PETITIONER: EAST INDIA TOBACCO CO. Vs. RESPONDENT: STATE OF ANDHRA PRADESH DATE OF JUDGMENT: 06/04/1962 BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR P.(CJ) GAJENDRAGADKAR, P.B. <NAME>, K.N. CITATION: 1962 AIR 1733 1963 SCR (1) 404 CITATOR INFO : R 1964 SC 925 (44) R 1964 SC1752 (26) C 1967 SC1458 (23) R 1968 SC 658 (8) RF 1970 SC1133 (15,39) RF 1971 SC 870 (23) RF 1972 SC 828 (20) R 1972 SC 845 (14) APL 1974 SC1111 (10) MV 1975 SC1564 (65) R 1976 SC 670 (24) R 1979 SC 321 (5) R 1980 SC 738 (10) RF 1981 SC 463 (16) F 1983 SC1283 (8) R 1985 SC 679 (36) RF 1989 SC 100 (31) RF 1992 SC 999 (12) ACT: Sales Tax-Tobacco-Imposition of Tax on sale of Virginia Tobacco and exemption of country tobacco-Provision if discriminatory-Purchase which procedes sale for export if could be exempted from tax-Madras General Sales Tax Act, 1939 (Mad. 9 of 1939), as amended by the Madras General Sales Tax and the Madras Tobacco (Taxation of Sales and Registration) (Andhra Amendment) Act(Andhra XIV of 1955), ss. 5, 6-Constitution of India, Arts. 14, 286 (1) (b). HEADNOTE: The appellants firms were doing business in the export of Virginia tobacco. The usual course of that business was stated to be that appellants first entered into contracts with their customers abroad for the sale of tobacco. and thereafter they purchased the requisite quantities of goods locally and then exported them to foreign purchasers in performance of their contracts. Section 5 of the Madras General Sales Tax Act, 1939, was amended by <ORG> when the Andhra State came into existence by the Amending Act XIV Of 1955. As a result of this enactment to sales of country tobacco were exempted ; while sale of Virginia tobacco were liable to be taxed. The appellants were called upon to produce their account books relating to their business in tobacco for the purpose of assessing sales tax. The appellants filed Petitions under Art. 226 of the Constitution challenging the constitutionality of the Amending Act , XIV of 1955, on 405 the grounds inter alia that in taxing sales of Virginia tobacco and exempting from tax sales of other tobacco, the Act was discriminatory, as obnoxious to Art. 14 , and besides that having regard to their course of business, any tax levied on their sales was in contravention of Art. 286 (1) (b) as amounting to a tax on sales "in the course of export" of tobacco. <ORG> dismissed the petition holding that the impugned Act did not infringe any constitutional provision, but granted certificate under Art. 133 of the Constitution to appeal to <ORG>. Held, that it is for the person who assails a legislation as discriminatory to establish that it is not based on a valid classification and this burden is all the heavier when the legislation under attack is a taxing statute. Though taxation laws must pass the test of Art. 14 of the Constitution, in deciding whether such a law is discrimi- natory or not, it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that the statute is not open to attack on the mere ground that it taxes some persons or objects and not others, It is only when within the range of its selection, the law operates unequally, and this cannot be justified on the basis of a valid classification, that there would be a violation of Arts. 14. The Madras General Sales Tax (Andhra Amendment) Act, 1955, which taxed sales of Virginia Tobacco but exempted sales of 'Nattu' or country tobacco could not be said to be discriminatory and was not obnoxious to Art, 14. Virginia tobacco has features which distinguishes it from country tobacco and can be treated as a class in itself. It was therefore within the power of the State to impose tax on the sales of Virginia tobacco while exempting sales of country tobacco. It is only the sale under which the export is made that is protected by Art. 286 (1) (b) ; a purchase which precedes such a sale does not fall within its purview though made for the purpose of or with a view to effect an export. <NAME> v. State of Area  2 S.C.R. 77 <CITATION> .  1 S. C. R. 1045, <CITATION> ,  S. C. R 2 70, <NAME> v. <NAME>,  309 U. S. 83 : 34 L. Ed. 590, C. Heisler v. <ORG> 250 U.S. 345 : 67 L. Ed. 237, <CITATION> . 406  S. C. R. 11 12, <CITATION> .  S. C. R. 53, <CITATION> . 1. R 1956 S. C. 158 and State of facture Co., A. I. Mysore v. Mysore Spinning JUDGMENT:

& CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 290 & 291 of 1961.

Appeals from the judgment and order dated September 25, 1957, of <ORG>, in writ Petitions No. 1172 of 1956 of 1957.

<NAME> and <NAME>, for the Appellants. <NAME>, <NAME>, <NAME>, for the respondent.

1962. April 6. The Judgment of the Court was delivered by <NAME>, J.-Those are appeals against the judgment of <ORG> in petitions Nos. 11 72 of 1956 and 56 of 1957 filed under Art. 226 of the Constitution questioning the validity of the Andhra Act XIV of 1955 insofar as it imposes a tax on the sale of Virginia tobacco. The appellants are firms doing business in the export of tobacco. The usual course of that business is stated to be that they first enter into contracts with their customers abroad for the sale of tobacco, that thereafter they purchase the requisite quantities of goods locally and then export them to the foreign purchasers in performance of their contracts. Prior to October 1, 1953, the area wherein the appellants carried on business formed part of the State of Madras, and on that date the- State of Andhra was constituted, and the area in question fell within that State. The law relating to sales tax in force in that area it; the Madras General Sales Tax Act, TX of 1939. Section 407  5 of this Act provides for exemption of tax on sales of goods specified therein and a. 6 confers on the State Government power to exempt the tax payable on the sale of any specified class of goods or by any specified class of persons. In exercise of the powers conferred by a. 6 the Government of Madras issued on March 31, 1953, a notification No. 144 exempting the sales of unmanufactured tobacco from sales tax. After the Andhra State came into existence, the <ORG> of that State enacted Act XIV of 1955 hereinafter referred to as "the Amendment Act " whereby it amended s. 5 of the Madras General Sales Tax Act by adding as item (viii) the following :-

"(viii) raw tobacco (except country variety thereof whether cured or uncured, shall be liable to tax under Section 3 , Sub Section 1 only at the point of the first purchase effected in the State of Andhra by a dealer who is not exempt from taxation under Section 3 , Sub Section 3 but at the rate of seven and half pies for every rupee on his turnover. Explanation :-For the purpose of this item, country variety of tobacco means variety of tobacco other than Virginia and other similar varieties of tobacco".

As a result of this enactment exemption from tax was limited to sales of what is known as country tobacco (Nattu tobacco) and so far as sales of Virginia tobacco are concerned, they became liable to be taxed. Pursuant to the Amendment Act , <ORG> issued on November 4, 1955, a notification No. 711 cancelling the earlier notification No. 144 dated March 31, 1953.

Acting under the provisions of the Amendment Act , the Additional Commercial Tax Officer, Guntur, issued notices to the appellants to 'produce the account books relating to their business in tobacco for the purpose of assessing sales tax. To this the appellants replied by filing petitions under Art. 226 of the Constitution in <ORG> challenging the constitutionality of the Amendment Act on the grounds inter alia that in taxing sales of Virginia tobacco and exempting from tax sales of other tobacco, the Act was discriminatory, and that in consequent ID it was obnoxious to Art. 14 of the Constitution and that further it was in contravention of Art. 286 (1) (b) as it was really a tax on sales in the course of export of tobacco. They accordingly prayed that a mandamus might be issued directing the respondents to forbear from making an assessment on the sales of tobacco. The learned Judges disagreed with these contentions and dismissed the petitions, holding that the impugned Act did not infringe any constitutional provisions, but granted certificates under Art. 133 of the Constitution. That is how these appeals come before us.

On the arguments addressed to us, two questions arise for our determination :

(1) Is the impugned Act repugnant to Art. 14 for the reason that it singles out Virginia tobacco for taxation ?

(2) Is the impugned legislation in con- travention of Art. 286 (1) (b) as imposing a tax on sales in the course of export ?

(1)On the first question the contention of the appellants may be thus stated. All laws must satisfy the requirements of Art. 14. Taxation laws are no exception to it. In imposing a tax on the sales of Virginia tobacco and not on other kinds of tobacco the impugned Act is on the face of it discriminatory. It is there-fore obnoxious to Art, 14 and is void, It is not in dispute that taxation laws must, also pass the test of Art. 14. That has been laid down recently by this Court in <CITATION> (1). But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the <ORG> has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Art. 14. The following statement of the law in <NAME> on "Constitutional Law" page 587, would correctly represent the position with reference to taxing statutes under our Constitution :-

"A State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably........................ <ORG> has been practical and has permitted a very wide latitude in classification for taxation".

In the light of these principles, we may now proceed to discuss whether the impugned Act is repugnant to Art, 14 of the Constitution. The point for consideration is whether there is in fact a real distinction between Virginia tobacco and other tobacco called country tobacco 'Nattu tobacco'. If there is, then the Act is valid, if not it must be held to be unconstitutional. The finding of learned Judges on this point is as follows :-

" Broadly, there are two types,Virginia and Nattu, differing in taste, light, colour and texture............... There are obvious (1) [1961] 2 S C. R. 77, differences between the two categories of to- bacco, in the nomenclature used, in the process of growing, curing and grading, in the market facilities foreign and inland, in the price and in the variety of uses to which they are put and also the class of customers that take to them."

Thus it will be seen that Virginia tobacco has features which distinguish it from country tobacco, and can be treated as a class in itself. It will therefore be within the power of the <ORG> to impose a tax on the sales of Virginia tobacco while exempting the country tobacco. It argued for the appellants that to repel the charge of discrimination in taxing only Virginia tobacco, and not the country tobacco, it is not sufficient merely to *bow that there are differences between the two varieties, but that it must further be shown, as held in <CITATION> (1) and <CITATION> (2), that the differential has reasonable relation to the object of the legislation. The differences between the Virginia tobacco and the country tobacco, as found be the learned Judged, are not, it is argued , germane to the levy of sales tax, and so there is no valid classification. We are unable to agree with this contention. If a <ORG> can validly pick and chose one commodity for taxation and that is not open to attack under Art. 14 , the same result must follow when the <ORG> picks out one category of goods and subjects it to taxation. It should, in this connection, be remembered that under the law it is for the person who assails a legislation a discriminatory to established that it is not based on a valid classification and it is well settled that this burden is all the heavier when (1)  1. S.C.R 104S.

(2) [1959] S. C.R. 279.

the legislation under attack is a taxing statute. "In taxation even more than in other fields" it was observed by <ORG> of United States in <NAME> v. Kentucky (1) "<ORG>s possess the greatest freedom in classification. The burden it; on the one attacking the legislative arrangement to negative every conceivable basis which might support it". How wide the powers of the <ORG> are in classifying objects for purposes of taxation will be seen from the following resume of the law given by <NAME>, in his "Constitutional Law" p. 668 :-

"<ORG> has seldom any classification made in connection with the levying of property taxes. It has sustained the levy of a heavier burden of taxation upon motor vehicles using the public high ways than that levied upon other forms of property, and the imposition of a heavier tax upon oil than upon other property. The equal protection clause does not prohibit the levy of a tax on ores which is not imposed upon similar interests in quarries, forests and other forms of wasting asset, nor even the imposition of a tax upon anthracite that is not levied upon bituminous coal. A statute providing for the assessment of one type of intangible at its actual value while other intangibles are assessed at their face value does not deny equal protection even when both are subject to the same rate of tax. The decision of <ORG> in this field have permitted a State legislature to exercise an extremely wide discretion in classifying property for tax purposes so long as it refrained from clear and hostile discrimination against particular persons or classes".

A decision near to the present case on the facts is C. Heisler v. <ORG> (2).

(1) (1940) 309 US 83; 84 L. Ed. 590. (2) 260 US 245; 67 L. Ed 237.

There the question was whether a law imposing a tax on Anthracite coal and not upon bituminous coal was unconstitutional as violating the equal protection of laws guaranteed by the 14th Amendment to the Federal Constitution. In upholding the validity of the law, Justice <NAME> observed as follows:-

"The fact of competition may be accepted. Both coals, being compositions of carbon are of course capable of combustion and may be used as fuels but under different conditions and manifestations and the difference deter- mines a choice between them as fuels. By disregarding that difference and the greater ones which exist and by dwelling on competi- tion alone, it is easy to erect an argument of strength against the taxation of one and not of the other. But this may not be done. The differences between them are a just basis for their different classification; and the differences are great and important. They differ even as fuels. they differ fundamentally in other particulars. Anthracite coal has no substantial use beyond a fuel; bituminous coal has other uses. Products of utility are obtained from it. The fact is not denied and the products are enumerated that the extent of their use. They are therefore incentives to industries that the <ORG> in natural policy might well hesitate to obstruct or burden and to yield to the policy or consider it is well within the concession or the power of the <ORG> expressed in the cases we have cited. The distinction in the treatment of the respective coals being within the power conceded by the cases to the <ORG> it has logical and legal justification and is necessarily, not unreasonable or arbitrary".

In our Judgment the differences which exist between the Virginia and "Nattu country tobacco, as found by the learned Judge,@, are materials on which the State could treat Virginia tobacco as forming a class by itself for purpose of taxation, and the impugned legislation must be held to be not obnoxious to Art. 14 of the Constitution.

(2) It is next argued that the Amendment Act is ultra vires because in reality it imposes a tax on sales in the course of export and that is hit by Art. 286 (1) (b). The course of business followed by the appellants has already been set out. It may be assumed for the purpose of the present discussion that the purchases made by the appellants on which the tax is sought to be imposed were made for the purpose of executing specific orders which they had received from their foreign customers. The question is whether even so the sales in question took place in the course of export for the purpose of Art. 286 (1) (b). In support of their contention that they did, the appellants rely on the following observations in <CITATION> . (1):-

"A sale by export thus involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the coun- try bay land or sea. Such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export forms parts of a single transaction. Of these two integrated activities, which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other".

Now the contention is that the agreement entered into with the foreign purchasers for <NAME> of the Virginia tobacco, the purchase of the same (1) [1952] S. C. R. 1112, 1118.

locally by the appellants for performing the contract and their subsequent export to the foreign purchasers must all be hold to form one integrated transaction of sale in the course of export.

Now the observations quoted above were made in refutation of the contention that the expression "sale in the course of export or import" meant only a sale which takes place while the goods are actually in movement, in the course of export or import, as for example, when shipping documents are endorsed and delivered when the goods are in transit. This <ORG>, held that this was too narrow an interpretation to put on the words in question and that a sale which actually occasions the export or import would fall within Art. 286 (1) (b). The question whether sales which precede export are sales in the course of export within Art. 286 (1) (b) arose directly for decision in <CITATION> (1) and it was held that they were not Explaining in the course of the judgment, the true scope of the observations in State of Travancore Cochin's case (2) quoted above, <NAME>, C.I observed :-.

"The phrase "integrated activities' was used in the previous decision to denote that ',such a sale' (i. e., a sale which occasions the export) 'cannot be dissociated from the export without which it cannot be effectuated, an the sale and the resultant export from para of a single transaction'. It is in that send that the two activities-the sale and the export- were said to be integrated. A purchase for the purpose of export like production or manufacture for export, is only an a preparatory to export and cannot, in our opinion, be regarded as an act done ,in the court (1) [1954] S.C.R. 53.

(2) [1952] S. C. R. 1112, 1118.

of the export of the goods out of the territory of India', and more than the other two activities can be so regarded."

We may refer to two other decisions of this Court where this question has been considered. <CITATION> .(1), the facts were that an assessee secured orders for the supply of untanned hides and skins from London purchasers and then, he purchased them locally in order to implement those orders and exported them, and the question was whether a tax on those purchases was hit by Art. 286(1)(b). In holding that it was not, this Court observed:-

"Such purchases were, it is true, for the purpose of export but such purchases did not themselves occasion the export and consequ- ently did not fall within the exemption of Art. 286(1)(b) of the Constitution as held by this Court in <CITATION> .( S.C.R. 1112). Nor did such purchases in the <ORG> by the exporter for the purpose of export come within the ambit of Art. 286(1) (b ), as held by the decision of the majority in <CITATION> ((1954] S.C.R. 53)."

The point came up again for consideration before this Court in <CITATION> . (2) and it was held following the decision cited above that Art.286((1)(b) could be invoked only in respect of the sale which occasions the export, and not of any sales precedent to it.

On these authorities the law must be taken to be well settled that it is only the sale under which the export is made that is protected by Art.. 286 (1)(b), and that a purchase which precedes such a (1) A.I.R. 1956 S.C. 158. (2) A.I.R. 1958 S.C. 1002, 1005.

<NAME>

sale does not fall within its purview though it is made for the purpose of, or with a view to export. The impugned legislation must accordingly be held not to contravene Art. 286(1)(b).

In the result both the contentions urged by the appellants fail and the appeals must be dismissed with costs, one hearing fee.

Appeals dismissed.


PETITIONER: <ORG>. & <ORG>. Vs. RESPONDENT: EMPLOYEES STATE INSURANCE CORPORATION DATE OF JUDGMENT23/09/1971 BENCH: <NAME>, P. JAGANMOHAN BENCH: <NAME>, P. JAGANMOHAN VAIDYIALINGAM, C.A. CITATION: 1972 AIR 1935 1972 SCR (1) 867 1972 SCC (2) 860 ACT: Employees' State Insurance Act , 1948, s. 96(1)(b) -Power to prescribe by rules "the procedure to be followed in proceedings before the court"-If includes power to prescribe period of limitation for claims under s. 75 . Limitation, Statutes of-Nature. HEADNOTE: In exercise of the power conferred by s. 96(1)(b) of the Employees' State Insurance Act , 1948, to "Prescribe by rule the procedure to be followed in proceedings" before <ORG>, the State <ORG> made r. 17 prescribing a period of limitation of twelve months for every application to the Court. <ORG> filed an application before the Court claiming payment of the contribution due from the appellant. The appellant took the plea that the application was barred as it was not presented within the period prescribed. <ORG>, on a reference, held that s. 96(1) (b) did not grant power to <ORG> to make a rule prescribing a period of limitation on claims enumerated in s. 75(2) and, therefore, r. 17 was ultra vires the rule making power under s. 96(1) . On the question whether the power to prescribe a period of limitation 'for initiating proceedings before the court is a part of, and is included in, the power to prescribe "the procedure to be followed in proceedings" before such courts, HELD : The power under s. 96(1) (b) does not empower the government to prescribe by rule a period of limitation for claims under s. 75 . (i) The law of limitation to remedies because, the rule is that claims in respect of rights cannot be entertained if not commenced within the time prescribed by the statute in respect of that right. The object of the statutes of limitation is to compel a person to exercise his right to take action within a reasonable time, as also, to discourage and suppress stale, fake and, fraudulent claims. While this is so, there are two aspects of the statutes of limitation, the one concerns the extinguishment of the right if a claim or action is not commenced within a particular time; the other merely bars the claim without affecting the right which either remains merely a moral obligation or can be availed of to furnish the consideration for fresh enforceable obligation. Where a statute prescribing limitation extinguishes the right it affects substantive rights, while, that which purely pertains to the commencement of action without touching the right is procedural. The statement that substantive law determines rights and procedural law deals with remedies is not wholly valid, for, neither the entire law of remedies belongs to procedure, because, rights are hidden even in the "interstices of procedure". There is, therefore, no clear cut division between the two. [872 G, 873 C-E, 874 B] (ii)There is difference between the manner in which jurisprudential lawyersconsider the question and the way in which judges view the matter. Where a question of limitation arises, the present tendency is towards the view that statutes of limitation may not prove to be a deter- mining factor. But, what has to be considered is whether the statute 868 extinguishes merely the remedy, or extinguishes the substantive right as well as the remedy. The safest course would be to examine each case on its own facts and circumstances and determine, for in-stance, whether it affects substantive 'rights and extinguishes them, whether it merely concerns a procedural rule only dealing with remedies, whether the intendment to Prescribe limitation is discernible in the scheme of the Act, or whether it is inconsistent with the rule making power., [876 H] (iii) Apart from the implications inherent in the term "Procedure" appearing in s. 96(1) the word in furnishes a clue, to the controversy, that the procedure must be in relation to the proceedings in court after it has taken seisin of the matter. Therefore, the application by which the court is asked to adjudicate a matter covered by s. 75(2) is outside the scope of the rule-making power. [877 D] (iv)The provisions of the Act clearly indicate that the whole scheme is dependent upon the contributions made by the employer not only in respect of the amounts payable by him but also in respect of those payable by the employee. No limitation has been fixed for the recovery of these amounts by the <ORG> from the employer; on the other hand s. 68 empowers the <ORG> to resort to coercive process. If any such steps are proposed to be taken by the <ORG> and the employee is aggrieved he has a right to file and apply to <ORG> and have his claim adjudicated by it in the same way as the <ORG> can prefer a claim in a case where the liability to pay is disputed. Section 75(2) (d) clearly envisages this course when it provides that the claim against a principal employer under s. 68 shall be decided by <ORG>. The fact that neither s. 75(2) (d) nor s. 68 , nor s. 77 which deals with the commencement of the proceedings, prescribe any period of limitation, while a period of limitation is provided in the case of a claim by an employee for the payment of any benefit under the regulations, clearly shows that the legislatures did not intend to fetter the claim under s. 75 (2) (d). Where the legislature clearly intends to provide specifically the period of limitation in 'respect of claims arising thereunder, it cannot be considered to have left such matters in respect of claim under some similar provisions to be provided for by the rules to be made by, government under its delegated powers to prescribe the procedure to be followed in proceedings before such court. [878 H-879 C, 880 F] (v)Nor does s. 78(2) delegate any power to the- government to make rules. The section only requires <ORG> to follow "such procedure as may be prescribed by rules made by the State <ORG>". And these rules can only be made under s. 96 of the Act. [882 D] (vi)Further, the nature of the rule bars the claim itself and extinguishes the right which is not in the pale of procedure. A provision by which an employee loses his right to 'receive payment of any benefit conferred 'by the Act, if he does not file an application within 12 months after the claim has become due, affects substantive rights, and must, therefore. be dealt with by the legislature itself and is not to be inferred from the rule-making power conferred for regulating the procedure unless that is specifically provided for. The legislature does not part with the power to prescribe limitation which it jealously retains to itself unless it intends to do so in clear and unambiguous terms or by necessary intendment. [881 B-F] Employees' State insurance <CITATION> ., A.I.R. 1964 (51) M.P. 75, <CITATION> A.I.R. 1964 (51) Mad. 869 376, <CITATION> A.I.R. 1967 (54) Punjab, 166 (FB) and E.S.L.C. Hyderabad v. <ORG>, Hyderabad, 1970 Labour & Industrial cases 921, approved. View contra in <CITATION> , A.I.R. 1965 (52) All. 410, disapproved. <CITATION> , A.I.R. 1968 (55) Punjab 56 (SB). Manoel Francisco Lonez A Ors. v. Lieut. Godoluhin James Burslem, (1843) IV M.I.A. 300, Ruckmaboye v. <NAME>, (1849-54) V M.I.A. 234, <CITATION> . A.I.R. 1917 Madras 957, Krishna- mzchariar v. <NAME> & Ors., I.L.R. 47 Madras 824, Bendredas v. <NAME>, I.L.R. 53 Bom. 453, <CITATION> , A.I.R. 1958 Madras 392, <CITATION> ,  I.L.R. 40 All 1( <CITATION> ,  I.L.R. 93 Bom. 14(FB). <CITATION> ..  3 S.C.R. 313, Punjab Cooperative Bank Ltd. v. Official Liquidators Punjab Cotton Press Company Ltd. (in Liquidation), A.I.R. 1941 Lah. 57 ( <CITATION> ,  3 S.C.R. 820, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 563 of 1967. Appeal from the judgment and order dated September 15, 16, 19, 1966 of <ORG> in Civil Reference No. 8 of 1964.

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

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

The Judgment of the Court was delivered by <NAME>, J. In exercise of the powers under Sec. 96(1)(b)of the Employees State Insurance Act 1948 (hereinafter referred to as 'the Act') relating to "the procedure to be followed in proceedings before such Courts and the execution of orders made by such Courts", <ORG> made the following Rule; "17. Limitation:

(1) Every application to the Court shall be brought within twelve months from the date on which the cause of action arose or as the case may be the claim became due :

Provided that the Court may entertain an application after the said period of twelve months if it is satisfied that the applicant had sufficient reasons for not making the application within the said period.

<NAME>

(2)Subject as aforesaid the provisions of Part II and III of the Indian Limitation Act, 1908 (IX of (1908), shall so far as may be appli ed to very such application", The vires of this Rule was challenged by <ORG> (hereinafter referred to as 'the Corporation) when it filed an application on 7th October 1963 against the Appellant in <ORG> (hereinafter referred to as <ORG>') claiming payment of the contributions due from it for the period 1st September 1957 to 31st July 1963. In those proceedings the Appellant had 'taken the plea that the application was barred under Rule 17 as it was not presented within twelve months from the date when the cause of action arose or as the case may be when the amount became due. As the plea raised before' it was important <ORG> made a reference under Section 81 of the Act on the following question for the decision of <ORG> :-

(1)Whether rule 17 of the Employees' State Insurance Rule is ultra vires the rule making power of the State Government under Sec. 96(1) of the Employees State Insurance Act ? (2)If yes, what, if any, limitation applies to appli-

cationsfiled by the Corporation to the Employees' In-

<ORG> ?

<ORG> having considered the several cases and the contentions and submissions mad-. before it held that the clear and unambiguous terms of s. 96 (1) (b) exclude the grant of the power to any State Government to make a rule prescribing a period of limitation on claims ennumerated in Sec.75(2). It was lb further of the view that where two interpretations of the terms of Sec. 96(1) (b) were possible that interpretation should be accepted which excludes the grant of such a power, because it appeared to it clear from the scheme of the Act and the provisos thereof that the legislature did not intend to confer such power on the State Governments. It therefore answered the first question in affirmative namely that Rule 17 is ultra vires the rule making power of the State Government under See. 96(1) (b) of the Act. On the second question it held that an application filed in a <ORG> before 1-1-1964 for relief under Sec. 75 of the Act was not subject to any period of limitation, but an application filed on or after 1- 1 -64, would, however, be covered by Art. 137 of the Limitation Act of 1963 which provides a limitation of 3 years from the date when the right to apply accrues. This appeal has been filed against that decision by certificate under Art. 1 3 3 (1)

(c) of the Constitution.

This question has been the subject matter of the decisions in <CITATION> . (1) <CITATION> cc Corporation, Madras & Anr.(2) <CITATION> , ( 3 ) <CITATION> , Amritsar, ( 4 ) <CITATION> (3), E.S.L.C. Hyderabad v. <ORG>, Hyderabad (6) . All the High Courts in these cases except that of Allahabad held that the rule is ultra vires the powers conferred on the State Government under Sec. 9 6 ( 1 ) (b) inasmuch as it is not empowered to make rules prescribing periods of limitation for applications to be filed before the Court, though in Madhya Pradesh case it was also said that "Even if it be taken that clause (b) of Sec. 96(1), as it is worded, is wide enough to cover a rule of limitation, that cannot authorize the Government to frame a rule regulating limitation for the recovery of contributions...............

because according to- it the validity of the rule does not necessarily depend on the ascertainment of "whether it confers rights or merely regulates procedure, but by determining whether it is in conformity with the powers conferred by the statute and whether it is consistent with the provisions of the statute". These decisions also held that the scheme of the Act was such that the <ORG> did not and could not have intended to confer any power upon <ORG> to make rules prescribing a period of limitation for application under Sec. 75(2). The question which directly confronts us is whether the power to prescribe periods of limitation for initiating proceedings before the <ORG> is a part of, and is included, in the power to prescribe "the procedure to be followed in proceedings before such <ORG>s". The answer to this question would involve the determination of the further question whether the law relating to limitation is pro- cedural or substantive or partly procedural and partly substantive. If it is procedural law does it make any difference whether it relates to the time of filing application for initiation of proceedings before the <ORG> or whether it relates to interlocutory applications or other statements filed before it after the initiation of such pro- ceedings,. The contention on behalf of the Appellant is that the law relating to limitation is merely procedural, as such it makes (1) AIR 1964 (Vol. 51) Madhya Pradesh 75.

(2) AIR 1964 (Vol. 51) Madras 376.

(3) AIR 1965 (Vol. 52) Allahabad 410.

(4) AIR 1967 (Vol. 54) Punjab 166 (FB).

(5) AIR 1968 (Vol. 55) Punjab 56 (SB).

(6) 1970 Labour & Industrial cases 921.

no difference whether it relates to the time of filing an application or it deals with the time for filing interlocutory applications or other statements. There is also it is submitted no indication in the scheme of the Act that it is otherwise or that there is any impediment for the Government to prescribe under the rule making authority the period of limitation for applications under Sec. 75 (2). Before we consider the scheme of the Act it may be necessary to examine the scope and ambit of the terms 'procedure' as used in Sec. 96(1)(b).

The topic of procedure has been the subject of academic de- bate and scrutiny as well as of judicial decisions over a long period but in spite of it, it has defied the formulation of a logical test or definition which enables us, to determine and demarcate the bounds where procedural law ends and substantive law begins, or in other words it hardly facilitates us in distinguishing in a given case whether the subject of controversy concerns procedural law or substantive law. The reason for this appears to be obvious, because substantive law deals with right and is fundamental while procedure is concerned with legal process involving actions and remedies, which <NAME> defines "as that branch of law which governs the process of litigation", or to put it in another way, substantive law is that which we enforce while procedure deals with rules by which we enforce it. We are tempted in this regard to cite a picturesque aphorism of <NAME> when he says "Substantive law is canonised procedure. Procedure is unfrocked substantive law(1)".

The manner of this approach may be open to the criticism of having over simplified the distinction, but nonetheless this will ,enable us to grasp the essential requisites of each of the concepts which at any rate "has been found to be a workable concept to point out the real and valid difference between the rules in which stability is of prime importance and those in which flexibility is a more important value (2 ) ". Keeping these basic assumptions in view it will be appropriate to examine whether the topic of limitation belongs to the Branch of procedural law or is outside it. if it is a part of the procedure whether the entire topic is covered by it or only a part of it and if so what part of it and the tests for ascertaining them. The law of limitation appertains to remedies because the rule is that claims in respect of rights cannot be entertained if not commenced within the time prescribed by the statute in respect of that right. Apart from Legislative action prescribing the time, there is no period of limitation recognised under the general law and therefore any time fixed by the statute is neces-

(1) XLV Harvard Law Journal-617 & 645.

(2) American Juris-prudence-Vol. 51 (Second Edn.) 605.

sarily to be arbitrary. A, statute prescribing limitation however does not confer a right of action nor speaking generally does it confer on a person a right to relief which has been barred by eflux of time prescribed by the law. The necessity for enacting periods of limitation is to ensure that actions are commenced within a particular period, firstly to assure the availability of evidence documentary as well as oral to enable the defendant to contest the claim against him; secondly to give effect to the principle that law does not assist a person who is inactive and sleeps over his lights by allowing them when challenged or disputed to remain dormant, without asserting them in a court of law. The, principle which forms the basis of this rule is expressed in the maxim vigilantibus, non dormientibus, jura subveniunt (the laws give help to those who are watchful and not to those who sleep). Therefore the, object of the statutes of limitations is to compel a person to exercise his right to action within a reasonable time as also to dis- courage and suppress stale, fake or fraudulent claims. While this is so there are two aspects of the statutes of limitation the one concerns the extinguishment of the right if a claim or action is not commenced with a particular time and the other merely bars the claim without affecting the right which either remains merely as a moral obligation or can be availed of to furnish the consideration for a fresh enforceable obligation. Where a statute prescribing the limitation extinguishes the right, it affects substantive rights while that which purely pertains to the commencement of action without touching the right is said to be procedural. According to <NAME> the law of procedure is that branch of the law of actions which governs the process of litigation, both Civil and Criminal. "All the residue" he says "is substantive law, and relates not to the process of litigation but to its purposes and sub-, ject matter". It may be stated that much water has flown under the bridges since the original English theory justifying a statute of limitation on the ground that a debt long overdue was pre- sumed to have been paid and discharged or that such statutes are merely procedural. Historically there was a period when substantive law was inextricably intermixed with procedure; at a later period procedural law seems to have reigned supreme when forms of action ruled. In the words of Maine "So great is the ascendancy of the Law of Act ions in the infancy of Courts of Justice, that substantive law has at first the look of being gradually secreted in the interstices of procedure()". Even after the forms of action were abolished <NAME> in his Equity was still able to say "The forms of action we have buried but they still rule us from their graves", to which <NAME> added "In their life they were powers of evil and even in death they have not wholly ceased from troubling(2)". <NAME> had however observed in "The (1) Maine, Early Law and Custom 389.

(2) 21 L.Q.R. 43.

Common Law", "wherever we trace a leading doctrine of sub stantive law far enough back, we are likely to find some forgotten circumstance of procedure at its source". It does not therefore appear that the statement that substantive law determ.nes rights and procedural law deals with remedies is wholly valid, for neither the entire law of remedies belongs to procedure nor are rights merely confined to substantive law, because as already noticed rights are hidden even "in the interstices of procedure". There is therefore no clear cut division between the two.

A large number of decisions have been referred before us both English and Indian some of antiquity in support of the proposition that the law prescribing the time within which an action can be commenced is purely procedural and therefore when a statute empowers the <ORG>. to make rules in respect of procedure it confers upon it also the rights to prescribe limitation. To this end have been cited the cases of <NAME> & Ors. v. Lieut. <NAME>), and <NAME> v. <NAME>). An examination of these cases would. show that what was being considered was whether the law of limitation was part of the lex fori which foreigners and persons not domiciled in the country have to follow if they have to have recourse to actions in that country. In the latter case <ORG> observed at page 265 "The arguments in support of the plea are founded upon the legal character of a law of limitation or prescription, and it is insisted, and the <ORG> are of opinion, correctly insisted, that such legal character of 'the law of prescription has been so much considered and di-cussed among writers upon jurisprudence, and has been so often the subject of legal decision in the courts of law of this and other countries, that it is no longer subject to doubt and uncertainty. In truth, it has become almost an axiom in jurisprudence, that is law of prescription, or law of limitation, which is meant by that denomination, is a law relating to procedure having reference only to the lex fori".

These observations as well as those in the earlier case must be understood in the light of the principles governing conflict of laws. What was in fact being examined was whether they are part of the procedural law in the sense that the Municipal laws will be applicable on the question of limitation for the commencement of actions because if limitation was purely a question of substantive law that would be governed by the law of the country of the (2) (1849-54)_(V_Moore Indian Appeals 234).

domicile of the person who is having recourse to the Courts of the other country. In other words the substantive rights of the parties to an action are governed by a foreign law while all matters pertaining to procedure are governed exclusively by <ORG>.

The cases cited at the <ORG>, of the various <ORG> in this country show that they were construing the rules prescribing limitation in respect of proceedings in Court i.e. proceedings afterthe institution of the suit or filing of the Appeal. <CITATION> & 4nr.(1), the question was. whether &,,a High Court by framing a rule under Sec. 122 Civil Procedure Code could make Section 5 of the Limitation Act applicable to applications under sub-rule (2) of Rule 13 of Order IX. While holding that it could, <NAME>, J as he then was made this pertinent observation :

"Whatever may be the case of the statute prescribing say 3 years for an action to be brought I am quite clear that the Articles in the Act limiting applications of this nature which are almost entirely interlocutory deal clearly with matters of procedure............

This was also the view of the Full Bench in <CITATION> .(2), which was followed by <ORG> in <NAME> v. <NAME> ( 3 ). It was contended in <CITATION> (4), that rule 41 (A) (2) of the Appellate side Rules of the Madras High Court providing for the presentation of a petition to <ORG> within 90 days from the date of the order passed in an execution proceedings was ultra vires, because <ORG>s were not entitled by rules to regulate or enlarge the periods in the Limitation Act in respect of the proceedings to which the Limitation, Act apply'This contention was negatived on the ground that such a powerwas inherent in Sec. 122 of the Civil Procedure Code. The argument of the petitioner that he had a vested right to go up in revision at any time and that the decision of the Full Bench in <CITATION> . (2 ) does not affect his right, was rejected on the ground that Sec. 122 Civil Procedure Code empowers <ORG>s to make rules regu- lating their own procedure and the procedure of the subordinate Courts subject to their superintendence. There were earlier decisions of <ORG> and <ORG> as also a decision of <ORG> rendered under Sec. 602 of the old Civil Procedure Code

1. AIR 1917 Madras 957.

(2) ILR 47 Madras 824.

(3) ILR 53 Bombay 453.

(4) AIR 1958 Madras 392.

referred to by <NAME>, J., in his referring order in <NAME>'s case which took the view that <ORG> has riot the power by rule under Sec. 122 or the corresponding Sec. 602 of the old Civil Procedure Code to make rules for altering the period of limitation prescribed by the Indian Limitation Act see <CITATION> (l), and <CITATION> (2). Again a similar question arose as to whether clause 27 of the Letters Patent of the Lahore High <ORG> (there are similar clauses in the Letters Patent of the other <ORG>) could validly empower the making of rule 4 prescribing a period for filing an appeal under Clause 10 of the Letters Patent. Clause 27 of the Letters Patent empowered <ORG> from time to time to make rules and orders for regulating the practice of the <ORG> etc. This <ORG> in <CITATION> . ( 3 ) , approved the view of a Full Bench of <ORG> in <ORG> v. <ORG> (in liquidation) (4), where it was held that rule 4 is a special law within the meaning of Sec. 29 (2) of the Limitation Act . <NAME>, J., as he then was said at page 320 "Rule 4 is made by <ORG> in exercise of the legislative power conferred upon the said <ORG> under cl. 27 of the Letters Patent. As the said rule is a law made in respect of special cases covered by it, it would certainly be a special law within the meaning of S. 29(2) of the Limitation Act". In that case no question was raised as to whether rule 4 was dealing with a procedural matter or dealt with a substantive right. These cases are of little assistance and if at all they lay down the principle that interlocutory proceedings before the <ORG> do not deal with substantive rights and are concerned with mere procedure and can be dealt with by rules made under the powers conferred on <ORG> to regulate the procedure. It is therefore apparent that whether the fulfilment of a particular formality as a condition of enforceability of a particular right is procedural or substantive has not been, as we had already noticed free from difficulty. What appears to be a self- evident principle will not become so evident when we begin to devise tests for distinguishing procedural rule from substantive law. It appears to us that there is a difference between the manner in which the jurisprudential lawyers consider the question and the %way in which the Judges view the matter. The present tendency (1)  I.L.R 40 All. 1 (FB).

(2) [1908] I.L.R 32, Bom. 14 (FB).

is that where a question of limitation arises, the distinction between so-called substantive and procedural statutes of limitation may not prove to be a determining factor but what has to be considered is whether the statute extinguishes merely the remedy or extinguishes the substantive right as well as the remedy. Instead of generalising on a principal the safest course would IV to' examine each case on its own facts and circumstances and determine for instance whether it affects substantive rights and extinguishes% them or whether it merely concerns a procedural rule only dealing with remedies or whether the intendment to prescribe limitation is discernible from the scheme of the Act or is inconsistent with the rule making power etc, Apart from the implications inherent in the term procedure appearing in Sec. 96(1)(b) the power to prescribe by rules any matter falling within the ambit of the term must be the "Procedure to be followed in proceedings be-fore such <ORG>". The word 'in', emphasised by us, furnishes a clue to the controversy that the procedure must be in relation to proceedings in <ORG> after it has taken decision of the matter, which obviously it takes when moved by an application presented before it. If such be the meaning the application by which the <ORG> is asked to adjudicate on a matter covered by Sec. 75(2) is outside the scope of the rule making power conferred on the <ORG>. <CITATION> (1), one of the questions that was considered by this <ORG> was whether the clause that provides for a suit to be brought within one year after the delivery of the goods or the date when the goods should have been delivered, only prescribes a rule of limitation or does it also provide for the extinction of the right to compensation after certain period of time. It was observed by <NAME>, J, at page 836 :

"The distinction between the extinction of a right and the extinction of a remedy for the enforcement of that right, though fine, is of great importance. The legislature could not but have been conscious of this distinction when using the words "discharged from all liability" in an article purporting to prescribe rights and immunities of the shipowners. The words are apt to express an intention of total extinction of the liability and should, specially in view of the international character of the legislation, be construed in that sense.

It is hardly necessary to add that once the liability is extinguished under this clause, there is no scope of any acknowledgement of liability thereafter".

What we have to consider is, apart from the question that the <ORG> on the terms of Sec. 96(1) (b) is not em- powered to fix periods of limitation for filing applications under Sec. 75 (2) to move the <ORG>, whether on an examination of the Scheme of the Act , rule 17 affects substantive rights by extinguishing the claim of the <ORG> to enforce the liability for contributions payable by the Appellant.

An examination of the purpose and intendment of the Act and the scheme which it effectuates, leaves no doubt that it was enacted for the benefit of the employees and their dependents, in case of sickness, maternity and 'employment injury', as also to make provision for certain other matters. Sec. 40 makes the employer liable in the first instance to pay the contributions of the employer as well as the employee to the <ORG> subject to the recovery from the employee of the. amount he is liable to contribute. This liability on the employer is categorial and mandatory. He is further required under Sec. 44 to submit to the <ORG> returns as specified therein. Chapter V com- prised of Sections 46 to 73 , deals with the benefits which includes among others, sickness and disablement benefit of the employee, his eligibility for receiving payments and. the compensation payable to his dependents. If the employee fails or neglects to pay the contributions as required, the <ORG> has the right to recover from him under Sec. 68, the amounts specified in that Section as an arrear of land revenue. Sec. 94 provides that the contributions due to a corporation are deemed to be included in the debts under the Insolvency Act s and the Company's Act, and are given priority over other debts in the distribution of the pro- perty of the insolvent or- in the distribution of the assets of a Company in liquidation. Chapter VI deals with adjudication of disputes and claims, of which Sec. 74 provi des for he Constitution of <ORG>; Sec. 74 specifies the matters to be decided by that Court; Sec. 76 and Sec. 77 deal with the institution and commencement of proceedings and Sec. 78 with the powers of <ORG>. Sec. 80 deals with the non-admissibility of the claim, if not made within twelve months after the claim is due while Sec. 82(3) prescribes the period within which an appeal should be filed against the order of <ORG>. These provisions in our view unmistakably indicate that the whole scheme is dependent upon the contributions made by the employer not only with respect to the amounts payable by him but also in respect of those payable by the employee. No limitation has been fixed for the recovery of these amounts by the <ORG> from the employer; on the other hand Sec. 68 empowers the <ORG> to resort to coercive process. If any such steps are proposed to be taken by the <ORG> and the employer is aggrieved he has a right to file and apply to <ORG> and have his claim adjudicated by it in the same way as the <ORG> can prefer a claim in a case where the liability to pay is disputed. Sec. 75 (2) (d) clearly envisages this course when it provides that "the claim against a principal employer under Sec. 68" shall be decided by <ORG>. It may be useful to read Sec. 68 and 75 (2) (d) which are given below Sec. 68 (1)If any principal employer fails or neglects to pay any contribution which under this Act he is liable to pay in respect of any employee and by reason thereof such person becomes disentitled to any benefit or entitled to a benefit on a lower scale, the <ORG> should have been paid by the principal employer, pay to the person the benefit at the rate to which he would have been paid by the principal employer, pay to the person the benefit at the rate to which he would have been entitled if the failure or neglect had not occurred and the <ORG> shall be entitled to recover from the principal employer either-

(i) the difference between the amount of benefit which is paid by the <ORG> to the said person and the amount of the benefit which would have been payable on the basis of the contributions which were in fact paid by the employer; or

(ii) twice the amount of the contribution which the employer failed or neglected to pay; whichever is greater.

(2)The amount recoverable under this Section may be recovered as if it were on arrear of land revenue.

Sec.75 (2) The following claim shall be decided by <ORG>, namely

(d)Claim against a principal employer under Section 68 ;

It is contended by the learned <ORG> that Sec. 68 is a crucial provision as it indicates that the right of the <ORG> to enforce its claim for payment has been preserved subject to tile provision that the omission or neglect by the principal employer to make contribution deprives the employee of any benefit either totally or 'at a reduced scale. It is only in these circumstances he submits that the <ORG> can recover the amount by coercive process but in any other case the <ORG>'s claim to recover by an application to <ORG> can be made subject to a period of limitation by a rule made under Sec. 96(1)(b). We are unable to appreciate the logic of this submission because the benefit of an employee can be negatived or partially admitted for instance either by reason of the employer not showing him in the return as an employee of his or showing him as drawing a lesser wage than what he is entitled to or as it may happen mostly, when he fails to make the payments even according to the returns-made by him. In all these cases the employee's benefits will be affected because the basis of the scheme of conferring benefit on the employee is the contribution of both the employer and the employee. It is clear therefore that the right of the <ORG> to recover these amounts by coercive process is not restricted by any limitation nor could the <ORG> by recourse to the rule making power prescribe a period in the teeth of Sec. 68. What Sec. 75(2) is empowering is not necessarily the recovery of the amounts due to the <ORG> from the employer by recourse to <ORG> but also the settlement of the dispute of a claim by the <ORG> against the principal employer which implies that the principal employer also can, where he disputes the claim made and action is proposed to be taken against him by the <ORG> under See. 68 to recover the amounts said to be due from him. While this is so there is also no impediment for the <ORG> itself to apply to <ORG> to determine a dispute against an employer where it is satisfied that such a dispute exists. In either case neither Sec. 69 nor Sec. 75 (2) (d) prescribes a period of limitation. It may also be mentioned that Sec. 77 which deals with the commencement of the proceedings, does not provide for any limitation for filing an application to <ORG> even though it provides under sub-sec. (2) of that Section that every such application shall be in such form and shall contain such particulars and shall be accompanied by.such fee, if any, that may be prescribed by rules made by the State <ORG> in consultation with the <ORG>. This was probably an appropriate provision in which the legislature if it had intended to prescribe a time for such applications could have provided. Be that as it may in our view the omission to provide a period of limitation in any of these provisions while providing for a limitation of a claim by an employee for the payment of any benefit under the regulations, shows clearly that the legis- lature did not intend to fetter the claim under Sec. 75(2)(d). It appears to us that where the legislature clearly intends to pro vide specifically the period of limitation in respect of claims arising thereunder it cannot be considered to have left such matters in respect of claims under some similar provisions to be provided for by the rules to be made by the <ORG> under its delegated powers to prescribe the procedure to be. followed in proceedings before such <ORG>. What is sought to be conferred is the power to make rules for regulating the procedure before <ORG> after an application has been filed and when it is seized of the matter. That apart the nature of the rule bars the claim itself and extinguishes the right which is not within the pale of procedure. Rule 17 is of such a nature and is similar in terms to Sec. 80. There is no gain-saying the fact that if an employee does not file an application before <ORG> within 12 months after the claim has become due or he is unable to satisfy <ORG> that there was a reasonable excuse for him in not doing so, his right to receive payment of any benefit conferred by the Act is lost. Such a provision affects substantive rights and must therefore be dealt with by the legislature itself and is not to be inferred from the rule making power conferred for regulating the procedure unless that is specifically provided for. It was pointed out that in the Constitution also where <ORG> was authorised with the approval of the President to make rules for regulating generally the practice and procedure of the <ORG>, a specific power was given to it by Art. 145 (1) (b) to prescribe limitation for entertaining appeals before it. It is therefore apparent that the legislature does not part with the power to prescribe limitation which it jealously retains to itself unless it intends to do so in clear and unambiguous terms or by necessary intendment. The view taken by <ORG> Madras, Punjab and Andhra Pradesh High <ORG>s in the cases already referred to are in consonance with the view we have taken. In the decision of the Punjab High <ORG>, <NAME>, J, as he then was expressed the view of the Full Bench with which <NAME>, and <NAME>, agreed. After examining the provisions of the Act he observed at page 170-171 "At this stage, I consider it appropriate to point out, what is fairly well-recognised, that what is necessarily or clearly implied in a statute is an effectual as that, which is expressed because it often speaks as plainly by necessary inference as in any other manner. The purposes and aims of an Act as discernible from its statutory scheme are accordingly important guideposts in discovering the true legislative intent. One who considers only the letter, of an enactment, goes but, skin deep into its true meaning; to be able to fathom the real statutory intent it is always helpful to inquire into the object intended to be accomplished.

Considering the entire scheme of the Act before us, it is quite clear that fixation of any period of limitation for the <ORG> to realise the contributions from the employer may tend seriously to obstruct the effective working and enforcement of the scheme of insurance".

It may be of interest to notice that <NAME> had earlier taken a different view in <CITATION> (1), but said that he, had no hesitation in agreeing with <NAME> view because he realised that his earlier view was based on an over-simplification. In the latest case <ORG> also following the earlier decision of Madhya Pradesh, Madras and Punjab held that the State Government had exceeded its powers to frame Rule 17 as no such power to prescribe limitation under the provisions ,of Sec. 96 (1 )

(b) or under Sec. 78 (2) can be said to have been delegated to <ORG>. We, however, find that Sec. 78(2) does not delegate any power to the Government to make rules but only requires <ORG> to follow "such pro- cedure as may be prescribed by rules made by <ORG>" which rules can only be made under Sec. 96 of the Act. In the view we have taken it is unnecessary to examine the question whether legislative practice also leads to the same conclusion though in the Madras and the Punjab decisions that was also one of the grounds given in support of their respective conclusions. The contrary view expressed by a Bench of <ORG> is in our opinion not good law. We may before parting with this case point out that the legislature since chosen to specifically prescribe 3 years as limitation period by addition of sub- sec. (1A) to Sec. 77 while deleting Sec. 80. See 77(1A) provides that "Every such application shall be made within a period of three years from the date on which the cause of action arose". By this amendment the claim under clause

(d), as well as, the one under clause (f) of sub-section (2) of Section 75 which provides for the adjudication of a claim by <ORG> for the recovery of any benefit admissible under the Act for which a separate limitation was fixed under Sec. 80, is now to be made within 3 years from the date of the accrual of the cause of action. This. amendment also confirms the view taken by this Court that the power under Section 96 (1) (b) does not empower the <ORG> to prescribe by rules a period of limitation for claims under Sec. 75. In the result this appeal is dismissed with costs.

K.B.N. Appeal dismissed.