S.H. Sheth, J.
1. This group of 52 appeals arises out of as many suits filed in the City Civil Court, Ahmedabad. They were filed by shareholders of corporate employers in which they challenged the vires of Sections 3 and 6A of the Bombay Labour Welfare Fund Act, 1953 and Rules 3 and 4 of the Labour Welfare Fund (Gujarat) Rules, 1962. They contended that the aforesaid provisions were ultra vires Article 19(1)(f) and Article 31(2) of the Constitution of India. Some of the suits were instituted in 1975 and others were instituted in 1976. No evidence was led in the suits. They were decided on the basis of legal arguments advanced before the learned trial Judge. On 2nd September 1978, they were decided by the learned trial Judge by a common judgment. He turned down the contentions raised by the plaintiffs and dismissed the suits. Decrees passed by him in all the suits are challenged by the plaintiffs in these appeals.
2.Before we enter upon the examination of the contentions raised by the plaintiffs before us, it is necessary to set out the history of the litigation relating to the impugned provisions. The Bombay Labour Welfare Fund Act, 1953 (hereinafter referred to as 'the Labour Welfare Act' for the sake of brevity) was enacted by Bombay Legislture in 1953. Section 3 as it was then was challenged in a group of writ petitions before the High Court of Bombay on the ground that it was ultra vires Article 31(2). Section 3 as it was then read as follows:
(1). There shall be constituted a fund called the Bombay Labour Welfare Fund and, notwithstanding anything contained in any other law for the time being in force, the sums specified in Sub-section (2) shall be 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 8.
(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) Provided: '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 Section 7 provided as follows:
Without prejudice to the generality of Sub-section (1) the moneys in the Fund may be utilised 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 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.
Sub-section (10) of Section 2 defined the expression 'Unpaid accumulations' in the following terms:
'Unpaid accumulations' means 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....
3. The writ petitions were heard by Chagla C.J. and Tendolkar J. who dismissed them by their order dated 14th September 1953. The reasons which weighed with the learned Judges were as follows. When the State acquires the property of a private citizen for a public purpose, it does so in the exercise of the right which it has by reason of the principle of eminent domain. Therefore, in the context of Article 31(2) under which challenge was raised to Section 3, the learned Judges observed that they must be first satisfied that the legislation which they were considering acquired or took possession of the property belonging to the petitioner. They further observed that, on analysis of the impugned legislation, the substance thereof was that the State directed the petitioner who was the debtor of his employees to pay to the State the debt due instead of paying it to his creditors. Therefore, in the opinion of the learned Judges, no property of the petitioner was involved in the impugned legislation and all that the law did was to substitute one creditor in place of another. They were of the opinion that the impugned legislation did not fall under Article 31(2). However, in the alternative, they observed that if the case fell under Article 31(2), there could be no doubt that the petitioner must succeed because obviously no compensation was provided for acquisition or taking possession of the property of the petitioner. However, since the case did not fall under Article 31(2), the question of considering the challenge under the provision did not arise. The learned Judges also felt inclined to consider, whether, apart from Article 31(2), the State Legislature was competent to enact the impugned legislation and whether it contravened any fundamental right other than one specified in Article 31(2).
4. Now, the legislative competence of the State Legislature to enact the impugned provision was not challenged. They also did not consider the question whether any right of the petitioner other than one specified in Article 31(2) was violated because the petitioner had not raised any such challenge. On analysis of the impugned provisions, the learned Chief Justice observed that all that the Legislature had done was to substitute one creditor in place of another and that when one remembered that the moneys were to be paid into a Fund which was going to be administered for the welfare of labour and for most laudable objects, it was impossible to urge that the restriction placed by the Legislature upon the right of the employer (if he had any right in that case) under Article 19(1)(f) was not a reasonable restriction. Mr. Justice Tendolkar who delivered a concurring judgment expressed the view that all that the impugned provision did was to direct the employer to pay into the Fund the moneys which belonged to the empolyers. In the opinion of the learned Judge, to that extent, the employers were deprived of their moneys. However, in the opinion of the learned Judge, it was not a case of taking possession or acquisition of property at all. Analysing the concept of 'taking of possession', the learned Judge observed that it implied transfer of beneficial interest and that no beneficial interest in those moneys was sought to be transferred to the State. All that was sought to be done was that the Fund would be utilized for the welfare of the very class of people who were the original creditors of the employer and to whom the amount was admittedly due. He, therefore, expressed the view that it was not a case of 'taking possession' or 'acquisition of property' under Article 31(1) and that such a deprivation could be done under the authority of law. The impugned Act, according to him, supplied that authority. It is clear, therefore, that the High Court of Bombay turned down the challenge under Article 31(2) on the ground that 'money' was not the property and also observed that the 'deprivation of moneys' did not offend Article 19(1)(f) because the purpose for which the State wanted to utilize them constituted a reasonable restriction. It may also be noted that the learned judges assumed that unpaid accumulations constituted a 'debt' due by the employer to his employees. It appears that the question as to how the dispute, if any, which an employer might raise by contending that they were not the accumulations due to his employees would be decided was not raised before them. This decision of the High Court of Bombay is reported in Bombay Dyeing and . v. The State of Bombay 60 Bom. L.R. 731 (S.C.). The judgment of the High Court of Bombay, we may add, is reported along with the decision of the Supreme Court in the reporter referred to above.
5. The petitioner in that case was given certificate under Article 132 to appeal to the Supreme Court against that decision. On 20th December 1957, the Supreme Court decided the appeal and struck down Section 3 partly. The decision of the Supreme Court has been published in the same report along with the judgment of the High Court of Bombay. It has also been reported in Bombay and Ors. AIR 1958 S.C. 328. The Supreme Court, inter alia, held that Articles 31(1) and 31(2) were not mutually exclusive and that transfer of title to the State was not an essential requisite of acquisition under Article 31(2). It was further held that deprivation of property and substantial abridgement of the rights of the owner fell within Article 31(2) and that the law which produced those results must, in order to be valid, and that the law which produced those results must, in order to be valid, satisfy the conditions laid down in that Article. It was next observed that Article 31(1) and Article 31(2) covered the same ground and that substantial interference with right to property fell within the operation of Article 31(2). Having so laid down in regard to the width and amplitude of Clauses (1) and (2) of Article 31, the Supreme Court held that Sub-section (1) of Section 3 in so far as it related to payment of 'unpaid accumulation' to the Board specified in Section 3(2)(b) infringed Article 31(2) because it deprived an employer of his moneys without paying him any compensation. The question whether the acquisition contemplated by Clause (2) of Article 31 was not confined to cases of transfer of ownership to the State and that even deprivation of the property would fall within it was left unexamined. It was further observed in that decision that even if it was assumed that Sub-section (1) of Section 3 was not within the prohibition enacted by Clause (2) of Article 31, because it operated only on money and money was not the property for the purposes of that Article, the protection against the deprivation of money could be sought in Article 19(1)(f) because the word 'property' used therein had a wider connotation than it had in Article 31(2). Article 19(1)(f) embraced within its sweep 'money'. It was held that Section 3(1) in so far as it related to Section 3(2)(b) was not saved by Article 19(5) and that therefore, it contravened Article 19(1)(f). It was next held that Section 3(1) in so far as it related to Section 3(2)(b) did not relate to 'abandoned property'. If it related to 'abandoned property', it, by its very nature, could not be held to violate the rights of any person either under Article 19(1)(f) or Article 31(2) because only a person who had some interest in the property could complain that the impugned legislation invaded his right, whether under Article 19(1)(f) or Article 31(2) In 'abandoned property', exhypothesi no one had any interest. The Supreme Court further observed that the Labour Welfare Act could not be regarded as one relating to 'abandoned property'. A legislation with respect to 'abandoned property must, in the first instance, safeguard the property for the benefit of its true owner and the State could take it over only in absence of any claim to it. Sub-section (1) of Section 3 in its relation to Section 3(2)(a) was held to be valid. The observation made by the High Court of Bombay that the Act merely provided for a substitution of creditors was turned down by the Supreme Court because when an employee did his work, the wages earned by him became a 'debt' due to him from his employer. They could be assigned under law. However, if the employee had assigned the 'debt' to the Board constituted under the Act, the latter would be entitled to recover it from the employer. What could be done by an act of parties could also be done by a legislation. The Supreme Court, therefore, proceeded to examine the question whether, under the provisions of the impugned statute, it could be held that there was a statutory transfer of wages earned by the workmen to the Board. It was contended that the Act made no provision for transfer of 'debt' to the Board and that there was only a provision for the payment of the amounts. The Supreme Court in that context observed that that contention canvassed only a narrow view of the true scope of the impugned provisions. Looking at the substance of the matter, the Supreme Court was of the opinion that Section 3(1) did operate to transfer the debts due to the employees to the Board. The question as to who could make a grievance against the impugned legislation was also raised before the Supreme Court. In that context, it was observed that a question as to the constitutionality of a statute could be raised only by a person who was aggrieved by it. The impugned statute dealt with rights arising out of contract which presupposed at least the existence of two parties with mutual rights and obligations. It was, therefore, difficult, the Supreme Court observed further, to see how, when the rights of one party to a contract were interfered with, those of the other could remain unaffected by it. One the provisions of the Labour Welfare Act as they then stood, the supreme Court felt that even if an employer made payment to the Board under Section 3(1) on the footing that the law was not unconstitutional as against him, there was nothing which prevented an employee from suing his employer to recover the same amount on the ground that the Act was unconstitutional. That the employer had already paid the amount to the Board in pursuance of the provisions of the statute could not furnish any answer to the claim made by an employee. Therefore, the Supreme Court observed that the fact that a statute which operated on a contract must affect all the rights of the parties to a contract and that if it was bad as regards one of them, it should be held to be bad regards others as well. However, that question was not further pursued by the Supreme Court because the Labour Welfare Act was held unconstitutional even as regards the employers (paragraph 28 of the report.).
6. After the Supreme Court declared Section 3(1) in so far as it related to Section 3(2)(b) unconstitutional, Gujarat Legislature enacted. The Bombay Labour Welfare Fund (Gujarat Extension and Amendment) Act, 1961, which came into force on 1st July 1962. It, inter alia, made amendments to the preamble and the long title to the Act. It also amended Section 2(10) and Section 3 and inserted Section 6A. Sub-section (10) of Section 2 was amended by adding to it certain words. The amended Sub-section (10) of Section 2 reads as follows:
'Unpaid accumulations' means 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 but not including the amount of contribution, if any, paid by an employer to a provident fund established under the Employees' Provident Funds Act, 1952.
The words commencing from 'but not including...' and ending with 'Employees' Provident Funds Act, 1952' were inserted by Gujarat Act 47 of 1961. The amendment made to Section 3 by Gujarat Act 47 of 1971 inserted Sub-section (4) and modified Sub-section (1) of Section 3. Sub-section (4) provides as follows:
Notwithstanding anything contained in any other law for the time being in force or any contract or instrument, all unpaid accumulations shall be collected by such agencies and in such manner as may be prescribed and be paid in the first instance to the Board which shall keep a separate account therefore until claims thereto have been decided in the manner provided in Section 6A.
Sub-section (1) of Section 3 as amended by Gujarat Act 47 of 1961 reads as follows:
The State Government shall constitute a fund called the Labour Welfare Fund and notwithstanding anything contained in any other law for the time being the force, the sums specified in Sub-section (2) shall, subject to the provisions of Sub-section (4) and Section 6A be paid into the Fund.
It may be noted at this stage that the Act was further amended by Gujarat Act 29 of 1973. We are not concerned in this case with the validity or otherwise of the amendments made by Gujarat Act 29 of 1973. In order to remove the constitutional vice which the Supreme Court had discovered in Section 3(1) in so far as it related to Section 3(2)(b), the Gujarat Legislature by Gujarat Act 47 of 1961 inserted Section 6A. It reads as under:
6A. (1) All unpaid accumulations shall be deemed to be abandoned property.
(2) Any unpaid accumulations paid to the Board in accordance with the provisions of Section 3 shall, on such payment, discharge an employer of the liability to make payment to an employee in respect thereof, but to the extent only of the amount paid to the Board; and the liability to make payment to the employee to the extent aforesaid shall, subject to the succeeding provisions of this section, be deemed to be transferred to the Board.
(3) As soon as possible after any unpaid accumulation is paid to the Board under sub-section (4) of Section 3 the Board shall by a public notice call upon interested employees to submit to the Board their claims for any payment due to them.
(4) Such public notice shall contain such particulars as may be prescribed and it shall be.
(a) affixed on the notice board, or in its absence on a conspicuous part of the premises, of each establishment in which the unpaid accumulations were earned;
(b) published in the Official Gazette, and
(c) published in any two newspapers in the language commonly understood in the area in which such establishment is situated, and circulating therein or in such other manner as may be prescribed, regard being had to the amount of claim.
(5) After the notice is first affixed and published under Sub-section (4) it shall be again affixed and published from time to time for a period of three years from the date on which it was first affixed and published, in the manner provided in that sub-section in the months of June and December each year.
(6) A certificate of the Board to the effect that the provisions of Sub-sections (4) and (5) were complied with shall be conclusive evidence thereof.
(7) Any claim received, whether in answer to the notices or otherwise within a period of four years from the date of the first publication of the notice in respect of such claim, shall be transferred by the Board to the Authority appointed under
Section 15 of the Payment of Wages Act, 1936, having jurisdiction in the aria in which the factory or establishment is situated and the Authority shall proceed to adjudicate upon, and decide such claim. In hearing such claim, the Authority shall have the powers conferred by, and shall follow the procedure (in se far as it is applicable) followed in giving effect to the provisions of that Act.
(8) If in deciding any claim under Sub-section (7), the Authority allows the whole or part of such claim, it shall declare that the unpaid accumulation in relation to which the claim is made shall, to the extent to which the claim is allowed, cease to be abandoned property and shall order the Board to pay to the claimant the amount of the claim as allowed by it; and the Board shall make payment accordingly: Provided that the Board shall not be liable to pay any sum in excess of that paid under Sub-section (4) of Section 3 to the Board as unpaid accumulations in respect of the claim.
(9) An appeal shall lie in the City of Ahmedabad to the Court of Small Causes and elsewhere to the District Court against a decision under Sub-section (7) rejecting any claim or part thereof, if made within a period of sixty days from the date of such decision.
(10) The board shall comply with any order made in appeal.
(11) The decision of the Authority, subject to an appeal as aforesaid, and the decision in appeal of the Court of Small Causes, or as the case may be, the District Court, shall be final and conclusive as to the right to receive payment, the liability of the Board to pay and also as to the amount, if any.
(12) If no claim is made within the time specified in Sub-section (7) or a claim or part thereof has been rejected under the foregoing provisions then the unpaid accumulations in respect of such claim shall accure to and vest in the State as bona vacantia and shall thereafter without further assurance be deemed to be transferred to, and form part of, the Fund.
Thereafter, by Gujarat Act. 8 of 1963, Sub-section (13) was added to Section 6A. It provides as follows:
(13). Nothing in the foregoing provisions of this section shall apply to unpaid accumulations not already paid to the Board.
(a) in respect of which no separate accounts have been maintained so that the unpaid claims of employees are not traceable, or
(b) which are proved to have been spent before the sixth day of December 1961 and accordingly such unpaid accumulations shall not be liable to be collected and paid under Sub-section (4) of Section 3.
Section 2 of the Amending Act by which Sub-section (13) was inserted in Section 6A expressly made Sub-section (13) retrospective with effect from the date on which the labour Welfare Act came into force.
7. It is necessary to refer at this stage to Section 13 of the Gujarat Act 47 of 1961 which amended the Labour Welfare Act. It provides as follows:
The amendments made in the principal Act by Section 2(b), 6 and 9 of this Act shall be deemed always to have been made in the principal Act.
Section 2(b) of the Amending Act amended the long title of the preamble. Section 6 of the Amending Act amended Section 3(1) and inserted Sub-section (4) in Section 3. Sub-section (1) of Section 3 and the provisions of Sub-section (4) of Section 3 were given retrospective effect from the dale on which the Labour Welfare Fund came into force. By Section 9 of the Amending Act, Section 6A was inserted.
8. On 2nd August 1962, the Welfare Commissioner appointed under the Labour Welfare Act sent notice to the employers to pay up all unpaid accumulations which were classified by him into two parts; (1) all unpaid accumulations as found on 24th June 1953 and (2) unpaid accumulations during the period from 25th June 1953 to 31st June 1962. On 24th August 1962, the employers replied to the Welfare Commissioner. On 9th October 1962, Sub-sections (1), (2) and (4) of Section 3 and 6A were challenged by some of the employers in Special Civil Application No. 836 of 1962 (The Arvind Mills Ltd. v. The State of Gujarat and Ors. 7 GLR 156), which was instituted in this Court. On 19th, 20th and 21st July 1965, a Division Bench of this Court consisting of P.N. Bhagwati, J. (as he then was) and N.G. Shelat, J. decided it. Several contentions were raised before this Court. Except two, all were negatived by this Court. It was held against the employer that he unpaid accumulations as defined in Section 2(10) were regarded as abandoned property and that, therefore, the State was entitled to take them over by virtue of its prerogative right. Before it did so, it would take possession of the unpaid accumulations and give opportunity to the true owners to make their claims to them. If no claim was made within the specified period or if a claim was made but was rejected wholly or in part, the State could appropriate the unpaid accumulations to it. The unpaid accumulations did not become bona vacantia on the expiration of the specified period. They could not become bona vacantia unless an opportunity was given tot eh true owner to come forward to claim them and no claim was made or if the claim was made, it was rejected partly or wholly. It was further observed that what the Act provided in respect of unpaid accumulations was a transfer of debts or claims from the employer to the Board and that such a transfer was subject to the provisions of Sub-sections (3) to (13) of Section 6A. It was further observed in that decision that within the meaning of Section 2(10), the unpaid accumulations included not only such payments as were admittedly due to the employees but not made to them but they also included payments which were in fact due to the employees but which were not made to them for any reason whatever. Whether payments have not been made because the employees did not come forward to claim them or because the employer disputed them was not a matter of substance. The Labour Welfare Act was principally and primarily a legislation for welfare of labour. Unpaid accumulations was one of the several items which would go the make up the Fund. The unpaid accumulations in regard to which provision was made in the Labour Welfare Act were debts or claims due by the employer to the employees who had not claimed them for a period of three years. The impugned legislation merely tried to prevent unjust enrichment of the employer which would otherwise result from non-interference by the State, at least in those cases in which the employees would not come forward to claim the unpaid accumulations. Even if in these circumstances the unpaid accumulations were taken over by the State for the purpose of employing them for the benefit of labour generally, it could not be successfully contended that such a legislation was not incidental or ancillary to the true subjects of welfare of labour. It was, therefore, held that the impugned legislation, being an incidental and ancillary legislation, was within the legislative competence of State Legislature under Entry 24 in List III in seventh schedule to the Constitution. It is, therefore, clear that the challenge to the constitutional competence of the State Legislature to enact the impugned provision was turned down by this Court.
9. It was also contended that the Labour Welfare Act was extra-territorial in operation because some of the employees to whom the employers owed might have gone outside the State. This Court negatived that challenge on the ground that the employees had earned their wages within the State and that the situs of unpaid accumulations was within the State. These two facts constituted sufficient territorial nexus to entitle the state Legislature to make the impugned law. Such a legislation could not be regarded as extra-territorial in operation.
10. The next contention which was raised before this Court was that Section 6A of the Labour Welfare Act-a State legislation-was repugnant to Section 33C (2) of the Industrial Disputes Act, 1947-a Central legislation. This Court, on an analysis of the provisions of Section 6A of the Labour Welfare act and Section 33C (2) of the Industrial Disputes Act. Section 6A (2) of the Labour Welfare Act statutorily assigned to the Board the debt due from the employer. Therefore, the Board was the statutory assignee of the employee and that statutory assignment was subject to the provisions of Sub-section (3) to (13) of Section 6A, which, inter alia, provided as a condition of statutory assignment that the employee shall be entitled to recover the amount of his claim from the Board in the manner specified in those sub-sections. If further provided that if an employee failed to do so, his debt would be extinguished. To such cases, Section 33C (2) of the Industrial Disputes Act could not apply. Therefore, it was observed by this Court that there was no direct conflict between Section 6A of the Labour Welfare Act and Section 33C (2) of the Industrial Disputes Act. Whereas Section 33C (2) in terms enacted a remedy which could be pursued by an employee who wanted to enforce his claim against his employer, Section 6A provided remedy to the employee which he could enforce against the Board which was the statutory assignee of the employee in respect of his unpaid wages or other dues. Therefore, the aforesaid two pieces of legislation dealt with entirely distinct and separate matters and did not occupy the same field. Doctrine of repugnancy, therefore, as held by this Court, did not apply.
10A. So far as challenge under Article 31(2) was concerned, it was observed by this Court that the relevant provisions of the Labour Welfare Act brought about a statutory novatio which could not be regarded as a compulsory acquisition of money belonging to the employer. If the State Legislature made a provision under which money was taken from the debtor in discharge of the debt owed by him, such a statutory provision could not be regarded as a law for compulsory acquisition of money. Therefore, the employer could not complain of any violation of his fundamental rights under Article 31(2) because what was taken away from him was money belonging to him and that money was not the property for the purpose of Article 31(2). It was further held by this Court that the impugned provisions could not be regarded as violative of the fundamental rights of the employees under Article 31(2) because what was taken away from them as a result of the operation of the impugned provisions were their actionable claims and that the actionable claims did not come within the prohibition of Article 31(2) of the Constitution.
11. It was next contended before this Court in that case that, except for the provisions of the Labour Welfare Act, an employee could enforce his debt against his employer without any limitation of time. As a result of the operation of the impugned provisions, he could make a claim before the Board only within a period of four years from the date of the first publication of notice under Section 6A (3). If he failed to do so, his debt would be extinguished. Answering the contention, this Court held that the effect of the impugned provisions on the right of the employee was not only to introduce the period of limitation but also to extinguish the right on the expiration of such period of limitation. However, it was not an unreasonable restriction under Article 19(5) because even total prohibition and extinction were included within the connotation of the expression 'restriction' contemplated by Clause (5) of Article 19. Therefore, in the opinion of this Court, the impugned provisions merely imposed a reasonable restriction on the fundamental right of the employee to acquire, hold and dispose of his debt under Article 19(1)(f).
12. A law which recognises the debt of an employee and provides for its payment but insists on the proof of the debt before a judicial authority before it is paid to him cannot, it was held by this Court, be regarded as unreasonable. The retrospective operation given to a statute is indeed a relevant factor but it does not per se make the restrictive provisions of the statute unreasonable.
13. It was also contended in the name of the employees that the notice provided by the impugned provisions for inviting claims from the employees was inadequate and unreasonable inasmuch as the impugned provisions only provided for a public notice and not a personal notice to the employees even though the permanent addresses of the employees might be known to the Board. It was also contended that the impugned provisions were unconstitutional inasmuch as they imposed an unreasonable restriction on the fundamental right of an employee under Article 19(1)(f) because a public notice to workmen who are generally illiterate, migratory and drawn from outside the State is no notice at all. Answering this contention, this Court held that the public notice provided by Section 6A was merely a pretence or an eye-wash because it would not ordinarily reach the employees and that under such circumstances the debts of the employees would be lost very often without their knowing that the debts were due to them and that they were entitled to claim them. It was next observed by this Court that it was unreasonable to regard that a property was an 'abandoned property' merely because it was not claimed within a period of three years. Such a period of time, in the opinion of this Court, could not be regarded as adequate for the purpose of raising such a presumption in regard to unpaid accumulations. Therefore, on the grounds that public notice to workmen was not an adequate notice and that, on the expiry of the period of three years, unpaid accumulations could not be regarded as 'abandoned property', this Court held that the impugned provisions violated the fundamental right of the employees under Article 19(1)(f) and were, therefore, void.
14. So far as the right of the employer under Article 19(1)(f) was concerned, it was observed by this Court that, under the impugned provisions, even if the claim of an employee was rejected on merits and after it was found that there was no debt or claim due to the employee, the amount found that there was no debt or claim due to the employee, the amount paid to the Board in respect of such claims was not required to be returned to the employer but it became vested in the State. In the opinion of this Court, it clearly amounted to deprivation of the employer's moneys without payment of compensation. It was further observed that under Section 3(4), it was the Welfare Commissioner who was given the power to determine what were unpaid accumulations after making such enquiry as he deemed fit. According to this Court, it only amounted to an exparte subjective determination of the Welfare Commissioner which would not be liable to be tested in appeal. The result would be that the employer would be clearly deprived of his moneys on an exparte subjective determination by the Welfare Commissioner. Therefore, this Court held that the impugned provisions clearly imposed unreasonable restriction on the fundamental right of the employees under Article 19(1)(f) and were, therefore, void.
15. This Court upheld the challenge raised by the employer under Article 14 and declared the impugned provisions void. In that behalf, it was observed by this Court that there was no rational basis or classification between a factory and an establishment carrying on other business or trade for the purpose of the applicability of the Act. The introduction of an establishment carrying on a tramway or motor omnibus service within the definition made it impossible to find a rational principle under-laying the classification which has any relation to the object of the Act. This Court also found hostile discrimination under Article 14 between Government factories and Government establishments other than factories. Whereas Government factories fell within the definition of the 'establishment' as given in Sub-section (4) of Section 2, the Government establishments other than factories did not fall within the definition. It was observed by this Court that if there were establishments of the Government, however few they might be, they could not be excluded on any valid principle of classification having regard to the consideration underlying the enactment of the impugned legislation once Government factories were included. Therefore, the conclusion which this Court recorded was that the discrimination was writ large in the definition of 'establishment' and that since the definition permeated through every part of the provision and was an integral part thereof, the impugned provisions were violative of Article 14 and they were, therefore, declared void.
16. The petitioner in that ease was an employer company or a corporate employer. It was not a citizen employer. The maintainability of the petitioner was, therefore, challenged on the ground that a corporate employer-not being a citizen-could not complain of violation of fundamental rights. Answering that contention in favour of the petitioner, this Court observed that if the impugned provisions infringed the fundamental right of the citizen employers under Article 19(1)(f), so much of the impugned provisions as contravened that fundamental right would be void. However, it would not be correct to say that they would be void only so far as citizen employers were concerned and that they would have life and force in so far as non-citizen employers were concerned. The effect of taking such a view would certainly be that even non-citizen employers would be entitled to contend that the impugned provisions would be void through they have no fundamental right under Article 19(1)(f). However, such a result was brought about not by the interpretation of Article 13(2) but by reason of the fact that the Legislature whilst enacting the impugned legislation had chosen to make it generally applicable to citizens and non-citizens alike.
17. It may be noted that the constitutional challenge raised by a non-citizen employer was upheld by this Court on the ground that it violated Article 14 and that it also violated Article 19(1)(f). Since the impugned provisions were made applicable to citizens as well as to non-citizens, even a non-citizen could successfully raise a challenge under Article 19(1)(f). Therefore, in the view which this Court took, it struck down the impugned provisions.
18. This decision was challenged in the Supreme Court by the State of gujarat. The decision of the Supreme Court is reported in State of Gujarat and Anr. etc. v. Shri Ambica Mills Limited, Ahmedabad, etc. : 3SCR760 . The Supreme Court reversed the fining recorded by this Court under Article 14 and held that the impugned provisions were not discriminatory. It is not necessary for the purpose of this case to analyse in details the reasons which weighed with the Supreme Court in recording that conclusion. So far as the finding under Article 19(1)(f) was concerned, though the Supreme Court meticulously analysed the impugned provisions, it held that the writ petitions filed by corporate employers or non-citizen employers were not maintainable because they did not have any fundamental right under Article 19(1)(f). Therefore, the Supreme Court after having reversed the two findings recorded by this Court in favour of the employers dismissed the petitions. The Supreme Court did not record any final conclusion in regard to the infringement of the fundamental right of citizen employers because no citizen employer had filed any petition.
19. Since the Supreme Court refrained from recording any final conclusion in regard to the alleged violation of fundamental rights of citizen-employers, shareholders of corporate employers as citizens enjoying fundamental rights under the Constitution filed the present suits in the City Civil Court at Ahmedabad and invoked the provisions of Order 1, Rule 8 of the Code of Civil Procedure. In these suits, they challenged the constitutional validity of Section 3 (as amended by Gujarat Act 47 of 1961) and Section 6A of the Labour Welfare Act and Rules 3 and 4 of the Labour Welfare Fund (Gujarat) Rules, 1962, on the ground that they contravened their fundamental rights under Article 19(1)(f) and Article 31. It was, inter alia, contended before the learned trial Judge that the decision of this Court in Arvind Mills' case (supra) was impliedly overruled in so far as it related to the violation of the fundamental rights of the citizen-employers by the decisions of the Supreme Court in appeal which arose from that case. The learned trial Judge held that the decision of this Court in Arvind Mills' case (supra) was impliedly overruled by the Supreme Court. He, therefore, examined the constitutional challenge de novo and recorded the conclusion that the impugned provisions did not offend Article 19(1)(f) and Article 31. He, thereupon, dismissed all the suits.
20. The plaintiffs having been aggrieved by the decrees passed by the learned trial Judge have filed these appeals. Before we proceed to examine the contentions raised by Mr. I.M. Nanavaty, it si necessary to note that he has expressly given up the constitutional challenge raised by the plaintiffs to Section 6A (13) of the Labour Welfare Act.
21. The first contention which is required to be examined immediately is whether the decision of this Court in Arvind Mills' (supra) has been impliedly overruled by the Supreme Court in so far as it relates to the fundamental rights of citizen-employers. This question has arisen in the following context. The earlier writ petition was filed in this Court by a corporate employer. Even though the corporate employer did not have any fundamental right and, therefore, could not complain of its breach, this Court allowed the petition because the fundamental right conferred upon the citizen employers under Article 19(1)(f) and Article 31(2) was violated. In the opinion of this Court, if a fundamental right conferred upon a citizen by the Constitution was violated by the impugned provisions, it would not be correct to say that it would be void only as regards citizen employers and would have life and force as regards non-citizen employers. We have summarized the decision of this Court in extenso in the foregoing parts of this judgment. To recapitulate, Article 19(1)(f) was violated because the determination of unpaid accumulations which an employer was called upon to part with was left to the exparte subjective satisfaction if the Welfare Commissioner. In other words, the Labour Welfare Act provided no machinery to determine what would be the unpaid accumulations which an employer owed to his employees in case the employer raised a dispute in that behalf. It was ultra vires Article 31(2) because the unpaid accumulations in regard to which an employer disputed his liability to pay would remain the property of the employer and he could not he deprived of them without paying compensation to him. Now, when this decision was challenged in appeal before the Supreme Court, the Supreme Court in terms held that the impugned provision violating the fundamental right of a citizen would be void as regards the citizen employers only but that it would be so as regards those who did not have the fundamental rights. In other words, if a law is otherwise good and does not contravene any of the fundamental rights of non-citizens, the non-citizens cannot take advantage of the voidness of the law as against the fundamental right of the citizen employer and claim that there is no law at all. Therefore, the Supreme Court reversed the decision of this Court and dismissed the writ petition, not because no fundamental right of a citizen employer was violated, but because no writ petition was filed by a citizen-employer, who could invoke his fundamental right against the impugned provision. In other words, what was regarded by this Court as inseverable was regarded by the Supreme Court as severable. It is not wholly true to say that the Supreme Court has not expressed any opinion on the violation of the rights of citizen-employers by the impugned provisions. The Supreme Court has made certain observations. They were made not for the purpose of deciding the appeal but because the scheme of the impugned provisions was examined in order to decide the maintainability of the writ petitions. Under these circumstances, can it be said that what was not expressly reversed by the Supreme Court was impliedly overruled? Whereas Mr. Nanavaty has contended that it has not been impliedly overruled, the learned Government Pleader has contended that it has been impliedly overruled.
22. In support of his argument, Mr. Nanavaty has invited our attention to the decision of this Court in Shri Prithvi Cotton Molls Ltd v. Broach Borough Municipality and Ors. AIR 1968 Gujarat 124. The facts in that case were as follows. Broach Borough Municipality was governed by Bombay Municipal Boroughs Act, 1925, until 31st December 1964. It was replaced by Gujarat Municipalities Act, 1963, which came into force on 1st January 1965. The Municipality came to be governed by the new Act. It had earlier levied house-tax which was continued from time to time. It was permanently imposed under Section 73 of the Bombay Municipal Boroughs Act with effect from 1st April 1959. The Municipality for that purpose framed House Tax Rules under Section 58(j) of the Bombay Municipal Boroughs Act. The petitioner in that case owned lands and buildings which were situated within the limits of the Municipality. The house-tax was paid every year upon the presentation of the bill by the Municipality. Therefore, the Supreme Court decided the case of Patel Gordhandas Hargovindas and Ors. v. The Municipal Commissioner, Ahmedabad and Anr. : 2SCR608 . A tax designated as a rate imposed by the former Municipal Borough of Ahmedabad under Section 73 of Bombay Municipal Boroughs Act was challenged on two grounds. One of the grounds was that Ahmedabad Municipality had introduced a rate and that, therefore, the impost could be levied only on the annual letting value of the open land and not on its capital value. The Supreme Court upheld that contention by a majority judgment. Broach Borough Municipality had also levied house-tax on the basis of the capital value of the lands and buildings situated within its limits. The petitioner in that case came to know of the decision of the Supreme Court and entered into correspondence with Broach Borough Municipality. It was contended on its behalf that the house-tax imposed by Broach Borough Municipality was illegal and that the petitioner was under no obligation to pay the amount of house-tax claimed from him. The Broach Borough Municipality did not stay its hands and resorted to coercive machinery to recover the house-tax in that case. Therefore, the petitioner filed in that case Special Civil Application No. 846 of 1963. Therefore the Broach Municipality presented two sets of bills, one dated 11th September 1963 and another dated 1st August 1964. In respect of the self-same properties of the petitioner and certain other properties which had been constructed by the petitioner, a little more than a sum of Rs. 23,000/- was claimed from the petitioner in two sets of bills presented by the Municipality. They included the arrears, the petitioner resisted the claim on the same ground on which he had resisted the previous demand. The petitioner, therefore, filed a second petition-Special Civil Application No. 765 of 1964. Before the second petition was filed, the Gujarat State Legislature passed Gujarat Imposition of Taxes by Municipalities (Validation) Act, 1963, which came into force on 26th January 1964. By that Act, the State Legislature purported to validate the imposition, collection and recovery of taxes and rates, assessed inter alia, under the Bombay Municipal Boroughs Act and sought to confer authority on the Municipalities to collect and recover such taxes. After the two petitions were filed, Gujarat State Legislature passed Gujarat Municipalities Act which came into force on 1st January 1965. Section 99 of this Act was suitably amended to enable the Municipality to impose a tax on the capital value of the lands and buildings in order to enable the Municipalities to get over the decision of the Supreme Court in Gordhandus' case (supra). The Gujarat Municipalities Act repealed the Bombay Municipal Boroughs Act but incorporated a clause which saved the House Tax Rules and the tax imposed thereunder. Thereafter both the petitions were amended by the petitioner. By amendment, the petitioner challenged the validity of Gujarat Imposition of Taxes by Municipalities (Validation) Act, 1963, and the relative position under the Gujarat Municipalities Act which either purported to save the house-tax or to confer power on the Municipalities to get over the law pronounced by the Supreme Court in Gordhandas case (supra).
23. In Municipal Commissioner, The Municipal Corporation of the City of Ahmedabad v. Gordhandas Hargovandas Patel, 55 Bom. L.R. 1028, under Section 73 of the Bombay Municipal Boroughs Act, 1925, Ahmedabad Municipal Corporation had framed Rule 350A under which rate on open plots of land at a certain percentage was levied on 'the valuation based on capital.' It was, therefore, contended on behalf of the tax-player that the rate on the basis of which tax was levied amounted to a capital levy and that, therefore, Rule 350A was ultra vires. The Bombay High Court held that Rule 350A was ultra vires the powers of the Municipality. If further held that the tax levied by the Municipal Corporation on the open land was a tax falling under Entry 42 in List II of Schedule VII to the Government of India Act, 1935, and that it could not be treated as trespassing upon Entry 55 in List I of Schedule VII to the Government of India Act on the assumption that it amounted to a tax on the capital value of the assets. Therefore, it was held that the rule was not ultra vires. It was also contended that the state Legislature did not have legislative competence to enact the provision impugned in that case. That contention was negatived by Bombay High Court.
24. This decision of the High Court of Bombay was challenged by the tax-payer in appeal to the Supreme Court. By its decision (reported in Gordhandas' case (supra)), the Supreme Court reversed the decision of the High Court of Bombay. In the view of the majority, Rule 350A framed by the Municipal Corporation, Ahmedabad, for rating open lands read with rule 243 was ultra vires Sections 73 and 75 inasmuch as it permitted the fixation of rate at percentage of capital value of the lands and not on their annual value. Therefore, the assessment list prepared in that manner under Rule 350A was struck down as ultra vires the Act. The decision of the High Court of Bombay was reversed on the merits of the case. That part of the decision of the High Court of Bombay which upheld the legislative competence of the state Legislature was left untouched by the Supreme Court.
25. It was contended in the case of Prithvi Cotton Mills (supra) before this Court on behalf of the petitioner that the view expressed by the High Court of Bombay on the question of legislative competence of the State Legislature was impliedly overruled by the Supreme Court. It was otherwise contended on behalf of the respondents. This Court upheld the contention that since the Supreme Court had not expressed any opinion on the decision of the High Court of Bombay in so far as it upheld the legislative competence of the Provincial Legislature, that part of the decision of the High Court of Bombay was not overruled or displaced. It was also contended before this Court that when a decision of one Court is reversed in appeal by another Court, the decision of the appellate Court is substituted for the decision of the subordinate Court and that the decision of the subordinate Court which has been reversed has no legal existence. This Court turned down that contention. This Court laid down that it could not uphold the contention that the principle of substitution would apply to a part of the judgment solemnly pronounced by a Court and not overruled or reversed by the superior Court but kept expressly open. Therefore, as long as that part of the decision remained intact it was binding upon all Courts and tribunals which are subordinate or coordinate to the Court which recorded that decision. This Court also turned down the submission made on behalf of the petitioner that that part of the decision of the High Court of Bombay was robbed of its binding character.
26. Relying upon this decision, Mr. Nanavaty has argued that the decision of this Court in Arvind Mills' case (supra) in so far as it relates to the violation of the fundamental rights or citizen-employers in binding upon this Court. It is not necessary for us to express any opinion on this aspect of the case for two reasons, the first reason in this. This Court held that the impugned provision was ultra vires the fundamental rights of a citizen under Article 19(1)(f) and Article 14. However, so far as Article 19(1)(f) was concerned, it could not be void merely as regards the citizen-employers but it would be wholly void. That, according to this Court, was the interpretation to which Article 13(2) lent itself. It was on this assumption that this Court struck down at the instance of corporate-employers the impugned provisions. The Supreme Court in appeal found that it was an erroneous view. According to the Supreme Court, a single provision which is impugned under the Constitution can be ultra vires the fundament rights of a citizen and yet can be effective and can remain in force against non-citizens or corporate employers. Judging the value of the decision of this Court in Arvind Mills' case (supra) in light of this proposition laid down by the Supreme Court, it can be said without any fear of contradiction that the view which this Court expressed in regard to violation or infringement or the fundamental rights or citizen-employers was obiter dicta. In other words, on an erroneous assumptions this Court expressed a view and decided a contention which it was not necessary for it do decide in that case because no writ petition was filed by a citizen-employer. Therefore, we must partly uphold the contention raised by the leaned Government Pleader as hold that the view expressed by this Court in Arvind Mills' case (supra) in the matter of violation of the fundamental rights of a citizen-employer is not binding upon this Court which is a Court of co-ordinate jurisdiction because that view, in light of the decision of the Supreme Court in appeal, is obiter dicta.
27. However, an obiter dictum pronounced by this Court is also entitled to great respect though it does not have the binding value. In ordinary course, therefore, we would have, with great respect, examined the reasoning which led this Court to express the view which it did in the matter of violation of fundamental rights of a citizen-employer by the impugned provisions. However, it is not necessary for us in this case to do so because the question relating to violation of the fundamental rights of citizen-employers has been examined by the Supreme Court in the appeal which was carried to it from the decision of this Court in Arvind Mills' case (supra).
28. Now, so far as the view of the Supreme Court on this aspect is concerned, it is not conclusive, because, after having elaborately examined the contention, the Supreme Court has left it inconclusive which is borne out by the fact that paragraph 22 of the report opens with expression. 'Be that as it may' and then it is stated in paragraph 23 that the Supreme Court assumes that the impugned provisions abridge the fundamental rights of a citizen-employer and a citizen-employee under Article 19(1)(f) and proceeds to decide the question whether the impugned provisions are void as regards non-citizen employers or corporate employers under Article 13(2). Therefore, we must say that the observations made by the Supreme Court in Ambica Mills' case (supra) are also obiter dicta. But the obiter dicta expressed by the Supreme Court are binding upon this Court.
29. Let us now turn, therefore, to what the Supreme Court has stated on the subject. Unpaid accumulations represent the obligation of the employers to the employees and they are the property of the employees. What is treated as 'abandoned property' is the obligation to the employees owed by the employers. It is the property from the standpoint of employees. The scheme of legislation from a practical point of view disclosed that what was treated as 'abandoned property' was the money which the employees were entitled to get from the employers. What the Labour Welfare Board took over was the obligation of the employers to pay the amounts due to the employees in consideration of the moneys paid by the employers to the Board. The State after it took over the moneys became liable to make payment to the employees to the extent of the amount received. Whether the liability which the State assumed to the employees was an altogether new liability or an old liability of the employers was more a matter of academic interest than of practical consequence. When unpaid accumulations were paid by the employers to the Board, the liability of the employers to make payment tot he employees in respect of their claims was discharged to the extent of the amount paid to the Board. And, on the transfer of such liability to the Board, the debts or claims to that extent could not be enforced against the employers. The Supreme Court has further observed that if unpaid accumulations transferred tot he Labour Welfare Board under the Act were not claimed within the total period of seven years, the inactivity on the part of the employees would furnish adequate basis for the administration by the State of the unascertained claims or demands. It could not be said that the period of seven years allowed to the employees for the purpose of claiming unpaid accumulations was an unreasonably short period and that, therefore, it would result in infringement of any constitutional rights of the employees. The Supreme Court also could not think that the State would be, in fact, less able or less willing to pay the amounts to the employees after it had taken them over. It could not be assumed that the mere substitution of the State as the debtor would deprive the employees of their property or impose on them any uncostitutional burden. Unless an injury, actual or threatened, was shown, no constitutional argument could be raised against the taking over of unpaid accumulations by the State. Since the employers are the debtors of the employees, they can interpose no objection if the State is lawfully entitled to demand the payment because, in that case, payment of debt to the State under the statute releases the employers of their liability to the employees. The various modes of notice prescribed in Section 6A of the Labour Welfare Act were sufficient to give reasonable information to the employees within the State and outside it to come forward and demand the amount if they really wanted to do so. These observations made by the Supreme Court should really have concluded the question before this Court. We find from these observations that what now the employers regard as their property is really their liability and that the transfer of such liability from the employers to the Labour Welfare Board does not violate any fundamental right of theirs.
30. However, it has been argued by Mr. Nanavaty that a disputed debt which has not been adjudicated upon and which has not become the judgment-debt continues, in so far as the moneys are concerned, to be the property of the employers which the employers are entitled to use for their benefit. According to him, it is only the judgment-debt which creates the liability and brings about the cessation of the employers' interest in the moneys payable under such a judgment-debt. In this context, it has been further argued by him that since there is no machinery provided under the Act to adjudicate upon the disputed accumulations which have remained unpaid, what the Act seeks is to deprive the employers of their moneys before their liability to pay them to their employer is adjudicated upon. Relying upon a decision of the Supreme Court to which we shall presently refer, it has been argued by Mr. Nanavaty that the maximum that can be said against the employers in respect of disputed accumulations which have remained unpaid to their employees is that there is an outstanding credit-debt of the employers. According to him, such a credit-debt cannot be used as a weapon or instrument to deprive the employers of their moneys because a debtor is under no obligation to pay his debt to his creditor unless the debt has been adjudicated upon by a Court of law and decree has been passed in favour of the creditor. Though we feel that we are bound by the obiter dicta expressed by the Supreme Court in Ambica Mills' case (supra) in regard to the nature of unpaid accumulations we propose to answer this contention raised by Mr. Nanavaty in order to finally put an end tot he controversy so far as this Court is concerned.
31. The learned Government Pleader has contended that by Forty-Fourth Constitution Amendment, Article 19(1)(f) and Article 31 have been repealed and that, therefore, they cannot now be invoked for challenging the constitutional validity of the impugned provisions of the Labour Welfare Act. He has cited several decisions in support of his contention. None of them is applicable to the instant case. We are, however, making a brief reference to each one of them.
32. The first decision is in Union of India v. Madan Gopal Kabra : 25ITR58(SC) . It was a case under the income-tax Act, 1922 (as amended by Finance Act, 1950). The principle which has been laid down in that decision is that the Constitution has no retrospective operation except where a different intention clearly appears. Where new Legislatures are brought into existence and certain powers of legislation are conferred upon them, it is not correct to say that the Constitution operates retrospectively. The legislative powers which are conferred upon Parliament under Article 245 and Article 246 read with List I of the Seventh Schedule could obviously be exercised only after the Constitution came into force and no retrospective operation of the Constitution was involved in the conferment of those powers. However, it is quite a different thing to say that the Parliament while exercising the powers thus acquired is precluded from making a retroactive law. The question must depend upon the scope of the powers conferred and it must be determined with reference to the terms of the instrument by which, affirmatively, the legislative powers have been created and by which, negatively, they have been restricted. It was a case in which Income-tax Act, 1922 was made applicable to United State of Rajasthan where it did not apply earlier. This is a case in which the application of the question which has arisen is whether certain fundamental rights which were in force in the country prior to their repeal by the Forty-Fourth Constitutional Amendment can be said to be of no consequence during the period of their operation on account of their subsequent and prospective repeal.
33. The next decision to which reference has been made is in Bhikhaji Narain Dhakars and Ors. v. State of Madhya Pradesh and Anr. : 2SCR589 . It was a case under C.P. and Berar Motor Vehicles (Amendment) Act, 1947. The constitutional validity of that legislation was challenged on the grounds that it violated Article 19(1)(g) and (6) and Article 31(2) of the Constitution. Now, on 18th June 1951, by the Constitution (First Amendment) Act, 1951, Clause (2) of Art, 19 was amended and a new clause was introduced. It was expressly made retrospective. However, Clause (6) of Article 19 which was amended was not made retrospective. It was contended that although the Amending Act became on and from 26th January 1950 void as against the citizens to the extent of its inconsistency with the provisions of Article 19(1)(g), nevertheless after 18th June 1951, with the amendment of Clause (6), the Amending Act ceased to be inconsistent with the fundamental right guaranteed by Article 19(1)(g) read with Clause (6) of the amended Article because that clause, as it then stood, created by State law the monopoly in respect, inter alia, of motor transport business and it became operative again even as against the citizens. It was contended that the law was void for its unconstitutionality and was, therefore, dead and could not be vitalized by subsequent amendment to the Constitution removing the constitutional objection unless it was re-enacted. It is in that context that the Supreme Court construed the word 'void' used in Article 13 and observed that the question of its interpretation was concluded by the majority decision of the Supreme Court in Keshavan Madhva Menon v. The State of Bombay : 1951CriLJ680 . The Supreme Court, therefore, proceeded to apply the ratio decidendi in that case to the facts of the case which they were deciding. The Supreme Court took the view that the C.P. and Berar Motor Vehicles (Amendment) Act, 1947 was an existing law when the Constitution came into force. It imposed on the exercise of the right guaranteed to the citizens of India by Article 19(1)(g) restriction which could not be justified as reasonable under Clause (6) as it then stood and, therefore, under Article 13(1) that law became void 'to the extent of such inconsistency'. Relying upon the principles laid down in Kehsvan Madhava Menon's case (supra) the Supreme Court further observed that such a law became void not 'in toto' or for all purposes or for all times or for all persons but only 'to the extent of such enconsistency'. Secondly, it did not become void independently of the existence of the rights guaranteed by Part III of the Constitution. On and after the commencement of the Constitution, the impugned law as a result of its becoming inconsistent with the provisions of Article 19(1)(g) read with Clause (6) as it then stood, could not be permitted to stand in the way of the exercise of that fundament right. Upon the interpretation and application of Clause (1) of Article 13, the Supreme Court observed that by reason of the language used in that Article, the entire operation of the inconsistent law could not be said to have been obliterated or wiped out. It existed for all past transactions and for enforcement of rights and liabilities which accrued before the Constitution came into existence. It continued in force even after the commencement of the Constitution with respect to persons who were not citizens and who could not claim the fundamental right. Clause (1) of Article 13 had the effect of nullifying or rendering the existing law which had become inconsistent with Article 19(1)(g) read with Clause (6) as it then stood, ineffectual, nugatory and devoid of any legal force or binding effect only with respect to the exercise of the fundamental right on and after the date of the commencement of the Constitution. Therefore, between 26th January 1950 and 18th June 1951, the impugned Act could not stand in the way of the exercise of the fundamental right of the citizens under Article 19(1)(g). Proceeding further, the Supreme Court has observed that the true position is that the impugned law became eclipsed for the time being by the fundamental right. The effect of the Constitution (First Amendment) Act, 1951, was that it removed the shadow and made the impugned Act free from all blemish or infirmity. If it was not so, then it was not intelligible what 'existing law' could have been sought to be saved from the operation of Article 19(1)(g) by the amended Clause (6) in so far as it sanctioned the creation of State monopoly because, ex hypothesi, all existing laws creating such monopolies had become void at the date of the commencement of the Constitution in view of Clause (6) as it then stood. All laws, existing or future, which were inconsistent with the provisions of Part III of the Constitution were, by the express provision of Article 13, rendered nugatory 'to the extent of such inconsistency'. Such laws were not dead for all purposes. They existed for the purpose of pre-Constitution rights and liabilities and they remained operative, even after the Constitution, as against non-citizens. Against the citizens, they remained in a dormant or moribund condition. However, after the amendment of Clause (6) of Article 19 on 18th June 1951, the impugned Act ceased to be unconstitutional and became revivified and enforceable against citizens as well as against non-citizens. It was true that, as the amended Clause (6) was not made retrospective, the impugned Act could have no operation as against citizens between 26th January 1950 and 18th June 1951 and that no rights and obligations could be founded on the impugned Act during the said period whereas the amended Clause (2) by reason and on account of its being made retrospective had the effect during that period. The learned Government Pleader has invoked from this decision the doctrine of eclipse and tried to argue that what could not be recovered under the provisions of the Labour Welfare Act, by virtue of the provisions of Article 19(1)(f) and Article 31(2), assuming that it was so, could now be recovered because all that could be said now was that unpaid accumulations, even if they were irrecoverable before Forty-Fourth Constitutional Amendment came into force, lay in dormant and moribund condition and that they could now be recovered on account of the removal of of the shadow of eclipse produced on them by Article 19(1)(f) and Article 31(2). We are unable to uphold the argument which the learned Government has based upon this decision because when Articles 19(1)(i) and 31(2) were in operation, no liability inconsistent with those Articles could be created by any law, Such statutory liability as was consistent with those Articles could alone be enforced. Merely because Article 19(1)(f) and Article 31 have been repealed now, it cannot be said that the liability which was hit by Article 19(1)(f) and Article 31 when they were in force can now be enforced. To accede to the argument which the learned Government Pleader has raised is to hold that even though Article 19(1)(f) and Article 31 have been repealed prospectively, they had never been in force since the Constitution came into effect.
34. The next decision to which out attention has been invited is in M.P. V. Sundararamier and Co. v. The Stale of Andhra Pradesh and Anr : 1SCR1422 . It was a case under Madras General Sales Tax Act, 1939 as applied to the State of Andhra Pradesh. The learned Government Pleader has relied upon the observations made in paragraph 42 of the report. It has been observed by the Supreme Court that unconstitutionality of an impugned provision may arise either because the law is in respect of a matter not within the competence of the Legislature or because, the matter itself being within its competence, its provisions offend constitutional restrictions. In a Federal Constitutional where the legislative powers are distributed between different bodies, the competence of the legislature to enact a particular law must depend upon whether the topic of that legislation has been assigned by the Constitution Act to that Legislature. Therefore, a law made by a State on an Entry in List I of VII Schedule in the Constitution shall be wholly incompetent and void. However, the law may be made on a topic within its competence, as for example, an entry in List II, but it may infringe restrictions imposed by the Constitution on the character of the law to be passed, as for example, limitations enacted in Part III of the Constitution. A legislation on a topic which is not within the competence of a Legislature and a legislature which is within the competence of Legislature but which violates the constitutional limitations have both the same reckoning in a Court of law. Both of them are unenforceable. The Supreme Court, therefore, proceeded to examine the question as to whether both the laws were of the same quality and character or stood on the same footing for all purposes. The Supreme Court noted that the preponderance of authority was in favour of the view that the law on a matter not within the competence of the Legislature is a nullity and a law on a topic within its competence but repugnant to the constitutional prohibitions is only unenforceable. This distinction has a material bearing on certain situations. If a law is made on a field not within the domain of the Legislature, it is absolutely null and void and subsequent cession of that field to the Legislature will not have the effect of breathing life into what was a still-born piece of legislation and a fresh legislation on the subject would be the requisite. In paragraph 47 of the report, the Supreme Court has summarised its conclusions as follows: Where an enactment is unconstitutional in part but valid as to the rest, assuming of course that the two portions are severable, it could not be said to have been wiped out of the statute book because it must remain there for the purpose of enforcement of the valid portion thereof. Since it continues on the statute book, even that portion which is unenforceable on the ground that it is unconstitutional will operate propria vigore. In such a case, there will be no need for a fresh legislation to give effect to it.
35. The next decision is in Deep Chand v. The Slate of Uttar Pradesh and Ors. : AIR1959SC648 . The Supreme Court was called upon in that case to consider the effect of the provisions of Constitution (Fourth Amendment) Act, 1955. The Supreme Court has in that case considered when doctrine of eclipse can be applied. It has been observed by the Supreme Court that a Legislature has no power to make any law in derogation of the injunction contained in Article 13. The Supreme Court has also considered the distinction between Clause (1) and Clause (2) of Article 13. Whereas under Clause (1), a pre-Constitution law subsisted except to the extent of its inconsistency with the provisions of Part III, no post-Constitution law can be made contravening the provisions of Part III, and, therefore, the law to that extent, though made, is a nullity from its inception. Clause (2) of Article 13 says in clear and unambiguous terms that no State shall make any law which takes away or abridges the rights conferred by Part III. A constitutional prohibition against a State making certain laws cannot be whittled down by analogy or by drawing inspiration from decisions on the provisions of other Constitutions. A plain reading of the clause indicates, without any reasonable doubt, that the prohibition goes to the root of the matter and limits the State's power to make law; the law made inspite of the prohibition is a still-born law. It has next been observed that the doctrine of eclipse has no application to post-Constitution laws infringing the fundamental rights as they are ah initio void in toto or to the extent of their contravention of the fundamental rights. It is, therefore, clear that whereas under Clause (1) of Article 13, pre-Constitution laws are void to the extent of their inconsistency with the provisions of the Constitution, a post-constitution law made in infringement of the fundamental rights is ah initio void in toto or to the extent of the contravention of the fundamental rights. To such a law, doctrine of eclipse does not apply. In other words, the Supreme Court has observed that the doctrine of eclipse can be invoked only in case of a law which is valid when made, but a shadow is cast on it by supervening constitutional inconsistency or supervening existing statutory inconsistency. Once the shadow is removed, the impugned Act is freed from all blemish or infirmity.
36. The argument which has been advanced on the basis of this decision is that unpaid accumulations which suffered an eclipse cast by Article 19(1)(f) and Article 31(2) now become revivified on account of repeal of Article 19(1)(f) and Article 31.
37. The next decision is in Mahendra Lal Jaini v. State of Uttar Pradesh and Ors. : AIR1963SC1019 . The principles which have been laid down by the Supreme Court in that case are as follows. The doctrine of eclipse applies to pre-Constitution laws which are governed by Article 13(1) and docs not apply to post-Constitution laws which are governed by Article 13(2). The words 'to the extent of in Article 13 do not import any idea of time They only import the idea that the law may be void either wholly or in part and that only such portions will be void as are inconsistent with Part III or have contravened Part III and no more. The pre-Constitution laws which were perfectly valid when they were passed and the existence of which was recognised under Article 13(1) can be revived by the removal of the inconsitency in question. There is a difference between the language and scope of Article 13(1) and 13(2). A plain reading of the words in Article 13(1) and 13(2) brings out a clear distinction between the two. Article 13(1) declares such pre-Contitution laws as are inconsistent with fundamental rights void. Article 13(2) consists of two parts. The first part imposes an inhibition on the power of the State to make a law contravening fundamental rights and the second part, which is merely a consequential one, mentions the effect of the breach by providing that such law is void to the extent of the contravention. In view of this clear position, unlike a law governed by Article 13(1) which was valid when made, the law made in contravention of the prohibition contained in Article 13(2) is a still-born law either wholly or partially depending upon the extent of the contravention. Such a law dead from the beginning and there can be no question of its revival under the doctrine of eclipse. The application of the doctrine of eclipse in one case and not in the other case does not depend upon giving a different meaning to the word 'void' in the two parts of Article 13. The meaning of the word 'void' is, for all practical purposes, the same in both the clauses, namely, that the law is ineffectual and nugatory and deviod of any legal force or binding effect. However, there is one vital difference in this matter. The voidness of post-Constitution laws is only from the date when the Constitution came into force. Therefore, they existed and operated for sometime and for certain purposes. The voidness of post-Constitution laws is from their very inception and they cannot, therefore, continue to exist for any purposes. This distinction between the voidness in one case and the voidness in the other arises from the circumstances that one is a pre-Constitution law and the other is a post-Contitution law. The application of the doctrine in one case and not in the other case arises from the inherent difference between Article 13(1) and Article 13(2) arising from the fact that one is dealing with the result that in one case the law being not still-born the doctrine of eclipse will apply while, in the other case, the laws being still-bom, there will be no scope for the application of the doctrine of eclipse.
38. The next decision is in The State of Punjab v. M/s Sansari Mal Puran Chand : 1SCR336 . It was a case under the East Punjab General Sales Tax Act, 1948. In that case, constitutional validity inter alia, of Section 5 was challenged. The Supreme Court held that Section 5 as originally enacted in 1948 was void. But merely because Section 5 was void it did not render Sections 4 and 6 and the other sections of that Act void. They remained only unenforceable until new Section 5 was inserted. Section 5 as amended by East Punjab Act 19 of 1952 was not invalid on the ground of excessive delegation of legislative authority nor was it invalid on the ground that Act of 1952 purported to amend a still-born law. Insertion of amended Section 5 with retrospective effect was held valid. However, the amended Section 5 could not take effect either prospectively or retrospectively in respect of sales and purchases of essential goods because of the ban of Article 286(3) as it was in force then. It could, however, take effect in respect of sales and purchases of other goods. With the amendment of Clause (3) of Article 286 by the Constitution (Sixth Amendment) Act in 1956, the restriction placed by Article 286(3) prior to its amendment in respect of essential goods was lifted an the amended Section 5 took effect thereafter in respect of all such goods also.
39. In State of Mysore and Anr. v. D. Achih Chetty etc. : 3SCR55 , the Supreme Court was considering the scope and effect of Bangalore Acquisition of Lands (Validation) Act. By enacting the Validating Act, the Mysore Legislature tried to make a single law retrospectively for acquisition of land made prior to its enactment for the purpose of improvement, expansion or development of the city of Bangalore. The Validating Act provided that no acquisition shall be called in question on the ground that the State Government was not competent to make the acquisition. No claim based upon the failure to observe the provisions of the Improvement Act could, therefore, be heard. The Supreme Court held that the State Legislature had the power to make a law with retrospective effect getting over discrimination caused by two different procedures.
40. The next decision is in L. Jagannath etc. v. The Authorised Officer, Lands Reforms. Madurai and Anr. etc AIR 1952 S.C. 425. In that case, the validity of Madras Land Reforms (Fixation of Ceiling on Land) Act, 1961, was challenged. That Act was struck down as unconstitutional in A.P. Krishnaswamy Naidu v. State of Madras : 7SCR82 . It was thereafter included in the Ninth Schedule. It was contended that since it was declared invalid, it had become non est and was void ah initio. It was thereupon contended that Article 31-B could not become valid merely on account of its inclusion in the Ninth Schedule. In nother words, it was argued that since that Act was void under Article 13(2), it was dead and could not be revivified by subsequent amendment to the Constitution but had to be re-enacted. The Supreme Court held that apart from the question as to whether fundamental rights originally enshrined in the Constitution were subject to the amendatory process of Article 386, it must be held that Article 31-B and the Ninth Schedule have cured the defect, if any, in the various Acts mentioned in the said Schedule as regards any unconstitutionality alleged on the ground of infringement of fundamental rights and that, by the express words of Article 31-B, such curing of the defect took place with retrospective operation from the dates on which the Acts were put on the statute book. Therefore, such Acts, even if void or inoperative at the time when they were enacted by reason of infringement of Article 13(2) of the Constitution, assumed full force and vigour from the respective dates of their enactment after their inclusion in the Ninth Schedule read with Article 31-B of the Constitution. The States could not, at any time, cure a defect arising from the violation of the provisions of Part III of the Constitution and, therefore, the objection that the said Madras Act should have been re-enacted by the Madras Legislature after the Seventeenth Constitutional Amendment came into force was not accepted.
41. The next decision is in Hari Singh and Ors. v. The Military Estate Officer, Delhi Circle, Delhi Cantt. and Anr. : 1SCR515 . In that case, the Supreme Court was examining the provisions of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971. Under the provisions of this Act, discrimination resulting from two procedures provided under an earlier Act was retrospectively removed. It was held by the Supreme Court that it was within the legislative competence to enact such a validating Act.
42. The next decision to which our attention has been invited is in The Ahmedabad St. Xaviers College Society and Anr. etc. v. State Gujarat and Anr : 1SCR173 . All that has been pointed out from this decision is that if a provision is enacted to check the abuse of power of administration, it does not offend the constitutional provision.
43. All these decisions have been pressed into service by the learned Government Pleader to drive home to us two propositions. The first relates tot he doctrine of eclipse and the second relates to the retroactive character of a prospective legislation. We cannot apply to the instant case the doctrine of eclipse and hold that the provisions as to unpaid accumulations which were eclipsed by Article 19(1)(f) and Article 31 now emerge, if they were otherwise void under the Constitution as a good law. Doctrine of eclipse applies to a pre-Constitutional law which was valid before the Constitution came into force and was found to be inconsistent with it after the Constitution came into force. The law with which we are dealing is not a pre-Constitution law but a post-Constitution law. It is, therefore, governed by Clause (2) of Article 13 which provides for voidness on the ground of constitutional contravention and not on the ground of constitutional inconsistency. Therefore, if Section 3 contravened Article 19(1)(f) and Article 31, it was void ab initio and could not be revivified merely because Article 19(1)(f) and Article 31 have now been repealed. Secondly, the question of retrospective character of the repeal of Article 19(1)(f) and Article 31 does not arise in the instant case. Admittedly, the repeal is not retrospective. We are unable to unhold the argument that though the State Legislature could not otherwise legislate in respect of unpaid accumulations before Forty-Fourth Constitutional Amendment came into force, it can now do so because the embargo placed by those two Articles has now been removed. Since the Labour Welfare Act is a post-constitution law, if Section 3 contravened Article 19(1)(f) and Article 31, it was dead ab initio and non est. It cannot be revivified now unless it is re-enacted. If it is re-enacted with retrospective effect, it will be open to challenge on the ground that the past liability which accrued from such an enactment could not be enforced because during the period in respect of which liability accrued, it contravened Article 19(1)(f) and Article 31(2) which were in force then. The problem which the learned Government Pleader has presented for our consideration cannot be solved with reference to any decision because it is a novel problem. It also cannot be said that the impugned provision should be tested on the anvil of the constitutional provisions as they now exist. In our opinion, it is an error to argue that if the Legislature enacts such law now when Article 19(1)(f) and Article 31(2) are not longer in existence and have been replaced by Article 300A, the impugned provisions will be valid. It is no test at all. So far as extra-legal point of view is concerned, we cannot assume that the State Legislature will enact such a law now. It is a matter of legislative will. Composition of the state Legislative goes on changing periodically. Therefore, in our opinion, the constitutional validity of the impugned provisions can be tested on the anvil of Article 19(1)(f) and Article 31(2) because, during the period they were in force, the liability which the impugned provisions produced for the employers must be consistent with those constitutional provisions. To take any other view is to make their repeal retrospective even though the Parliament has not repealed them with retrospective effect. We are, therefore, unable to unhold the preliminary contention raised by the learned Government Pleader.
44. We now turn to the merits of the case. Section 3(1) directs every employer to make over to the Labour Welfare Fund, inter alia, all unpaid accumulations as defined by Section 2(10). 'Unpaid accumulations' are payments due to the employees but not made to them. There is no doubt about the fact that all unpaid accumulations represent moneys. It cannot be gainsaid that moneys are 'property' within the meaning of Article 19(1)(f) as well as Article 31(2). It is not necessary to illustrate this proposition with reference to any decision of the Supreme Court. However, if any another authority for this proposition is required, it is firstly found in the case of Bombay Dyeing and . (supra). The principle has been affirmed by the Supreme Court in the case of Shree Ambica Mills Ltd. (supra).
45. The last decision to which out attention has been invited is in madan Mohan Pathak and Anr. v. Union of India and Ors. : (1978)ILLJ406SC . It was a case under the Life Insurance Corporation (Modification of Settlement) Act, 1976. The Supreme Court has observed in that decision that the 'property' cannot have one meaning in Article 19(1)(f) and another in Article 31(1) and still another in Article 31(2). 'Property' must have the same connotation in all the three Articles and since they are constitutional provisions intended to secure a Fundamental right, they must receive the widest interpretation and must be self to refer to property of every kind. 'Property' within the meaning of Article 19(1)(f) and Clause (2) of Article 31 comprises every form of property, tangible or intangible, including debts and choses in action such as unpaid accumulations of wages, pension, cash grant and constitutionally protected Privy Purse. While coming to that conclusion, the Supreme Court has referred to several earlier decisions. It cannot, therefore, be gainsaid that 'unpaid accumulations' are the property which originally belonged to the employer. While directing the employer to make over unpaid accumulations to the Labour Welfare Fund, no compensation as contemplated by Article 31(2) has been provided. This is an undisputed proposition. The only serious question which we are in this context called upon to decide is whether the unpaid accumulations are 'the property' of the employer.
46. Mr. Nanavaty has argued that if an employer disputes his liability to pay 'unpaid accumulations' to his workmen, they are his moneys. They cannot cease to be his moneys unless his liability to pay 'unpaid accumulations' has been determined or adjudicated upon by some one. In other words, accordings to Mr. Nanavaty, to deprive an employer of his moneys without adjudication of his liability is an unreasonable restriction within the meaning of Article 19(5), as it was in force at the relevant time, upon his fundamental right guaranteed by Article 19(1)(f). Secondly, to do so without paying the employer compensation is to violate Article 31(2). 'Unpaid accumulations', according to Mr. Nanavaty, are essentially and basically moneys belonging to the employer. If the employees to whom they are due do not claim them and if the employer disputes the liability to pay them, they continue to be the employer's moneys or his property. He is entitled to use and enjoy them.
47. Now, these 'Unpaid accumulations' can be divided in two classes. 'Unpaid accumulations' admittedly due to workmen and not paid to them form one class. In our opinion, they are not employer's moneys or 'property'. Accumulations admittedly due to the employees and not paid to them are employees' moneys in the hands of the employer. They stand on per with judgment-debt because no adjudication in respect of such admittedly undischarged liability is required. The second class consists of disputed 'unpaid accumulations'. In such a case, the employer disputes his liability to pay such accumulations to the workmen. The question which, therefore arises for our consideration is whether there is any machinery to determine the employer's liability in respect of unpaid accumulations in case he disputes it? If the Act provides for such a machinery, the determination recorded as a result of adjudication will create for the employer a judgment-debt and the employer's interests in those 'unpaid accumulations' shall cease to exist.
48. In reply to this contention raised by Mr. Nanavaty, the learned Government Pleader has principally relied upon two arguments. The first argument centres rounds Rule 4 of the Labour Welfare Fund (Gujarat) Rules, 1962. It appears that this rule was not pointed out to this Court When it decided Arvind Mills' case reported in 7 GLR 156. This Court in that decision has in terms laid down that the determination of 'unpaid accumulations' due from and payable by an employer was left to the subjective determination of the Welfare Commissioner. With great respect, we do not agree with that proposition. Rule 4 requires the Welfare Commissioner to make such enquiry as he may deem fit. It has got to be read in light of Section 3(4) which was inserted by Gujarat Act 47 of 1961. It lays down that 'notwithstanding anything contained in any other law for the time being in force or any contract or instrument, all unpaid accumulations shall be collected by such agencies and in such manner as may be prescribed and be paid in the first instance to the Board which shall keep a separate account therefore until claims thereto have been decided in the manner provided in sed. 64.' Rule 4 has reference to Sub-section (4) of Section 3. The expression 'after making such enquiries as he may deem fit' used in Rule 4 does not give the Welfare Commissioner unfettered and arbitrary discretion to hold an enquiry or not to hold one. The scheme of Rule 4 has got to be read in light of Section 12 of the Act, which inter alia empowers the State Government to appoint Inspectors to inspect records in connection with the sums payable into the Funds. Such an Inspector has the power to enter at any reasonable time any premises for carrying out the purposes of the Act, to require any employer to produce any document for inspection, to supply him a true copy of any such document and to give him a statement in writing Rule 19A requires every Inspector to visit all establishments at least once in every six months to verify whether the statements required to be submitted by an employer under the rules have been submitted and if so, whether the information submitted is complete and correct. It is clear, therefore, that under Section 12 and the relevant rules made under the Act, an Inspector has the authority to gather material from every establishment in order to find out what are, inter alia, 'unpaid accumulations' which are laying with the employers. He then reports to the Welfare Commissioner to which reference has been made in Rule 4. In our opinion, the scheme of Rule 4 is as follows. On the receipt of the report or the Inspector or otherwise, the Welfare Commissioner comes to a tentative conclusion as to what are 'unpaid accumulations' which an employer is liable to pay to the Labour Welfare Board. Having recorded such a tentative conclusion, he gives notice to the employer to find out whether there is any dispute about the tentative conclusion which is recorded in regard to the employer's liability. If the employer disputes the liability, he is bound to hold an enquiry. It is wrong to say that, under Rule 4, to hold an enquiry or not to hold an enquiry is a matter of his arbitrary choice. Thereafter the Welfare Commissioner holds an enquiry and determines on evidence the liability of an employer in respect of 'unpaid accumulations' due from him. The Welfare Commissioner cannot, in a matter of this type, but act on the evidence before him. What the Welfare Commissioner does is to record an objective determination on evidence of an objective fact. There is no clement of subjective satisfaction in this case. Since the Welfare Commissioner is recording an objective determination on evidence, he is bound to make a reasoned order showing how he has arrived at his conclusion in regard to 'unpaid accumulations' which an employer is liable to pay. Thereafter he serves a notice of demand upon the employer. In our opinion, this determination is also not final under the Act or the rules because no provision has been pointed out which bars the jurisdiction of the Civil Court in the matter or makes the determination of the Welfare Commissioner final. Therefore, if an employer is aggrieved by the objective determination recorded by the Welfare Commissioner, it is open to him to challenge it in a Civil Court whose decision indeed, as it should be, shall be final and shall hold the field. In our opinion, therefore, rule 4 provides adequate machinery for judicial determination of' 'unpaid accumulations' which an employer owes to his employees and which are liable to be made over to the Labour Welfare Fund under the Act.
49. It is not only Rule 4 to whom the Role of protecting the Act against the constitutional vice can be assigned. It is quite probable that the rule-making authority in future may amend rule 4 and rob it of its real value. Does, in such a case, an Act which was valid become invalid? Even if rule 4 is modified in future, the impugned provisions of the Act will not be rendered void because neither the Act nor the rules made thereunder make the determination of the Welfare Commissioner final and bar the jurisdiction of the Civil Court to examine it. We are, therefore, of the opinion that a notice of demand issued by the Welfare Commissioner can be challenged in a Civil Court. 'Unpaid accumulations' which are collected by the Board shall vest in the Board after the adjudication by the Civil Court, in case of dispute, has become final. Otherwise also, where there is a dispute which has gone to the Civil Court, the Board may not recover them voluntarily or can be restrained from recovering them under the force of an interim injunction which the Civil Court may issue. However, if the Board has recovered them, the Board is bound to hold them subject tot he determination of the dispute by the Civil Court. If the Board has recovered 'unpaid accumulations' during the pendency of the litigation before the Civil Court, the Board is bound to hold them on behalf of the employer in cases the employer succeeds. Therefore, if such a holding accounts to vesting, the Board shall be divested of them if the Civil Court decides in favour of the employer. If it does not amount to vesting, the Board holds them on behalf of the employer subject to the result in civil litigation. If the Board loses the litigation, it is bound to return the 'unpaid accumulations' to the employer with interest. If succeeds in it, they finally vest in it. After having scanned the provisions of the Labour Welfare Act, we are unable to come to the conclusion that it is a complete code.
50. Mr. Nanavaty has then invited our attention to Section 17 which provides as under:
Any sum payable into the Fund under this Act shall, without prejudice to any other mode of recovery, be recoverable on behalf of the Board as an arrear of land revenue.
Ordinarily, resort to Section 17 will be had only after the Civil Court has finally decided the dispute where one exists in relation to the determination recorded by the Welfare Commissioner. However, if the provisions of Section 17 are invoked during the pendency of the litigation, the injury likely to be caused by it can be averted by applying for an interim injunction. If the Civil Court does not issue it, even then, no irreparable injury is likely to be caused to the employer because, as observed above, the Board is bound to hold them in trust for the employer and return them to the employer with interest in case the employer succeeds.
51. Mr. Nanavaty has also argued that the impugned provisions make 'abandoned property' what is not 'abandoned property'. In other words, according to him, what is not 'an abandoned property' cannot be artificially made 'abandoned property' by the Legislature and then cannot taken over. In light of the conclusions which we have recorded, this question hardly survives. After the Welfare Commissioner has recorded an objective determination on evidence in regard tot eh 'unpaid accumulations' which an employer is bound to make over to the Labour Welfare Fund, they cease to be the employer's property. Therefore if an employee claims them, he will, subject to proof of his claim between him and the Board, get them. If he does not claim them within the stipulated time or fails to prove his claim, then it can certainly by regarded by the Act as 'abandoned property' and the State is entitled to take them over. That is what the Supreme Court has stated in Ambica Mills' case (supra). The argument which Mr. Nanavaty has in this context raised is that failure to prove his claim by an employee or omission on the part of an employee to claim his dues must necessarily result in such 'unpaid accumulations' finally becoming the property of the employer. This argument presupposes a tripartite determination in respect of 'unpaid accumulations' which are disputed. According to Mr. Nanavaty, the determination must be between the Labour Welfare Board on one hand. In our opinion, in a case of this type, a tripartite determination is not necessary particularly when the employees residing in different parts of the country have not thought fit to claim their wages and other dues. It there are two bipartisan determinations, it is enough and protects the rights of all. The first bipartisan determination shall be, in case of a dispute, between an employer and the Labourt Welfare Board. The second bipartisan determination shall be between an employee who claims his 'unpaid accumulations' and the Labour Welfare Board. We see nothing wrong in such two bipartisan determinations. It is difficult to hold that, in a matter of this type, an employee, his employer and the Board must be brought together in order to record a single determination. Once a determination has been recorded, in case of a dispute between an employer and the Labour Welfare Board and once the liability of the employer has been determined, the employer goes out of picture and he must make over all 'unpaid accumulations' to the Labour Welfare Board. Thereafter, if an employee claims his 'unpaid accumulations,' he may approach the Labour Welfare Board or sue it. On proof of his claim, the Board is bound to pay him. It may happen in a given case that whereas a in dispute between an employer and the Labour Welfare Board, it has been shown that employer owes to workman 'A' a certain amount, workman 'A' may not be in a position to prove it against the Board when he tries to recover it from the Board after the Board has received it from the employer. This hiatus cannot be taken advantage of by the employer. Nor can he be permitted to argue that even though his liability to the Board has been proved in judicial proceedings, his fundamental right is violated because the employee has failed to prove his claim against the Board. If an employee fails to prove his claim against the Board, it is the employee's inability and not the employer's right. The right to the moneys which the employer had would come to an end as soon as it was proved between him and the Board that he owed a certain amount to his particular employee or employee 'A'. No such hiatus is likely to arise where an employee does not choose to make any claim against the Board. Therefore, we cannot permit an employer who has lost his right in litigation against the Board to claim it again when the concerned employee tries to prove his claim against the Board. In other words, the right which an employer had to hold the moneys was reduced to ashes upon the judicial determination of the liability of the employer in litigation between him and the Board. When an employee fails to make good his claim against the Board, his right is also reduced to ashes. Out of the ashes of the employee's right, the employer cannot revivify his right nor can he retrieve it after having lost against the Board.
52. It cannot be gainsaid that within the meaning of Section 3 read with Section 2(10), all 'unpaid accumulations' initially are the employer's property, it has been argued by Mr. Nanavaty. In our opinion, except admittedly unpaid accumulations, they are his property only at an initial stage but they cease to be his property after the judicial determination of his liability in that behalf has been recorded. We are, therefore, unable to uphold the argument raised by Mr. Nanavaty that when the employer is deprived of them, he is deprived of his property without compensation. We are also unable to uphold, for the reasons stated above, that there is no machinery for adjudication of disputes in the Labour Welfare Act and the rules. In our opinion, since the determination recorded by the Welfare Commissioner is an objective determination on evidence of an objective fact subject to the final determination by the Civil Court, the question of subjective satisfaction as recorded by this Court in Arvind Mills' case (supra) does not arise. In that view of the matter, we are unable to uphold the argument raised by Mr. Nanavaty that in the guise of discharging an employer of his liability under Section 6A, what is done is to deprive the employer of his property. Once we view in this light the provisions of the Labour Welfare Act, it is difficult to uphold the argument raise by Mr. Nanavaty that Section 17 provides a drastic remedy for recovery of 'unpaid accumulations'. The conclusion which we have recorded is also fortified by the language of Section 2(10) which defines 'unpaid accumulations'. They are payments 'due to the employees but not made to them'. 'Due', in our opinion means, what is found due to an employee by the Welfare Commissioner on holding an objective enquiry in the first instance where he is bound to hear the employer and then by the Civil Court if the dispute still continues after the Welfare Commissioner has recorded his determination.
53. Looking at it from another angle, we can classify the 'unpaid accumulations' into four divisions, (i) Unpaid accumulations credited by an employer in his books of accounts to the employees' accounts. Ordinarily, there is likely to be no dispute in regard to such 'unpaid accumulations'. However, if there arises one, the Welfare Commissioner is bound to determine it is laid down by us subject to the final determination by the Civil Court if the dispute is taken there, (ii) The second division consists of 'unpaid accumulations' not credited by the employers in their books of accounts to the accounts of their employees and not claimed by the employees but shown generally in the balance-sheet. In case of such 'unpaid accumulations', ordinarily, there is bound to be a dispute between the employer and the Welfare Commissioner. In such a case, the dispute will be subject to the decision of the Civil Court if the dispute is carried there, (iii) The third division will consist of 'unpaid accumulations' in respect of which the employees have made claims within a period of three years as contemplated by Section 2(10) and they have been rejected. In such a case, moneys indeed go back to the employer and the Board cannot claim them because the employee In a dispute between him and his employer raised within the specified period has failed to prove his claim, (iv) The fourth and the last division consists of claims made by the employees within the time specified in Section 2(10) of the Labour Welfare Act and upheld against the employer. In such cases, an employer is bound to pay 'unpaid accumulations' to his employee and the Board cannot claim them. However, if they are not paid to the employee even after adjudication, he is bound to make them over to the Board. There is little scope for dispute in a case of this type.
54. In order to show that the State under the force of a law can take over only judgment-debt and nothing more. Mr. Nanavaty has cited before us the decision of the Supreme Court in H.H. Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur and Ors. v. Union of India : 3SCR9 . In that case, Chief Justice Hadiyatullah, speaking on behalf of the majority of the Supreme Court, meticulously and minutely contradistinguished the character of judgment-debt from other debts. In case of a debt or a liability to pay moneys, it has to pass through four stages. First, there is a debt which is not yet due. It has not become a part of the obligor's 'things' because no debt liability has arisen. When the liability may have arisen but is not either ascertained or admitted, it passes through the second stage. The amount due, even at this stage, does not become a part of the obligor's 'things.' When the liability is both ascertained and admitted, the third stage is reached. Then it becomes the property proper of the debtor in creditor's hands. The law begins to recognise such property in insolvency in dealing with it in fraud of creditors, fraudulent preference of one creditor against another subrogation, equitable estoppel, stoppage in transit etc. At the third stage, it becomes a credit-debt which is fully provable and absolutely owing. The last stage is reached when the debt becomes a judgment-debt by reason of a decree of a Court.
55. Mr. Nanavaty has argued that unless the liability of an employer to pay 'unpaid accumulations' to his employees is either ascertained or admitted, it does not become a credit-debt, much less a judgment-debt. According to him, a credit-debt is one which an employer is entitled to hold and enjoy. As already stated above, when the Welfare Commissioner on evidence determines the employer's liability to pay 'unpaid accumulations,' they become the judgment-debt, subject indeed to the decision of the Civil Court if the dispute is taken there by an aggrieved party. Such a debt, in our opinion, is a judgment-debt which the Legislature can transfer to the Board directing the employer to make over the amount to the Board and directing the Board to take over the liability. The Legislature can statutorily discharge the employers from their obligation. Therefore, what the Legislature has done is nothing but a substitution of creditors.
56. Mr. Nanavati has further argued that if we discover in Section 4 the machinery for adjudication of disputes in regard to 'unpaid accumulations' it will lead to conflicting adjudications. He developed his argument thus. The first adjudication will be before the Payment of Wages Authority between an employer and his employee. Another adjudication will be between the Labour Welfare Board and the employer. It is quire probable, according to him, that what is found by Payment of Wages Authority as not due to an employee may be found to be due to the Board and the employer will, in such a case, be required to pay the amount to the Board. This apprehension expressed by Mr. Nanavaty is, in our opinion, totally unfounded. We say so because the adjudication before the Payment of Wages Authority between an employer and his employee is for the purpose of deciding the dispute between them. If the Payment of Wages Authority decides in favour of an employer the dispute which has been raised within 3 years by holding that he owes no 'unpaid accumulations' to his employee the employer will have no liability in respect of such an amount to pay it over to the Board. If the Payment of Wages Authority decides such a dispute in favour of an employee, ordinarily, the employee will recover the moneys from his employer. If the employee does not take them away from his employer, then it remains the judgment-debt of the employer and the employer will be under a statutory obligation to transfer it to the Board by paying over the amount to it. The adjudication before the Payment of Wages Authority is bound to be within a period of three years as contemplated by Section 2(10) of the Labour Welfare Act before the Board comes into picture. To repeat, if an employee has succeeded before the Payment of Wages Authority and taken away his dues from his employer, the Board cannot claim them from the employer. If he has not taken them away, the Board has a statutory right to demand it from the employer and the employer has no property therein because it has become a judgment-debt. In case of 'unpaid accumulations' which are disputed and which have not been adjudicated upon before the Payment of Wages Authority or any other judicial or quasi-judicial forum, it will be open to the employer to seek an objective determination of his liability from the Welfare Commissioner and to challenge the determination recorded by the Welfare Commissioner on evidence before a Court of Law if he still disputes it. Once the dispute is decided between the employer and the Board by the Welfare Commissioner or by the Civil Court, as the case may be, the employer loses his property in those moneys and he merely owes a judgment-debt to his employee which can be taken over by the Board. Such an adjudication, in our opinion, need not necessarily be in the presence of the employee.
57. The learned Government Pleader has tried to show us FORM C to The Labour Welfare Fund (Gujarat) Rules, 1972. It prescribes a Register of particulars of employees in whose respect the unpaid accumulations are held by an employer. It is a statutory obligation of the employer to maintain such a register and it is bound to furnish very good evidence to find out what 'unpaid accumulations' are due from an employer to his employees. From A to the said Rules is the Register of Wages which an employer is required to maintain under Rule 21. Next piece of evidence which will be of very great significance in case of a dispute will be furnished by the account books of the employers.
58. The learned Government Pleader has invited our attention to the unreported decision of the Supreme Court in Writ Petition No. 4319 of 1978 decided on 23rd July 1978. In that case, the determination of damages was left to an Executive Officer. The question arose in the context of Section 143 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the constitutional validity of which was challenged in that case. The determination of damages under Section 14B was left to the Central Provident Fund Commissioner or such other officer as might be authorised by the Central Government by notification in the Official Gazette in that behalf. The section was held to be valid. Therefore, the Legislature may, in its wisdom, authorise an executive officer to perform judicial or quasi-judicial functions of adjudication. It cannot always be said in such a case that there is want of machinery for adjudication and that, therefore, the statute is unconstitutional. A given statute may be unconstitutional if Civil Court's jurisdiction has been expressly or by necessary implication ousted and the entire determination has been left to the subjective satisfaction of an executive officer. We, therefore, safely rely upon this unreported decision and uphold the constitutional validity of the impugned provisions in light of Rule 4 because there is no ouster of Civil Court's jurisdiction and Rule 4 provides quasi-judicial authority for adjudication. In order to explain to us the scope of an enquiry such as one which is contemplated by Rule 4, our attention has been invited by the learned Government Pleader to the decision of the Supreme Court in The Commissioner of Coal Mines Provident Fund, Dhanhad and Ors. v. J.P. Lalla and Sons AIR 1975 S.C. 676 and also to the decision of the Delhi High Court in Wire Netting Stores v. Regional Provident Funds Commissioner and Ors. : 1SCR244 . It is not necessary to make a detailed reference to these decisions in light of the view which we have expressed.
59. Upon the analysis of the impugned and other relevant provisions, it is clear that the Labour Welfare Act lays down no penal consequences for non-compliance with the demand made by the Welfare Commissioner. Secondly, it does not accord finality to the determination given by the Welfare Commissioner objectively and no evidence. Thirdly, no interest is payable by an employer on 'unpaid accumulations'. We are, therefore, of the opinion that since there is no bar to invoking the machinery of the plenary Court to have the dispute between the employer and the Board adjudicated upon and secondly, since machinery has been provided by Rule 4, and since no such drastic consequences as specified above ensure from non-compliance with the determination recorded by the Welfare Commissioner, we are of the opinion that the impugned provisions are reasonable and, since what an employer is required to make over to the Board is judgment-debt, the employer is not deprived of his property.
60. The learned Government Pleader has also invited out attention to the decision of the Supreme Court in Pathumma and Ors v. State of Kerala and Ors. : 2SCR537 . In that decision, the Supreme Court has laid down that Courts should interpret the constitutional provisions against the social setting of the country so as to show a complete consciousness and deep awareness of the growing requirements of the society, the increasing needs of the nation, the burning problems of the day the complex issues facing the people which the legislature in its wisdom, through beneficial legislation, seeks to solve. It has also been laid down that the judicial approach should be dynamic rather than static, pragmatic and not pedantic and elastic rather than rigid. The Supreme Court has also laid down that while determining the reasonableness of a statute, guidelines can be inferred from the Directive Principles laid down in the Constitution.
61. The last argument which Mr. Nanavaty has raised is whether machinery for adjudication can be provided by a rule. In other words, can the constitutional validity of the impugned provisions of the Labour Welfare Act be upheld in light of the rule or rules made thereunder? Cam a rule render an otherwise unconstitutional Act constitutional? He has, in terms, conceded that if the Act and the Rules came into force simultaneously, then, resort to rules could be made for the purpose of upholding the constitutional validity of an impugned statute. He has in the context of this case tried to point out that the Labour Welfare Act and the Rules made thereunder originally by Government of Bombay did not come into force simultaneously. The Labour Welfare Act came into force on 24th June 1953. Government of Gujarat originally made Rules thereunder and brought them into force on 30th June 1953. Rule 4 was in 1953 in the same form in which it is now. Basing his argument upon these two dates, Mr. Nanavaty has argued that the Rules came into force six days after the Act came into force. Therefore, resort to rules cannot be had for determining the constitutional validity of the impugned provisions. It is necessary to remember in this context that the material provisions of the Labour Welfare Act as originally enacted were held unconstitutional by the Supreme Court. The scheme, therefore, which the original Act incorporated failed. It was revived in a different form when Gujarat Legislature passed the Amending Act which came into force on 1st July 1962. Indeed, the amended provisions were given retrospective effect from the date on which the Act came into force. That is the effect of Section 13 of the Amending Act. Irrespective of the back date with effect from which the amended provisions were brought into force, the fact remains that the Amending Act itself came into force on 1st July 1962. On that day, rule 4 upon which we have placed reliance was in force. In our opinion, therefore, it is open to us to rely open rule 4 in order to determine the constitutional validity of the provisions of the Labour Welfare Act. Mr. Nanavaty has invited our attention to the decision of the Supreme Court in The Stale of Bombay and Anr. v. The United Motors (India) Ltd. and Ors. : 4SCR1069 . The principle which Mr. Nanavaty has tried to enunciate before us has been laid down in that decision. Since, in our opinion, 1st July 1962 when the Amending Act came into force, is the material date and since on that date rule 4 was in force, the principle laid down by the Supreme Court in the aforesaid decision has no application to this case.
62. It is necessary to repeat that we are not upholding the constitutional validity of the impugned provisions only on the strength of Rule 4. If Rule 4 was the sole prop upon which the impugned provisions could have rested, we would have considered the argument raised by Mr. Nanavaty in greater details. In our opinion, as held above, the impugned provisions of the Labour Welfare Act are not only valid on account of the existence of Rule 4 but also on account of the fact that machinery provided by the Civil Court can be resorted to by an employer for adjudication of the liability which he disputes and no penal consequences flow from non-compliance with the objective determination recorded by the Welfare Commissioner on evidence.
In light of the reasons which we have stated, the impugned provisions of the Act did not offend Article 19(1)(f) because what the State tries to take over from an employer under the Labour Welfare Act is a judgment-debt and nothing more. Secondly, since the judgment-debt alone is taken over by the State, the question of paying compensation to the employer under Article 31(2) could not arise. It is only a statutory substitution of creditors. The Act directs an employer to part with his liability and gives him a statutory discharge from that liability.
We may record that Mr. Nanavaty has not challenged the legislative competence of the State Legislature to enact the impugned provisions because, according to him, he has nothing to say against the finding recorded by this Court in that behalf in the case of Arvind Mills Ltd. (supra). We, therefore, do not propose to re-examine that question.
63. In view of the reasons which we have recorded, the constitutional challenge raised by the plaintiffs to the impugned provisions of the Labour Welfare Act fails.
In the result, all the appeals fail and are dismissed. Decrees passed by the trial Court are confirmed. We direct that in the circumstances there shall be no order as to costs in each one of the appeals.
Mr. I.M. Nanavaty who appears on behalf of the plaintiffs applies orally for certificate of fitness under Article 133(1) of the Constitution in order to enable the plaintiffs in each case to appeal to the Supreme Court against this decision. In our opinion, the questions which we have decided are questions of very great importance. They should, therefore, be finally decided by the Supreme Court. Accordingly, we grant certificate of fitness under Article 133(1) to the plaintiffs in each case for appealing to the Supreme Court against this decision.
64. Mr. I.M. Nanavaty also requests that the recoveries which are likely to be made under the Bombay Labour Welfare Fund Act, 1953, should be stayed for some time in order to enable the plaintiffs to obtain an appropriate interim relief from the Supreme Court. We have heard the learned Government Pleader on this request made by Mr. Nanavaty. We direct that the recoveries to be made under the said Act shall be stayed until 5th of November 1979 in order to enable plaintiffs in each case to obtain appropriate interim relief from the supreme Court.