Unpaid wage accumulations cannot be transferred to a welfare fund without extinguishing liability or compensating the employer.

A statutory transfer of unpaid accumulations to a Labour Welfare Fund was held unconstitutional because the employer's liability to employees was not extinguished, the debt remained outstanding despite limitation, and the scheme deprived the employer of property without compensation. The argument based on frustration and abandoned property also failed, as there was no mechanism to protect the true owners' claims before vesting. By contrast, the provision requiring fines realised from employees to be paid into the Fund was upheld because those sums were already impressed with a trust for employees and the employer had no beneficial interest in them.

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Issues: (i) whether the provision requiring unpaid accumulations to be paid to the Labour Welfare Fund was unconstitutional for depriving the employer of property without compensation and without valid discharge of liability; (ii) whether the provision requiring fines realised from employees to be paid to the Fund was unconstitutional.

Issue (i): whether the provision requiring unpaid accumulations to be paid to the Labour Welfare Fund was unconstitutional for depriving the employer of property without compensation and without valid discharge of liability.

Analysis: The unpaid wages, when earned, remained the employer's property until lawfully discharged. The statutory scheme was treated as transferring the debt to the Board, but the Act did not extinguish the employer's liability to the employees. Limitation only barred the remedy and did not discharge the debt, and even the argument based on frustration of contract did not assist because, if the contract became void, restitution under the Contract Act would still leave liability subsisting. The law was also not one concerning abandoned property, since there was no machinery for ascertaining or protecting the claims of the true owners before vesting.

Conclusion: The provision relating to unpaid accumulations was unconstitutional and void.

Issue (ii): whether the provision requiring fines realised from employees to be paid to the Labour Welfare Fund was unconstitutional.

Analysis: Fines under the wage law were already impressed with a trust for the benefit of employees, and the employer had no beneficial interest in them. The statute merely transferred the administration of that fund and widened the class of beneficiaries without taking any property belonging to the employer or imposing any unreasonable restriction on its rights.

Conclusion: The provision relating to fines was valid.

Final Conclusion: The statutory scheme was upheld in part and struck down in part, with invalidity confined to the transfer of unpaid accumulations and validity maintained for the transfer of fines.

Ratio Decidendi: A statutory transfer of the employer's money or debt to a public fund, without extinguishing the corresponding liability to the employee or compensating the owner, amounts to unconstitutional deprivation of property, whereas a direction concerning a fund in which the employer has no beneficial interest does not.

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