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PETITIONER:

BOMBAY DYEING &MANUFACTURING CO., LTD.

Vs.

RESPONDENT:

THE STATE OF BOMBAY AND OTHERS

DATE OF JUDGMENT:

20/12/1957

BENCH:

AIYYAR, T.L. VENKATARAMA

BENCH:

AIYYAR, 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 the State Legislature 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 the Bombay

Labour Welfare Fund 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 the

Division Bench 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

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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

The State of West Bengal v. Subodh Gopal Bose, [1954]

S.C.R. 587 and Dwarkadas Shrinivas of, Bombay v. Sholapur

Spinning and Weaving Co. Ltd., [1954] 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.

Commonwealth of Australia v. Bank of New South Wales,

[1950] A.C. 235, held inapplicable.

The State of Bihar v. Mahayajadhiraja Sir Kameshwar

Singh of Darbhanga, [1952] S.C.R. 889, considered.

The impugned Act had not the effect of substituting the

Board 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 Legislature obviously intended that only such wages

of the employees as were time-barred should be taken by the

State, 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 Board 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 State.

The impugned Act which vests the property absolutely in the

State without any regard for the claims of the true owner

cannot be said to be a law relating to abandoned property.

I43

1124

Connecticut Mutul Life Insurance Company v. Moore, 333

U.S 541, Anderson National Bank v. Luckett, 321 U.S. 233 and

Standard oil Company 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

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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 the Bombay High Court in Misc. Application No. 267

of 1953.

R. J. Kolah, B. Narayanaswamy and J. B. Dadachanji,

for the appellants.

H. M. Seervai, Advocate General for the State of

Bombay and R. H. Dhebar, for the respondents.

1957. December 20. The following Judgment of the Court

was delivered by

VENKATARAMA AIYAR J.-The appellant is a limited Company

incorporated under the Indian Companies Act, 1879. It is

carrying on business in the manufacture of textiles, and

owns three factories called Spring Mills,, Textile Mills and

Bombay Dye Works, all of, which are situate in Bombay. In

its balance sheet for the year 1951, it has shown as one of

its liabilities a sum of Rs. 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, the Legislature of the State of Bombay enacted

the Bombay Labour Welfare Fund Act (Bum. XL of 1953)

(hereinafter referred to as the Act), and it came into force

on June 4, 1953. We may, at this

1125

stage, refer to the relevant provisions of the Act, as it is

their validity that is the main point for our determination

in this appeal. The preamble to the Act recites that " It

is expedient to constitute a Fund for the financing of

activities to promote welfare of labour in the State of

Bombay and for conducting such activities ". Section 2 is

the definition section; sub-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:

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(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

1126

(3). The sums specified in sub-section (2) shall be

collected by such agencies and in such manner and the

accounts of the Fund shall be maintained and audited in such

manner as may be prescribed."

Section 7(1) provides that "the Fund shall vest in and ,be

held and applied by the Board as Trustees subject 'to the

provisions and for the purposes of this Act." Sub-section

(2) of s. 7 is very material, and is as follows:

"Without prejudice to the generality of sub-section (1)

the moneys in the Fund may be utilized by the Board to

defray expenditure on the following:

(a) community and social education centres including

reading rooms and libraries;

(b) community necessities;

(c) games and sports;

(d) excursions, tours and holiday homes;

(e) entertainment and other forms of recreations;

(f) home industries and subsidiary occupations for

women and unemployed persons;

(g) corporate activities of a social nature;

(h) cost of administering the Act including the

salaries and allowances of the staff appointed for the

purposes of the Act; and

(i) such other objects as would in the opinion of the

State Government improve the standard of living and

ameliorate the social conditions of labour:

Provided that the Fund shall not be utilized in financing

any measure which the employer is required under any law

for the time being in force to carry out;

Provided further that unpaid accumulations and ,fines

shall be paid to the Board and be expended by it under this

Act notwithstanding anything contained in the 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,

1127

be recoverable on behalf of the Board as an arrear of land

revenue."

Section 19 authorises the State Government to make rules to

carry out the purposes of this Act. Section 23 provides

that,

"In section 8 of the 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."

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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,

1128

4. Notice for payment of fines and unpaid accumu-

lations by Welfare Commissioner:-The Welfare Commissioner

may, after making such enquiries as he may deem fit, and

after calling for a report from the Inspector, if necessary,

serve a notice on any employer to pay any portion of fines

realised from the employees or unpaid accumulations held by

him which the employer has not paid in accordance with rule

3. The employer shall comply with the notice within 14 days

of the receipt thereof."

On July 7, 1953, the Welfare Commissioner, Bombay

appointed under 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 Chagla C. J. and Tendolkar

J. who held that the impugned Act was intra vires but on

different grounds. The learned -Chief Justice- was of the

opinion that, on its true construction, the Act merely

substituted the Board as a creditor in the place of the

employees, that there -was no taking of property, and that,

in consequence, there was no contravention of Art. 31 (2).

Tendolkar J. hold that " unpaid wages " were unquestionably

moneys which belonged to the employer and that he was being

deprived of them, but there was no taking of possession or

acquisition of property within .Art. 31 (2) of the

Constitution but a deprivation of moneys, and as it was done

under the authority of -law, it fell within the protection

of 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,

1129

The sole point for determination in this appeal is

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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. Kolah 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. Kolah is

therefore clearly right in his contention that the liability

of the appellant to pay wages to the employees does not ipso

facto extinguish its title to the moneys belonging to it

even pro tanto, and that the effect, therefore, of 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). Tendolkar, 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 State, that s. 3 (1) effected neither, that it did

deprive the employers of

1130

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 Court had occasion to

consider the true scope of Art. 31 (2) in relation to Art.

31 (1) in The State of West Bengal v. Subodh Gopal Bose (1)

and in Dwarkadas Shrinivas of Bombay v. The Sholapur

Spinning and Weaving Co. Ltd (2). In The State Of West

Bengal v. Subodh Gopal Bose(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 State, 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. Das, 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 State, Art. 31 (2)

dealt with the power of " eminent domain ". In Dwarkadas

Shrinivas of Bombay v. The Sholapur Spinning and Weaving

Co.(2) the majority of the Judges again reiterated the view

expressed in The State of West Bengal v. Subodh Gopal

Bose(1) that Arts. 31 (1) and 31 (2) covered the same

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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. Seervai, 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

State or to a corporation owned or controlled by the State,

it shall not be deemed to provide for the

(1) [1954] S.C.R. 587.

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

1131

compulsory acquisition or requisitioning of property,:

notwithstanding that it deprives any person of his

property."

The argument is that the theory that acquisition in Art. 31

(2) is not confined to cases of transfer of ownership to the

State, and that even deprivation of property would fall

within it, which is the basis of' the decisions in The State

of West Bengal v. Subodh Gopal Bose (1) and in Dwarkadas

Shrinivas of Bombay v. The Sholapur Spinning and Weaving Co.

Ltd. (2) can, in view of the above amendment, no longer be

accepted as correct, and that those decisions therefore

require to be reconsidered in the light of the new 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 The State of West Bengal v. Subodh Gopal Bose (1) and

Dwarkadas Shrinivas of Bombay v. The Sholapur Spinning and

Weaving Co. Ltd. (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. In The State

of Bihar v. Maharajadhiraja Sir Kameshwar Singh of

Darbhanga(3 ), this view was adopted by Mahajan J. at pages

943-944, by Mukherjea J. at page 961 and by Chandrasekhara

Aiyar J. at pages 1015 to 1018. It is argued for the

respondents that the position under Art. 31(2) is the same

as in America, as the provision therein that either the

(1) [1954] S.C.R. 587. (2) [1954] S.C.R. 674.

(3) [1952] S.C.R. 889.

144

1132

amount of the compensation should be fixed or the principles

on which and the manner in which compensation is to be

determined should be specified, involves that what is taken

is not money. It is argued, on the other hand, for the

appellant that the latest trends in American law show, as

was observed by Das J. (as he then was), at pages 984-985 in

The State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of

Darbhanga (1), a departure from the view held in earlier

authorities that moneys and choses inaction could not be the

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subject of " eminent domain "; and that, in any case, the

principles of American law should not be applied in the

interpretation of the provisions of our Constitution. If

the contention of the respondents is to be accepted, the

question naturally arises what protection a person has in

respect of moneys belonging to him if he can be deprived of

them by process of legislation. The answer of Mr. Seervai

is that that protection is to be sought in 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 Bijay Cotton Mills

Ltd. v.The State of Ajmer (2) in which this Court applied

Art. 19(6) in pronouncing on the validity of the Minimum

Wages Act (XI of 1948) requiring the employers to pay wages

at a rate not less than that to be fixed by the Government.

Assuming that the correct position is what the 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) [1952] S.C.R. 889.

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

1133

the State 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 Porter in Commonwealth of Australia v.

Bank of New South Wales (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 Board as the creditor in

the place of the employees, and that ss. 3 and 17 merely

prescribe the mode in which the obligation is to be enforced

and-that was the ground on which Chagla C. J. based his

judgment; and secondly, that the 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 Board

constituted under the Act, the latter would be entitled to

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recover it from the employer. And what could be done by act

of parties can also be done by legislation. What we have to

see, therefore, is whether on the provisions of the statute

it could be held that there is a statutory

(1) [1950] A-C. 235, 311.

1134

transfer of the wages earned by the workman to the Board.

Section 5 of the Act vests the amounts mentioned in s. 3(2)

in the Board, and s. 3(1) directs that those amounts should

be paid by the employer to the Board. Counsel for the

appellant contends that there are in the Act no words of

transfer of the debts to the ;Board, and that there is only

a provision for payment of the amounts. But this is taking

too narrow a view of the true scope of those provisions.

Looking at the substance of the matter, we are of opinion

that s. 3(1) and s. 5(1) do operate to transfer the debts

due to the employees, to the Board.

It will be observed that the definition of "unpaid

accumulations " takes in only payments due to the employees

remaining unpaid within a period of three years after they

become due. The intention of the Legislature obviously was

that claims of the employees which are within time should be

left to be enforced by them in the ordinary course of law,

and that it is only when they become time-barred and useless

to them that the State should step in and take them over.

On this, the question arises for consideration whether a

debt which is time-barred can be the subject of transfer,

and if it can be, how it can benefit the Board to take it

over if it cannot be realised by process of law. Now, it is

the settled law of this country that the statute of

Limitation only bars the remedy but does not extinguish the

debt. Section 28 of the Limitation Act provides that when

the period limited to a person for instituting a suit for

possession of any property has expired, his right to such

property is extinguished. And the authorities have held-and

rightly, that when the property is incapable of possession,

as for example, a debt, the section has no application, and

lapse of time does not extinguish the right of a person

thereto. Under 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

1135

to recover the debt from the surety, even though a suit on

it is barred against the principal debtor. Vide Mahant

Singh v. U Ba Yi (1), Subramania Aiyar v. Gopala Aiyar (2),

and Dil Muhammad v. Sain Das (3). And when a creditor has a

lien over goods by way of security for a loan, he can

enforce the lien for obtaining satisfaction of the debt,

even though an action' thereon would be time-barred. Vide

Narendra Lal Khan v. Tarubala Dasi (4). That is also the

law in England. Vide Halsbury's Laws of England (Hailsham's

Edition), Vol. 20, page 602, para. 756 and the observations

of Lindley L. J. in Carter v. White (5) and of Cotton L. J.

in Curwen v. Milburn (6). In American Jurisprudence, Vol.

34, page 314, the law is thus stated :

" A majority of the courts adhere to the view that a

statute of limitations, as distinguished from a statute

which prescribes conditions precedent to a right of action,

does not go to the substance of a right, but only to the

remedy. It does not extinguish the debt or preclude its

enforcement, unless the debtor chooses to avail himself of

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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.

1136

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 Board "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

Legislature of the Bombay State to modify the provisions of

the Limitation Act, it should be stated that limitation is a

topic enumerated in the Concurrent List, being Entry 13 in

List III in Seventh Schedule to the Constitution, and under

Art. 254(2), the State Legislature can enact a law modifying

the Central Act, provided it is reserved for consideration

by the President and assented to by him, and that has been

done in the present case. Coming to the impugned 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 State, and Mr. Kolah concedes, that if the

impugned law is otherwise valid, it cannot be said to be bad

by reason of this section. On the above analysis, there

cannot be any doubt that the effect of the relevant

provisions of the Act is to transfer to the Board the debts

due by the appellant to its employees free from the bar of

limitation.

The question still remains whether there has been a

substitution of creditors, and that can only be, if the debt

due to the employee is discharged and in its place there is

substituted the debt in favour of the Board. If, however,

the employer is not released from his liability to the

employee, then the effect of s. 3(1) is only to create in

the Board a statutory creditor in

1137

addition to the creditor under the contract of employment,

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and there can be no question of substitution. Mr. Seervai

agrees that if the Act does not operate to' discharge the

employer from his obligations to the employees in respect of

the wages due to them, then it must be held to be

unconstitutional as infringing 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. Seervai urges firstly that

though the Act does not, in terms, provide for the discharge

of the appellant on payment of the amount under s. 3(1),

that is the result of the provisions of the Payment of Wages

Act (Act IV of 1936), hereinafter referred to as the Wages

Act, and secondly, that the effect of s. 3(1) of the Act is

to render the contract of 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

1138

working day of such termination. Section 15 provides that

where an unauthorised deduction has been made from the wages

of an employed person or payment of wages has been delayed,

such person may apply to the authority appointed under the

Act for a direction for payment of the amount deducted or

the delayed ;wages, as the case may be, together with

payment of compensation. Such application has to be made

within six months from the date on which the deductions were

made or the date on which the payment of wages became due,

and by Act No. 62 of 1953 of the Bombay Legislature, the

period of six months has been enlarged to one year. There

is a proviso to this section that an application thereunder

can be made after the period prescribed therein "when the

applicant satisfies the authority that he had sufficient

cause for not making the application within such period."

Section 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,

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that having regard to the definition of "unpaid

accumulations" as meaning all payments due to the employees

but not made to them within a period of three years, the

employer runs no risk of being called upon to pay to the

employee what has been paid by him to the Board under 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

1139

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

Simpalax Manufacturing Co. Ltd. v. Alla-Ud-Din (1), it was

held that if there was any bona fide dispute as to the

amount payable, the jurisdiction of the Civil Court was not

barred by s. 22. On the other hand, it was held in Bhagwat

Rai v. Union of India (2) that the jurisdiction of the Civil

Court would be barred, even if there was a bona fide

dispute, and that the bar under s. 22(d) was absolute, and

certain observations in Modern Mills Ltd. v. Mangalvedhekar

(3) and A. B. Sarin v. B. C. Patil (4) were relied on, as

supporting this contention. Even if Mr. Seervai is right in

his contention that the law is correctly laid down in

Bhagwat Rai v. Union of India (2) and that the decision in

Simpalax Manufacturing Co. Ltd. v. Alla-Ud-Din(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.

145

1140

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

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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 Board. It

makes no distinction between claims for unpaid wages which

are barred by limitation and those which are not so barred.

It is contended for the respondents that when the subject-

matter of a law comprehends distinct matters as to some of

which it is unconstitutional and bad, it should nevertheless

be upheld as regards the others, if those others form a

distinct category, and that this principle applies not only

when a classification into distinct categories appears on

the face of the law but also when it exists in fact. Now,

the doctrine of severability in application is well-

established in our law (vide The State of Bombay v. F. N.

Balsara (1), The State of Bombay v.The United Motors (India)

Ltd.and R. M. D. Chamarbaugwalla v. Union of Indiaand

the principles applicable have been stated fullyin

Chamarbaugwalla'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.

1141

rities that we can confine the operation of the impugned Act

to those claims of unpaid wages which are barred by

limitation, the question still is whether the impugned Act

gives a discharge to the employer even in respect of those

claims; for, as already stated, the operation of 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 Board gets title

to them. If then a debt subsists even after it is barred by

limitation, the employer does not get, in law, a discharge

therefrom. The modes in which an obligation under a

contract becomes discharged are well-defined, and the bar of

limitation is not one of them. The following passages in

Anson's Law of Contract, 19th Edition, page 383, are

directly in point:

" At Common Law lapse of time does not affect

contractual rights. Such a right is of a permanent and

indestructible character, unless either from the nature of

the contract, or from its terms, it be limited in point of

duration.

"But though the right possesses this permanent

character, the remedies arising from its violation are

withdrawn after a certain lapse of time; interest reipub-

licae ut sit finis litium. The remedies are barred, though

the right is not extinguished."

And if the law requires that a debtor should get a dis-

charge before he can be compelled to pay, that requirement

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is not satisfied if he is merely told that in the normal

course he is not likely to be exposed to action by the

creditor.

That this distinction is not purely academical but.

1142

is of practical importance will be seen, when regard is had

to the provisions of the Industrial Disputes Act. Under

that Act, there is no period of limitation prescribed for

referring a dispute for adjudication by a tribunal. Even

when a claim for wages falls within the purview of the Wages

Act and an application under 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

the Federal Court in Shamnagore Jute Factory Co. Ld. v. S.

M. Modak (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. Seervai 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) [1949] F.C.R. 365.

1143

become void. Section 56 of the Contract Act embodies the

law relating to frustration of contracts, and the true scope

of that section was considered by this Court in Satyabrata

Ghose v. Mugneeram Bangur and Co.

The position was thus stated by Mukherjea J.:

" In the large majority of cases however the doctrine of

frustration is applied not on the ground that the parties

themselves agreed to an implied term which operated to

release them from the performance of the contract. The

relief is given by the court on the ground of subsequent

impossibility when it finds that the whole purpose or basis

of a contract was frustrated by the intrusion or occurrence

of an unexpected event or change of circumstances which was

beyond what was contemplated by the parties at the time when

they entered into the agreement. Here there is no question

of finding out an implied term agreed to by the parties

embodying a provision for discharge, because the parties did

not think about the matter at all nor could possibly have

any intention regarding it. When such an event or change of

circumstances occurs which is so fundamental as to be

regarded by law as striking at the root of the contract as a

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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.

1144

that the Legislature would have intervened and required the

employer to pay the arrears of wages to the Board, and that

that is a supervening impossibility which brings 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 Board 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 The State of Bihar v. Maharajadhiraja

1145

Sir Kameshwar Singh of Darbhanga (supra) at pages 942, 960-

961 and 1015 to 1018. Now, as the Act takes over the rights

of the employees in respect of wages due to them even when

they are not barred without making any provision for

compensation of the same to them, it must at least to that

extent be held to be unconstitutional, whether as

contravening Art. 19 (1) (f) or Art. 31 (2) it is

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unnecessary to decide.

It is then argued that this is an objection open only to

the employees, and that the appellant can make no grievance

of it. It is no doubt true that a question as to the

constitutionality of a statute can be raised only by a

person who is aggrieved by it; but here, the statute deals

with rights arising out of contract, and that presupposes

the existence of at least two parties with mutual rights and

obligations, and it is difficult to see how when the rights

of one party to it are interfered with, those of the other

can remain unaffected by it. Let us assume that the

appellant makes a payment to the Board under 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 Board. The

fact is that a statute which operates on a contract must

affect the rights of all the parties to the contract, and if

it is bad as regards one of them, it should be held to be

bad as regards the others as well. It is unnecessary to

pursue this question further, as we have held that the Act

is unconstitutional even as regards the appellant.

It remains to deal with the contention of the res-

pondents that the impugned legislation is, in substance, one

in respect of abandoned property, and that, by its very

nature, it cannot be held to violate the rights of any

person either under 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

1146

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 State becomes the owner of the properties of a person

who dies intestate as his ultimate heir, it merely takes

possession of property which is abandoned. At -common law,

abandoned personal property could not be the subject of

escheat. It could only be appropriated by the Sovereign as

bona vacantia. Vide Holdsworth's History of English Law,

Second Edition, Vol. 7, pages 495-496. In Connecticut

Mutual Life Insurance Company v. Moore(1), the principle

behind the law was stated to be that " the State may, more

properly, be custodian and beneficiary of abandoned property

than any other person." Consistently with the principle

stated above, a law relating to abandoned property enacts

firstly provisions for the State conserving and safeguarding

for the benefit of the true owners property in respect of

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which no claim is made for a specified and reasonable

period, and secondly, for those properties vesting in the

State absolutely when no claim is made with reference

thereto by the true owners within a time limited.

There has been quite a number of laws on abandoned

property in the American States, and their validity

(I) 333 U.S. 541, 546; (1947) 92 L.Ed. 863, 869.

1147

has been the subject of numerous decisions in the Supreme

Court of United States. In Anderson National Bank v.

Luckett (1), the law related to Bank deposits. It provided

that if moneys in deposit had not been demanded or operated

on, for a period of 10 years in the case of demand deposits

and 25 years in the case of non-demand deposits, they might

be presumed to have been abandoned and the Banks -were to

transfer them to the State. Claims to the deposits might be

made to the Commissioner of Revenue, who was to determine on

their validity, his decision being open to review by the

Courts. The validity of this law was questioned on the

ground that sufficient opportunity had not been given to the

depositors to claim the deposits, and that as they could

attack the law as unconstitutional, the Bank got no

protection by payment to the State. In repelling this

contention, the Supreme Court observed that the Act did not

deprive the depositors of any of their rights, they being

given ample opportunity to establish their rights, and that

it merely substituted the State in the place of the Bank as

their debtor. The Court also held that it was " within the

Constitutional power of the State to protect the interests

of depositors from the risks which attend long neglected

accounts, by taking them into custody when they have been

inactive so long as to be presumptively abandoned ". In

Connecticut Mutual Life Insurance Co. v. Moore (supra), the

law was with reference to moneys payable on life insurance

policies, which had matured. It provided that if those

amounts had remained unclaimed for a period of seven years,

then it had to be advertised by the companies in the manner

provided therein, and if no claims were preferred

thereafter, the amounts were to be paid to the State

Comptroller for care and custody. In holding that the law

was valid, the Court observed :

" There is ample provision for notice to beneficiaries

and for administrative and judicial hearing of their claims

and payment of same. There is no possible injury to any

beneficiary."

(1) 321 U.S. 233, 241; (1943) 88 L Ed. 692, 701 146

1148

In Standard Oil Company v. New Jersey (1), the law related

to shares and unpaid dividends, and provided for the State

taking them over, if they remained unclaimed for a period of

14 years. There was a provision for notice to the unknown

owners by advertisement. It was held following Connecticut

Mutual Life Insurance Company v. Moore (supra) that the law

was valid.

In the light of the above discussion, there cannot be

any reasonable doubt that the impugned Act cannot be

regarded as one relating to abandoned property. The period

of three years mentioned in 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

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there is no provision made in the Act for investigating the

claims of the employees or for payment of the amounts due to

them, if they established their claims. The purpose of a

legislation with respect to abandoned property being, in the

first instance, to safeguard the property for the benefit of

the true owner and the State taking it over only in the

absence of such claims, a law which vests the property

absolutely in the State without regard to the claims of the

true owners cannot be considered as one relating to

abandoned property. This contention of the respondents must

also be rejected.

In the result, we are of opinion that 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 Board 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,

1149

different from what it is as regards unpaid accumulations.

Section 8 of the Wages Act deals with the question of fines

which could be imposed by the employer, and it provides that

they should be entered in a separate register, and applied

for the benefit of his employees. It is not denied by the

appellant that under this provision the fines are

constituted a trust' fund, and that the employers are bare

trustees in respect of such fund. Now, the grievance of the

appellant is that the Act deprives it of its rights as

trustees, and vests them in the Board, and that, further,

while the beneficiaries under 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 The State of West Bengal

v. Subodh Gopal Bose and Dwarkadas Shrinivas of Bombay v.

The Sholapur Spinning and Weaving Co. Ltd. (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 Legislature, which gave the employees certain rights

which they did not have before, and what it can give, it can

also take away or modify, and we do not see how the

employers are aggrieved by it. We are of opinion that no

valid grounds exist on which 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 Court below, that the provisions of the impugned Act are

unconstitutional and void in so far as they relate to "

unpaid accumulations", but that they are valid as regards "

fines "; and an appropriate writ will

1150

issue against the respondents in the terms stated above.

The appeal succeeds in part, but as it is stated that "

unpaid accumulations " form by far the most substantial

portion of the claim, we direct the respondents to pay half

the costs of the appellant here and in the Court below.

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Appeal allowed in part.