judgement:
ivil Appeal No. 167 of 1954.
Appeal from the Judgment and decree dated September 14, 1953, of the Bombay High Court in Misc.
Application No. 267 of 1953.
R. J. Kolah, B. Narayanaswamy and J. B. Dadachanji, for the appellants.
H. M. Seervai, Advocate General for the State of Bombay and R. H. Dhebar, for the respondents.
December 20.
The following Judgment of the Court was delivered by VENKATARAMA AIYAR J.
The appellant is a limited Company incorporated under the Indian Companies Act, 1879.
It is carrying on business in the manufacture of textiles, and owns three factories called Spring Mills,, Textile Mills and Bombay Dye Works, all of, which are situate in Bombay.
In its balance sheet for the year 1951, it has shown as one of its liabilities a sum of Rs. 1,65,731 1 0 under the heading "Unclaimed wages ".
This amount is made up of wages earned by the workmen in the factories but remaining undrawn by them, and represents accumulations from year to year ever since the formation of the Company which, it is stated, was about the year 1880. ' The dispute in this appeal mainly relates to this amount.
In 1953, the Legislature of the State of Bombay enacted the Bombay Labour Welfare Fund Act (Bum.
XL of 1953) (hereinafter referred to as the Act), and it came into force on June 4, 1953.
We may, at this 1125 stage, refer to the relevant provisions of the Act, as it is their validity that is the main point for our determination in this appeal.
The preamble to the Act recites that " It is expedient to constitute a Fund for the financing of activities to promote welfare of labour in the State of Bombay and for conducting such activities ".
Section 2 is the definition section; sub section
(2) defines an " employee " as meaning " any person who, is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in an establishment".
Employer " is defined in sub section
(3) as meaning " any person who employs either directly or through another person either on behalf of himself or any other person, one or more employees in an establishment and includes in a factory any person named under section 7(i)(f) of the , as the manager ".
Sub section (10) defines " Unpaid accumulations " as meaning " all payments due to the employees but not made to them within a period of three years from the date on which they became due whether before or after the commencement of this Act including the wages and gratuity legally payable".
"Wages "is defined in sub section
(11) as meaning " all remuneration capable of being expressed in terms of money which would) if the terms of the contract of employment, express or implied were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment. .
Then, there is section 3, which runs as follows: (1).
"There shall be constituted a fund called the Bombay Labour Welfare fund and, notwithstanding anything contained in any other law for the time being in force, the sums specified in sub section (2) ,shall be paid into the Fund.
The Fund shall consist of (a) all fines realised from the employees; (b) all unpaid accumulations; (c) any voluntary donations; (d) any fund transferred under sub section (5) of section 7; and (e) any sum borrowed under section 1126 (3).
The sums specified in sub section (2) shall be collected by such agencies and in such manner and the accounts of the Fund shall be maintained and audited in such manner as may be prescribed." Section 7(1) provides that "the Fund shall vest in and ,be held and applied by the Board as Trustees subject 'to the provisions and for the purposes of this Act.
" Sub section (2) of section 7 is very material, and is as follows: "Without prejudice to the generality of sub section (1) the moneys in the Fund may be utilized by the Board to defray expenditure on the following: (a) community and social education centres including reading rooms and libraries; (b) community necessities; (c) games and sports; (d) excursions, tours and holiday homes; (e) entertainment and other forms of recreations; (f) home industries and subsidiary occupations for women and unemployed persons; (g) corporate activities of a social nature; (h) cost of administering the Act including the salaries and allowances of the staff appointed for the purposes of the Act; and (i) such other objects as would in the opinion of the State Government improve the standard of living and ameliorate the social conditions of labour: Provided that the Fund shall not be utilized in financing any measure which the employer is required under any law for the time being in force to carry out; Provided further that unpaid accumulations and ,fines shall be paid to the Board and be expended by it under this Act notwithstanding anything contained in the (IV of 1936), or any other law for the time being in force ".
Section 11 provides for the appointment of an officer called the Welfare Commissioner, and defines his ,powers and duties.
Section.17 enacts that, " Any sum payable into the Fund under this Act shall without prejudice to any other mode of recovery, 1127 be recoverable on behalf of the Board as an arrear of land revenue.
" Section 19 authorises the State Government to make rules to carry out the purposes of this Act.
Section 23 provides that, "In section 8 of the (IV of 1936), to sub section (8) the following shall be added, before the Explanation namely: " but in the case of any factory or establishment to which the Bombay Labour Welfare Fund Act, 1953 (Bom.
XL of 1953), applies all such realisations shall be paid into the Fund constituted under the said Act.
" Rules were framed by the State of Bombay in exercise of the powers conferred by section 19, and they were published on June 30, 1953.
The material rules are Nos. 3 and 4, which are as follows: 3.
" Payment of fines and of unpaid accumulations by employer (I) Within fifteen days from the date on which the Act shall come into force in any area, every employer in such area shall pay by cheque, money order or cash to the Welfare Commissioner (a)all fines realised from the employees before the said date and remaining unutilized on that date; ,and (b)all unpaid accumulations held by the employer on the aforesaid date.
(2)The employer shall along with such payment submit a statement to the Welfare Commissioner giving full particulars of the amounts so paid.
(3) Thereafter, all fines realised from the employees and all unpaid accumulations during the quarters ending 31st March, 30th June, 30th September and 31st December shall be paid by the employer in the manner aforesaid to the Welfare Commissioner on or before the 15th of April, 15th of July , 15th of October and 15th of January succeeding such quarter and a statement giving particulars of the amounts so paid shall be submitted by him along with such payment to the Welfare Commissioner, 1128 4.
Notice for payment of fines and unpaid accumu lations by Welfare Commissioner: The Welfare Commissioner may, after making such enquiries as he may deem fit, and after calling for a report from the Inspector, if necessary, serve a notice on any employer to pay any portion of fines realised from the employees or unpaid accumulations held by him which the employer has not paid in accordance with rule 3.
The employer shall comply with the notice within 14 days of the receipt thereof." On July 7, 1953, the Welfare Commissioner, Bombay appointed under section 1 1 of the impugned Act, sent a notice to the appellant and other companies similarly situate, inviting their attention to the relevant provisions of the Act and of the rules and calling upon them to remit the fines and unpaid accumulations remaining with, them, in accordance with the directions contained therein.
To this, the appellant sent a reply on the same date impugning the validity of the Act as being in violation of the provisions of article 31 (2), and followed it up by filing the writ petition out of which the present appeal arises, it being treated by consent of parties as a test case.
The application was heard by Chagla C. J. and Tendolkar J. who held that the impugned Act was intra vires but on different grounds.
The learned Chief Justice was of the opinion that, on its true construction, the Act merely substituted the Board as a creditor in the place of the employees, that there was no taking of property, and that, in consequence, there was no contravention of article 31 (2).
Tendolkar J. hold that " unpaid wages " were unquestionably moneys which belonged to the employer and that he was being deprived of them, but there was no taking of possession or acquisition of property within .Art.
31 (2) of the Constitution but a deprivation of moneys, and as it was done under the authority of law, it fell within the protection of article 31 (1).
In the result, the petition was dismissed.
The learned Judges,however, granted a certificate under article 132, and that is how the appeal comes before us, 1129 The sole point for determination in this appeal is whether section 3 (1) and sub cls.
(a) and (b) of section 3(2) of the Act are void as contravening the provisions of the Constitution; but to decide it, we have to consider quite a number of questions which have been raised and discussed in the arguments before us.
It will be convenient to deal with the two items, fines realised ' from the employees, section 3 (2) (a) and unpaid accumulations, section 3 (2) (b) separately, as the issues involved in the determination of their validity are different.
Taking first unpaid accumulations, section 3 (2) (b), the contention of Mr. Kolah for the appellant is that s 3 (1) is repugnant to article 31 (2) inasmuch as it deprives the employers of moneys belonging to them without payment of any compensation merely on the ground that they represent wages due to the employees.
Now, money is undoubtedly property, and it cannot be disputed that a person who has money does not cease to be its owner merely by reason of the fact that he owes debts in satisfaction of which it may have to be applied.
Until the creditor takes appropriate proceedings under the law for the realisation of his debt and the title of the debtor is extinguished in those proceedings, the title to the property continues in the debtor.
Mr. Kolah is therefore clearly right in his contention that the liability of the appellant to pay wages to the employees does not ipso facto extinguish its title to the moneys belonging to it even pro tanto, and that the effect, therefore, of section 3 (1) is to take away money belonging to it.
Then, the question is whether such a provision is hit by article 31 (2) on the ground that it is acquisition or taking possession of property for a public purpose without payment of compensation.
It is common ground that the taking is for a public purpose.
The point in dispute is whether what is sought to be done under section 3 is acquisition or taking possession of property within article 31 (2).
Tendolkar, J., answered this question against the appellant, because, in his view, article 31 (2) would apply only if there was a transfer of title to or beneficial interest in the amounts to the State, that section 3 (1) effected neither, that it did deprive the employers of 1130 oheir moneys, but that fell under article 31 (1) and not article 31 (2), and that as that was done under the authority of law, it could not be questioned.
Subsequent to this decision, this Court had occasion to consider the true scope of article 31 (2) in relation to article 31 (1) in The State of West Bengal vs Subodh Gopal Bose (1) and in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd (2).
In The State Of West Bengal vs Subodh Gopal Bose(1), the majority of the learned Judges took the view that.
articles 31 (1) and 31 (2) were not mutually exclusive, that it was not an essential requisite of acquisition under article 31 (2) that there should be a transfer of title to the State, that deprivation of property and substantial abridgement of the rights of the owner were also within article 31 (2), and that a law which produced those results must, in order to be valid, satisfy the conditions laid down in that Article.
Das, J., (as he then was) differed from this view, and held that the contents of the two provisions were distinct, that while article 31 (1) had reference to the " police power" of the State, article 31 (2) dealt with the power of " eminent domain ".
In Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co.(2) the majority of the Judges again reiterated the view expressed in The State of West Bengal vs Subodh Gopal Bose(1) that articles 31 (1) and 31 (2) covered the same ground, and that substantial interference with rights to property would be within the operation of Art ' 31 (2).
On these decisions, it should follow that section 3 of the impugned Act is bad as infringing article 31 (2), in that it deprives the appellant of its moneys without giving any compensation.
Mr. Seervai, however, resists this contention on the strength of article 31 (2A), which was introduced by the Constitution (Fourth Amendment) Act, 1955.
It is as follows: " Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for the (1) ; (2) ; 1131 compulsory acquisition or requisitioning of property,: notwithstanding that it deprives any person of his property.
" The argument is that the theory that acquisition in article 31 (2) is not confined to cases of transfer of ownership to the State, and that even deprivation of property would fall within it, which is the basis of ' the decisions in The State of West Bengal vs Subodh Gopal Bose (1) and in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd. (2) can, in view of the above amendment, no longer be accepted as correct, and that those decisions therefore require to be reconsidered in the light of the new article 31 (2A).
But it is not disputed that this provision has no retrospective operation, and that the rights of the parties must be decided in accordance with the law as on the date of the writ application, and that on the provisions of the Constitution as they stood on that date and as interpreted in The State of West Bengal vs Subodh Gopal Bose (1) and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd. (2), section 3 (1) of the impugned Act would be obnoxious to article 31 (2).
This should be sufficient to conclude this, question in favour of the appellant, but the respondents contend that section 3 (1) is not within the prohibi tion of article 31 (2), because it operates only on money, and money is not property for purposes of that Article.
There is considerable authority in America that the power of eminent domain does not extend to the taking of money, the reason being that compensation which is to be paid in respect of money can only be money, and that, therefore, in substance it is a forced loan.
In The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga(3 ), this view was adopted by Mahajan J. at pages 943 944, by Mukherjea J. at page 961 and by Chandrasekhara Aiyar J. at pages 1015 to 1018.
It is argued for the respondents that the position under article 31(2) is the same as in America, as the provision therein that either the (1) ; (2) ; (3) 144 1132 amount of the compensation should be fixed or the principles on which and the manner in which compensation is to be determined should be specified, involves that what is taken is not money.
It is argued, on the other hand, for the appellant that the latest trends in American law show, as was observed by Das J. (as he then was), at pages 984 985 in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (1), a departure from the view held in earlier authorities that moneys and choses inaction could not be the subject of " eminent domain "; and that, in any case, the principles of American law should not be applied in the interpretation of the provisions of our Constitution.
If the contention of the respondents is to be accepted, the question naturally arises what protection a person has in respect of moneys belonging to him if he can be deprived of them by process of legislation.
The answer of Mr. Seervai is that that protection is to be sought in article 19(1)(f), that the word " property" therein has a wider connotation than what it bears in article 31(2) and includes money, and that the citizens have the right to hold money subject only to law such as is saved by article 19(5).
In support of this position, he relied on the decision in Bijay Cotton Mills Ltd. vs
The State of Ajmer (2) in which this Court applied article 19(6) in pronouncing on the validity of the Minimum Wages Act (XI of 1948) requiring the employers to pay wages at a rate not less than that to be fixed by the Government.
Assuming that the correct position is what the res pondents contend it is, the question that has still to be determined is whether the impugned Act could be supported under article 19(5).
There was some discussion before us as to the scope of this provision, the point of the debate being whether the words "imposing reasonable restriction" would cover a legislation, which not merely regulated the exercise of the rights guaranteed by article 19(1)(f) but totally extinguished them, and whether a law like the present one which deprived the owner of his properties could be held to fall within that provision.
It was argued that a law authorising (1) (2) ; 1133 the State to seize and destroy diseased cattle, noxious drugs and the like, could not be brought within article 19(5) if the word 'restriction ' was to be narrowly construed, and that accordingly the power to restrict must be held to include, in appropriate cases, the power to prohibit the exercise of the right.
That view does find support in the observations of Lord Porter in Commonwealth of Australia vs Bank of New South Wales (1); but the present legislation cannot be sustained even on the above interpretation of the word 'restriction ', as section 3(1) of the Act deals with moneys and money cannot be likened to diseased cattle or noxious drugs so as to attract the exercise of police power under article 19(5).
It appears to us that whether we apply article 31(2) or article 19(5), the impugned Act cannot be upheld, and it must be struck down, unless we accept the other contentions which have been urged for the respondents in support of its validity.
Those contentions are firstly, that the Act merely substitutes the Board as the creditor in the place of the employees, and that sections 3 and 17 merely prescribe the mode in which the obligation is to be enforced and that was the ground on which Chagla C. J. based his judgment; and secondly, that the impugned legislation is one in respect of abandoned property, and it is not open to attack as contravening either article 19 (1)(f) or article 31(2).
It is those contentions that now fall to be considered.
As regards the first contention, the question is whether on a fair construction of the provisions of the impugned Act, it is possible to spell out a substitution of creditors.
When an employee has done his work, the amount of wages earned by him becomes a debt due to him from the employer, and it is property which could be assigned under the law.
If the employee had assigned the debt to the Board constituted under the Act, the latter would be entitled to recover it from the employer.
And what could be done by act of parties can also be done by legislation.
What we have to see, therefore, is whether on the provisions of the statute it could be held that there is a statutory (1) [1950] A C. 235, 311.
1134 transfer of the wages earned by the workman to the Board.
Section 5 of the Act vests the amounts mentioned in section 3(2) in the Board, and section 3(1) directs that those amounts should be paid by the employer to the Board.
Counsel for the appellant contends that there are in the Act no words of transfer of the debts to the ;Board, and that there is only a provision for payment of the amounts.
But this is taking too narrow a view of the true scope of those provisions.
Looking at the substance of the matter, we are of opinion that section 3(1) and section 5(1) do operate to transfer the debts due to the employees, to the Board.
It will be observed that the definition of "unpaid accumulations " takes in only payments due to the employees remaining unpaid within a period of three years after they become due.
The intention of the Legislature obviously was that claims of the employees which are within time should be left to be enforced by them in the ordinary course of law, and that it is only when they become time barred and useless to them that the State should step in and take them over.
On this, the question arises for consideration whether a debt which is time barred can be the subject of transfer, and if it can be, how it can benefit the Board to take it over if it cannot be realised by process of law.
Now, it is the settled law of this country that the statute of Limitation only bars the remedy but does not extinguish the debt.
Section 28 of the Limitation Act provides that when the period limited to a person for instituting a suit for possession of any property has expired, his right to such property is extinguished.
And the authorities have held and rightly, that when the property is incapable of possession, as for example, a debt, the section has no application, and lapse of time does not extinguish the right of a person thereto.
Under section 25(3) of the Contract Act, a barred debt is good consideration for a fresh promise to pay the amount.
When a debtor makes a payment without any direction as to how it is to be appropriated, the creditor has the right to appropriate it towards a barred debt.
(Vide section 60 of the Contract Act).
It has also been held that a creditor is entitled 1135 to recover the debt from the surety, even though a suit on it is barred against the principal debtor.
Vide Mahant Singh vs U Ba Yi (1), Subramania Aiyar vs Gopala Aiyar (2), and Dil Muhammad vs Sain Das (3).
And when a creditor has a lien over goods by way of security for a loan, he can enforce the lien for obtaining satisfaction of the debt, even though an action ' thereon would be time barred.
Vide Narendra Lal Khan vs Tarubala Dasi (4).
That is also the law in England.
Vide Halsbury 's Laws of England (Hailsham 's Edition), Vol. 20, page 602, para.
756 and the observations of Lindley L. J. in Carter vs White (5) and of Cotton L. J. in Curwen vs Milburn (6).
In American Jurisprudence, Vol.
34, page 314, the law is thus stated : " A majority of the courts adhere to the view that a statute of limitations, as distinguished from a statute which prescribes conditions precedent to a right of action, does not go to the substance of a right, but only to the remedy.
It does not extinguish the debt or preclude its enforcement, unless the debtor chooses to avail himself of the defence and specially pleads it.
An indebtedness does not lose its character as such merely because it is barred; it still affords sufficient consideration to support a promise to pay, and gives a creditor an insurable interest." In Corpus Juris Secundum, Vol.
53, page 922, we have the following statement of the law : " The general rule, at least with respect to debts or money demands, is that a statute of limitation bars, or runs "against, the remedy and does not discharge the debt or extinguish or impair the right, obligation, or cause of action.
" The position then is that under the law a debt subsists notwithstanding that its recovery is barred by limitation, and no argument has been addressed to us by the appellant that the transfer of such a debt is invalid; and indeed it could not be, in view of the provisions in the impugned Act, which release the debts (1) (1939) L. R. 66 1.
A. 198.
(2) Mad.
(3) A.I.R. 1927 Lah.
(4) Cal. 817, 823.
(5) , 672.
(6) 24, 434.
1136 due to the employees from the bar of limitation.
Section 3(1) provides that payment shall be made of the amounts specified in sub cl.
(2) "notwithstanding anything contained in any other law for the time being in force.
" A similar provision is again enacted in the second proviso to sub section
(2) of section 5 that "unpaid accumulations " and fines shall be paid to the Board "notwithstanding anything contained in the , or any other law for the time being in force.
" One of those laws is the law of limitation, and the effect of these provisions is to suspend limitation in respect of the claims to which section 3(2) relates.
To dispel any doubt as to whether it was competent to the Legislature of the Bombay State to modify the provisions of the Limitation Act, it should be stated that limitation is a topic enumerated in the Concurrent List, being Entry 13 in List III in Seventh Schedule to the Constitution, and under article 254(2), the State Legislature can enact a law modifying the Central Act, provided it is reserved for consideration by the President and assented to by him, and that has been done in the present case.
Coming to the impugned Act, there is one other provision therein to which reference must be made.
Section 17 provides that without prejudice to other modes of recovery, the sums payable to the fund under section 3 may be recovered as arrears of land revenue.
This is a provision which is generally made when amounts are due and payable to the State, and Mr. Kolah concedes, that if the impugned law is otherwise valid, it cannot be said to be bad by reason of this section.
On the above analysis, there cannot be any doubt that the effect of the relevant provisions of the Act is to transfer to the Board the debts due by the appellant to its employees free from the bar of limitation.
The question still remains whether there has been a substitution of creditors, and that can only be, if the debt due to the employee is discharged and in its place there is substituted the debt in favour of the Board.
If, however, the employer is not released from his liability to the employee, then the effect of section 3(1) is only to create in the Board a statutory creditor in 1137 addition to the creditor under the contract of employment, and there can be no question of substitution.
Mr. Seervai agrees that if the Act does not operate to ' discharge the employer from his obligations to the employees in respect of the wages due to them, then it must be held to be unconstitutional as infringing article 19(1)(f), because his contention that the effect of ' the Act was only to take the property of the employer in discharge of its obligations could not then be maintained.
The real point for determination, therefore, is whether on payment of the amounts in accordance with section 3(1) of the Act, the appellant gets a discharge of his obligations to the employees in respect of wages due to them.
The Act does not contain any provision to that effect, and the absence thereof has been strongly relied on by the appellant as showing that no substitution of creditors was intended.
In answer to this contention, Mr. Seervai urges firstly that though the Act does not, in terms, provide for the discharge of the appellant on payment of the amount under section 3(1), that is the result of the provisions of the (Act IV of 1936), hereinafter referred to as the Wages Act, and secondly, that the effect of section 3(1) of the Act is to render the contract of employment void under section 56 of the Contract Act, and the appellant is thereby discharged from his obligations thereunder.
We shall now examine both these contentions.
To appreciate the first contention, it is necessary to refer to the relevant provisions of the Wages Act.
Section 2(vi) defines "wages" in terms which comprehend whatever falls within the definition of that word in section 2(11) of the impugned Act.
Section 3 casts on the employer the responsibility for payment of wages to persons employed by him.
Section 4 provides for the fixing of wage periods, which, however, are not to exceed one month.
Under section 5, the wages have to be paid before the expiry of ten days after the last day of the wage period in case of employees who continue in service and in the case of those whose employment has been terminated, within the second 1138 working day of such termination.
Section 15 provides that where an unauthorised deduction has been made from the wages of an employed person or payment of wages has been delayed, such person may apply to the authority appointed under the Act for a direction for payment of the amount deducted or the delayed ;wages, as the case may be, together with payment of compensation.
Such application has to be made within six months from the date on which the deductions were made or the date on which the payment of wages became due, and by Act No. 62 of 1953 of the Bombay Legislature, the period of six months has been enlarged to one year.
There is a proviso to this section that an application thereunder can be made after the period prescribed therein "when the applicant satisfies the authority that he had sufficient cause for not making the application within such period.
" Section 22(d) of the Act provides that, "No Court shall entertain any suit for the recovery of wage or of any deduction from wages in so far as the sum so claimed could have been recovered by an application under section 15. .
Now, the argument of the respondents is that under the provisions aforesaid, an employee has to prosecute his claim for unpaid wages before the authority within the time limited by section 15 of the Wages Act, which is one year in the State of Bombay, that if he fails to do so it becomes unenforceable, and a suit with respect thereto under the general law is also barred.
The result is, it is contended, that having regard to the definition of "unpaid accumulations" as meaning all payments due to the employees but not made to them within a period of three years, the employer runs no risk of being called upon to pay to the employee what has been paid by him to the Board under section 3(1), and that therefore a payment under the impugned Act gives him what is, for all practical purposes, a good discharge.
This argument rests on the supposition that so far as unpaid wages are concerned, the operation of the Wages Act is co extensive with that of the impugned Act.
But that clearly is erroneous.
It is true that wages as defined in the Wages Act 1139 would include whatever are wages under the impugned Act.
But section 1(6) limits the application of the Wages Act to wages which are below Rs. 200 for a wage period.
In respect of wages of Rs. 200 or more, it is the general law that would apply, and the period of limitation is not one year under section 15 of the Wages Act but three years under article 102 of the Limitation ' Act, which period is capable of extension under the provisions of the Limitation Act beyond the three years mentioned in section 2(10) of the impugned Act.
Then, it is to be noted that under the proviso to section 15(1), the authority has the power to admit a petition even beyond the period mentioned there, if sufficient cause is shown therefor.
To this, the reply of the respondents is that as on the terms of section 3(1) and the second proviso to section 5(2) they are to take effect notwithstanding anything contained in the Wages Act or any other law, they override the power conferred by the proviso to section 15(1) of the Wages Act or the provisions of the Limitation Act.
Even as regards section 22 of the Wages Act, there is divergence of judicial opinion as to its true scope.
In Simpalax Manufacturing Co. Ltd. vs Alla Ud Din (1), it was held that if there was any bona fide dispute as to the amount payable, the jurisdiction of the Civil Court was not barred by section 22.
On the other hand, it was held in Bhagwat Rai vs Union of India (2) that the jurisdiction of the Civil Court would be barred, even if there was a bona fide dispute, and that the bar under section 22(d) was absolute, and certain observations in Modern Mills Ltd. vs Mangalvedhekar (3) and A. B. Sarin vs B. C. Patil (4) were relied on, as supporting this contention.
Even if Mr. Seervai is right in his contention that the law is correctly laid down in Bhagwat Rai vs Union of India (2) and that the decision in Simpalax Manufacturing Co. Ltd. vs Alla Ud Din(1) is wrong, the fact remains that claims in respect of unpaid wages to which the impugned Act applies must, in view of section 1(6) of the Wages Act, fall at least (1) A.I.R. 1945 Lah.
(2) I.L.R. (4) A.I.R. 1951 BOM.
(3) A.I.R. 1950 Bom.
145 1140 in part outside the purview of that Act, and the protection afforded by section 15 of that Act will not be available with reference thereto.
It is next contended that even if the impugned Act does not protect the employer in respect of unpaid wages which fall outside the Wages Act, it should be upheld in so far as it relates to those claims which fall within the purview of that Act, as the bar of limitation under section 15 of that Act is sufficient safeguard to the employer against being made liable at the instance of the employees for wages which had been paid to the Board.
And it is also contended that even with reference to claims for unpaid wages which fall outside the Wages Act, the impugned Act should be held to be valid if such claims are barred under the provisions of the Limitation Act.
In other words, the contention is that the impugned Act should be upheld in respect of that portion of the unpaid wages the recovery of which by the employees is barred by limitation whether under section 15 of the Wages Act or the Limitation Act.
The impugned Act, it should be noted, merely enacts that all unpaid accumulations should be paid to the Board.
It makes no distinction between claims for unpaid wages which are barred by limitation and those which are not so barred.
It is contended for the respondents that when the subject matter of a law comprehends distinct matters as to some of which it is unconstitutional and bad, it should nevertheless be upheld as regards the others, if those others form a distinct category, and that this principle applies not only when a classification into distinct categories appears on the face of the law but also when it exists in fact.
Now, the doctrine of severability in application is well established in our law (vide The State of Bombay vs F. N. Balsara (1), The State of Bombay vs
The United Motors (India) Ltd.and R. M. D. Chamarbaugwalla vs Union of Indiaand the principles applicable have been stated fullyin Chamarbaugwalla 's Case (3).
But assuming on the basis of the above autho (1) ; (2) [1953] S.C.R.1069.
(3)[1957] S.C.R. 930.
1141 rities that we can confine the operation of the impugned Act to those claims of unpaid wages which are barred by limitation, the question still is whether the impugned Act gives a discharge to the employer even in respect of those claims; for, as already stated, the operation of article 19(1)(f) can be avoided only if it is established that there has been a substitution of creditors, which can only be if and when the employer gets a discharge from those obligations to the employees.
The point to be decided therefore is whether the effect of the bar of limitation is to discharge the employer from liability to the employees.
It has been already mentioned that when a debt becomes time barred, it does not become extinguished but only unenforceable in a court of law.
Indeed, it is on that footing that there can be a statutory transfer of the debts due to the employees, and that is how the Board gets title to them.
If then a debt subsists even after it is barred by limitation, the employer does not get, in law, a discharge therefrom.
The modes in which an obligation under a contract becomes discharged are well defined, and the bar of limitation is not one of them.
The following passages in Anson 's Law of Contract, 19th Edition, page 383, are directly in point: " At Common Law lapse of time does not affect contractual rights.
Such a right is of a permanent and indestructible character, unless either from the nature of the contract, or from its terms, it be limited in point of duration.
"But though the right possesses this permanent character, the remedies arising from its violation are withdrawn after a certain lapse of time; interest reipub licae ut sit finis litium.
The remedies are barred, though the right is not extinguished." And if the law requires that a debtor should get a dis charge before he can be compelled to pay, that requirement is not satisfied if he is merely told that in the normal course he is not likely to be exposed to action by the creditor.
That this distinction is not purely academical but.
1142 is of practical importance will be seen, when regard is had to the provisions of the Industrial Disputes Act.
Under that Act, there is no period of limitation prescribed for referring a dispute for adjudication by a tribunal.
Even when a claim for wages falls within the purview of the Wages Act and an application under section 15 of that Act would be barred, it can nevertheless give rise to an industrial dispute in respect of which action can be taken under the provisions of the Industrial Disputes Act.
It was held by the Federal Court in Shamnagore Jute Factory Co. Ld.
vs section M. Modak (1) that section 22(d) of the Wages Act did not take away the power of the authorities to refer to a tribunal set up under the Industrial Disputes Act a claim which could be made under the Wages Act, as that section had application only to suits and did not exclude other proceedings permitted by law for the enforcement of payment.
If a tribunal appointed under that Act can direct an employer to make payment of wages, it follows that the bar under section 15 of the Wages Act does not give an absolute protection to the employer, and the same consequence must follow when the bar of limitation arises under the Limitation Act.
The result therefore is that when an employer makes a payment under section 3(1) of the Act he gets no discharge from his obligation to the employees, even when the enforcement thereof is barred by limitation.
The contention based on the provisions of the Wages Act failing, Mr. Seervai falls back on section 56 of the Contract Act as furnishing a ground for holding that the employer is discharged.
(2) of section 56 provides that, " a contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
" It is argued that by operation of section 3 of the impugned Act, the performance of the contract by the employer has become impossible, and the contract has thereby (1) 1143 become void.
Section 56 of the Contract Act embodies the law relating to frustration of contracts, and the true scope of that section was considered by this Court in Satyabrata Ghose vs Mugneeram Bangur and Co. The position was thus stated by Mukherjea J.: " In the large majority of cases however the doctrine of frustration is applied not on the ground that the parties themselves agreed to an implied term which operated to release them from the performance of the contract.
The relief is given by the court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement.
Here there is no question of finding out an implied term agreed to by the parties embodying a provision for discharge, because the parties did not think about the matter at all nor could possibly have any intention regarding it.
When such an event or change of circumstances occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the court which can pronounce the contract to be frustrated and at an end.
The court undoubtedly has to examine the contract and the circumstances under which it was made.
The belief, knowledge and intention of the parties are evidence, but evidence only on which the court has to form its own conclusion whether the changed circumstances destroyed altogether the basis of the adventure and its underlying object.
This may be called a rule of construction by English Judges but it is certainly not a principle of giving effect to the intention of the parties which underlies all rules of construction.
This is really a rule of positive law and as such comes within the purview of section 56 of the Indian Contract Act.
" Counsel for the respondents relies on these obser vations, and contends that when the contract of service was entered into between the employer and the employees, they could not have contemplated (I) ; ,323. 1144 that the Legislature would have intervened and required the employer to pay the arrears of wages to the Board, and that that is a supervening impossibility which brings section 56 into play and renders the contract void.
We are not satisfied that the performance of the contract of service has been rendered impossible by reason of section 3(1) of the impugned Act.
But assuming that that is the position, what follows ? The matter would then be governed by section 65 of the Contract Act, which provides that when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it.
Under this section, the employer is liable to make compensation to the employee for the work done by him, and that liability can be enforced against him in spite of the fact that he has paid the unclaimed wages to the Board under section 3 (1) of the Act.
We are therefore of opinion that even if the matter is governed by section 56 of the Contract Act, the employer is no more discharged than by the operation of the bar of limitation under section 15 of the Wages Act, or the provisions of the Limitation Act.
In this view, it must be held that the provisions of the impugned Act are unconstitutional, in that they take away the property of the appellant in violation of either article 19 (1) (f) or article 31 (2) of the Constitution.
A contention was also raised on behalf of the appellant that even if the impugned Act did not encroach on any of the Constitutional rights of the appellant, it clearly violated the rights of the employees in that it deprives them of their right to wages earned by them , that it was therefore void as against them as being in contravention of article 31 (2), and being void against them, it was void against the appellant as well.
For the respondents, it is contended that the Act cannot be held to infringe article 31 (2) even as regards the employees, as choses in action equally with money are outside the operation of that Article, and reliance is placed on the observations already referred to in The State of Bihar vs Maharajadhiraja 1145 Sir Kameshwar Singh of Darbhanga (supra) at pages 942, 960 961 and 1015 to 1018.
Now, as the Act takes over the rights of the employees in respect of wages due to them even when they are not barred without making any provision for compensation of the same to them, it must at least to that extent be held to be unconstitutional, whether as contravening article 19 (1) (f) or article 31 (2) it is unnecessary to decide.
It is then argued that this is an objection open only to the employees, and that the appellant can make no grievance of it.
It is no doubt true that a question as to the constitutionality of a statute can be raised only by a person who is aggrieved by it; but here, the statute deals with rights arising out of contract, and that presupposes the existence of at least two parties with mutual rights and obligations, and it is difficult to see how when the rights of one party to it are interfered with, those of the other can remain unaffected by it.
Let us assume that the appellant makes a payment to the Board under section 3 (1) of the impugned Act on the footing that the law is not unconstitutional as against him.
What is there to prevent the employee from suing to recover the same amount from the appellant on the ground that the Act is unconstitutional ? It will be no answer to that claim to plead that the appellant has already paid the amount to the Board.
The fact is that a statute which operates on a contract must affect the rights of all the parties to the contract, and if it is bad as regards one of them, it should be held to be bad as regards the others as well.
It is unnecessary to pursue this question further, as we have held that the Act is unconstitutional even as regards the appellant.
It remains to deal with the contention of the res pondents that the impugned legislation is, in substance, one in respect of abandoned property, and that, by its very nature, it cannot be held to violate the rights of any person either under article 19 (1) (f) or article 31 (2).
That would be the correct position if the character of the legislation is what the respondents claim it to be, for it is only a person who has some interest in property that can complain that the 1146 impugned legislation invades that right whether it be under article 19 (1) (f) or article 31 (2), and if it is abandoned property, ex hypothesi there is no one who has any interest in it.
But can the impugned Act be held to be legislation with respect to abandoned property ? To answer this question, it is necessary to examine the basic principles underlying such a legislation, and ascertain whether those are the principles oil which the Act is framed.
The expression " abandoned property " or to use the more familiar term "bona vacantia " comprises properties of two different kinds, those which come in by escheat and those over which no one has a claim.
In Halsbury 's Laws of England, Third Edition, Vol. 7, page 536, para.
1152, it is stated that " the term bona vacantia is applied to things in which no one can claim a property and includes the residuary estate of persons dying intestate ".
There is, however, this distinction between the two classes of property that while the State becomes the owner of the properties of a person who dies intestate as his ultimate heir, it merely takes possession of property which is abandoned.
At common law, abandoned personal property could not be the subject of escheat.
It could only be appropriated by the Sovereign as bona vacantia.
Vide Holdsworth 's History of English Law, Second Edition, Vol. 7, pages 495 496.
In Connecticut Mutual Life Insurance Company vs Moore(1), the principle behind the law was stated to be that " the State may, more properly, be custodian and beneficiary of abandoned property than any other person." Consistently with the principle stated above, a law relating to abandoned property enacts firstly provisions for the State conserving and safeguarding for the benefit of the true owners property in respect of which no claim is made for a specified and reasonable period, and secondly, for those properties vesting in the State absolutely when no claim is made with reference thereto by the true owners within a time limited.
There has been quite a number of laws on abandoned property in the American States, and their validity (I) ; , 546; ; , 869.
1147 has been the subject of numerous decisions in the Supreme Court of United States.
In Anderson National Bank vs Luckett (1), the law related to Bank deposits.
It provided that if moneys in deposit had not been demanded or operated on, for a period of 10 years in the case of demand deposits and 25 years in the case of non demand deposits, they might be presumed to have been abandoned and the Banks were to transfer them to the State.
Claims to the deposits might be made to the Commissioner of Revenue, who was to determine on their validity, his decision being open to review by the Courts.
The validity of this law was questioned on the ground that sufficient opportunity had not been given to the depositors to claim the deposits, and that as they could attack the law as unconstitutional, the Bank got no protection by payment to the State.
In repelling this contention, the Supreme Court observed that the Act did not deprive the depositors of any of their rights, they being given ample opportunity to establish their rights, and that it merely substituted the State in the place of the Bank as their debtor.
The Court also held that it was " within the Constitutional power of the State to protect the interests of depositors from the risks which attend long neglected accounts, by taking them into custody when they have been inactive so long as to be presumptively abandoned ".
In Connecticut Mutual Life Insurance Co. vs Moore (supra), the law was with reference to moneys payable on life insurance policies, which had matured.
It provided that if those amounts had remained unclaimed for a period of seven years, then it had to be advertised by the companies in the manner provided therein, and if no claims were preferred thereafter, the amounts were to be paid to the State Comptroller for care and custody.
In holding that the law was valid, the Court observed : " There is ample provision for notice to beneficiaries and for administrative and judicial hearing of their claims and payment of same.
There is no possible injury to any beneficiary." (1) ; , 241; ; , 701 146 1148 In Standard Oil Company vs New Jersey (1), the law related to shares and unpaid dividends, and provided for the State taking them over, if they remained unclaimed for a period of 14 years.
There was a provision for notice to the unknown owners by advertisement.
It was held following Connecticut Mutual Life Insurance Company vs Moore (supra) that the law was valid.
In the light of the above discussion, there cannot be any reasonable doubt that the impugned Act cannot be regarded as one relating to abandoned property.
The period of three years mentioned in section 2 (10) of the Act is merely the period of limitation mentioned in article 102 of the Limitation Act, and even taking into account the class of persons whose claims are dealt with in the Act, as counsel for respondents would have us do, the period cannot be regarded as adequate for raising a presumption as to abandoment.
A more serious objection to viewing the legislation as one relating to abandoned claims is that there is no provision made in the Act for investigating the claims of the employees or for payment of the amounts due to them, if they established their claims.
The purpose of a legislation with respect to abandoned property being, in the first instance, to safeguard the property for the benefit of the true owner and the State taking it over only in the absence of such claims, a law which vests the property absolutely in the State without regard to the claims of the true owners cannot be considered as one relating to abandoned property.
This contention of the respondents must also be rejected.
In the result, we are of opinion that section 3(1) in so far as it relates to unpaid accumulations in section 3(2)(b) is unconstitutional and void.
We have now to deal with the question as to the validity of section 3(1) and section 3(2)(a) of the Act, which require the employers to hand over to the Board the fines realised from the employees.
So far as this item is concerned, the position of the employers is wholly (1) ; ; , 1149 different from what it is as regards unpaid accumulations.
Section 8 of the Wages Act deals with the question of fines which could be imposed by the employer, and it provides that they should be entered in a separate register, and applied for the benefit of his employees.
It is not denied by the appellant that under this provision the fines are constituted a trust ' fund, and that the employers are bare trustees in respect of such fund.
Now, the grievance of the appellant is that the Act deprives it of its rights as trustees, and vests them in the Board, and that, further, while the beneficiaries under section 8 of the Wages Act are its own employees, under section 5(2) of the impugned Act they include otherpersons as well.
There might have been substance in the complaint that the appellant had been deprived of its rights as trustee if it bad any beneficial interest in the fund.
But admittedly, it has none, and it is therefore difficult to hold that there has been such substantial deprivation of property, as will offend article 31(2) according to the decisions in The State of West Bengal vs Subodh Gopal Bose and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd. (supra) or such unreasonable interference with rights to property, as will infringe article 19(1)(f).
It is argued with some emphasis that in enlarging the circle of beneficiaries, the Act has encroached on the rights of the employees of the appellant.
But then, the trust is the creation not of the appellant but of the Legislature, which gave the employees certain rights which they did not have before, and what it can give, it can also take away or modify, and we do not see how the employers are aggrieved by it.
We are of opinion that no valid grounds exist on which section 3(1) and section 3(2)(a) of the impugned Act could be attacked as unconstitutional, and they must accordingly be held to be valid.
In the result, we hold, in modification of the order of the Court below, that the provisions of the impugned Act are unconstitutional and void in so far as they relate to " unpaid accumulations", but that they are valid as regards " fines "; and an appropriate writ will 1150 issue against the respondents in the terms stated above.
The appeal succeeds in part, but as it is stated that " unpaid accumulations " form by far the most substantial portion of the claim, we direct the respondents to pay half the costs of the appellant here and in the Court below.
Appeal allowed in part.

summary:
The Bombay Labour Welfare Fund Act (Bom.
XL of 1953) was enacted by the State Legislature with the object of constituting a fund for the financing of activities for the welfare of labour and section 3(1) of the Act provided as follows: "There shall be constituted a fund called the Bombay Labour Welfare Fund and, notwithstanding anything contained in any other law for the time being in force, the sums specified in subsection (2) shall be paid into the Fund.
" Section 3(2) provided, inter alia, as follows "The Fund shall consist of : (a) all fines realised from the employees; (b) all unpaid accumulation;" Notices were served on the appellant 's company as also on other companies similarly situated, by the Welfare Commissioner, appointed under the Act, calling upon them to remit to him the fines and unpaid accumulations in their custody.
The appellant in reply questioned the validity of the Act on the ground that it contravened article 31(2) Of the Constitution and, thereafter, filed a Writ petition, out of which the present appeal arises, which was treated by consent of parties as a test case.
The Judges of the Division Bench who heard the matter field that the impugned Act was intra vires, though on different grounds, and dismissed the petition.
The sole point for determination in the appeal was whether section 3(I) and sub cls.
(a) and (b) Of section 3(2) Of the Act were void as being violative of article 31(2) Of the Constitution: Held, that the unpaid accumulation of wages remaining with the appellant company was its own property and section 3(1) of the impugned Act in so far as it directs the payment of it tinder 3(2)(b) of the Act contravenes article 31(2) Of the Constitution and must be invalid.
Article 31(2A) of the Constitution has no retrospective effect and cannot apply and the matter must be decided on the law as it stood at the date of the Writ petition.
1123 The State of West Bengal vs Subodh Gopal Bose, ; and Dwarkadas Shrinivas of, Bombay vs Sholapur Spinning and Weaving Co. Ltd., ; , applied.
Assuming that money was not property within the meaning of article 31(2) and article 19(1)(f) applied that Article also would be of no help to the respondent as the Act could not be supported under article 19(5) Of the Constitution.
Commonwealth of Australia vs Bank of New South Wales, , held inapplicable.
The State of Bihar vs Mahayajadhiraja Sir Kameshwar Singh of Darbhanga, , considered.
The impugned Act had not the effect of substituting the Board as the creditor in place of the employee nor could it be said to be a legislation in respect of abandoned property.
Although by defining 'unpaid accumulation ' in the way it did the Legislature obviously intended that only such wages of the employees as were time barred should be taken by the State, it being well settled that the law of limitation only bars the remedy but does not extinguish the debt, sections 3(I), 5(2) and 17 of the Act must be held to have the effect of transferring to the Board the debts due by the appellant to its employees free from the bar of limitation.
Such a transfer can be valid only if it gives a complete discharge to the employer from the debts.
If it does not, the Act must be held to infringe article 19(1)(f) of the Constitution.
The Act contains no provision granting a discharge to the debtor.
The bar of limitation prescribed either by section 15 Of the Payment of Wages Act (Act IV Of 1936) or article 102 of the Limitation Act or the provisions of section 56 of the Contract Act, assuming they applied, could not give such a discharge.
Where the Statute deals with rights arising out of a contract and interferes with the rights of one of the parties to it, it must affect those of the other parties to it as well.
Consequently, the impugned Act which takes over the rights of the employees in respect of wages due to them without compensation and is, therefore unconstitutional, as contravening article 19(1)(f) or Art 31(2) of the Constitution, would be unconstitutional as regards the appellant as well.
The purpose of a legislation relating to abandoned property must be, in the first instance, to safeguard the property in the interest of the true owner and thereafter, in absence of any claim, the taking over of it by the State.
The impugned Act which vests the property absolutely in the State without any regard for the claims of the true owner cannot be said to be a law relating to abandoned property.
I43 1124 Connecticut Mutul Life Insurance Company vs Moore, ; , Anderson National Bank vs Luckett, ; and Standard oil Company vs New Jersey, ; , referred to.
As regards the fines mentioned in section 3(2)(a) of the Act the appellant must be held to be a bare trustee under section 8 of the Wages Act having no beneficial interest in fund created by that Act, and, consequently, sections 3(I) and 3(2)(a) of the Act cannot contravene article 31(2) Or article 19(1)(f) of the Constitution.
Nor could it be said that the Act by extending the circle of beneficiaries had encroached on the rights of the employees of the appellant.
These sections must, therefore, be held to be constitutionally valid.


judgement:
ivil Appeal No. 10747 of 1983.
From the Judgment and order dated 26.8.1983 of the Rajasthan High Court in S.B. Civil Second A. No. 153 of 1983.
Shiv Dayal Srivastava, S.K. Bagga and Mrs. S.K. Bagga for the Appellants.
Dr. Y.S. Chitale and Aruneshwar Gupta for the Respondents.
The Judgment of the Court was delivered by OZA, J.
This is an appeal filed by the tenant after obtaining leave from this Court against a decree for eviction granted by the trial court and ultimately affirmed in second appeal by the High Court of Rajasthan by its judgment dated 26.8.83.
It appears that the appellants became tenants in 1947 but in 1958 the predecessors in 127 title of the respondents one Shri Bhonri Lal Surender Kumar and Rajinder Kumar purchased the property and thereafter in 1959 they became the tenants of Bhonri Lal and others.
It is alleged that originally the rent was Rs.135 but later on was raised to Rs.145.
The premises in question is a showroom and apparently is a business premises.
In the year 1974, Bhonri Lal, Surendra Kumar and Rajinder Kumar filed a suit for eviction against the present appellant in respect of this show room which is situated at M.I. Road, Jaipur, on the ground of bona fide need, material alterations in the premises and default in payment of rent.
During the pendency of this suit the present respondent purchased the property from Bhonri Lal and others in 1979.
In substance the present respondent Harsh Wardhan Himanshu and Smt.
Ritu Kasliwal purchased this property during the pendency of the suit and continued with the suit but the only ground on which eviction was granted and which was pressed before us and also before the High Court was the ground that the tenant present appellant without the permission of the landlord has made material alterations in the premises.
The learned Judge of the High Court has maintained the finding of the construction of a balcony (Dochatti) and maintained the order of eviction on the ground that it is material alterations in the premises.
The decree has been passed under Section 13(1)(c) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 which reads as under: "13(1)(c) that the tenant has without the permission of the landlord made or permitted to be made any such construction as, in the opinion of the court has materially altered the premises or is likely to diminish the value thereof.
" It is only on this ground that the decree has been passed which has been challenged by the appellant before us.
It is contended by learned counsel for the appellant that in the plaint what was alleged by the plaintiff was as stated in Para 5: "Para 5 That the defendants had constructed one Dochatti as balcony which is covering good area and is utilizing this Dochhati for his business.
This work done by defendant is material alteration in the rented premises and this being without permission of plaintiffs is against the 128 law and on this Court the plaintiffs are entitled to get eviction decree for tenanted property.
" In the written statement this Para 5 after amendment reads thus: "Firm oriental Engineering Co. constructed a storey like balcony over the disputed show room in 1958 with the permission of the plaintiff.
" It was contended by learned counsel that what the courts below have tried to infer on the basis of some inspection note and some affidavit filed at the back of the appellant and on the basis of no other evidence that it is a structure permanent in nature and that it has been affixed in the wall and that it has also been affixed on the floor, this according to learned counsel, is all based on no evidence at all.
It was contended by the learned counsel that the only pleading was that this wooden balcony (Dochhatti) has been raised by the tenant.
It is significant that even this is not alleged in the plaint when this was done whereas in the written statement it was clearly stated that this Dochhatti was made in 1958.
It was further contended that in fact there is no material or evidence to come to the conclusion that this was constructed at what time.
It is significant, according to the learned counsel for the appellant, that the two notices which were given before filing of the suit by the predecessors in title of the respondent this was not alleged as one of the grounds of eviction and in his own statement in cross examination what was stated has significantly been omitted from consideration by the three courts, the trial court, the appellate court and the High Court of Rajasthan.
Learned counsel referred to this part of the statement and contended that it is clear that in the notice this was not made as a ground.
In his cross examination he stated that when the tenant assured that it will be removed when he will vacate, he gave up and that was not taken as a ground for eviction in the notice.
Apart from it, it was contended that in fact in 1964 a window was opened just to give sufficient light and air to this Dochhatti or balcony which is alleged to have been constructed by the tenant and for this purpose the expenses were borne by the landlord which is admitted by the predecessors in title of the respondent in their own statement and which is not disputed in these proceedings.
On the basis of this it was contended that in fact the finding reached by the three courts is not based on evidence.
It is also contended that the material evidence has not been looked into at all and that the material which could not be said to be evidence in the case has been looked into to reach this conclusion.
129 It was further contended that apart from this the inference that this is a material alteration is contrary to the principles laid down by this court in number of decisions.
According to the learned counsel, it could not be said to be a construction which materially altered the premises in question.
On the basis of the statement of the respondents predecessor in title Bhonri Lal in cross examination, the absence of this being a ground of eviction in the two notices issued by the respondent Bhonri Lal before filing of the suit and the payment of the expenditure incurred for opening a window to provide light to this balcony by the landlord himself are circumstances, according to the learned counsel, which clearly go to show that this Dochhatti or balcony was constructed with the permission of Bhonri Lal and others who were the predecessors in title.
It is also clear that for all these years this was present in the show room as is clear from the evidence that it is visible from outside.
Therefore it could not be said that the landlord did not notice it and still no objection was raised.
Learned counsel for the appellant further contended that the making of the balcony which is the wooden structure supported on wooden pillars and supported on wooden beams could not in any manner be said to be a material alteration of the building itself and in support of this contention the learned counsel placed reliance on the decision of this Court in Om Prakash vs Amar Singh and another, AIR 1987 SC 617.
It was also contended that the landlord having seen the balcony constructed and not having raised any objection in so much so that even in the notice he did not raise an objection nor it is made a ground for eviction clearly goes to show that it was with the implied consent of the landlord that this Dochhatti or balcony was constructed.
It is also clear from the circumstances that in order to provide light and air to this balcony in the upper portion a window was made in the show room and the cost of the construction of this window was paid by the landlord as is admitted by him.
This also goes to show that this balcony or this wooden cabin was constructed or made with the implied consent of the landlord.
The statement made by Bhonri Lal in cross examination clearly shows, according to the learned counsel, that even if any right accrued to him on the ground of this alteration he waived it and for this purpose learned counsel placed reliance on Dawsons Bank Ltd. vs Nippon Menkwa Kabushihi Kaish, AIR 1935 Privy Council P 79 (Japan Cotton Trading Co. Ltd.).
On the question of waiver, learned counsel for the appellant also referred to certain observations in Maxwell on the Interpretation of Statutes and also to certain observations from the American Jurisprudence.
130 Learned counsel for the respondents, on the other hand, referred to the plaint paragraph 5 quoted above and also the written statement para 5 after amendment and contended that on these allegations the courts below came to a finding of fact.
However it was not disputed that what construction has been made is a finding of fact but whether it amounts to material alteration or not is undoubtedly a question of law.
It was further contended by the learned counsel that as all the three courts have concurrently came to the conclusion on question on fact, it is not open to this Court to reopen that question.
It was also contended by learned counsel that the inspection note by the learned trial Judge, no doubt, has been relied upon but it is contended that as observed by the teamed Judge of the High Court it is relied upon only for purposes of appreciating evidence but unfortunately the learned counsel for the respondents himself could not refer to any other evidence except the statement of the tenant the appellant himself and apart from it even the allegations contained in para S of the plaint do not clearly make out that how this construction is such which was affixed on the wall and on the basis of which an attempt was made to contend that in fact it could not be removed unless the walls are demolished.
This argument and the inferences drawn by the courts below apparently are not based on any evidence at all.
The learned counsel contended that the balcony is strongly annexed lo the walls with the beams and the structure is 10`x25 ' to the entire breadth of the showroom and also contended that it could not be removed without damaging the walls and thereby damaging the property itself but unfortunately learned counsel could not refer to any evidence in the case which could suggest these facts which were alleged by the learned counsel during the course of his arguments.
Counsel in support of his contentions placed reliance on the decision of this Court in Om Prakash 's case (supra) and also on Babu Manmohan Das Shah & Ors.
vs Bishun Das, ; and it was also contended that question of waiver does not arise, according to the learned counsel, as if the landlord wants not to raise any objection, he could grant a permission to the tenant but in absence of that the question of waiver could not be raised.
Learned counsel attempted to contend that Bhonri Lal who filed this suit in 1974 filed the suit on that ground and therefore it could not be said that he waived the right to file a suit on this ground.
Learned counsel did not refer to the statement of Bhonri Lal himself in cross examination.
It was contended that it was in 1972 that the landlord for the first time came to know about the construction of this balcony and in 1974 suit was filed.
It was therefore contended that the appeal deserves to be rejected.
131 The first notice given on behalf of Bhonri Lal is through an advocate and in this notice it is clear that this objection about any construction or material alteration is not at all mentioned.
Another notice which is given just a little before the filing of the suit is a notice dated 13.8.74 and in this notice also there is no mention of any material alteration or construction of the Dochhatti or balcony.
Although in this there is a reference to some damage to the floor of show room which was also made as one of the grounds which later on was not pressed and given up.
It is therefore plain that if this Dochhatti or balcony which is a wooden construction put on was a matter which was without the permission of the landlord and about which the landlord had not consented, he would have made it as a ground for termination of the lease or a ground of eviction in any one of these two notices if not in both.
It is very clear that this fact has not at all been alleged in these notices given to the tenant appellant.
In the cross examination of Bhonri Lal, it is clearly stated when he was asked as to why in the notices which he gave before the filing of the suit this was not made a ground for termination of the lease, he plainly stated "no notice was given for the reason that the defendant had said that when they would vacate the show room they would remove the balcony.
On their saying so, I did not have any objection about the balcony.
On the eastern side there is a window.
I do not know its length and breadth.
This is correct that this window was constructed in the year 1964.
The cost of construction of the window amounting to Rs.199.85 p. has been paid by me to the defendant.
The balcony gets light and air through this widow.
" It is significant as referred to above that in the two notices this was not made as a ground.
It is also significant that when this was brought to the notice of Bhonri Lal the landlord who filed this suit originally he gave the above explanation.
The present respondent in fact purchased during the pendency of the suit this property and indirectly purchased this litigation.
Statement which has been quoted above goes to show that he gave up his objection to the balcony, it is also clear from his evidence that a window which was opened to give light and air to this balcony, the cost of it was also borne by the landlord himself.
In the context of this evidence it is significant that even in the plaint it was not clearly stated that this balcony was made in the year 1972 as is now alleged.
It is also significant that what is now alleged that this balcony is supported on beams which have been fixed in the walls and pillars which have been fixed in the floor is also not alleged in the plaint at all.
It is also not alleged in the plaint as to how this structure which is 132 a wooden structure easily removeable according to the defendant appellant could be said to be a material alteration or as to how it has impaired or damaged or lowered the value of the property of the appellant.
It is no doubt true that the Section as it stands does not require that in addition to material alteration it should be to lower or reduce the value of the property as was clearly observed by the learned Judge of the High Court and on that count there appears to be not much controversy.
It is significant that all the three courts neither considered the omission of this allegation in the notices nor the statement made by Bhonri Lal quoted above and descripancies in pleadings referred to above and have come to conclusions which could not be reached.
The only possible conclusion from these facts could be that either this balcony was constructed with the implied consent of the landlord or that after seeing it and understanding and on assurance given by the tenant the landlord decide to waive his objection to it and therefore did not make it as a ground for termination of the lease in his notice before the suit and even in the earlier notice which was given by him if at all there is any doubt it is clear that the landlord waived his right to file a suit on this ground.
Unfortunately all the three courts failed to look into these conclusions appearing in evidence and failed to appreciate the matter in this light.
On the question of waiver, in Maxwell on the Interpretation of Statutes it is observed as under: "In Stylo Shoes, Ltd. vs Prices Tailors, Ltd., (75) a notice to determine an existing tenancy under the Landlord and Tenant Act, 1954 had not, it was argued.
been served "by leaving it for the tenants at their last known place of abode in England" as required by section 23(1) of the Act.
The tenants had in fact received the notice, had intimated to the landlords that they would not be willing to give up possession of the premises, and had issued an originating summons for a new tenancy.
On the facts, Wynn Parry J. held that the notice had been properly served; but he added that, even if it had not been duly served, the tenants must in the circumstances be taken to have waived any invalidity in the service." (75) " It clearly goes to show that if a party gives up the advantage he could take of a position of law it is not open to him to change and say that he can avail of that ground.
In Dawsons Bank, Ltd 's case, (supra) the Lordships were considering the question of waiver as a little 133 different from estoppel and they observed as under: "on the other hand, waiver is contractual, and may constitute a cause of action; it is an agreement to release or not to assert a right.
If an agent, with authority to make such an agreement on behalf of his principal agrees to waive his principal 's rights then subject to any other question such as consideration the principal will be bound, but he will be bound by contract." But in the context of the conclusion that we have reached on the basis of circumstances indicated above that it could not be held that the tenant had constructed this Dochhatti or balcony a wooden piece without the consent express or implied of the landlord, in our opinion, it is not necessary for us to dialate on the question of waiver any further and in this view of the matter we are not referring to the other decisions on the question of waiver.
It was contended on behalf of the respondents that the finding about the construction without the consent of the landlord is a finding of fact and therefore could not be gone into in this appeal on leave under article 136 of the Constitution but it is clear that if the Courts below while coming to a conclusion of fact has omitted to consider material pieces of evidence and have drawn inferences without looking into the material pieces of evidence which prove circumstances on the basis of which a contrary inference could be drawn, such findings are not binding on this Court and in this view of the matter therefore in our opinion the conclusions reached by the courts below could not be accepted.
The next question which was debated at length by learned counel for parties is as to whether the said construction of the wooden Dochhatti or a balcony is a material alteration within the meaning of Sec. 13(1)(c) of the Act quoted above and in this regard it is undisputed that what has been constructed is a wooden structure which makes in the showroom a cabin and on the roof of the cabin a kind of balcony with a wooden staircase from inside the cabin to go to this balcony.
Admittedly this all is a wooden structure built on beams and planks inside the showroom itself and in order to come to the conclusion whether such a wooden cabin made up inside the showroom could be said to be a material alteration or not, we can draw much from Om Prakash 's case (supra) where it was observed: 134 "The Act does not define either the word 'materially ' or the word 'altered '.
In the absence of any legislative definition of the aforesaid words it would be useful to refer to the meaning given to these words in dictionaries.
Concise oxford Dictionary defines the word 'alter ' as change in character, position ' "materially" as an adverb means important essentially concerned with matter not with form.
In Words and Phrases (Permanent Edition) one of the meanings of the word 'alter ' is to make change, to modify, to change, change of a thing from one form and set to another.
The expression 'alteration ' with reference to building means 'substantial ' change, varying, change the form or the nature of the building without destroying its identity".
The meaning given to those two words show that the expression 'materially altered ' means "a substantial change in the character, form and the structure of the building without destroying its identity".
It means that the nature and character of change or alteration of the building must be of essential and important nature.
In Babu Manmohan Dos Shah vs Bishun Dos, ; 1967 SC 643), this Court considering the expression 'material alterations ' occuring in section 3(1)(c), U.P. (Temporary) Control of Rent and Eviction Act, 1947 observed; "Without attempting to lay down any general definition as to what material alterations mean, as such, the question would depend on the facts and circumstances of each case, the alterations in the present case must mean material alterations as the construction carried out by the respondent had the effect of altering the front and structure of the premises.
" It is no doubt true that in the last part of this passage quoted above it has been clearly stated that no definition could be drawn of the material alteration but it will have to be decided on the basis of facts and circumstances appearing in each case but the material consideration would be whether the construction carried out by the tenant alters the front show or the structure of the premises and considering this aspect of the law it was further observed: "In determining the question the Court must address itself to the nature, character of the constructions and the extent 135 to which they make changes in the front and structure of the accommodation, having regard to the purpose for which the accommodation may have been let out to the tenant.
The Legislature intended that only those constructions which bring about substantial change in the front and structure of the building should provided a ground for tenants ' eviction, it took care to use the word "materially altered the accommodation".
The material alterations contemplate change of substantial nature affecting the form and character of the building.
Many a time tenants make minor constructions and alterations for the convenient use of the tenanted accommodation.
The Legislature does not provide for their eviction instead the construction so made would furnish ground for eviction only when they bring about substantial change in the front and structure of the building.
Construction of a Chabutra, Almirah, opening a window or closing a verandah by temporary structure or replacing of a damaged roof which may be leaking or placing partition in a room or making similar minor alterations for the convenient use of the accommodation do not materially alter the building as in spite of such constructions the front and structure of the building may remain unaffected.
The essential element which needs consideration is as to whether the constructions are substantial in nature and they alter the form, front and structure of the accommodation.
" Here it has been observed that the essential element which needs consideration as to whether the construction are substantial in nature and they alter the front elevation or the front and the structure of the building itself and it is in the light of this that ultimately in this decision what was constructed has been held not to be material alteration as it was observed: "The partition wall was made without digging any foundation of the floor of the room nor it touched the ceiling instead; it converting a big hall into two portions for its convenient use, it could be removed at any time without causing any damage to the building.
The partition wall did not make any structural change of substantial character either in the form or structure of the accommodation.
" The question as to whether the construction is of a permanent nature 136 or a temporary nature also was considered by this Court in the decision quoted above and it was observed: "The High Court observed that the fact that a construction is pennanent or temporary in nature does not affect the question as to whether the constructions materially alter the accommodation or not.
We do not agree with this view.
The nature of constructions, whether they are permanent or temporary, is a relevant consideration in determining the question of 'material alteration '.
A permanent construction tends to make changes in the accommodation on a permanent basis, while a temporary construction is on temporary basis which do not ordinarily affect the form or structure of the building, as it can easily be removed without causing any damage to the building.
" It is thus clear that what is alleged to have been constructed in the present case, in the light of the test laid down by this Court in the decision referred to above, could not be said to be material alteration in the premises in question.
In Venkatlal G. Pittie & Anr.
vs M/s Bright Bros. (Pvt.) Ltd., (3) SC 139 the question was not about material alteration but the question was whether the construction carried out by the tenant were permanent in nature and were such which has diminished the value of the property and further that the construction have been made after encroaching on the land which was not the part of the lease and in that context the question as to whether the structures raised were permanent or temporary have been considered and the nature of the things as appeared in that case apparently is of no avail so far as the case in hand is concerned as it was observed in that case: "Two questions arise for consideration in these appeals (i) whether the structure constructed by the tenant in the premises in question amounted to permanent structure leading to the forfeiture of the tenancy of the tenant; (ii) what is the scope and extent of the jurisdiction of the High Court under Article 227 of the Constitution on questions of facts found by the appellate bench of Small Causes Court.
" In Babu Manmohan Das Shah 's case, (supra) the question which was be fore this Court was not as tn whether the construction made was such which could be said to be a material alteration but the real question which was raised before the Court was whether it is necessary further to hold 137 that this construction diminishes the value of the accommodation although in the Section it was material alteration or such construction which diminishes the value of the accommodation used but it was contended that it will amount to and considering this aspect of the matter in this judgment it was observed: "As already stated, even if the alterations did not cause any damage to the premises or did not substantially diminish their value the alterations were material alterations and on that basis alone the appellants were entitled to evict the respondent.
" It is thus clear that even this judgment is of no assistance so far as the present case is concerned.
In the light of the discussions above and in the light of the test laid down by this Court in Om Prakash 's case.
supra it is clear that this construction of the balcony or Dochhatti which is a wooden structure does not amount to material alteration which could give a cause of action to the respondent landlord for filing a suit of eviction.
No other question was pressed.
In the light of the discussions above therefore the appeal has to be allowed.
It is therefore allowed.
The judgment and decree passed by the courts below are set aside and the suit filed by the respondent is dismissed.
In the circumstances of the case parties are directed to bear their own costs so far as this Court is concerned.
S.L. Appeal allowed.

dataset_name: IN-Abs

summary:
% In the year 1974, the then landlords of the property in dispute, Bhonri Lal and others, filed a suit for eviction against the tenants appellants on the ground of bona fide need, material alterations in the premises and default in payment of the rent.
During the pendency of the suit, the present respondents purchased the property in 1979 and v continued with the suit for eviction.
The trial Court passed a decree for eviction on the ground of material alterations construction of a wooden balcony (Dochhatti) made in the premises by the appellants under section 13(1)(c) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950.
The decree of the trial Court was affirmed in Second Appeal by the High Court.
Aggrieved by the decision of the High Court, the appellants appealed to this Court by special leave.
Allowing the Appeal, the Court, ^ HELD: The first notice in the case given to the tenants/appellants on behalf of the then landlord Bhonri Lal was through an Advocate and there was no mention of the objection about any construction or material alteration at all.
Another notice dated 13.8.1974, given just a little before the filing of the suit for eviction, also did not contain any mention of any material alteration or construction of the balcony (Dochatti).
There was a reference to some damage to the floor of the property in dispute in that notice, but the same was given up and not pressed.
It was, therefore, plain that if the balcony/Dochatti, which was a wooden structure, was a construction without the permission and consent of the landlord, he would have made it a ground for termination of the lease or a ground of eviction mentioned in any one of the two notices above said, if not both.
It was a significant factor that in the two notices, that construction was not mentioned as a ground.
In his cross examination, Bhonri Lal admit 125 ted that no notice about the balcony had been given, and explained away the reasons therefor.
[131A D] The present respondents purchased the property in dispute during the pendency of the suit.
The statement of Bhonri Lal in cross examination, showed that he had given up his objection to the balcony, and it was also clear from his evidence that the cost of a window, constructed in the year 1964 to give light and air to the balcony, had been borne by the landlord himself.
In the context of that evidence, it was significant that even in the plaint it had not been clearly stated that the balcony had been constructed in the year 1972 as was now alleged.
It was also significant that what was now alleged that the balcony was supported on beams fixed in the walls and pillars fixed in the floor was also not alleged in the plaint at all.
It was also not alleged in the plaint as to how the structure in question which was a wooden structure, easily removable according to the appellants, could be said to be a material alteration or how the same had impaired or damaged or lowered the value of the property involved.
It is true that section 13(1)(c) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950, as it stands, does not require that in addition to the material alteration being there, it should be to lower or reduce the value of the property, but it was significant that all the three Courts below had not considered the omission of that allegation in the notices and the statement of Bhonri Lal and other discrepancies in the pleadings, and had come to the conclusion which could not be reached.
The only possible conclusion from these facts could be that either the balcony had been constructed with the implied consent of the landlord or that after seeing it the landlord had decided to waive his objection to it on an assurance given by the tenant, and, therefore, had not made it a ground for termination of the lease in his notices given before the suit; the landlord had waived his right to file a suit on that ground.
All the three Courts had failed to look into these conclusions appearing in evidence and appreciate the matter in this light.
If a party gives up the advantage he could take of a position of law, it is not open to him to change and say that he can avail of that position.
[131F H; 132A D; H] In the context of the conclusion that the Court had reached in the facts and circumstances that it could not be held that the tenants had constructed the wooden balcony or Dochhatti without the consent express or implied of the landlord, it was not necessary for the Court to dilate on the question of waiver any further.
[133C] 126 If the Courts below have, while coming to a conclusion of fact, omitted to consider material pieces of evidence and have drawn inferences without looking into that evidence which proves circumstances on the basis of which a contrary inference could be drawn, then, such findings are not binding on this Court and in this view of the matter, the conclusions reached by the Courts below could not be accepted.
[133E] In the light of the test laid down by this Court in Om Prakash vs Amar Singh and another, A.I.R. 1987 S.C. 617, it was clear that the construction of the balcony (Dochhatti), which was a wooden structure, did not amount to a material alteration which could give a cause of action to the respondents landord for filing a suit for eviction.
The judgments and decrees passed by the Courts below set aside and suit filed by the respondents dismissed.
[137C E ] Om Prakash vs Amar Singh and another, A.I.R. 1987 S.C. 617; Dawsons Bank Ltd. vs Nippon Menkwa Kabushihi Kaish (Japan Cotton Trading Co. Ltd.) A.I.R. 1935 Privy Council 78 and Babu Manmohan Das Shah and Ors., vs Bishun Das, ; , relied upon.
Venkatlal G. Pittle & Anr.
vs M/s. Bright Bros. Pvt. Ltd., (3) S.C. 139, referred to.