ORG>, 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 22(d) 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 s. 15 of the Wages Act, which is one year in the State of Bombay, that if he fails to do so it becomes unenforceable, and a suit with respect thereto under the general law is also barred. The result is, it is contended, that having regard to the definition of "unpaid accumulations" as meaning all payments due to the employees but not made to them within a period of three years, the employer runs no risk of being called upon to pay to the employee what has been paid by him to the <ORG> under s. 3(1) , and that therefore a payment under the impugned Act gives him what is, for all practical purposes, a good discharge. This argument rests on the supposition that so far as unpaid wages are concerned, the operation of the Wages Act is co-extensive with that of the impugned Act. But that clearly is erroneous. It is true that wages as defined in the Wages Act  would include whatever are wages under the impugned Act. But s. 1(6) limits the application of the 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 s. 15 of the Wages Act but three years under Art. 102 of the Limitation' Act, which period is 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 to 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 <ORG> v. <NAME> (1), it was held that if there was any bona fide dispute as to the amount payable, the jurisdiction of <ORG> was not barred by s. 22 . On the other hand, it was held in <CITATION> (2) that the jurisdiction of <ORG> would be barred, even if there was a bona fide dispute, and that the bar under s. 22(d) was absolute, and certain observations in <CITATION> (3) and <CITATION> (4) were relied on, as supporting this contention. Even if Mr. <NAME> is right in his contention that the law is correctly laid down in <CITATION> (2) and that the decision in <ORG> v. <NAME>(1) is wrong, the fact remains that claims in respect of unpaid wages to which the impugned Act applies must, in view of s. 1(6) of the Wages Act, fall at least (1) A.I.R. 1945 Lah. 195.

(2) I.L.R. 1953 Nag. 433.

(4) A.I.R. 1951 BOM. 423.

(3) A.I.R. 1950 Bom. 342.

in part outside the purview of that Act, and the protection afforded by s. 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 s. 15 of that Act is sufficient safeguard to the employer against being made liable at the instance of the employees for wages which had been paid to the Board. And it is also contended that even with reference to claims for unpaid wages which fall outside the Wages Act , the impugned Act should be held to be valid if such claims are barred under the provisions of the Limitation Act . In other words, the contention is that the impugned Act should be upheld in respect of that portion of the unpaid wages the recovery of which by the employees is barred by limitation whether under s. 15 of the Wages Act or the Limitation Act .

The impugned Act, it should be noted, merely enacts that all unpaid accumulations should be paid to the <ORG>. 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 <CITATION> (1), <CITATION> .and <NAME> v. Union of Indiaand the principles applicable have been stated fullyin <NAME>'s Case (3). But assuming on the basis of the above autho-

(1) [1951] S.C.R. 682. (2) [1953] S.C.R.1069. (3)[1957] S.C.R. 930.

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 Art. 19(1)(f) 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 <ORG> 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.

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 s. 15 of that Act would be barred, it can nevertheless give rise to an industrial dispute in respect of which action can be taken under the provisions of the Industrial Disputes Act . It was held by <ORG> in <CITATION> (1) that s. 22(d) of the Wages Act did not take away the power of the authorities to refer to a tribunal set up under the Industrial Disputes Act a claim which could be made under the Wages Act , as that section had application only to suits and did not exclude other proceedings permitted by law for the enforcement of payment. If a tribunal appointed under that Act can direct an employer to make payment of wages, it follows that the bar under s. 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 s. 3(1) 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. <NAME> falls back on s. 56 of the Contract Act as furnishing a ground for holding that the employer is discharged. Para. (2) of s. 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 s. 3 of the impugned Act, the performance of the contract by the employer has become impossible, and the contract has thereby (1)  F.C.R. 365.

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 <CITATION> .

The position was thus stated by <NAME>: " 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) [1954] S.C.R. 310,323.

that the <ORG> would have intervened and required the employer to pay the arrears of wages to the <ORG>, and that that is a supervening impossibility which brings s. 56 into play and renders the contract void. We are not satisfied that the performance of the contract of service has been rendered impossible by reason of s. 3(1) of the impugned Act. But assuming that that is the position, what follows ? The matter would then be governed by s. 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 <ORG> under s. 3 (1) of the Act. We are therefore of opinion that even if the matter is governed by s. 56 of the Contract Act, the employer is no more discharged than by the operation of the bar of limitation under s. 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 Art. 19 (1) (f) or Art. 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 Art. 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 Art. 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 <CITATION> (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 Art. 19 (1) (f) or Art. 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 <ORG> under s. 3 (1) of the impugned Act on the footing that the law is not unconstitutional as against him. What is there to prevent the employee from suing to recover the same amount from the appellant on the ground that the Act is unconstitutional ? It will be no answer to that claim to plead that the appellant has already paid the amount to the <ORG>. 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 Art. 19 (1) (f) or Art. 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 impugned legislation invades that right whether it be under Art. 19 (1) (f) or Art. 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 <ORG> 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. <NAME>, Second Edition, Vol. 7, pages 495-496. In <ORG> v. Moore(1), the principle behind the law was stated to be that " the <ORG> 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 <ORG> 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 <ORG> 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 <ORG>s, and their validity (I) 333 U.S. 541, 546; (1947) 92 L.Ed. 863, 869.

has been the subject of numerous decisions in <ORG> of United <ORG>s. In <ORG> v. <NAME> (1), the law related to <ORG> 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 <ORG>s -were to transfer them to the <ORG>. 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 <ORG> got no protection by payment to the <ORG>. In repelling this contention, <ORG> 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 <ORG> in the place of the <ORG> as their debtor. The Court also held that it was " within the Constitutional power of the <ORG> 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 <ORG> v. <NAME> (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 <ORG> 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) 321 U.S. 233, 241; (1943) 88 L Ed. 692, 701 146 In <ORG> v. New Jersey (1), the law related to shares and unpaid dividends, and provided for the <ORG> 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 <ORG> v. <NAME> (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 s. 2 (10) of the Act is merely the period of limitation mentioned in Art. 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 <ORG> taking it over only in the absence of such claims, a law which vests the property absolutely in the <ORG> 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 s. 3(1) in so far as it relates to unpaid accumulations in s. 3(2)(b) is unconstitutional and void.

We have now to deal with the question as to the validity of s. 3(1) and s. 3(2)(a) of the Act, which require the employers to hand over to the <ORG> the fines realised from the employees. So far as this item is concerned, the position of the employers is wholly (1) 341 U.S. 428 ; (1950) 95 L.Ed. 1078, 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 <ORG>, and that, further, while the beneficiaries under s. 8 of the Wages Act are its own employees, under s. 5(2) 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 Art. 31(2) according to the decisions in <CITATION> and <CITATION> . (supra) or such unreasonable interference with rights to property, as will infringe Art. 19(1)(f). 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 <ORG>, 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 s. 3(1) and s. 3(2)(a) 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 <ORG> 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 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 <ORG> below.

Appeal allowed in part.


Order Sheet Serial No........ G.A. No.3852 of 2006 C.S. No.2706 of 1955 IN THE HIGH COURT AT CALCUTTA ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL SIDE In the matter of : <NAME> & <NAME>. Vs <NAME>. Before: The Hon'ble Justice <NAME> Date: 14.08.2008. JUDGMENT

The Court: In this application <ORG>, represented by its Secretary has sought the following reliefs:

a) Joint Receivers, namely, Mr. <NAME> and Mr. <NAME> be discharged.

b) Joint Receivers be directed to hand-over all assets, properties, of every description, whatever belonging to the said Deity to its Shebait the said Radhanath Sirkar including all monies and all movable properties in the form of money or otherwise kept in bank accounts since operated by Joint Commissioner of Partition/Receiver/Special Referee.

c) To pass such further or other order or orders as to Your Lordships may seem fit and proper.

On or about 8 th September, 1955, the plaintiffs instituted the above suit for partition of the properties of Late <NAME> and other reliefs.

On or about 1 st August, 1956, after the suit was filed <NAME>, since deceased, purchased the building and premises No.60 & 160/1 B.B. Ganguly Street, Calcutta, hereinafter referred to as the <NAME> property, allegedly from out of his own funds.

On or about 18 th July, 1960, <NAME> filed an application claiming that the said <NAME> property was part of the joint family property and that he was joint owner thereof.

On 19 th September, 1960, a preliminary decree was passed in the suit by <NAME>, J. In terms of the decree, a Special Referee was appointed to decide the issues specified in the preliminary decree. The Special Referee was inter alia directed to enquire into the title of <ORG> property, which was acquired in the name of one of the defendants, subsequent to institution of the suit.

According to the petitioner, the preliminary decree was acted upon and by two instruments dated 16.3.1990 and 15.5.1995. The entire suit properties including the Bowbazar property was acquired by <NAME> to whom all the co-sharers sold out and conveyed their right, title and interest.

According to the petitioner, this Court by an order dated 8 th July, 1999, affirmed the assignment of the properties in favour of the Deity of which <NAME> is presently Sebait.

According to the petitioner, the Deity now under the care of its <ORG>, <NAME>, is the owner of the Bowbazar property. The petitioner submits that the joint receivers over the properties may be discharged in view of the registered documents whereby the properties have been transferred to and stand in the name of the Deity represented by its <ORG>.

One <NAME>, son of late <NAME>, was the original defendant No.2 in the suit has opposed this application for discharge of <ORG>. <NAME> has, however, not been brought on record, on the death of his father.

Mr. <NAME> appearing on behalf of the petitioner submits that <NAME>, son of the deceased defendant No.2, has no locus standi to oppose the application for discharge of the joint receivers.

Mr. <NAME> further argued that no explanation has been given as to why <NAME> has not been brought on record though 9 years have elapsed since the death of his father.

Mr. <NAME> submitted that the instruments which are dated 16 th March, 1990, 14 th February, 1991 and 10 th May, 1995 were all executed during the life of <NAME>, since deceased. <NAME> did not challenge the said deeds during his lifetime. His son <NAME> also did not challenge the instruments at any earlier stage.

Mr. <NAME> finally submitted that by an order dated 25 th July, 1998, <ORG> allowed the amendment of the plaint filed in the partition suit. By reason of the amendment, the <NAME> property, has now been included in the plaint as part of the joint family property.

Mr. <NAME> submitted that the order of amendment had not been challenged either by <NAME> or his late father during his life time. The order could not, therefore, be challenged at this stage.

Mr. <NAME> submitted that the amendment put an end to the contention of <NAME> that the <NAME> property was not a joint family property, but the self-acquired property of his father.

Mr. <NAME> submitted that <NAME> in his affidavit affirmed on 15 th March, 2007, referred to the report of the Commissioner of Partition/Special Referee dated 28 th February, 1995 wherein it is recorded that most of the properties mentioned in the schedule as well as in the body of the plaint, were still joint family properties.

Mr. <NAME> appearing on behalf of the applicant, <NAME>, pointed out that an application has been made on 11 th February, 1998, taking exception to the report of the Special Referee filed on 18th January, 1988.

Mr. <NAME>, however, took exception to the fact that the submission with regard to exception to the report should have been made, after 3 days of hearing of this application. Be that as it may, the fact remains that the application for exception has not yet been disposed of.

Mr. <NAME> emphasized the fact that the order dated 25 th July, 1995 of <NAME>, J. allowing amendment of the plaint, had not been challenged by <NAME>, since deceased, or by <NAME> by preferring an appeal therefrom.

Mr. <NAME> argued that <NAME>, since deceased, had in any case, been driven out of the family in May, 1960. The expulsion, if any, of <NAME>, from the joint family, is immaterial, and makes no difference to the status of the <NAME> property or the right, title, interest therein.

Mr. <NAME> finally submitted that there being no objection to this application from any of the co-sharers, an order should be made discharging the Joint Receivers and directing them to make over possession of the Bowbazar property to the <NAME> of the Deity.

Mr. <NAME>, however, strongly asserted that the <NAME> property had been purchased by <NAME>, since deceased, from out of his own funds, long after institution of the suit.

On or about 24 th March, 1986, on the application of <NAME>, in this Court for appointment of Commissioner of <ORG>, <NAME> had been appointed Commissioner of <ORG> and Special Referee, in terms of the preliminary decree in the suit.

On or about 7 th August, 1987, the Special Referee entered into reference for the purpose of holding an enquiry as to the title of the Bowbazar property. In the said reference, the parties filed their respective statements and counter statements.

The Special Referee filed a report on 18th January, 1988, holding that the said premises were joint family property. Exception was taken to the report by a petition affirmed on 11 th February, 1988.

On or about 15 th February, 1988, <NAME>, J. issued directions for affidavits in the said application. On 26 th April, 2007 the Registrar, <ORG>, reported that the application is still pending.

Mr. <NAME> submitted that the order of status quo passed in respect of <ORG> property, over twenty years back, on 15 th February, 1988, is still in force.

It appears that on or about 14 th February, 1991, while the application taking exception to the report of the Special Referee, was still pending, the defendant No.1 executed and registered a deed of trust in terms whereof, the Bowbazar property was to be held for the benefit of certain Deities.

Mr. <NAME> argued that since no final decree has been passed in the partition suit, this application is liable to be dismissed.

Mr. <NAME> submitted, that the applicant made this application for discharge of <ORG> over some properties, in a pending partition suit, to which he is not a party, claiming title over the properties. It is, therefore, mandatory for the applicant to obtain leave to be examined pro interesse suo.

Mr. <NAME> submitted that the applicant would have to satisfy this <ORG>, on evidence, that the applicant has a better title over the property, vis-à-vis, the contesting parties in the suit, and only then can the receivers appointed over the property, be discharged. Reliance has been placed on the judgment reported in 1941 CLJ 197.

Mr. <NAME> submitted that the applicant has not sought any leave to be examined pro interesse suo. The applicant has intentionally avoided adjudication of title, in as much as the applicant is aware that the applicant has none. The application is liable to be dismissed on that ground alone.

The Bowbazar property has admittedly been under <ORG> for about two decades. The partition suit is still pending, as also the application taking exception to the report of the Special Referee.

As rightly argued by Mr. <NAME>, the petitioner not being a party to the suit, it was necessary for the petitioner to get himself examined pro interesse suo, in order to obtain discharge of the Joint Receivers.

This Court is not inclined to discharge <ORG>, on the application of a stranger to the suit. The Bowbazar property has been under <ORG> for several years.

It is immaterial that the application for discharge of the Joint Receiver is being opposed by only one heir of a deceased defendant. The suit being for partition of joint properties, it is immaterial that the heirs of <NAME>, since deceased, have not been brought on record. Even one interested heir might oppose an order that might be against the interest of the estate.

As observed above, the partition suit has not finally been decreed. The question of whether the <NAME> property constitutes part of the joint properties of the parties to the partition suit or is the self acquired property of <NAME> has not finally been adjudicated. Mere allowing of an amendment of the plaint does not tantamount to a judicial verdict and/or pronouncement on the status of the properties sought to be incorporated in the plaint by amendment, or of title thereto.

If this Court accepts the contention of the <NAME> property being the self-acquired property of Late <NAME>, the transfer deeds executed by the persons claiming joint ownership thereof would be rendered unenforceable, ineffective, and liable to cancellation.

Discharge of the Joint Receivers, at this stage would in any event, render the application taking exception to the report of the Special Referee infructuous. If the application taking exception to the report of the Special Referee has not been disposed of for 10 years, the applicant is not to suffer.

In my view, that the prayer for discharge of Joint Receivers cannot be entertained until the application taking exception to the report of the Special Referee is disposed of.

This application is, thus dismissed.

(<NAME>, J.)


JUDGMENT <NAME>, J.

1. In these appeals the challenge is to the decision of <ORG> who had upheld the acquisition of land of the appellants which had been acquired by the respondents under the provisions of the Rajasthan Urban Improvement Act, 1959 (hereinafter referred to as 'the said Act).

2. The proceedings for acquisition of land of the appellants commenced with the State of Rajasthan issuing notification dated 10th October, 1979, under Section 52(2) of the said Act proposing to acquire the land, described in the said notification, which was situated in various villages in and around the city of Jaipur. The notification stated that it was necessary to acquire the land mentioned therein for improvement of land of Sector 1A of Jaipur City for the purposes of multipurpose schemes, i.e., for the construction of buildings residential, commercial and industrial units. By this notification information was given to all the concerned owners and persons interested in the land which was sought to be acquired to file any objections, which they had, against the proposed acquisition. In respect of the land of the appellants notification under Section 52(1) of the said Act was issued on 20th April, 1984. It was stated therein that the land mentioned in the said notification was needed under the said Act for the improvement of urban areas and this notification was issued after considering those objections "which had been filed by the interested persons. It was also notified that on the date of publication of the said notification in <ORG> "the said land shall be vested in <ORG> free from all encumbrances". Though, this notification was dated 7th March, 1984, the same was, however, published in <ORG> on 20th April, 1984.

3. The Land Acquisition Act , 1894, was extended to the State of Rajasthan on 24th September, 1984. Some of the persons whose lands were acquired filed suits challenging the acquisition proceedings under Section 52 of the said Act. According to the appellants the said suits were dismissed on 2nd September, 1986. Awards were, passed on different dates. In the present appeals the awards were passed on 30th September, 1988, 30th November, 1988 and 28th June, 1989.

4. A number of writ petitions were then filed in <ORG>. Vide a common judgment dated 21st October, 1992, a Single Judge of <ORG> dismissed 24 writ petitions and upheld the acquisition of the land which had been made. Appeals were filed against the said judgment and a Division Bench of <ORG> dismissed the same on 17th December, 1992. Civil Appeal Nos. 624-25 and 626-28 of 1993 challenge the aforesaid judgment of the Division Bench of <ORG>.

5. Another set of appeals against the judgment of the Single Judge of <ORG> were dismissed by <ORG> vide judgment dated 12th May, 1994, by following its earlier decision of 17th December, 1992. Special Leave Petition (Civil) No. 15971 of 1995 is filed against this judgment.

6. The main contention which has been urged on behalf of the appellants is that no award had been made within two years of the notification issued under Section 52 of the said Act. It was contended that with the Land Acquisition Act 1894 having been extended, the Rajasthan Urban Improvement Act, 1959 ceased to have been any operation and thereafter acquisition proceedings were required to be taken under the relevant provisions of the Central Act . Section 11-A of the Land Acquisition Act 1894 requires that the award should be made within two years of the publication of Section 6 notification and, it was submitted, that in the instant cases the awards were made beyond the said period of two years and without complying with the provisions of Section 6 of the Land Acquisition Act, 1894.

7. It was also submitted by Mr. <NAME>, learned senior counsel for the appellants, that another Division Bench of <ORG> in the case of <CITATION> 1993(2) WLC (Raj) 738, had quashed the notification of 10th October, 1979, issued Under Section 52(2) of the said Act as well as the notification dated 7th March, 1984, issued under Section 52(1) of the said Act. The submission was that as this judgment has not so far been reversed, therefore, this Court must hold that the acquisition allegedly made by the respondents

8. Section 52 of the Rajasthan Urban Improvement Act, 1959 contains provision for compulsory acquisition of the land and the same reads as under could no longer be sustained.

Compulsory acquisition of land.--

(1) Where on representation from the Trust (or otherwise) it appears to <ORG> that any land is required for the purpose of improvement or for any other purpose under this Act, <ORG> may acquire such land by publishing in the official Gazette a notice specifying the particular purpose for which such land is required and stating that <ORG> had decided to acquire the land in pursuance of this section.

(2) Before publishing a notice under Sub-section (I), <ORG> shall by another notice call upon the owner of the land and any other person who in the opinion of <ORG> may be interested therein to show cause, within such time as may be specified in the notice, why the land should not be acquired.

(Such notice shall be individually served upon (he owner of the land and any other person who in the opinion of <ORG> may be interested therein. It shall also be published in <ORG> at least 30 days in advance and shall be pasted on some conspicuous place in the locality, where the land to be acquired is situate. Such publication and pasting of notice shall be deemed as sufficient and proper service of notice upon the owner of the land and upon all other persons who may be interested therein.) (3) Within the time specified in the notice, the owner of the land or any other person interested therein may show cause and make objections, why the land should not be acquired. Every such objection to the notice given under Sub-section (2) shall be made in writing to the Officer on Special Duty, or any other officer appointed by <ORG> for the purpose. Such officer shall give the objector an opportunity of being heard, either in person or by pleader, and after hearing all such objections and after making such enquiry, as he deems necessary, shall submit the case for the decision of <ORG> together with the record of the proceedings held by him and a report containing his recommendations on the objections. Thereafter, <ORG> may pass such orders as it deems fit. The decision of <ORG> thereon shall be final.

(4) When a notice under Sub-section (I) is published in the Official Gazette, the land shall, on and from the date of such publication, vest absolutely in <ORG> free from all encumbrances.

(5) Where any land is vested in <ORG> under Sub-section (4), <ORG> may, by notice in writing, order any person who may be in possession of the land to surrender or deliver possession thereof to <ORG> or any person duly authorised by it in this behalf within thirty days of the service of the notice.

(6) If any person refuses or fails to comply with an order made under Sub-section (5), <ORG> may take possession of the land and may for that purpose use such force as may be necessary.

(7) After the land has been acquired and its possession taken <ORG> shall, on payment of the amount of compensation as determined under Section 53 , the amount of interest thereon and of all other charges incurred by <ORG> in this connection, transfer it to the <ORG> or any other prescribed authority or department for the purpose for which it is acquired.

Provided that such transfer of the land may he made to the <ORG> or to any other prescribed authority or <ORG> without recovering any amount,--

(i) where <ORG> is satisfied that any such land is urgently needed by the <ORG>, prescribed authority or <ORG> for carrying out improvement under the Act immediately, or

(ii) where any such land is intended to be allotted free of charge to the Schedule Castes. Scheduled Tribes or to person entitled under Section 31 of the Rajasthan Tenancy Act, 1955 (Rajasthan Act 3 of 1955) to possess a site for a residential house in the abadi of the Urban area free of charge.) (8) Any notice issued or published by <ORG> under this section may also be issued or published for and on behalf of it by any officer subordinate to it so authorised.

9. After the extension of the Land Acquisition Act , 1894, to the State of Rajasthan, the existing Rajasthan Urban Improvement Act, 1959 stood repealed. <ORG> then passed the Rajasthan Urban Improvement (Amendment) Act. 1987 (hereinafter referred to as 'the Amending Act '), with a view to amend the provisions of the Principal Act and to provide for certain transitory and special procedure for the disposal of pending and present proceeding as well as payment of compensation, interest etc. The Amending Act incorporated a new provision, namely, Section 60-A in the Principal Act. This Section 60-A provided for transitory provisions for pending matters relating to acquisition of land. Sub-section (3) of this section relating to the period within which the award could be made was as follows:--

(3) Where in a matter pending on the date of commencement, a notice under Sub-section (2) of Section 52 or a notice under Sub-section (1) thereof has been served of, as the case may be, published, such notice shall be deemed to be the notification or declaration published or made under Sub-section (1) of Section 4 or, as the case may be, under Sub-section (1) of Section 6 of the Land Acquisition Act and the declaration or award in such a matter shall be made within a period of one year or, as the case may be, two years from the date of commencement.

The provisions of this Amending Act were held to be ultra vires by a decision of <ORG> inasmuch as the said Act did not have the assent of the President. Thereupon, the Rajasthan Urban Improvement (Amendment and Validation) Act , 1980 thereinafter referred to as the Validating Act ) was passed which received the assent of the President on 24th March. 1995. A new Section 60-A was inserted in the Principal Act which contained, a transitory provision and which reads as follows:

60-A. Transitory provisions or pending matters relating to acquisition of land notwithstanding anything otherwise contained in Sub-section (1) of Section 52 , where in any matter relating to the . acquisition of land pending on the date of commencement of the Rajasthan Urban Improvement (Amendment) Act, 1987 (hereinafter in this section referred to as the date of commencement), an action, thing or order has been taken, done, or made under and in accordance with the provisions of this Act as it stood before the date of commencement such action, thing, or order shall not be re-opened or reviewed or be liable to be challenged on the ground that such action, thing or order was at variance with that provided in the Land Acquisition Act , 1894 (Central Act I of 1894) (hereinafter in this section referred to as the Land Acquisition Act ) subject however that any further proceedings, action or order in such matter conducted, taken or made on or after the date of commencement shall subject to the other provisions of this section, be made under and in accordance with the Land Acquisition Act .

(2) The amount of compensation or interest or that payable for any other reasons shall in a matter pending on the date of commencement be payable under and in accordance with the provisions of the Land Acquisition Act and the money paid prior to the date of commencement shall be deducted from or adjusted against the said amount.

(3) Where in a matter pending on the date of commencement, a notice under Sub-section (2) of Section 52 or a notice under Sub-section (1) thereof has been served or as the case may be published such notice shall be deemed to be the notification or declaration published or made under Sub-section (1) of Section 4 , or as the case may be under Sub-section (1) of Section 6 of the Land Acquisition Act and the declaration or award in such a matter shall be made within a period of one year or, as the case may be, two years from the date of commencement.

(4) Where any land has, prior to the date of commencement, vested in <ORG> or its possession has been taken in accordance with the provisions of this Act as it stood before the date of commencement, such vesting or possession of land shall not be liable to be challenged on the ground that no amount of compensation was tendered and paid in accordance with Sub-section (3A) of Section 17 of the Land Acquisition Act subject, however, that such amount shall be tendered and paid within a period of six months from the date of commencement.

(5) In determining the amount of compensation to be awarded in a matter pending on the date of commencement, the market value of the land at the date on which the notice was published in the official gazette under Clause (b) of Sub-section (6) of Section 52 as it stood before the date of commencement shall be taken into consideration.

(6) An appeal filed under Section 54 or Section 56 or a dispute referred under Section 55 or Section 59 and pending on the date of commencement shall be decided having regard to the provisions of the Land Acquisition Act .

10. The provisions of Section 52(2) of the said Act are akin to Section 4 of the Land Acquisition Act. According to this section before publishing a notice under Sub-section (1), a notice is issued to the owners of land and other persons, who are interested, to show cause why <ORG> should not acquire the. land. Due publicity of the issuance of the said notice is required to be given, apart from individual service of the said notice. Sub-section (3) of Section 52 enables the owners or the person interested to show cause and file objections against the proposed acquisition of the land. These objections are to be in writing and an opportunity of being heard, in person or through pleader, has to be afforded by the Officer on Special Duty to the objectors. Thereupon a report is required to be given to <ORG> containing the recommendations on the objections which are filed. It is evident that the enquiry envisaged by Sub-section (3) of Section 52 is similar to the one under Section 5-A of the Land Acquisition Act, 1894. It is after complying with the provisions of Sub-sections (2) and (3) that <ORG> can issue a notification under Sub-section (1) of Section 52 acquiring the land specified in the notification for the purpose of improvement or for any other purpose under the Act. On the said notification under Section 52(1) being issued, Sub-section (4) of Section 52 provides that with the publication of the notice in <ORG>, the land shall on and from the date of the publication "vest absolutely in <ORG> free from all encumbrances". Once the land has so vested, possession is to be taken by <ORG> and after the amount of compensation is determined according to Section 52 , the payment of the same is to be made and the land can then be transferred to <ORG>.

11. From the facts narrated hereinabove it is clear that the Central Act was extended to the State of Rajasthan only after the land in question had vested in <ORG> with the publication of the notification under Section 52(1) on 10th October, 1984. Once the vesting of the land in <ORG>, free from all encumbrances, was completed, the subsequent extension of the Land Acquisition Act , 1894 to the State of Rajasthan and the amendments made by the Amending Act s to the Rajasthan Urban Improvement Trust Act becomes wholly irrelevant and of no consequence. Neither the amendments nor the extension of the Central Act can have the effect, in law or otherwise, of divesting the State of ownership of the land which had already been vested in it.

12. The provisions of Sub-section (4) of Section 52 are somewhat similar to Section 17 of the Land Acquisition Act, 1894. Just as publication of a notification under Section 52(1) vests the land in the <ORG>, free from all encumbrances, as provided by Section 52(4) , similarly when possession of land is taken under Section 17(1) the land vests absolutely in the <ORG> free from all encumbrances. A question arose before this Court that if there is a non-compliance with the provisions of Section 5-A and an award is not made in respect to the land so acquired, would the acquisition proceedings lapse. In <NAME> v. <ORG> of U. P. , this Court held that once possession had been taken under Section 17(1) and the land vested in the <ORG> then the <ORG> could not withdraw from acquisition under Section 48 and the provisions of Section 11-A were not attracted and, therefore, the acquisition proceedings would not lapse on failure to make an award within the period prescribed therein. It was further held that non-compliance of Section 17 (3-A), regarding part payment of compensation before taking possession, would also not render the possession illegal and entitle the <ORG> to withdraw from acquisition. The aforesaid principle has been reiterated by this Court in <NAME>. <ORG> of A. P. , and <NAME> v. <ORG> of Bihar . In view of the aforesaid ratio it follows that the provisions of Section 11-A are not attracted in the present case and even if it be assumed that the award has not been passed within the stipulated period, the acquisition of land does not come to an end.

13. It was contended by the learned counsel for the respondents that the <ORG> had complied with all the legal requirements in the present case. Our attention was drawn to Section 60-A of the Amending Act and the Validating Act and it was submitted, and in our opinion rightly, that Sub-section (3) of the Amending Act and Sub-section (4) of the Validating Act only required the making of the award and payment of money within the period stipulated therein. The facts narrated hereinabove show that this was done. In any case non-compliance with the provisions of this sub-section will not in any way affect the vesting of the land which has already taken place with the publication of the notification dated 20th April, 1984. The provisions of Sub-section (4) of Section 60-A of the Validating Act are analogous to Section 17-A of the Land Acquisition Act and as held in the aforesaid decisions of this <ORG> non-compliance with the said provisions will not in any way amount to the divesting of acquisition which has taken place or the acquisition proceedings having lapsed.

14. There is also no merit in the contention of the learned counsel for the appellants that the decision of the Division Bench of <ORG> rendered in 1993 in <NAME>'s case 1993 (2) WLC 738 (supra) can in any way affect the present proceedings. Firstly, the said decision of the Division Bench of <ORG> is not final because the Special Leave Petition (C) Nos. 3100-3127 of 1994 have been filed and the same are pending in this Court; secondly this decision has not been approved by a Full Bench of <ORG> in its judgment dated 1st November, 1995 in D.B. Civil Special Appeal No. 25:5 of 1995 -- <CITATION> , and the other connected cases.

In this judgment, dealing with <NAME>'s case (1993 (2) WLC 738) the Full Bench observed as follows:--

<ORG> of this Court in the case <CITATION> . reported in (1993) 2 WLN 527, has held that the acquisition proceedings cannot be taken in the absence of sanctioned notified scheme. This view has been taken in the absence of sanctioned notified scheme. This view has been taken by interpreting only para 9 of the <ORG> decision of <ORG>'s case 1994 AIR S.CW 2272 to the facts and circumstances of the case before <ORG>: Consideration of paras 8 and 11 of the <ORG> decision does not find place in the decision of <ORG>. As stated above, the combined effect of paras 8, 9 and 11 of the <ORG> decision seems to be otherwise. With utmost respect, it is difficult to agree with the observations made and view expressed by <ORG> in the case of <NAME> (supra) as regards the decision of the <ORG> in the case of <ORG> (supra).

It is indeed unfortunate that the judgment of <ORG> in <NAME>'s case was relied on, when the same had been overruled by <ORG> of that Court without referring to <ORG> decision. Further-more even on merits we find the said decision of <ORG> of <ORG> in <NAME>'s case does not lay down the correct law and the later decision of <ORG> is correctly decided. The contention which was raised before <ORG>, and it succeeded, in <NAME>'s case was that there could be no proceedings for acquisition which do not conform with the provisions of the Master Plan inasmuch as the Master Plan shows one particular use for the land in question the said land could not be acquired for a different purpose. It was further contended that without framing of a scheme land could not be acquired under Section 52 of the said Act. In upholding this contention <ORG> placed reliance on the Two Judge Bench decision of this Court in <CITATION>  : 1992 AIR SCW 1674.

15. Decision of this Court in <CITATION> , also considered a similar question pertaining to the Rajasthan Urban Improvement Act, 1959. It had been contended that land could not be acquired under Section 52 of the Act unless and until there was a scheme for improvement of the urban area under the Rajasthan Urban Improvement Act, 1959. Rejecting this contention this Court observed as follows (at pp. 2277 and 2278 of AIR SCW) :--

The crux of the argument is that the improvement in the urban area can only be carried out by executing the schemes framed under the Act and in no other way. We do not agree with Mr. <NAME>. Under the scheme of the Act the improvement of the urban area can be undertaken by the <ORG> and also by any of the departments of the <ORG>. The framing of the scheme becomes mandatory only when the work is undertaken by the <ORG>. The State <ORG>, in any of its departments, may decide to develop the urban area under the Act and in that case it would not be necessary for the <ORG> to have a scheme framed under Chapter V of the Act. The power of the State <ORG> to acquire land under the Act has been designed to meet the scheme of the Act. Under Section 52 of the Act the land can be acquired by the State <ORG> at the instance of the <ORG>, or a department of the <ORG> or any prescribed authority. The plain language of Section 52(1) of the Act negates the contention raised by Mr. <NAME>. Where on a representation from the <ORG> or otherwise it appears to the State <ORG> that any land in required for the purpose of improvement or for any other purpose under the Act it can acquire such land by issuing a notification under Section 52(1) of the Act. It is, thus, clear that the State <ORG> has the power to acquire land either for the execution of the schemes framed by the <ORG> under Chapter V of the Actor for any other public purpose under the Act. No fault can be found with the procedure followed by the State <ORG> in this case. The notification issued by the State <ORG> under Sub-section (1) of Section 52 of the Act specifically states that the land was being acquired for the construction of residential, commercial and administrative buildings. The <ORG> -- having taken a policy decision to acquire land for the public purpose -- was justified in issuing the notification under Section 52(1) of the Act in respect of the land in dispute.

16. The effect of this is that even if there is no scheme prepared or finalised, under a <ORG> or Urban Improvement Act, acquisition could be validly made under the provisions of the Land Acquisition Act for a public purpose or under the Rajasthan Urban Improvement Act for the purpose of improvement or for any other purpose under the Act. The decision relating to the Rajasthan Act is directly on the point. The other decision under the Tamil Nadu Act does not, therefore, require any further discussion.

17. For the aforesaid reasons, we do not find any merit in these appeals and the same are dismissed with costs.

18. Civil Appeal No. 3851 of 1996 (@ SLP (C) No. 15971/95) Leave granted. The appeal is dismissed with costs.