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PETITIONER: BHARAT BARREL & DRUM MFG.  CO.  LTD. & ANR.

       Vs.

RESPONDENT: EMPLOYEES STATE INSURANCE CORPORATION

DATE OF JUDGMENT23/09/1971

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN VAIDYIALINGAM, C.A.

CITATION:  1972 AIR 1935            1972 SCR  (1) 867  1972 SCC  (2) 860

ACT: Employees’  State Insurance Act, 1948, s. 96(1)(b)-Power  to prescribe  by  rules  "the  procedure  to  be  followed   in proceedings before the court"-If includes power to prescribe period of limitation for claims under s. 75. Limitation, Statutes of-Nature.

HEADNOTE: In  exercise  of the power conferred by s. 96(1)(b)  of  the Employees’ State Insurance Act, 1948, to "Prescribe by  rule the  procedure  to be followed in  proceedings"  before  the Insurance Court, the State Government made r. 17 prescribing a   period  of  limitation  of  twelve  months   for   every application  to the Court.  The Employees’  State  Insurance Corporation  filed an application before the Court  claiming payment  of  the contribution due from the  appellant.   The appellant  took the plea that the application was barred  as it was not presented within the period prescribed. The  High Court, on a reference, held that s. 96(1) (b) did not  grant power  to Government to make a rule prescribing a period  of limitation on claims enumerated in s. 75(2) and,  therefore, r. 17 was ultra vires the rule making power under s.  96(1). On  the question whether the power to prescribe a period  of limitation ’for initiating proceedings before the court is a part  of,  and is included in, the power to  prescribe  "the procedure to be followed in proceedings" before such courts, HELD  :  The power under s. 96(1) (b) does not  empower  the government  to prescribe by rule a period of limitation  for claims under s. 75. (i)  The law of limitation to remedies because, the rule  is that  claims in respect of rights cannot be  entertained  if not  commenced within the time prescribed by the statute  in respect  of  that  right.  The object  of  the  statutes  of limitation  is to compel a person to exercise his  right  to take action within a reasonable time, as also, to discourage and suppress stale, fake and, fraudulent claims.  While this is so, there are two aspects of the statutes of  limitation, the one concerns the extinguishment of the right if a  claim or  action  is not commenced within a particular  time;  the other  merely  bars the claim without  affecting  the  right which  either  remains merely a moral obligation or  can  be availed   of  to  furnish  the consideration   for   fresh

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enforceable   obligation.   Where  a   statute   prescribing limitation  extinguishes  the right it  affects  substantive rights,   while,   that  which  purely   pertains   to   the commencement  of  action  without  touching  the  right   is procedural.   The statement that substantive law  determines rights and procedural law deals with remedies is not  wholly valid,  for, neither the entire law of remedies  belongs  to procedure,   because,   rights  are  hidden  even   in   the "interstices  of procedure".  There is, therefore, no  clear cut division between the two. [872 G, 873 C-E, 874 B] (ii)There  is  difference  between  the  manner  in   which jurisprudential lawyersconsider  the question and the  way in which judges view the matter. Where   a   question   of limitation arises, the present tendency is towards the  view that  statutes  of limitation may not prove to be  a  deter- mining  factor.  But, what has to be considered  is  whether the statute 868 extinguishes   merely  the  remedy,  or   extinguishes   the substantive right as well as the remedy.  The safest  course would  be  to  examine  each  case  on  its  own  facts  and circumstances  and  determine,  for  in-stance,  whether  it affects  substantive ’rights and extinguishes them,  whether it  merely  concerns  a procedural rule  only  dealing  with remedies, whether the intendment to Prescribe limitation  is discernible  in  the  scheme of the Act, or  whether  it  is inconsistent with the rule making power., [876 H]  (iii)  Apart  from the implications inherent  in  the  term "Procedure"  appearing in s. 96(1) the word in  furnishes  a clue,  to  the controversy, that the procedure  must  be  in relation  to  the proceedings in court after  it  has  taken seisin  of the matter.  Therefore, the application by  which the  court  is asked to adjudicate a matter  covered  by  s. 75(2) is outside the scope of the rule-making power. [877 D] (iv)The  provisions  of the Act clearly indicate  that  the whole scheme is dependent upon the contributions made by the employer  not only in respect of the amounts payable by  him but  also in respect of those payable by the  employee.   No limitation has been fixed for the recovery of these  amounts by  the Corporation from the employer; on the other hand  s. 68  empowers the Corporation to resort to coercive  process. If  any  such  steps  are  proposed  to  be  taken  by   the Corporation and the employee is aggrieved he has a right  to file  and  apply to the Insurance Court and have  his  claim adjudicated  by  it in the same way as the  Corporation  can prefer  a  claim  in a case where the liability  to  pay  is disputed.   Section 75(2) (d) clearly envisages this  course when it provides that the claim against a principal employer under  s. 68 shall be decided by the Insurance  Court.   The fact  that neither s. 75(2) (d) nor s. 68, nor s.  77  which deals  with the commencement of the  proceedings,  prescribe any  period of limitation, while a period of  limitation  is provided  in  the  case of a claim by an  employee  for  the payment of any benefit under the regulations, clearly  shows that  the  legislatures did not intend to fetter  the  claim under s. 75 (2) (d).  Where the legislature clearly  intends to provide specifically the period of limitation in ’respect of  claims  arising thereunder, it cannot be  considered  to have  left  such  matters in respect  of  claim  under  some similar  provisions  to be provided for by the rules  to  be made by, government under its delegated powers to  prescribe the  procedure  to be followed in  proceedings  before  such court. [878 H-879 C, 880 F] (v)Nor does s. 78(2) delegate any power to the- government to  make  rules.  The section only  requires  the  Insurance

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Court  to  follow "such procedure as may  be  prescribed  by rules  made by the State Government".  And these  rules  can only be made under s. 96 of the Act. [882 D] (vi)Further,  the nature of the rule bars the claim  itself and  extinguishes  the  right which is not in  the  pale  of procedure.  A provision by which an employee loses his right to ’receive payment of any benefit conferred ’by the Act, if he  does not file an application within 12 months after  the claim has become due, affects substantive rights, and  must, therefore.  be dealt with by the legislature itself  and  is not to be inferred from the rule-making power conferred  for regulating   the  procedure  unless  that  is   specifically provided for.  The legislature does not part with the  power to prescribe limitation which it jealously retains to itself unless it intends to do so in clear and unambiguous terms or by necessary intendment. [881 B-F] Employees’  State  insurance Corporation V.  Madhya  Pradesh Government  &  Ors., A.I.R. 1964 (51) M.P. 75,  M/s.   Solar Works,  Madras  v. Employees’ State  Insurance  Corporation, Madras A.I.R. 1964 (51) Mad.  869 376,  United  India  Timber  Works,  Yamunagar  &  Anr.   v. Employees’ State Insurance Corporation, Amritsar A.I.R. 1967 (54)  Punjab, 166 (FB) and E.S.L.C. Hyderabad v. A.P.  State Electricity Board, Hyderabad, 1970 Labour & Industrial cases 921, approved. View  contra  in M/s.  A. K. Brothers  v.  Employees’  State Insurance   Corporation,   A.I.R.  1965   (52)   All.   410, disapproved. Roshan Industries Pvt.  Ltd., Yamunagar v. Employees’  State Insurance  Corporation,  A.I.R. 1968 (55)  Punjab  56  (SB). Manoel  Francisco  Lonez A Ors. v. Lieut.   Godoluhin  James Burslem,  (1843)  IV M.I.A. 300,  Ruckmaboye  v.  Lulloobhoy Mottichund,  (1849-54) V M.I.A. 234, Sennimalai  Goundan  v. Palani  Gonndan  & Anr.  A.I.R. 1917  Madras  957,  Krishna- mzchariar  v.  Srirangammal & Ors., I.L.R.  47  Madras  824, Bendredas  v. Thakurdev, I.L.R. 53 Bom. 453, Velu Pillai  v. Sevuga  Perumal  Pillai, A.I.R. 1958  Madras  392,  Narsingh Sahai  v. Sheo Prasad, [1918] I.L.R. 40 All 1(FB),  Chunilal Jethabhai v. Dhyabhai Amulakh, [1908] I.L.R. 93 Bom. 14(FB). Union  of India v. Ram Kanwar & Ors.. [1962] 3  S.C.R.  313, Punjab Cooperative Bank Ltd. v. Official Liquidators  Punjab Cotton Press Company Ltd. (in Liquidation), A.I.R. 1941 Lah. 57  (FB),  and East & West Steamship Company,  George  Town, Madras  v. S. K. Ramalingam Chettiar, [1960] 3  S.C.R.  820, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 563 of 1967. Appeal  from the judgment and order dated September 15,  16, 19,  1966 of the Bombay High Court in Civil Reference No.  8 of 1964. G.B.  Pai,  Bhuvanesh Kumari and O. C.  Mathur,  for  the appellants.  L.  M.  Singhvi,  Ram Panjawani and S. P.  Nayar,  for  the respondent. The Judgment of the Court was delivered by P.Jaganmohan  Reddy, J. In exercise of the  powers  under Sec.  96(1)(b)of  the  Employees State  Insurance  Act  1948 (hereinafter  referred  to as ’the Act’)  relating  to  "the procedure  to be followed in proceedings before such  Courts and  the  execution  of orders made  by  such  Courts",  the Government of Bombay made the following Rule;

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"17.  Limitation:               (1)  Every application to the Court  shall  be               brought within twelve months from the date  on               which the cause of action arose or as the case               may be the claim became due :               Provided  that  the  Court  may  entertain  an               application  after the said period  of  twelve               months  if it is satisfied that the  applicant               had  sufficient  reasons for  not  making  the               application within the said period.               870               (2)Subject  as aforesaid the provisions  of               Part II and III of the Indian Limitation  Act,               1908  (IX  of (1908), shall so far as  may  be appli ed to very such application", The vires of this Rule was challenged by the Employees State Insurance  Corporation  (hereinafter  referred  to  as  ’the Corporation)  when  it filed an application on  7th  October 1963 against the Appellant in the Employees Insurance  Court (hereinafter  referred to as the Insurance Court’)  claiming payment of the contributions due from it for the period  1st September 1957 to 31st July 1963.  In those proceedings  the Appellant  had  ’taken  the plea that  the  application  was barred  under Rule 17 as it was not presented within  twelve months  from the date when the cause of action arose  or  as the  case  may be when the amount became due.  As  the  plea raised  before’ it was important the Insurance Court made  a reference  under  Section  81 of the Act  on  the  following question for the decision of the High Court of Bombay :-               (1)Whether rule 17 of the Employees’  State               Insurance Rule is ultra vires the rule  making               power of the State Government under Sec. 96(1)               of the Employees State Insurance Act ?               (2)If yes, what, if any, limitation applies               to appli-               cationsfiled  by  the Corporation  to  the               Employees’ In-               surance Court ?  The  High  Court of Bombay having  considered  the  several cases  and the contentions and submissions mad-.  before  it held  that the clear and unambiguous terms of s. 96 (1)  (b) exclude  the grant of the power to any State  Government  to make  a  rule prescribing a period of limitation  on  claims ennumerated in Sec.75(2). It was lb further of the view that where  two  interpretations of the terms of Sec.  96(1)  (b) were  possible that interpretation should be accepted  which excludes  the grant of such a power, because it appeared  to it clear from the scheme of the Act and the provisos thereof that the legislature did not intend to confer such power  on the  State  Governments.  It therefore  answered  the  first question  in affirmative namely that Rule 17 is ultra  vires the  rule  making power of the State Government  under  See. 96(1)  (b) of the Act.  On the second question it held  that an  application filed in a Court before 1-1-1964 for  relief under  Sec. 75 of the Act was not subject to any  period  of limitation,  but an application filed on or after 1- 1  -64, would, however, be covered by Art. 137 of the Limitation Act of 1963 which provides a limitation of 3 years from the date when the right to apply accrues.  This appeal has been filed against  that decision by certificate under Art. 1 3  3  (1) (c) of the Constitution. 871 This  question has been the subject matter of the  decisions in  Employees      State  Insurance  Corporation  v.  Madhya Pradesh  Government  & Ors. (1) M/s Solar Works,  Madras  v.

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Employees  State Insurance cc Corporation, Madras &  Anr.(2) M/s.    A.  K.  Brothers  v.  Employees’   State   Insurance Corporation, ( 3 ) United India Timber Works, Yamunanagar  & Anr. v. Employees State Insurance Corporation, Amritsar, ( 4 )  Roshan  Industries Pvt.  Ltd.   Yamunagar  v.  Employees’ State Insurance Corporation(3), E.S.L.C. Hyderabad v. A.  P. State Electricity Board, Hyderabad (6) . All the High Courts in  these cases except that of Allahabad held that the  rule is ultra vires the powers conferred on the State  Government under Sec. 9 6 ( 1 ) (b) inasmuch as it is not empowered  to make   rules   prescribing   periods   of   limitation   for applications to be filed before the Court, though in  Madhya Pradesh case it was also said that               "Even  if it be taken that clause (b) of  Sec.               96(1),  as  it is worded, is  wide  enough  to               cover  a  rule  of  limitation,  that   cannot               authorize  the  Government  to  frame  a  rule               regulating  limitation  for  the  recovery  of               contributions............... because  according to- it the validity of the rule does  not necessarily  depend  on  the ascertainment  of  "whether  it confers  rights  or  merely  regulates  procedure,  but   by determining  whether  it is in conformity  with  the  powers conferred  by the statute and whether it is consistent  with the provisions of the statute".  These decisions also  held that the scheme of the Act was such that the Legislature did not  and could not have intended to confer any  power  upon the  State Government to make rules prescribing a period  of limitation for application under Sec. 75(2). The  question  which directly confronts us  is  whether  the power  to  prescribe periods of limitation  for  initiating proceedings before the Court is a part of, and is  included, in  the power to prescribe "the procedure to be followed  in proceedings  before  such  Courts".   The  answer  to   this question  would  involve the determination  of  the  further question  whether  the law relating to  limitation  is  pro- cedural  or  substantive  or partly  procedural  and  partly substantive.   If  it  is procedural law does  it  make  any difference  whether  it  relates  to  the  time  of   filing application  for initiation of proceedings before the  Court or whether it relates to interlocutory applications or other statements filed before it after the initiation of such pro- ceedings,.   The  contention on behalf of the  Appellant  is that the law relating to limitation is merely procedural, as such it makes (1)  AIR 1964 (Vol. 51) Madhya Pradesh 75. (2) AIR 1964 (Vol. 51) Madras 376. (3) AIR 1965 (Vol. 52) Allahabad 410. (4) AIR 1967 (Vol. 54) Punjab 166 (FB). (5) AIR 1968 (Vol. 55) Punjab 56 (SB). (6) 1970 Labour & Industrial cases 921. 872 no  difference whether it relates to the time of  filing  an application   or   it  deals  with  the  time   for   filing interlocutory  applications or other statements.   There  is also it is submitted no indication in the scheme of the  Act that it is otherwise or that there is any impediment for the Government to prescribe under the rule making authority  the period  of  limitation for applications under Sec.  75  (2). Before we consider the scheme of the Act it may be necessary to  examine the scope and ambit of the terms ’procedure’  as used in Sec. 96(1)(b). The topic of procedure has been the subject of academic  de- bate  and scrutiny as well as of judicial decisions  over  a long  period  but  in  spite  of  it,  it  has  defied   the

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formulation  of a logical test or definition  which  enables us,  to determine and demarcate the bounds where  procedural law  ends and substantive law begins, or in other  words  it hardly  facilitates  us in distinguishing in  a  given  case whether  the subject of controversy concerns procedural  law or  substantive  law.   The reason for this  appears  to  be obvious,  because  substantive law deals with right  and  is fundamental while procedure is concerned with legal  process involving  actions and remedies, which Salmond  defines  "as that branch of law which governs the process of litigation", or  to put it in another way, substantive law is that  which we  enforce  while procedure deals with rules  by  which  we enforce  it.   We  are  tempted in this  regard  to  cite  a picturesque   aphorism  of  Therman  Arnold  when  he   says "Substantive  law  is  canonised  procedure.   Procedure  is unfrocked substantive law(1)". The manner of this approach may be open to the criticism  of having over simplified the distinction, but nonetheless this will ,enable us to grasp the essential requisites of each of the  concepts  which  at any rate "has been found  to  be  a workable concept to point out the real and valid  difference between the rules in which stability is of prime  importance and those in which flexibility is a more important value  (2 )  ".  Keeping these basic assumptions in view  it  will  be appropriate  to  examine  whether the  topic  of  limitation belongs to the Branch of procedural law or is outside it. if it  is a part of the procedure whether the entire  topic  is covered by it or only a part of it and if so what part of it and the tests for ascertaining them.  The law of  limitation appertains  to remedies because the rule is that  claims  in respect  of  rights cannot be entertained if  not  commenced within the time prescribed by the statute in respect of that right.  Apart from Legislative action prescribing the  time, there  is  no  period of  limitation  recognised  under  the general  law and therefore any time fixed by the statute  is neces- (1)  XLV Harvard Law Journal-617 & 645. (2) American Juris-prudence-Vol. 51 (Second Edn.) 605. 873 sarily  to be arbitrary.  A, statute prescribing  limitation however  does  not  confer a right of  action  nor  speaking generally does it confer on a person a right to relief which has been barred by eflux of time prescribed by the law.  The necessity  for enacting periods of limitation is  to  ensure that  actions  are  commenced within  a  particular  period, firstly  to assure the availability of evidence  documentary as well as oral to enable the defendant to contest the claim against him; secondly to give effect to the principle that law does not assist a person who is inactive and sleeps over his  lights by allowing them when challenged or disputed  to remain  dormant, without asserting them in a court  of  law. The,  principle  which  forms  the basis  of  this  rule  is expressed in the maxim vigilantibus, non dormientibus,  jura subveniunt (the laws give help to those who are watchful and not  to  those  who sleep).  Therefore the,  object  of  the statutes  of limitations is to compel a person  to  exercise his right to action within a reasonable time as also to dis- courage  and  suppress  stale, fake  or  fraudulent  claims. While  this is so there are two aspects of the  statutes  of limitation the one concerns the extinguishment of the  right if a claim or action is not commenced with a particular time and  the other merely bars the claim without  affecting  the right  which either remains merely as a moral obligation  or can  be availed of to furnish the consideration for a  fresh enforceable  obligation.  Where a statute  prescribing  the

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limitation  extinguishes the right, it  affects  substantive rights while that which purely pertains to the  commencement of  action  without  touching  the  right  is  said  to   be procedural.   According to Salmond the law of  procedure  is that branch of the law of actions which governs the  process of  litigation, both Civil and Criminal.  "All the  residue" he says "is substantive law, and relates not to the  process of  litigation but to its purposes and sub-,  ject  matter". It may be stated that much water has flown under the bridges since  the original English theory justifying a  statute  of limitation  on the ground that a debt long overdue was  pre- sumed to have been paid and discharged or that such statutes are merely procedural.  Historically there was a period when substantive law was inextricably intermixed with  procedure; at  a  later  period procedural law seems  to  have  reigned supreme  when forms of action ruled.  In the words of  Maine "So  great  is the ascendancy of the Law of Actions  in  the infancy  of Courts of Justice, that substantive law  has  at first   the  look  of  being  gradually  secreted   in   the interstices of procedure()".  Even after the forms of action were abolished Maitland in his Equity was still able to  say "The  forms of action we have buried but they still rule  us from  their graves", to which Salmond added "In  their  life they  were  powers of evil and even in death they  have  not wholly ceased from troubling(2)".  Oliver Wendal Holmes  had however observed in "The (1) Maine, Early Law and Custom 389. (2) 21  L.Q.R. 43. 874 Common  Law", "wherever we trace a leading doctrine  of  sub stantive  law  far enough back, we are likely to  find  some forgotten circumstance of procedure at its source".  It does not therefore appear that the statement that substantive law determ.nes rights and procedural law deals with remedies  is wholly valid, for neither the entire law of remedies belongs to  procedure nor are rights merely confined to  substantive law,  because as already noticed rights are hidden even  "in the interstices of procedure".  There is therefore no  clear cut division between the two. A  large  number of decisions have been referred  before  us both English and Indian some of antiquity in support of  the proposition  that the law prescribing the time within  which an  action  can  be  commenced  is  purely  procedural   and therefore when a statute empowers the Govt. to make rules in respect  of procedure it confers upon it also the rights  to prescribe limitation.  To this end have been cited the cases of Manoel Francisco Lopez & Ors. v. Lieut.  Godolnhon  James Burslem(l), and Ruckmaboye v. Lulloobhoy Mottichund(2).   An examination  of these cases would. show that what was  being considered was whether the law of limitation was part of the lex  fori which foreigners and persons not domiciled in  the country  have  to follow if they have to  have  recourse  to actions  in  that  country.  In the latter  case  the  Privy Council observed at page 265               "The  arguments  in support of  the  plea  are               founded  upon the legal character of a law  of               limitation   or   prescription,  and   it   is               insisted,  and the Committee are  of  opinion,               correctly insisted, that such legal  character               of  ’the law of prescription has been so  much               considered  and di-cussed among  writers  upon               jurisprudence,  and  has  been  so  often  the               subject of legal decision in the courts of law               of  this  and other countries, that it  is  no               longer  subject to doubt and uncertainty.   In

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             truth,  it  has  become almost  an  axiom  in               jurisprudence, that is law of prescription, or               law  of  limitation, which is  meant  by  that               denomination,  is a law relating to  procedure               having reference only to the lex fori". These observations as well as those in the earlier case must be  understood  in  the light of  the  principles  governing conflict  of  laws.   What was in fact  being  examined  was whether  they  are part of the procedural law in  the  sense that  the Municipal laws will be applicable on the  question of  limitation  for the commencement of actions  because  if limitation  was  purely a question of substantive  law  that would be governed by the law of the country of the (2)  (1849-54)_(V_Moore Indian Appeals 234). 875 domicile of the person who is having recourse to the  Courts of the other country.  In other words the substantive rights of  the parties to an action are governed by a  foreign  law while  all  matters  pertaining to  procedure  are  governed exclusively by the lex fori. The  cases cited at the Bar, of the various High  Courts  in this  country  show  that they  were  construing  the  rules prescribing  limitation in respect of proceedings  in  Court i.e. proceedings afterthe institution of the suit or  filing of  the Appeal.  In Sennimalai Goundan v. Palani  Goundan  & 4nr.(1),  the  question  was. whether  &,,a  High  Court  by framing  a  rule under Sec. 122 Civil Procedure  Code  could make   Section  5  of  the  Limitation  Act  applicable   to applications  under  sub-rule (2) of Rule 13  of  Order  IX. While  holding that it could, Coutts-Trotter, J as  he  then was made this pertinent observation :               "Whatever  may  be  the case  of  the  statute               prescribing  say 3 years for an action  to  be               brought I am quite clear that the Articles  in               the  Act limiting applications of this  nature               which  are almost entirely interlocutory  deal               clearly with matters of procedure............ This was also the view of the Full Bench in Krishnamachariar v. Srirangammal & Ors.(2), which was followed by the  Bombay High Court in Bandredas v. Thakurdev ( 3 ). It was contended in Velu Pillai v. Sevuga Perumal Pillai(4), that rule 41 (A) (2)  of  the Appellate side Rules of the Madras  High  Court providing  for  the presentation of a petition to  the  High Court within 90 days from the date of the order passed in an execution  proceedings  was ultra vires,  because  the  High Courts were not entitled by rules to regulate or enlarge the periods in the Limitation Act in respect of the  proceedings to which the Limitation, Act apply’This contention  was negatived on the ground that such a powerwas inherent in Sec.  122 of the Civil Procedure Code.  The argument of  the petitioner  that he had a vested right to go up in  revision at  any  time  and that the decision of the  Full  Bench  in Krishnamachariar v. Srirangammal & Ors. (2 ) does not affect his  right, was rejected on the ground that Sec.  122  Civil Procedure Code empowers the High Courts to make rules  regu- lating  their  own  procedure  and  the  procedure  of   the subordinate Courts subject to their superintendence. There were earlier decisions of the Allahabad High Court and Lahore  High  Court as also a decision of  the  Bombay  High Court  rendered  under Sec. 602 of the old  Civil  Procedure Code 1. AIR 1917 Madras 957. (2) ILR 47 Madras 824. (3) ILR 53 Bombay 453. (4) AIR 1958 Madras 392.

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876 referred  to  by  Krishnan, J., in his  referring  order  in Krishnamachariar’s  case which took the view that  the  High Court  has  riot  the power by rule under Sec.  122  or  the corresponding  Sec. 602 of the old Civil Procedure  Code  to make rules for altering the period of limitation  prescribed by  the  Indian Limitation Act see Narsingh Sahai  v.  Sheo Prasad(l),  and Chunilal Jethabhai v. Dahvabhai  Amulakh(2). Again  a similar question arose as to whether clause  27  of the  Letters  Patent  of the Lahore High  Court  (there  are similar  clauses  in the Letters Patent of  the  other  High Courts)   could  validly  empower  the  making  of  rule   4 prescribing a period for filing an appeal under Clause 10 of the  Letters  Patent.   Clause  27  of  the  Letters  Patent empowered the High Court from time to time to make rules and orders  for regulating the practice of the Court etc.   This Court  in  Union  of  India v. Ram Kanwar & Ors.  (  3  )  , approved  the view of a Full Bench of the Punjab High  Court in  Punjab  Cooperative Bank Ltd.  v.  Official  Liquidators Punjab Cotton Press Company Ltd. (in liquidation) (4), where it was held that rule 4 is a special law within the  meaning of Sec. 29 (2) of the Limitation Act.  Subba Rao, J., as  he then was said at page 320               "Rule 4 is made by the High Court in  exercise               of  the legislative power conferred  upon  the               said  High ’Court under cl. 27 of the  Letters               Patent.   As  the said rule is a law  made  in               respect  of  special cases covered by  it,  it               would  certainly be a special law  within  the               meaning of S. 29(2) of the Limitation Act". In that case no question was raised as to whether rule 4 was dealing with a procedural matter or dealt with a substantive right.   These cases are of little assistance and if at  all they  lay down the principle that interlocutory  proceedings before the Court do not deal with substantive rights and are concerned with mere procedure and can be dealt with by rules made  under  the  powers  conferred on  the  High  Court  to regulate  the  procedure.   It is  therefore  apparent  that whether  the  fulfilment  of a  particular  formality  as  a condition  of  enforceability  of  a  particular  right   is procedural  or substantive has not been, as we  had  already noticed  free from difficulty.  What appears to be  a  self- evident  principle will not become so evident when we  begin to  devise  tests for distinguishing  procedural  rule  from substantive  law.   It  appears  to  us  that  there  is   a difference  between the manner in which the  jurisprudential lawyers  consider  the question and the %way  in  which  the Judges view the matter.  The present tendency (1) [1918] I.L.R 40 All. 1 (FB). (2)  [1908] I.L.R 32, Bom. 14 (FB).  877 is   that  where  a  question  of  limitation  arises,   the distinction  between  so-called substantive  and  procedural statutes  of  limitation may not prove to be  a  determining factor but what has to be considered is whether the  statute extinguishes   merely   the  remedy  or   extinguishes   the substantive  right  as  well  as  the  remedy.   Instead  of generalising  on a principal the safest course would IV  to’ examine  each  case on its own facts and  circumstances  and determine for instance whether it affects substantive rights and  extinguishes%  them  or whether it  merely  concerns  a procedural  rule only dealing with remedies or  whether  the intendment  to prescribe limitation is discernible from  the scheme  of the Act or is inconsistent with the  rule  making power etc,

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Apart  from the implications inherent in the term  procedure appearing  in Sec. 96(1)(b) the power to prescribe by  rules any matter falling within the ambit of the term must be  the "Procedure  to  be  followed  in  proceedings  be-fore  such Court".   The word ’in’, emphasised by us, furnishes a  clue to the controversy that the procedure must be in relation to proceedings  in  Court after it has taken  decision  of  the matter,   which  obviously  it  takes  when  moved   by   an application presented before it.  If such be the meaning the application  by which the Court is asked to adjudicate on  a matter  covered  by Sec. 75(2) is outside the scope  of  the rule making power conferred on the Government. In the East & West Steamship Company, George Town, Madras v. S. K. Ramalingam Chettiar(1), one of the questions that  was considered  by  this  Court  was  whether  the  clause  that provides for a suit to be brought within one year after  the delivery of the goods or the date when the goods should have been delivered, only prescribes a rule of limitation or does it  also  provide  for  the  extinction  of  the  right   to compensation after certain period of time.  It was  observed by Das Gupta, J, at page 836 :               "The  distinction between the extinction of  a               right  and the extinction of a remedy for  the               enforcement of that right, though fine, is  of               great  importance.  The legislature could  not               but  have been conscious of  this  distinction               when  using  the words  "discharged  from  all               liability"   in  an  article   purporting   to               prescribe   rights  and  immunities   of   the               shipowners.   The words are apt to express  an               intention of total extinction of the liability               and   should,   specially  in  view   of   the               international character of the legislation, be               construed in that sense.               878               It  is hardly necessary to add that  once  the               liability  is extinguished under this  clause,               there  is no scope of any  acknowledgement  of               liability thereafter". What  we have to consider is, apart from the  question  that the  Government  on the terms of Sec. 96(1) (b) is  not  em- powered to fix periods of limitation for filing applications under  Sec.  75  (2)  to  move  the  Court,  whether  on  an examination  of  the  Scheme of the  Act,  rule  17  affects substantive  rights  by  extinguishing  the  claim  of   the Corporation  to  enforce  the  liability  for  contributions payable by the Appellant. An examination of the purpose and intendment of the Act  and the scheme which it effectuates, leaves no doubt that it was enacted   for  the  benefit  of  the  employees  and   their dependents,  in case of sickness, maternity and  ’employment injury’,  as  also  to  make  provision  for  certain  other matters.   Sec.  40 makes the employer liable in  the  first instance to pay the contributions of the employer as well as the employee to the Corporation subject to the recovery from the  employee  of the. amount he is  liable  to  contribute. This liability on the employer is categorial and  mandatory. He  is  further  required under Sec. 44  to  submit  to  the Corporation  returns as specified therein.  Chapter  V  com- prised  of Sections 46 to 73, deals with the benefits  which includes  among others, sickness and disablement benefit  of the  employee, his eligibility for receiving  payments  and. the compensation payable to his dependents.  If the employee fails or neglects to pay the contributions as required,  the Corporation has the right to recover from him under Sec. 68,

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the  amounts specified in that Section as an arrear of  land revenue.   Sec. 94 provides that the contributions due to  a corporation are deemed to be included in the debts under the Insolvency  Acts  and  the  Company’s  Act,  and  are  given priority  over other debts in the distribution of  the  pro- perty of the insolvent or- in the distribution of the assets of  a  Company  in  liquidation.   Chapter  VI  deals   with adjudication  of  disputes  and claims,  of  which  Sec.  74 provi des for he Constitution of the Insurance Court;  Sec. 74  specifies the matters to be decided by that Court;  Sec. 76 and Sec. 77 deal with the institution and commencement of proceedings  and  Sec. 78 with the powers of  the  Insurance Court.   Sec.  80 deals with the  non-admissibility  of  the claim,  if not made within twelve months after the claim  is due  while Sec. 82(3) prescribes the period within which  an appeal  should be filed against the order of  the  Insurance Court.   These provisions in our view unmistakably  indicate that  the whole scheme is dependent upon  the  contributions made  by the employer not only with respect to  the  amounts payable  by him but also in respect of those payable by  the employee.  No limitation has been fixed for the recovery  of these amounts 879 by the Corporation from the employer; on the other hand Sec. 68  empowers the Corporation to resort to coercive  process. If  any  such  steps  are  proposed  to  be  taken  by   the Corporation and the employer is aggrieved he has a right  to file  and  apply to the Insurance Court and have  his  claim adjudicated  by  it in the same way as the  Corporation  can prefer  a  claim  in a case where the liability  to  pay  is disputed.   Sec.  75 (2) (d) clearly envisages  this  course when  it  provides  that  "the  claim  against  a  principal employer  under Sec. 68" shall be decided by  the  Employees Insurance  Court.  It may be useful to read Sec. 68  and  75 (2) (d) which are given below Sec.  68               (1)If  any  principal  employer  fails   or               neglects  to pay any contribution which  under               this Act he is liable to pay in respect of any               employee  and  by reason thereof  such  person               becomes disentitled to any benefit or entitled               to a benefit on a lower scale, the Corporation               should   have  been  paid  by  the   principal               employer, pay to the person the benefit at the               rate  to which he would have been paid by  the               principal  employer,  pay to  the  person  the               benefit  at  the rate to which he  would  have               been  entitled if the failure or  neglect  had               not  occurred  and the  Corporation  shall  be               entitled   to  recover  from   the   principal               employer either-               (i)   the  difference  between the  amount  of               benefit  which is paid by the  Corporation  to               the said person and the amount of the  benefit               which would have been payable on the basis  of               the  contributions which were in fact paid  by               the employer; or               (ii)  twice  the  amount of  the  contribution               which the employer failed or neglected to pay;               whichever is greater.               (2)The   amount  recoverable   under   this               Section  may  be recovered as if  it  were  on               arrear of land revenue.               Sec.75 (2)               The  following claim shall be decided  by  the

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             Employees’ Insurance Court, namely               (d)Claim against a principal employer under               Section 68; It  is contended by the learned Advocates for the  Appellant that Sec. 68 is a crucial provision as it indicates that the right  of the Corporation to enforce its claim  for  payment has been preserved 880 subject  to tile provision that the omission or  neglect  by the  principal employer  to make contribution  deprives  the employee  of  any benefit either totally or  ’at  a  reduced scale.   It is only in these circumstances he  submits  that the  Corporation can recover the amount by coercive  process but in any other case the Corporation’s claim to recover  by an application to the Insurance Court can be made subject to a  period of limitation by a rule made under Sec.  96(1)(b). We  are  unable to appreciate the logic of  this  submission because  the  benefit  of an employee can  be  negatived  or partially  admitted  for instance either by  reason  of  the employer not showing him in the return as an employee of his or  showing  him as drawing a lesser wage than  what  he  is entitled  to  or as it may happen mostly, when he  fails  to make the payments even according to the returns-made by him. In all these cases the employee’s benefits will be  affected because the basis of the scheme of conferring benefit on the employee  is the contribution of both the employer  and  the employee.   It  is  clear therefore that the  right  of  the Corporation to recover these amounts by coercive process  is not restricted by any limitation nor could the Government by recourse to the rule making power prescribe a period in  the teeth  of  Sec. 68.  What Sec. 75(2) is  empowering  is  not necessarily   the  recovery  of  the  amounts  due  to   the Corporation  from the employer by recourse to the  Insurance Court  but also the settlement of the dispute of a claim  by the Corporation against the principal employer which implies that the principal employer also can, where he disputes  the claim made and action is proposed to be taken against him by the Corporation under See. 68 to recover the amounts said to be  due  from  him.   While this is  so  there  is  also  no impediment  for  the  Corporation itself  to  apply  to  the Insurance  Court to determine a dispute against an  employer where it is satisfied that such a dispute exists.  In either case neither Sec. 69 nor Sec. 75 (2) (d) prescribes a period of limitation.  It may also be mentioned that Sec. 77  which deals  with  the commencement of the proceedings,  does  not provide for any limitation for filing an application to  the Insurance  Court even though it provides under sub-sec.  (2) of that Section that every such application shall be in such form  and  shall  contain  such  particulars  and  shall  be accompanied  by.such fee, if any, that may be prescribed  by rules made by the State Government in consultation with  the Corporation.  This was probably an appropriate provision  in which the legislature if it had intended to prescribe a time for  such applications could have provided.  Be that  as  it may  in  our  view  the omission  to  provide  a  period  of limitation in any of these provisions while providing for  a limitation of a claim by an employee for the payment of  any benefit under the regulations, shows clearly that the legis- lature  did  not  intend  to fetter  the  claim  under  Sec. 75(2)(d).   It  appears  to us that  where  the  legislature clearly intends to pro  881 vide  specifically  the period of limitation in  respect  of claims  arising thereunder it cannot be considered  to  have left  such matters in respect of claims under  some  similar

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provisions to be provided for by the rules to be made by the Government  under  its  delegated powers  to  prescribe  the procedure to be. followed in proceedings before such  Court. What  is sought to be conferred is the power to  make  rules for  regulating  the procedure before  the  Insurance  Court after an application has been filed and when it is seized of the  matter.   That apart the nature of the rule  bars  the claim itself and extinguishes the right which is not  within the  pale of procedure.  Rule 17 is of such a nature and  is similar  in terms to Sec. 80.  There is no  gain-saying  the fact that if an employee does not file an application before the  Insurance  Court within 12 months after the  claim  has become  due or he is unable to satisfy the  Insurance  Court that there was a reasonable excuse for him in not doing  so, his right to receive payment of any benefit conferred by the Act  is lost.  Such a provision affects  substantive  rights and  must therefore be dealt with by the legislature  itself and  is  not  to  be inferred from  the  rule  making  power conferred  for  regulating  the  procedure  unless  that  is specifically  provided for.  It was pointed out that in  the Constitution  also  where the Supreme Court  was  authorised with  the  approval  of  the President  to  make  rules  for regulating  generally  the  practice and  procedure  of  the Court, a specific power was given to it by Art. 145 (1)  (b) to prescribe limitation for entertaining appeals before it. It is therefore apparent that the legislature does not  part with  the power to prescribe limitation which  it  jealously retains  to itself unless it intends to do so in  clear  and unambiguous  terms  or by necessary  intendment.   The  view taken  by  the  Madhya Pradesh, Madras,  Punjab  and  Andhra Pradesh High Courts in the cases already referred to are  in consonance with the view we have taken.  In the decision  of the Punjab High Court, Dua, J, as he then was expressed the view of the Full Bench with which Palshaw C. J., and Mahajan J,  agreed.   After examining the provisions of the  Act  he observed at page 170-171               "At  this stage, I consider it appropriate  to               point  out,  what is  fairly  well-recognised,               that what is necessarily or clearly implied in               a  statute is an effectual as that,  which  is               expressed  because it often speaks as  plainly               by necessary inference as in any other manner.               The purposes and aims of an Act as discernible               from  its  statutory  scheme  are  accordingly               important  guideposts in discovering the  true               legislative  intent.  One who  considers  only               the  letter, of an enactment, goes  but,  skin               deep  into  its true meaning; to  be  able  to               fathom the real statutory intent it is  always               helpful to inquire into the object intended to               be accomplished.               882               Considering  the  entire  scheme  of  the  Act               before us, it is quite clear that fixation  of               any  period of limitation for the  Corporation               to realise the contributions from the employer               may  tend seriously to obstruct the  effective               working  and  enforcement  of  the  scheme  of               insurance". It  may  be  of interest to notice that Palshaw  C.  J.  had earlier  taken a different view in Chanan Singh v.  Regional Director, Employees State Insurance Corporation(1), but said that  he,  had no hesitation in agreeing with Dua  J’s  view because  he realised that his earlier view was based  on  an over-simplification.  In the latest case the Andhra  Pradesh

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High  Court  also following the earlier decision  of  Madhya Pradesh,  Madras and Punjab held that the  State  Government had exceeded its powers to frame Rule 17 as no such power to prescribe  limitation under the provisions ,of Sec. 96 (1  ) (b) or under Sec. 78 (2) can be said to have been  delegated to the State Government.  We, however, find that Sec.  78(2) does not delegate any power to the Government to make  rules but  only requires the Insurance Court to follow "such  pro- cedure  as  may  be prescribed by rules made  by  the  State Government"  which rules can only be made under Sec.  96  of the  Act.   In the view we have taken it is  unnecessary  to examine the question whether legislative practice also leads to  the same conclusion though in the Madras and the  Punjab decisions that was also one of the grounds given in  support of   their  respective  conclusions.   The   contrary   view expressed  by a Bench of the Allahabad High Court is in  our opinion not good law.  We may before parting with this  case point out that the legislature since chosen to  specifically prescribe  3 years as limitation period by addition of  sub- sec.  (1A)  to Sec. 77 while deleting Sec. 80.   See  77(1A) provides that "Every such application shall be made within a period  of three years from the date on which the  cause  of action  arose".   By this amendment the claim  under  clause (d),  as well as, the one under clause (f)  of  sub-section (2)  of Section 75 which provides for the adjudication of  a claim by the Insurance Court for the recovery of any benefit admissible under the Act for which a separate limitation was fixed  under Sec. 80, is now to be made within 3 years  from the  date  of  the accrual of the cause  of  action.   This. amendment  also confirms the view taken by this  Court  that the  power  under Section 96 (1) (b) does  not  empower  the Government to prescribe by rules a period of limitation  for claims  under  Sec.  75.   In  the  result  this  appeal  is dismissed with costs. K.B.N.                                                Appeal dismissed. 883