Sitaram Ramcharan Etc. vs M.N. Nagarshana And Ors.

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Not extracted

Decision Date: 25 September 1959

Coram: B.P. Sinha, K.N. Wanchoo, P.B. Gajendragadkar

In this case the Supreme Court noted that a group of consolidated appeals was presented before it after a certificate had been granted by the High Court at Bombay pursuant to Article 133 of the Constitution. The certificate indicated that, in the view of the High Court, the monetary value of the subject matter in dispute in the consolidated appeals exceeded twenty thousand rupees and that the matters raised involved a substantial question of law. The Court recorded that three hundred and eighty-five appellants, who were employees of the Watch and Ward Department of various textile mills located in Ahmedabad, were involved in twenty separate appeals. Between the twenty-second day of July 1953 and the sixth day of October 1953 the appellants filed twenty applications before the authority established under the Payment of Wages Act. In those applications they sought overtime wages for two distinct periods: the calendar year 1951 and the months of June and July 1953. Along with each of those applications the appellants filed a second set of twenty applications in which they requested the court to condone the delay in presenting their overtime claims, invoking the second proviso to section fifteen, sub-section two of the Payment of Wages Act, 1936. The authority examined the petitions for condonation and concluded that the appellants had not demonstrated a sufficient cause for failing to lodge their claims within the period prescribed by law. Following that decision the appellants approached the High Court at Bombay invoking Articles 226 and 227 of the Constitution; those applications were also rejected. Subsequently the appellants applied to the High Court for a certificate under Article 133, the certificate was granted, and on the basis of that certificate the matters were brought before the Supreme Court.

The Court then explained the factual backdrop against which the appellants made their present overtime claims. Section fifty-nine of the Factories Act, 1948, which became effective on the twenty-third day of September 1948, provides for the payment of additional wages for overtime to persons who fall within the definition of “worker” contained in section two, sub-section one of that Act. It was established and accepted by the parties that the appellants did not qualify as “workers” under that definition; consequently they could not invoke any of the advantages granted to workers by the provisions of the Factories Act. The Bombay Shops and Establishments Act, 1948, came into force in the State of Bombay on the eleventh day of January 1949, and it was not denied that the appellants were employees within the meaning of section two, sub-section six of that Act. Section seventy of the Bombay Shops and Establishments Act provides that the provisions of section fifty-nine of the Factories Act shall apply to all employees who work in factories similar to those where the appellants were employed. However, the language used in section seventy was observed to be ambiguous, and the legal effect of those provisions was a matter of uncertainty that had ultimately been clarified by a previous decision of this Court.

The Court referred to the judgment rendered on 8 May 1959 in the matter of Shri B. P. Hira, Works Manager, Central Railway, Parel, Bombay, versus Shri C. M. Pradhan and others. The Court observed that the difficulties presently before it arose because the appellants had failed to appreciate correctly the true effect of the provision in question. Consequently, the appellants did not realize that, by virtue of section 70 of the Bombay Shops and Establishments Act, they were entitled to the benefits contained in the relevant provisions of the Factories Act. Acting on this misunderstanding, the representative union of the appellants issued a notice of industrial dispute on 20 September 1949, seeking to obtain certain amenities that were provided under the Factories Act, as recorded in industrial case No. 192 of 1949. When the Full Bench of the Industrial Tribunal delivered its award on the reference on 25 November 1950, it observed that the employees did not appear to fall within the coverage of the Factories Act. On that basis, the Tribunal granted the workers a nine-hour working day, two holidays each month, and a limited provision for overtime wages. The Court noted that the award was based on the assumption that the provisions of the Factories Act did not apply to the appellants. However, on 2 May 1952, the Chief Judge of the Court of Small Causes delivered an appellate decision in the case of Ruby Mills, as reported in the Bombay Labour Gazette (January 1953, vol. 32, no. 5, p. 521). That decision examined section 70 of the Bombay Shops and Establishments Act and held that employees who fell within the ambit of that section were in fact entitled to claim overtime wages under section 59 of the Factories Act. In other words, the Ruby Mills judgment was the first authoritative construction that recognized section 70 as effectively extending the overtime-wage provisions of section 59 of the Factories Act to the employees covered by it. When the union became aware of the Ruby Mills decision, it wrote to the Minister of Labour, Bombay, on 30 October 1952, requesting that the Minister persuade the Ahmedabad mills to extend the benefits of the Factories Act to their watch-and-ward staff. The Minister replied on 1 November 1952, indicating that he had drawn the attention of the Factories Department to the Ruby Mills judgment. Following this reply, the union secretary appealed to the Chief Inspector of Factories in Ahmedabad to enforce the decision. A series of correspondences then took place among the union, the factory authorities and the Mill Owners’ Association of Ahmedabad. In May 1953, the Mill Owners’ Association accepted that the appellants were covered by the Factories Act, and by July 1953 the appellants received overtime wages calculated at the rate prescribed by the Factories Act for the first time. The implementation of overtime payment varied among the mills: some began paying from January 1953, others from May 1953, and the remainder from July 1953. In August 1953, the secretary of the newly formed union continued to pursue the matter, leading to further developments.

In the meantime the appellants had become members of the union, and the union addressed a letter to the employers requesting that overtime wages be paid for the period that had elapsed before the employers had begun to pay such wages. When the employers did not respond favorably to that request, the appellants filed the present applications before the authority, seeking to recover overtime wages for the earlier period that had been mentioned in the union’s letter. In the applications for condonation of delay the appellants asserted that they had honestly believed that neither the Factories Act nor the Bombay Shops and Establishments Act applied to the watch-and-ward staff, and that they had therefore approached the industrial court to obtain relief for their grievances. The Court noted that this step showed that the appellants had acted with due diligence and care in asserting their rights. The employers later admitted that the appellants were entitled to claim overtime wages only from May 1953, after which the appellants attempted to negotiate with the employers for payment of the overtime wages claimed in the present applications. On this basis the appellants prayed that the delay in presenting the claim should be condoned.

The employers opposed the claim on two grounds. First, they argued that the appellants’ principal ground for seeking condonation—that they were unaware of the law— amounted to a plea of ignorance of law, and that such ignorance could not constitute sufficient cause under the applicable proviso. Second, the employers contended that the appellants had provided no satisfactory explanation for the delay in filing the present applications after the decision dated 2 May 1952 in which section 70 of the Bombay Act was authoritatively considered by the appellate court in the Ruby Mills case (Vide Bombay Labour Gazette, January 1953, Vol. 32, No. 5, p. 521). Accordingly, the employers maintained that the appellants were not entitled to condonation of delay. The authority affirmed both of the employers’ contentions. It examined the cited judicial decisions and held that even if the appellants were ignorant of the rights conferred by section 70 of the Bombay Act, such ignorance could not be regarded as a sufficient cause. The authority also reviewed the appellants’ conduct after the Ruby Mills decision and found that their behaviour did not justify the claim that they had acted bona fide and with due diligence. In particular, the authority observed that the appellants did not specify when they became aware of the Ruby Mills decision, and they failed to provide a satisfactory explanation for why, after becoming aware of that decision, they did not promptly approach the authority.

The authority examined the correspondence exchanged between the parties after the decision in the Ruby Mills case, reported in the Bombay Labour Gazette of January 1953, volume 32, number 5, page 521. From that review it observed that the appellants continued to claim the benefit of the Factories Act on a prospective basis rather than retrospectively. No affidavit was offered to explain the appellants’ conduct after 2 May 1952, the date on which the Ruby Mills decision became effective. Because the authority could not find any satisfactory explanation for the appellants’ inaction after that date, it concluded that no sufficient cause had been demonstrated to justify condoning the delay. Consequently, the authority refused to excuse the delay and rejected the appellants’ claim for overtime wages for a period that fell outside the prescribed limitation period.

When the appellants challenged this decision before the High Court by filing petitions under Articles 226 and 227, the only point they raised was that the authority had erred in holding that an error of law could not constitute a sufficient cause under the relevant proviso to section 15(2) of the Act. The High Court’s record did not show that the appellants drew the Court’s attention to the authority’s second finding, and therefore that aspect was not examined in the High Court’s judgment. The High Court agreed with the authority’s view and held that ignorance of law could not be a sufficient cause. The Court observed, “Ignorance of law is ignorance of the rights of a party which the law confers upon him, whereas mistake of law is mistake in establishing those rights by, for instance, going to one forum instead of another.” The Court further noted that in cases of mistake of law, courts have usually excused the time taken to assert rights in an incorrect forum, drawing on the principle underlying section 14 of the Limitation Act. On the basis of this reasoning the High Court dismissed the petitions filed by the appellants.

Before addressing the merits of the arguments advanced by Mr Phadke in the present appeals, it was necessary to set out the relevant provisions of section 15 of the Act. Section 15(1) provides for the appointment of an authority to hear and determine, for any specified area, all claims arising from deductions from wages or delays in payment of wages of persons employed or paid in that area. Sub-section (2) states, inter alia, that if any deduction has been made from the wages of an employed person contrary to the provisions of the Act, or if any payment of wages has been delayed, the person may apply to the authority for a direction under sub-section (3). The applications presently before the Court were made under this sub-section. The first proviso to sub-section (2) sets a limitation period, requiring that every such application be presented within six months from the date on which the cause of action accrued. The second proviso, which is the focus of the present appeals, provides that an application may be admitted after the six-month period if the applicant satisfies the authority that he had a sufficient cause for not making the application within that period. The principal question that had been argued before both the High Court and the authority was whether ignorance of law could be regarded as a sufficient cause within the meaning of this second proviso.

Under section 15 of the Act, a person whose wages have been deducted contrary to the provisions of the Act, or whose wages have been delayed, may apply to the authority appointed under sub-section (1) for a direction as prescribed in sub-section (3). The present applications were filed under that sub-section. Sub-section (2) contains two provisos. The first proviso imposes a limitation, requiring that every such application be presented within six months from the date on which the cause of action accrued. The second proviso, which is the focus of the present appeals, provides that an application may be admitted after the six-month period if the applicant satisfies the authority that he had a “sufficient case” for not making the application within that period. The principal question before the High Court and before the authority was whether ignorance of law could be regarded as a sufficient cause within the meaning of this proviso.

Mr Phadke argued that the second proviso confers a wide discretion on the authority and that the legislature intentionally left the exercise of that discretion unregulated. He acknowledged that the discretion must be exercised judicially but objected to any rule, which he termed a “self-denying ordinance,” that would compel the authority invariably to reject ignorance of law as a “sufficient case.” He asserted that Indian law did not contain a rule that ignorance of law could not be a sufficient cause for explaining delay in instituting legal proceedings, and he contended that even if such a rule existed for ordinary litigation, it would be inappropriate to apply it to the interpretation of welfare legislation such as the Act. To support his position, he referred to the House of Lords decision in Hyman v Rose [1912] A.C. 623, and to the Supreme Court judgment in Namdeo Lokman Lodhi v Narmadabai [1953] S.C.R. 1009 at 1027, both of which dealt with the discretion of courts to grant relief against forfeiture and employed language that was interpreted broadly. He also relied heavily on the Privy Council decision in Brij Indar Singh v Kanshi Ram [(1917) L.R. 44 I.A. 218], where the Lordships observed a uniform practice among Indian High Courts that a mistake in law, in appropriate cases, was treated as a sufficient cause for excusing delay, noting the view expressed by Lord Dunedin that while the matter was not entirely open, altering that established procedural rule would cause considerable inconvenience.

In the passage quoted, the Court observed that although a simple mistake of law was not automatically a sufficient reason to compel a court to use its discretion under section 5, there could be substantial argument for applying the rule universally. However, the Court declared that the issue was not open for reconsideration. It explained that interfering with a procedural rule that had been established as a general principle by full benches of every Indian court and had been applied for many years would cause great inconvenience, and therefore the judges did not intend to disturb that rule. Counsel for the petitioner, Mr Phadke, contended that the quoted decision served as authority for the proposition that, in an appropriate case, a mistake of law or ignorance of law could constitute a sufficient cause under section 5 of the Limitation Act, and he argued that the same principle should guide the construction of the proviso under consideration. The Court indicated that it would not address this contention at this stage because, as it later explained, it had reached the conclusion that the appellants would fail even if the Court were to accept Mr Phadke’s present argument. The Court noted that the authority had ruled against the appellants on two separate grounds: first, that ignorance of law could not be treated as a sufficient cause; and second, that even assuming it could, the appellants had failed to explain the delay in filing the current applications after they became aware of the Ruby Mills decision, reported in the Bombay Labour Gazette of January 1953, volume 32, number 5, page 521, which was issued on May 2, 1952. The Court described this latter conclusion as a finding of fact, whose correctness could not have been challenged before the High Court and could not be reopened in the present appeals. It further observed that the High Court judges had apparently not been directed to consider this finding; had they been, the judges would have examined this aspect before addressing the interesting question of law that had been raised. Subsequently, counsel for the petitioner fairly admitted that he could not effectively contest the authority’s finding that no satisfactory explanation had been provided for the delay. Nevertheless, he argued that the finding would not affect the final outcome because, in his view, once ignorance of law was held to be a sufficient cause, the period up to May 2, 1952, would be covered by the appellants’ ignorance of the true scope and effect of section 70 of the Bombay Shops and Establishments Act. The Court indicated that this position might be conceded, noting that neither the workmen nor their union, nor the employers, nor the authorities under the Factories Act, nor even the industrial courts, had fully appreciated the true effect of that section. However, the Court emphasized that the remaining question was whether the appellants were still required to explain the delay that occurred after May 2, 1952.

Mr Phadke contended that his clients were not required to explain the delay that occurred after 2 May 1952. He argued that the relevant proviso should be understood to mean that if a sufficient cause for missing the prescribed six-month filing period was established, the application could be filed at any later time. According to his submission, once the statutory bar created by the six-month limitation was removed by showing such sufficient cause, the limitation issue ceased to exist and the applicant could no longer be required to justify the subsequent delay. In other words, the removal of the statutory bar eliminated any further limitation question, and the applicant could not be called upon to explain the delay that followed. This was the effect of the argument that Mr Phadke urged with respect to the proviso in question.

The argument relied heavily on the decision of the Court of Appeal in Lingley v. Thomas Firth & Sons Ltd. [(1921) 1 K.B. 655]. In that case the court had to interpret the phrase “reasonable cause” appearing in proviso (b) to section 2, sub-section (1) of the Workmen’s Compensation Act, 1906 (6 Edw. 7, C. 58). Section 2(1) imposed a six-month limitation for making a claim for compensation arising out of an accident covered by the Act, and proviso (b) provided that failure to make a claim within that period would not be a bar to proceeding if the failure resulted from mistake, absence from the United Kingdom, or other reasonable cause. In the Lingley case the claimant admitted that the claim was filed after the six-month period, but an application for arbitration was made a few months later. The County Court judge was satisfied that the claimant had shown reasonable cause under section 2, sub-section (1) for the delay and held that once the statutory bar was removed by establishing reasonable cause, no further limited period remained within which the claim had to be made, and compensation was awarded. The employer appealed, and the Court of Appeal allowed the appeal, reversing the County Court’s finding on the first point because it concluded that the claimant had not demonstrated reasonable cause for the failure to claim within six months. Nonetheless, while addressing the construction of section 2(1), proviso (b), the judges observed that if sufficient cause had been established, the claimant would have succeeded, because they agreed that once the six-month statutory bar was lifted, the claim could not be subject to any additional limitation.

The Court noted that once a claimant had established reasonable cause for the delay, no additional limitation could be imposed, and that this principle formed the basis of Mr Phadke’s argument. He urged that the same rule should govern the interpretation of the relevant proviso to section 15 of the Act. To support his submission, Mr Phadke referred to three Indian decisions, namely J Hogan v Gafur Ramzan [XXXV B.L.R. 1143], Salamat v Agent, East Indian Railway [(1938) I.L.R. 2 Cal. 52, 58], and Kamarhatti Co. Ltd. v Abdul Samad [(1952) I L.L.J. 490, 492]. All three cases dealt with compensation claims made under section 10 of the Workmen’s Compensation Act (VIII of 1923); the first two concerned the provision as it existed before its amendment in 1938, while the third addressed the provision after the 1938 amendment. The Court further observed that each of these decisions sought to adopt the view expressed by the Court of Appeal in Lingley [(1921) 1 K.B. 655].

In order to appreciate the effect of the Lingley decision, the Court explained that the Court of Appeal in that case was essentially applying an earlier House of Lords judgment in Powell v The Main Colliery Co. Ltd. [(1900) A.C. 366]. The Court of Appeal’s judges, the record shows, followed the House of Lords’ ruling, albeit with some reluctance. According to the House of Lords in Powell, the claim for compensation contemplated in section 2(1) of the English Act referred not to the initiation of tribunal proceedings but to the filing of a notice of claim addressed to the workman’s employer. Consequently, the six-month limitation prescribed by section 2(1) applied solely to the notice that the workman was required to give to his employer, and it did not extend to the subsequent tribunal proceedings for compensation. The notice had to be served within six months of the accident, after which the claimant could commence proceedings before the appropriate tribunal. The combined effect of the Powell and Lingley decisions was that, where a workman demonstrated sufficient cause for any delay in serving the notice to his employer, the law did not require him to justify any further delay in instituting tribunal proceedings, because no statutory time limit governed the institution of those proceedings.

The Court then turned to section 10 of the Indian Workmen’s Compensation Act. It observed that, in its original form, section 10(1) prescribed a six-month period for making a compensation claim and also mandated that notice of the accident be given as soon as practicable after the occurrence and before the workman voluntarily left the employment in which he was injured. The Court indicated that the second proviso to section 10(1) allowed the Commissioner to admit and decide any claim even if the notice or the claim had not been made within the prescribed time, provided the Commissioner was satisfied that the failure was due to sufficient cause. The Court remarked that this proviso had been interpreted as analogous to the proviso (b) to section 2(1) of the English Act, though it remained open to argument whether that comparison was accurate. After the 1938 amendment to section 10, the Court noted that the position had become clearly distinct from the English provision, and it proceeded to analyse the amended wording.

In this case, the Court noted that section 10(1) originally required the notice of the accident to be given as soon as practicable after the incident and before the workman voluntarily left the employment in which he was injured. The second proviso to that subsection provided that the Commissioner could admit and decide any claim for compensation even if the notice had not been given or the claim had not been instituted within the time prescribed by the subsection, provided the Commissioner was satisfied that the failure to give notice or to institute the claim was due to sufficient cause. It appeared that, when construing the material terms of this proviso, some had likened the position to that created by proviso (b) of section 2(1) of the English Workmen’s Compensation Act. The Court recognised that it was open to argument whether such a comparison was accurate; however, it emphasized that after the amendment of section 10 in 1938 the position under the Indian provision became clearly different and distinguishable from the English provision. Under the amended provision, the relevant proviso stated that a Commissioner could nonetheless entertain and decide any claim for compensation even where notice had not been given or the claim had not been preferred before the Commissioner within the time prescribed by section 10(1), if the Commissioner was satisfied that the failure to give notice or to prefer the claim was due to sufficient cause. The Court observed that section 10(1) required the notice of accident to be given as soon as practicable and the claim to be preferred before the Commissioner within six months. Although that period was later extended to one year, the Court regarded the extension as a separate matter. Consequently, the amended section 10 created a six-month limitation for preferring an application for compensation before the Commissioner, and the Court held that no analogy could be drawn between this limitation and the limitation prescribed by section 2(1) of the English Act. With respect, the Court added that in the case of Kamarhatti Co., Ltd. (1952 I L.L.J. 490, 492) the learned judges had applied the decision in Lingley’s case (1921 1 K.B. 655) without referring to the material amendment made to section 10 of the Indian Act. The Court described the view expressed in that case as obiter and noted that the substantive decision was that the claimant had failed to show sufficient cause even under a liberal construction of the proviso, leading to the setting aside of the order directing the employer to pay compensation. Hence, the Court concluded that the authorities relied upon by Mr Phadke dealt with a statutory limitation provision that was essentially different from the proviso presently before the Court. The proviso under consideration, therefore, prescribed the limitation for the institution of the application itself, rendering the principle laid down in Lingley’s case inapplicable to the question at hand.

The Court observed that the proviso provides a six-month limitation for instituting the application itself, and therefore the rule laid down in Lingley's case [(1921) 1 K.B. 655] could not be applied to the question before it. It further noted that the present proviso is substantively similar to the provision contained in section 5 of the Limitation Act, and that Mr Phadke had fairly conceded that there is a settled consensus of judicial opinion on how section 5 is to be construed. The Court explained that, when a party seeks condonation of delay under section 5 of the Limitation Act, the party must satisfy the court that it had sufficient cause for the entire period of delay, and that this requirement has always been understood to mean that the explanation must cover the whole of the period of delay. This principle was illustrated by reference to Ram Narain Joshi v. Parameswar Narain Mehta [[1903] I.L.R. 30 Cal. 309], where the court held that the party must explain the entire lapse of time. Applying this rule, the Court accepted the finding recorded by the authority that the appellants had failed to establish any sufficient cause for their inaction between 2 May 1952 and the respective dates on which they filed their present applications. That failure was deemed fatal to the appellants’ claim, and consequently the Court considered it unnecessary to address the larger question of law that Mr Phadke had sought to raise before the Court.

The Court also recorded that the learned Attorney-General had raised a preliminary objection concerning the validity of the certificate granted by the High Court in these appeals. The Attorney-General contended that the High Court erred in taking into account the total value of the consolidated appeals for the purpose of granting a certificate under Article 133. The Court, however, found no need to entertain this preliminary objection and therefore did not consider the argument further. As a result, the Court concluded that the appeals must fail and be dismissed. Since the respondent had not pressed for costs, the Court directed that each party bear its own costs in this Court, and it made no order as to court fees. Finally, the appeals were dismissed.