Kerala High Court
Kerala Non Banking Finance ... vs State Of Kerala
on 14 November, 2019
THE COURT ON 14-11-2019 DELIVERED THE FOLLOWING:
WP(C) No.26803 of 2017 (A) 3
C.R.
JUDGMENT
K. Vinod Chandran, J.
34. As to risk allowance, it has to be noticed that this again is a matter to be agreed upon by the employer and the representative associations of employees and there cannot be any assumption by the Government that the appraisers and Cashiers would be negligent and then be made liable for the loss caused to the employer, so as to prescribe a 10% addition to the basic wages for the risk undertaken by them. An employee, who is involved in a work for which there is an element of risk, also is engaged for the particular skill he has in discharging such work, which definitely has been taken into account by the Government in placing Cashier in category (vi) at a higher level than Clerks in category (v) as per the impugned proposals at Ext.P3. On this aspect pertinent is also the exclusion by clause (iv) of the definition of wages; 'any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment'(sic- S.2(h)(iv)).
35. We reiterate that service weightage, special allowance for extra duty and risk allowance are not permissible to be prescribed under the M.W. Act, since it does not involve the prescription of a minimum wage. The M.W Act only confers the power to prescribe the minimum living wage for an employee, taking into consideration a standard family and the attendant expenses, which any normal human being, who lives with dignity, has to bear in his life at a given point of time. It cannot take into account or reckon the various situations that may arise in employment, which are necessarily in the nature of an incidence of service. Every incidence of service whether it be as a benefit, like a higher pay scale on stagnation or a rigour, as in the case of transfer, is regulated by the contract of employment varied only by bilateral settlements entered into on conciliation or the terms modified on industrial adjudication. The second clause under 'service weightage' seeks to mitigate stagnation, not permissible under M.W.Act.
38. One other contention is that the Managers and Supervisors cannot be termed to be employees under the M.W Act and hence the prescription of minimum wages for the supervisory staff is beyond the power conferred under the Act. Reliance is placed again on Hindustan Sanitaryware and Industries Ltd. and Kerala Rubber Footware Manufacturers and Export Association. It is also argued that the definition of employer includes in so far as an establishment, other than a factory or one under the control of Government or a local authority, 'any person responsible to the owner for the supervision and control of the employees"[sic- S2(e)(iv)]. We cannot agree since the inclusive definition is only to ensure implementation of the Act and make liable any supervisory personnel also to the penalties under the Act. This ensures that the Supervisory staff, who are part of the Management take appropriate action to ensure that those employees under them are paid the minimum wages. They become employers only vis a vis employee, which employee is in their charge; the former being the immediate supervisory staff. This cannot change the essential nature of their relationship with the management or the persons in ultimate charge of the affairs of the establishment. A supervisory staff also vis a vis their management is an employee. We also have to pertinently notice that the Parliament while enacting the M.W Act of 1948 had experience of enacting another welfare legislation , a more comprehensive one, The Industrial Dispute Act of 1947 [for brevity, 'the I.D. Act']. The I.D. Act in its definition of workman excluded any person employed in a supervisory capacity drawing wages beyond a limit. Such an exclusion though could have been made; was consciously not made.
39. The Hindustan Sanitaryware and Industries Ltd. considered the prescription of wages to security personnel and found their engagement to be not in a skilled or unskilled, manual or clerical work. The same cannot be said of Managers or supervisors engaged in this particular industry, where an amount of accounting skill is necessarily required. As to the second decision of one of us [KVC,J], sitting single, we again, sitting Division, disagree with the declaration made therein, on the findings herein above.
40. On the above findings, we strike down the prescription of service weightage, allowance of extra duty and risk allowance prescribed by the State Government in the Notification produced at Ext. P3, for reason of it being beyond the competence of the State Government acting under the Minimum Wages Act, but sustain the notification on all other aspects.
We partly allow the writ petition, leaving the parties to bear their respective costs.
K. Vinod Chandran, J.
The writ petition impugn Ext.P7 order, rejecting the objections filed by the petitioner against the proposal made by Ext. P3 notification dated 28.07.2016, fixing the minimum wages of employees in private financial institutions, whom the petitioner Association represents. Though a final notification under Section 5(2) of the Minimum Wages Act, 1948 [for brevity, 'the M.W. Act'] has not been issued, it would be automatic, if the order of rejection is upheld by this Court. We observe so to make it clear that there could be no further challenge against the notification as such, especially since the Government, by the rejection, decided to accept the proposal brought out by Ext.P3 notification; the challenge against which is considered by us here. Ordinarily after consideration of representations, the final notification is brought out. Here an order was necessitated since a consideration of the objections was directed by this Court.
2. Sri.P.Ramakrishnan, ably argued for the petitioner, who was supported by Sri.Ramdas appearing for the addl. 3rd respondent, who got impleaded on their own accord. Sri.K.V. Sohan, State Attorney, put forth contentions for the State supported by Sri.S.Krishnamoorthy, who appears for the 2nd respondent Employees' Association, who was impleaded by us.
3. Sri.Ramakrishnan first took us to the appointment of a Committee under Section 5(1)(a) of the M.W. Act, pursuant to which the notification at Ext.P3 has been brought out. It is his contention that none of the members of the Committee, constituted under the provision had any connection with the Non- Banking Financial sector under which is covered the private financial institutions. Neither were the Non Banking Finance Companies [NBFCs] represented nor had the members appointed, even a remote connection with the business of finance. Reliance is placed on Ministry of Labour and Rehabilitation v. Tiffin's Barytes Asbestos and Paints Ltd. [(1985) 3 SCC 594] to urge the proposition that there should be a nexus between the persons appointed to represent the employers with the particular employment, for which minimum wages is prescribed. The proposals made by the Committee, which is in the nature of an advice or recommendation to the Government has been accepted in toto and the notification Exhibit P3 is a verbatim reproduction of the proposals of the Committee. The counter affidavit also indicates that the notification was issued on the advice of the Committee constituted. True, the objections have been considered by the Government, but however the petitioners lost an opportunity to proffer their views before the Committee. The Committee, if comprised of members having nexus to the financial sector would definitely have reached a different conclusion. The entire exercise has to be redone by appointing a Committee from the financial sector and any other sector, which the Government feels has a connection with financial sector.
4. In addition to that, the learned Counsel would take us through the various provisions of the M.W. Act to specifically challenge the prescriptions in Ext.P3 of service weightage, special allowance for extra duty and risk allowance, which, it is argued, is beyond the scope of the Government exercising powers under the M.W.Act. What is permissible is the prescription of a minimum wage adequate to have a decent living, which also has to take in many factors like health, education of children and so on and so forth, but not to the extent of prescribing other amounts, which would be the exclusive premise of the Management and representative unions to be agreed upon in a bilateral settlement. The decisions in Bidi, Bidi Leaves and Tobacco Merchants Association Vs. State of Bombay 1962 Supp. (1) SCR 381 and Hindustan Sanitaryware and Industries Ltd. v. State of Hariyana [AIR 2019 SC 2194], are relied on to canvas the proposition.
5. It is also pointed out that Clause (vii) and (viii) of Ext.P3, take in persons having supervisory duties, coming within the definition of 'employer' under the M.W. Act, which cannot be. Sri.Ramakrishnan fairly points out that the issue of service weightage and a Manager or Supervisor not coming under the definition of employee is covered by the judgment of one of us sitting single [KVC(J)] in Kerala Rubber Footware Manufacturers & Exporters Association, Calicut & Others v. State of Kerala & Others [2014 (1) KLT 277]. He would point out that the Court in that instance had not considered the decisions of the Hon'ble Supreme Court on the aspect of service weightage. But there could not be a different view with respect to the Managers or employees in supervisory capacity being excluded from the definition of 'employee'. On one aspect he doubts the decision and on the other relies on it.
6. It is also argued by the petitioner that the Government had not considered the varied size of the establishments in the financial sector, especially those involved in leasing and financing. They occupy a wide spectrum starting from a sole establishment to branches all over the State and even outside it. The minimum wages prescribed identically for such small establishments as also those having very many branches across the State or outside it indicates the casual approach of the Government. The capacity to pay the minimum wages also is a valid consideration.
7. Sri.K.V. Sohan, the State Attorney, would caution us from interfering with the notification, especially since this Court does not have any expertise in the matter of fixing minimum wages. However, it is vehemently contended by the State Attorney that the notification under Section 5(2) of the M.W. Act is not pursuant to the advice rendered by the Committee under Section 5(1)(a). Ext.P3 has been independently brought out by the Government under Section 5(1)(b) of the M.W. Act and on the directions of this Court, the objections were considered. This is the sole requirement when a notification is brought out under Section 5(1)(b) of the M.W. Act. If it were a notification under Section 5(1)(a) of the M.W. Act, on accepting the advice of the Committee, then there was no requirement for an objection before the Government or hearing on that count, since already the Committee had considered the objections and concerns of the stake holders. The learned State Attorney also submits that the statements in the Counter Affidavit to the contrary need not be taken note of, especially since it is trite that the Counter Affidavit cannot add, modify or alter the substance of the procedure followed in accordance with the Statute.
8. As far as the additional aspects challenged in the notification, it is pointed out that dearness allowance definitely can be prescribed under the Act. Service weightage is also a measure of ensuring dearness allowance on that further component of weightage in service, reckoning the period of service of an employee for increasing the basic wages. It is also pointed out that providing special allowance for extra duty is one under the Statute, specifically under Section 14. As for the risk allowance it is argued, the definition of 'wages' takes in the implied contract of an employment. Any employment, which brings with it an element of risk, for reason of the negligence of an employee, making him liable to compensate the management for any loss caused, has to be suitably taken care of. The liability to so compensate the loss caused to the Management would be implied in the contract of employment, which has been taken into account by the Government. The State Attorney would also rely on Kerala Rubber Footware Manufacturers and Exporters Association [supra] to support his plea on service weightage. However, it is pointed out that by the specific definition of employee, supervisory personnel also would come within such ambit; as distinguished from the definition in the Industrial Disputes Act, 1947. The State Attorney too on one aspect relies on the judgment but on the other doubts it.
9. The State relies on Y.A. Mamarde and Nine Others and Ghanshyam and Eight Others v. Authority under the Minimum Wages Act [Small Causes Court] Nagpur and Another [(1972) 2 SCC 108], Workmen Represented by Secretary v. Reptakos Brett & Co. Ltd. And Another [(1992) 1 SCC 290] Airfreight Ltd. v. State of Karnataka and Others [(1999) 6 SCC 567].
10. Sri.S. Krishnamoorthy appearing for the employees would submit that the question of financial capacity is no longer relevant going by the decision of the Hon'ble Supreme Court in Chandra Bhawan Boarding and Lodging, Bangalore v. State of Mysore and Another [AIR 1970 SC 2042]. The said decision also lays at naught the argument of the petitioner that the Committee constituted does not have the representatives of the financial sector, especially on the point of the option provided to the Government to either proceed under Clause (a) and (b) of Section 5(1). Reliance is also placed on the Full Bench decision of this Court reported in Malayalam Plantations Ltd. & Others v. State of Kerala & Others [1975 KLT 296], to argue that the capacity to pay of individual employers is not a relevant factor to be considered in prescribing Minimum Wages. The learned Counsel would contend that the various additional components provided in Ext.P3 notification are also incidence of service and could be validly provided under the M.W. Act. It is pointed out that without service weightage, on implementation of the minimum wages, a person having five years' experience in the organization and one who joins after the implementation would be entitled to only the very same pay. For effective implementation of the notification there should be service weightage; which otherwise will be denied to the employees. Specfic reference is made to the English version of the notification which according to him has more clarity. It is contented that the weightage provided is a one time measure to those employees continuing in the organisation confined to five years for all who have not less than five years of service. If at least that is not permitted every employee will start at the lowest of the scale.
11. Sri.Ramakrishnan has, in reply, argued that the special allowance for extra duty, is not one similar to overtime wages. In fact what is provided as special allowance for extra duty @10%, is already taken care of under Section 16 of the M.W. Act and it calls for no further prescription from the Government
12. Tiffins Barytes Asbestos [supra] was a case in which the High Court had interfered with the notification on two grounds; one that the Government employees appointed to the Committee constituted under Section 5(1)(a) of the M.W. Act cannot be said to be independent persons and that the so-called representatives of the industry did not represent the industry at all. The Hon'ble Supreme Court found that Government employees entrusted with the task of implementing the provisions of the M.W. Act cannot be dubbed as interested or as anything other than independent persons. As to the representation of the industry, it was held that the High Court did not have any material to say that the members appointed by the Government to the Committee did not represent the industry. What we are concerned with is the declaration that, in appointing members to a Committee constituted under the M.W. Act it is not necessary that they should be engaged for profit in the particular employment, but it is sufficient if there exists a nexus between the persons who are appointed and the employment concerned. In the present case, the members appointed to the Committee as is very evident from Ext.P1, a response to an RTI query made by the petitioner, have no connection with the finance sector. From the businesses of the representative- members of the employers, indicated in Ext.P1, we are convinced that none have any nexus with the particular employment in the finance sector. 13. Before we rule finally on the sustainability of the proposal made, we have to
consider the contention raised by the State Attorney that the notification is issued under Section 5(1)(b) of the M.W. Act. Section 5 speaks of procedure for fixing and revising of minimum wages and gives an option to the Government to proceed either as per clause (a) or (b) of Section 5(1). Under sub-section (2) if a committee is appointed under clause(a) a notification can be published accepting their advice and if the Government issues a proposal-notification under clause(b) it can be finalised after considering the representations made.
14. When fixing minimum rate of minimum wages in respect of any scheduled employment for the first time, as provided for in sub-section (1), the Government could either appoint Committees and sub- Committees to hold enquiries and advice it in respect of such fixation [clause (a)] or by notification in the official Gazette publish its proposals for information of the persons likely to be affected by such action and specify a date beyond two months for taking into consideration such proposal [clause(b)]. Sub-section (2) of Section 5, as we noticed in the preceding paragraph, has two limbs; the first dealing with the further steps pursuant to a recommendation received from a Committee or Sub-Committee appointed under Clause (a) and the second limb with reference to the procedure when the Government acts under Clause
(b). When the Government has appointed a Committee or sub-Committee, which holds enquiries; representations from the persons affected are received by the Committee itself and considered. The Government then is empowered to bring out a notification without any further consideration of objections. This is so, for reason of the Committee comprising of the representatives of the stake-holders having gone into the objections and made positive recommendations to the Government. However, when Clause (b) is resorted to, there is a requirement on the Government to consider all the representations received by it before the date specified under Clause (b) and then issue a notification in the official Gazette.
15. We see that the Counter Affidavit and even the objections in the impugned order proceed on the premise that the Committee's recommendations prevailed over the Government. But as was argued, the specific proposal is at Ext.P3 notification and there cannot be any addition, modification or subtraction from what is stated therein, which discloses the mind of the State Government who issued the notification. Ext.P3 specifically indicates that the notification is issued under Section 5(1)(b) of the M.W. Act. It is true that there is a verbatim reproduction of the recommendations made by the Committee earlier appointed. However the fact remains, the Committee's recommendations if accepted by the Government at the first instance, then there was no requirement to bring out a notification as seen from Ext.P3, which is only a proposal. The Government was quite concious of what it was doing and had hence brought out a proposal inviting representations, despite it having proceeded on the basis of the recommendations of the Committee appointed. Representations were received and they were also considered and the objections overruled.
16. In Chandra Bhawan, it was argued that Section 5(1) was violative of Article 14 of the Constitution as it confers an unguided and uncontrolled discretion on the Government to follow either of the alternative procedures in fixing minimum wages. It was contended that if a Committee is appointed under clause (a), the members appointed being representatives of the employers would be alive to the problems arising in the industry and able to apprise the Committee of such problems. The argument there, as is argued here was that it would have been more advantageous to the employer; which was rejected. The mischief that was sought to be remedied by the enactment, was held to be prevention of sweated labour and exploitation of the unorganised employees, by providing minimum wages, irrespective of the capacity of the industry to pay the same. Minimum Wages was found to be not a static concept but prone to change with the growth of economy and change in the standard of living; including not only the bear sustenance of the labourer and his family but also taking care of other primary needs like availing facility for medical treatment, educational needs of children, transport etc. 17. Chandra Bhawan also found the two alternate procedures/options under Section 5 to be proper since the Government could either take the
advice of the Committee or proceed by itself if it has sufficient material. When a Committee is appointed, it was not as if the Government is bound to accept their recommendation. It was categorically held that the power cannot be held to be unguided or arbitrary, if the Government decides by itself to proceed under Clause (b); especially since it was not conferred on an Officer of the Government but the State Government itself, which can be trusted to exercise properly that power to further the purpose of the Act. 18. In the present case we see that the Government appointed a Committee who conducted enquiries and the stake-holders were also heard.
Despite the law that the State Government could have then brought out a notification under Section 5(2); the Government issued a notification under Section 5(1)(b), calling for representations, which were considered. We do not find any reason to look into the constitution of the Committee or interfere with the notification on the ground that the Committee members were not the true representatives of the finance sector. We hence reject the contention raised by the petitioner that Ext.P3 is void ab initio for reason of the constitution of the Committee being not proper.
19. Bidi, Bidi Leaves and Tobacco Merchants Association considered a scheme delineated by the appropriate Government to mitigate the loss caused to the casual labourers employed in the bidi manufacturing industry for reason only of the prevalent practise of a unilateral decision taken by the Management, as to the quality of bidis, to reject those already made and deny the labourers payment to that extent. The practise was that the manufacturers employed a large number of persons for the purpose of making bidis, who were supplied with tendu leaves, tobacco and other necessary materials. The labourers took the materials to their respective work places and brought back the bidis prepared by them, to the manufacturer. On examination of the bidis, the employer accepts only those found to be prepared according to the terms of the contract and rejects such of them as are found to be of poor quality; making payments only for the bidis accepted. Even under the terms of contract the workers are entitled to receive payment only for the bidis accepted by the employer and not for those rejected; which all the same were retained by the employer. There were protests raised against the improper rejection of bidis, especially when it was done unilaterally.
20. The Hon'ble Supreme Court found that this works great hardship on the workers and the scheme was insofar as mandating a destruction of the bidis rejected and also payment at a lower percentage for those retained without destruction. It also provided for payment of full wages if the bidis are retained without destruction beyond a limit and there was maximum percentage fixed beyond which the employer could not reject the final product. It was found by the Court that there would not have been serious criticism against the scheme as such, but for the fact that such schemes to mitigate hardship of labourers were squarely coming within the ambit of an industrial adjudication under the provisions of the Industrial Disputes Act, 1947. An industrial adjudication it was found, could impose new obligations on the employer and even alter the terms of employment in the interest of social justice, with a view to secure industrial peace. On the question of prescription of minimum wages it was held 'if the relevant provisions of the Act confer upon the respondent the power to check the evil against which the workers complain then of course the validity of the impugned clauses would be beyond challenge. If, on the other hand, the power to prescribe or revise minimum rates of wages does not either expressly or by necessary implication include the power to provide for the machinery to check the evil in question, then the impugned clauses would be ultra vires however necessary it may be to check and control the said evil in question (sic- para10).
21. The extent of the authority under the M.W Act was stated by the Hon'ble Supreme Court in paragraph 17, which is extracted hereunder: "17. What is the extent of the authority conferred on the respondent in
fixing or revising minimum rates of wages under the relevant provisions of the Act? In dealing with this question we must necessarily bear in mind the definition of the term "wages" prescribed by S.2(h). As we have already seen the term "wages" includes remuneration which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of is employment, in other words, the term "wages" refers to remuneration payable to the employee as a result of the terms of employment, what would be the amount to which the employee is entitled if the other terms of the contract are performed. That is the question which has to be asked in determining what the term "wages" means under S.2(h). No doubt S.3,4 and 5 authorise the appropriate Government to fix the minimum rates of wages. In other words, if the wages fixed by a contract which is either express or implied are found to be low, authority is conferred on the appropriate Government to increase them so as to bring them to the level of what the said Government regards as the minimum wages in the particular scheduled employment in the particular area concerned. This means that power is conferred on the appropriate Government to modify one term of the contract express or implied between the employer and the employee and that is a term which has reference to the payment of wages. If for a certain piece of work done by the employee the employer has agreed to pay him either expressly or by implication a certain amount of wages the appropriate Government can issue a notification and prescribe that for the said work done under the contract the employer must pay his employee a much higher rate of wages and the higher rate of wages thus prescribed would be deemed to be the minimum rate of wages between the parties."
22. It was also held that the 'significance of the definition contained in S.2(h) lies in the fact that the rate of wages may be increased but no change can be made in the other terms of the contract. In other words, the Act operated on the wages and does not operate on the other terms of the contract between the employer and the employee'. [sic para 18]. It was held in paragraph 23 as follows:
"23. There is yet another consideration which is relevant in dealing with the question about the implied powers. The doctrine of implied power can be invoked where without the said power the material provision of the Act would become impossible of enforcement. In the present case all that S.5 requires is the fixation of minimum rates of wages and that has been done by the notification by Cls.1 and 2. What the subsidiary clauses purport to do is to make the enforcement of the fixed rate effective by providing for a machinery to deal with the possible disputes arising between the parties as a result of the practice of discarding chhat bidis. In other words, cls. 1 and 2 fix the minimum rates of wages and thus S.5 has been complied with and enforced. The remaining clauses purport to make the implementation of the provisions of cls.1 and 2 effective. That is very different from giving effect to S.5 itself. The enforcement of the notification is clearly not the same thing as exercising the power of fixing or revising the minimum rates of wages under S.5. A power may be implied, if necessary, in discharging the duty imposed upon the appropriate Government or in exercising the power conferred on the State Government in the matter of fixing or revising the minimum rates of wages; but surely no power can be implied for making effective the implementation of the notification issued under the said power or in the discharge of the said duty. The purpose of the Act cannot be said to have failed after the minimum rates of wages are prescribed and notified. What may turn out to be ineffective is the provision for payment of the said wages by reason of the rejection of good bidis, but that is a matter of an industrial dispute which has to be adjudicated upon under Ss.20 and 21 or under other provisions of the law. It is true that a large section of the workers in the bidi trade is illiterate, uneducated and unorganised; and there can be no doubt that their grievance on the ground of improper rejection of the bidis deerves to be redressed but, in our opinion, the procedure adopted by the respondent in redressing the said grievance is outside the scope of the Act, and therefore beyond the powers conferred on it buy S.5. The proper remedy in such a case may be to make a comprehensive reference of the dispute to the competent industrial tribunal and invite the tribunal to make a proper award in that behalf. We are, therefore, inclined to take the view that cls. 3 to 7 which form an integral scheme are outside the purview of the powers conferred on the respondent by S.5 of the Act and must therefore be declared to be ultra vires. It is common ground that these clauses are severable from cls. 1 and 2 and that their invalidity does not affect the validity of the said two clauses."
{underlining by us for emphasis}
23. Before we proceed further, we have to look at Kerala Rubber Footware Manufacturers and Export Association, which one of us authored. The aspects dealt with in that decision with which we are concerned is "service weightage" and "the prescription of wages for Managers and Supervisors". On service weightage the contention of the employer, writ petitioner therein, was that it went against uniformity of wages to all employees by providing an incentive for experience and that the same was not included in the proposals issued by the Government under Section 5(1)(b) of the M.W. Act. On the second aspect it was found that admittedly there were deliberations by the Advisory Board, in which the representatives of the stake-holders were participated. Reliance was also placed on the Full Bench decision in Malayalam Plantations Ltd., that no oral hearing is contemplated on the proposals, with which aspect we are not concerned. The provision for service weightage was to reckon continuous service in an establishment, @1% of the basic wages for every completed year subject to the employee having three years' continuous service on the date of commencement of notification. It was held that this is not a component in the nature of incentive, but would only be a variable, which every employee would be uniformly entitled to on completing certain years of service. As far as the prescription of wages for Managers and Supervisors, it was held that they would not come under the definition of employee and that their inclusion under the definition of employer would in any event take them away from the ambit of the Act.
24. The above finding on service weightage has to be tested on the anvil of the decisions of the Apex Court, now placed before us, which obviously was not considered in Kerala Rubber Footware Manufacturers and Export Association. We have already looked at Bidi, Bidi Leaves and Tobacco Merchants Association [supra]. In Hindustan Sanitaryware and Industries Ltd. which followed the Constitution Bench decision cited above, the question inter alia was as to categorisation of unskilled employees as semi-skilled and skilled with grading of 'A' and 'B' on their acquiring experience of a certain number of years; which is akin to service weightage. The employer therein challenged the said categorisation on the ground that under the M.W. Act the Government does not have the power to alter the conditions of service, contract or settlement between the employer and the employee. The definition of wages, employer and employee were specifically noticed by the Hon'ble Supreme Court and the Constitution Bench decision was copiously quoted from, which we have also extracted above. The argument of the Government of Haryana was that the prescription that a workman would be raised from semi-skilled 'B' category to semi-skilled 'A' category and then to the skilled category on completion of specific years of experience. This is to ensure that the workmen are not exploited by the employees. This was also on the recommendation of the expert body constituted to protect the interest of the workmen. The Hon'ble Supreme Court held "the grievances of the workmen can be redressed by fora constituted under the Industrial Disputes Act, 1947, if the Government does not have the competence to deal with certain issues in the notification under the Act [sic paragraph-12].
25. Again, Bidi, Bidi Leaves and Tobacco Merchants Association was noticed to find so in paragraph 13:
"13. There is no power vested in the Government by the Act to make alterations to the terms of a contract. The Act only confers jurisdiction in Government to fix/revise the minimum rate of wages notwithstanding the contract. The Notification dated 21.10.2015 postulates that unskilled employees having five years experience would be deemed categorized as semi-skilled "A"; that after three years of experience in semi-skilled "A", the employees would be deemed categorized as semi-skilled "B"; that after three years of experience in skilled "A", the employees would be deemed categorized as skilled "B". Such categorisation or classification by deeming workmen in one category to belong to another category is in direct contravention of the contract between the employer and the employee and is beyond the jurisdiction of the Government."
26. We also notice the various decisions relied upon by the State Attorney. Y.A. Mamarde [supra] was in the context of an overtime wage provided at the double of the normal rate, in the notification under the M.W. Act. The Hon'ble Supreme Court looked at Section 14 of the M.W. Act to find the Government to be competent to fix the rate of overtime wages by a notification under the Act. We observe that no such overtime wage has been prescribed in the instant notification. Reptakos Brett & Co. Ltd. was relied on to argue that the Hon'ble Supreme Court had expanded the definition of minimum wage to include certain other factors also. It has now been established and accepted that in the light of the expanding horizons of right to life, it is deemed to be a right to live with dignity.
2. Sri.P.Ramakrishnan, ably argued for the petitioner, who was supported by Sri.Ramdas appearing for the addl. 3rd respondent, who got impleaded on their own accord. Sri.K.V. Sohan, State Attorney, put forth contentions for the State supported by Sri.S.Krishnamoorthy, who appears for the 2nd respondent Employees' Association, who was impleaded by us.
3. Sri.Ramakrishnan first took us to the appointment of a Committee under Section 5(1)(a) of the M.W. Act, pursuant to which the notification at Ext.P3 has been brought out. It is his contention that none of the members of the Committee, constituted under the provision had any connection with the Non- Banking Financial sector under which is covered the private financial institutions. Neither were the Non Banking Finance Companies [NBFCs] represented nor had the members appointed, even a remote connection with the business of finance. Reliance is placed on Ministry of Labour and Rehabilitation v. Tiffin's Barytes Asbestos and Paints Ltd. [(1985) 3 SCC 594] to urge the proposition that there should be a nexus between the persons appointed to represent the employers with the particular employment, for which minimum wages is prescribed. The proposals made by the Committee, which is in the nature of an advice or recommendation to the Government has been accepted in toto and the notification Exhibit P3 is a verbatim reproduction of the proposals of the Committee. The counter affidavit also indicates that the notification was issued on the advice of the Committee constituted. True, the objections have been considered by the Government, but however the petitioners lost an opportunity to proffer their views before the Committee. The Committee, if comprised of members having nexus to the financial sector would definitely have reached a different conclusion. The entire exercise has to be redone by appointing a Committee from the financial sector and any other sector, which the Government feels has a connection with financial sector.
4. In addition to that, the learned Counsel would take us through the various provisions of the M.W. Act to specifically challenge the prescriptions in Ext.P3 of service weightage, special allowance for extra duty and risk allowance, which, it is argued, is beyond the scope of the Government exercising powers under the M.W.Act. What is permissible is the prescription of a minimum wage adequate to have a decent living, which also has to take in many factors like health, education of children and so on and so forth, but not to the extent of prescribing other amounts, which would be the exclusive premise of the Management and representative unions to be agreed upon in a bilateral settlement. The decisions in Bidi, Bidi Leaves and Tobacco Merchants Association Vs. State of Bombay 1962 Supp. (1) SCR 381 and Hindustan Sanitaryware and Industries Ltd. v. State of Hariyana [AIR 2019 SC 2194], are relied on to canvas the proposition.
5. It is also pointed out that Clause (vii) and (viii) of Ext.P3, take in persons having supervisory duties, coming within the definition of 'employer' under the M.W. Act, which cannot be. Sri.Ramakrishnan fairly points out that the issue of service weightage and a Manager or Supervisor not coming under the definition of employee is covered by the judgment of one of us sitting single [KVC(J)] in Kerala Rubber Footware Manufacturers & Exporters Association, Calicut & Others v. State of Kerala & Others [2014 (1) KLT 277]. He would point out that the Court in that instance had not considered the decisions of the Hon'ble Supreme Court on the aspect of service weightage. But there could not be a different view with respect to the Managers or employees in supervisory capacity being excluded from the definition of 'employee'. On one aspect he doubts the decision and on the other relies on it.
6. It is also argued by the petitioner that the Government had not considered the varied size of the establishments in the financial sector, especially those involved in leasing and financing. They occupy a wide spectrum starting from a sole establishment to branches all over the State and even outside it. The minimum wages prescribed identically for such small establishments as also those having very many branches across the State or outside it indicates the casual approach of the Government. The capacity to pay the minimum wages also is a valid consideration.
7. Sri.K.V. Sohan, the State Attorney, would caution us from interfering with the notification, especially since this Court does not have any expertise in the matter of fixing minimum wages. However, it is vehemently contended by the State Attorney that the notification under Section 5(2) of the M.W. Act is not pursuant to the advice rendered by the Committee under Section 5(1)(a). Ext.P3 has been independently brought out by the Government under Section 5(1)(b) of the M.W. Act and on the directions of this Court, the objections were considered. This is the sole requirement when a notification is brought out under Section 5(1)(b) of the M.W. Act. If it were a notification under Section 5(1)(a) of the M.W. Act, on accepting the advice of the Committee, then there was no requirement for an objection before the Government or hearing on that count, since already the Committee had considered the objections and concerns of the stake holders. The learned State Attorney also submits that the statements in the Counter Affidavit to the contrary need not be taken note of, especially since it is trite that the Counter Affidavit cannot add, modify or alter the substance of the procedure followed in accordance with the Statute.
8. As far as the additional aspects challenged in the notification, it is pointed out that dearness allowance definitely can be prescribed under the Act. Service weightage is also a measure of ensuring dearness allowance on that further component of weightage in service, reckoning the period of service of an employee for increasing the basic wages. It is also pointed out that providing special allowance for extra duty is one under the Statute, specifically under Section 14. As for the risk allowance it is argued, the definition of 'wages' takes in the implied contract of an employment. Any employment, which brings with it an element of risk, for reason of the negligence of an employee, making him liable to compensate the management for any loss caused, has to be suitably taken care of. The liability to so compensate the loss caused to the Management would be implied in the contract of employment, which has been taken into account by the Government. The State Attorney would also rely on Kerala Rubber Footware Manufacturers and Exporters Association [supra] to support his plea on service weightage. However, it is pointed out that by the specific definition of employee, supervisory personnel also would come within such ambit; as distinguished from the definition in the Industrial Disputes Act, 1947. The State Attorney too on one aspect relies on the judgment but on the other doubts it.
9. The State relies on Y.A. Mamarde and Nine Others and Ghanshyam and Eight Others v. Authority under the Minimum Wages Act [Small Causes Court] Nagpur and Another [(1972) 2 SCC 108], Workmen Represented by Secretary v. Reptakos Brett & Co. Ltd. And Another [(1992) 1 SCC 290] Airfreight Ltd. v. State of Karnataka and Others [(1999) 6 SCC 567].
10. Sri.S. Krishnamoorthy appearing for the employees would submit that the question of financial capacity is no longer relevant going by the decision of the Hon'ble Supreme Court in Chandra Bhawan Boarding and Lodging, Bangalore v. State of Mysore and Another [AIR 1970 SC 2042]. The said decision also lays at naught the argument of the petitioner that the Committee constituted does not have the representatives of the financial sector, especially on the point of the option provided to the Government to either proceed under Clause (a) and (b) of Section 5(1). Reliance is also placed on the Full Bench decision of this Court reported in Malayalam Plantations Ltd. & Others v. State of Kerala & Others [1975 KLT 296], to argue that the capacity to pay of individual employers is not a relevant factor to be considered in prescribing Minimum Wages. The learned Counsel would contend that the various additional components provided in Ext.P3 notification are also incidence of service and could be validly provided under the M.W. Act. It is pointed out that without service weightage, on implementation of the minimum wages, a person having five years' experience in the organization and one who joins after the implementation would be entitled to only the very same pay. For effective implementation of the notification there should be service weightage; which otherwise will be denied to the employees. Specfic reference is made to the English version of the notification which according to him has more clarity. It is contented that the weightage provided is a one time measure to those employees continuing in the organisation confined to five years for all who have not less than five years of service. If at least that is not permitted every employee will start at the lowest of the scale.
11. Sri.Ramakrishnan has, in reply, argued that the special allowance for extra duty, is not one similar to overtime wages. In fact what is provided as special allowance for extra duty @10%, is already taken care of under Section 16 of the M.W. Act and it calls for no further prescription from the Government
12. Tiffins Barytes Asbestos [supra] was a case in which the High Court had interfered with the notification on two grounds; one that the Government employees appointed to the Committee constituted under Section 5(1)(a) of the M.W. Act cannot be said to be independent persons and that the so-called representatives of the industry did not represent the industry at all. The Hon'ble Supreme Court found that Government employees entrusted with the task of implementing the provisions of the M.W. Act cannot be dubbed as interested or as anything other than independent persons. As to the representation of the industry, it was held that the High Court did not have any material to say that the members appointed by the Government to the Committee did not represent the industry. What we are concerned with is the declaration that, in appointing members to a Committee constituted under the M.W. Act it is not necessary that they should be engaged for profit in the particular employment, but it is sufficient if there exists a nexus between the persons who are appointed and the employment concerned. In the present case, the members appointed to the Committee as is very evident from Ext.P1, a response to an RTI query made by the petitioner, have no connection with the finance sector. From the businesses of the representative- members of the employers, indicated in Ext.P1, we are convinced that none have any nexus with the particular employment in the finance sector. 13. Before we rule finally on the sustainability of the proposal made, we have to
consider the contention raised by the State Attorney that the notification is issued under Section 5(1)(b) of the M.W. Act. Section 5 speaks of procedure for fixing and revising of minimum wages and gives an option to the Government to proceed either as per clause (a) or (b) of Section 5(1). Under sub-section (2) if a committee is appointed under clause(a) a notification can be published accepting their advice and if the Government issues a proposal-notification under clause(b) it can be finalised after considering the representations made.
14. When fixing minimum rate of minimum wages in respect of any scheduled employment for the first time, as provided for in sub-section (1), the Government could either appoint Committees and sub- Committees to hold enquiries and advice it in respect of such fixation [clause (a)] or by notification in the official Gazette publish its proposals for information of the persons likely to be affected by such action and specify a date beyond two months for taking into consideration such proposal [clause(b)]. Sub-section (2) of Section 5, as we noticed in the preceding paragraph, has two limbs; the first dealing with the further steps pursuant to a recommendation received from a Committee or Sub-Committee appointed under Clause (a) and the second limb with reference to the procedure when the Government acts under Clause
(b). When the Government has appointed a Committee or sub-Committee, which holds enquiries; representations from the persons affected are received by the Committee itself and considered. The Government then is empowered to bring out a notification without any further consideration of objections. This is so, for reason of the Committee comprising of the representatives of the stake-holders having gone into the objections and made positive recommendations to the Government. However, when Clause (b) is resorted to, there is a requirement on the Government to consider all the representations received by it before the date specified under Clause (b) and then issue a notification in the official Gazette.
15. We see that the Counter Affidavit and even the objections in the impugned order proceed on the premise that the Committee's recommendations prevailed over the Government. But as was argued, the specific proposal is at Ext.P3 notification and there cannot be any addition, modification or subtraction from what is stated therein, which discloses the mind of the State Government who issued the notification. Ext.P3 specifically indicates that the notification is issued under Section 5(1)(b) of the M.W. Act. It is true that there is a verbatim reproduction of the recommendations made by the Committee earlier appointed. However the fact remains, the Committee's recommendations if accepted by the Government at the first instance, then there was no requirement to bring out a notification as seen from Ext.P3, which is only a proposal. The Government was quite concious of what it was doing and had hence brought out a proposal inviting representations, despite it having proceeded on the basis of the recommendations of the Committee appointed. Representations were received and they were also considered and the objections overruled.
16. In Chandra Bhawan, it was argued that Section 5(1) was violative of Article 14 of the Constitution as it confers an unguided and uncontrolled discretion on the Government to follow either of the alternative procedures in fixing minimum wages. It was contended that if a Committee is appointed under clause (a), the members appointed being representatives of the employers would be alive to the problems arising in the industry and able to apprise the Committee of such problems. The argument there, as is argued here was that it would have been more advantageous to the employer; which was rejected. The mischief that was sought to be remedied by the enactment, was held to be prevention of sweated labour and exploitation of the unorganised employees, by providing minimum wages, irrespective of the capacity of the industry to pay the same. Minimum Wages was found to be not a static concept but prone to change with the growth of economy and change in the standard of living; including not only the bear sustenance of the labourer and his family but also taking care of other primary needs like availing facility for medical treatment, educational needs of children, transport etc. 17. Chandra Bhawan also found the two alternate procedures/options under Section 5 to be proper since the Government could either take the
advice of the Committee or proceed by itself if it has sufficient material. When a Committee is appointed, it was not as if the Government is bound to accept their recommendation. It was categorically held that the power cannot be held to be unguided or arbitrary, if the Government decides by itself to proceed under Clause (b); especially since it was not conferred on an Officer of the Government but the State Government itself, which can be trusted to exercise properly that power to further the purpose of the Act. 18. In the present case we see that the Government appointed a Committee who conducted enquiries and the stake-holders were also heard.
Despite the law that the State Government could have then brought out a notification under Section 5(2); the Government issued a notification under Section 5(1)(b), calling for representations, which were considered. We do not find any reason to look into the constitution of the Committee or interfere with the notification on the ground that the Committee members were not the true representatives of the finance sector. We hence reject the contention raised by the petitioner that Ext.P3 is void ab initio for reason of the constitution of the Committee being not proper.
19. Bidi, Bidi Leaves and Tobacco Merchants Association considered a scheme delineated by the appropriate Government to mitigate the loss caused to the casual labourers employed in the bidi manufacturing industry for reason only of the prevalent practise of a unilateral decision taken by the Management, as to the quality of bidis, to reject those already made and deny the labourers payment to that extent. The practise was that the manufacturers employed a large number of persons for the purpose of making bidis, who were supplied with tendu leaves, tobacco and other necessary materials. The labourers took the materials to their respective work places and brought back the bidis prepared by them, to the manufacturer. On examination of the bidis, the employer accepts only those found to be prepared according to the terms of the contract and rejects such of them as are found to be of poor quality; making payments only for the bidis accepted. Even under the terms of contract the workers are entitled to receive payment only for the bidis accepted by the employer and not for those rejected; which all the same were retained by the employer. There were protests raised against the improper rejection of bidis, especially when it was done unilaterally.
20. The Hon'ble Supreme Court found that this works great hardship on the workers and the scheme was insofar as mandating a destruction of the bidis rejected and also payment at a lower percentage for those retained without destruction. It also provided for payment of full wages if the bidis are retained without destruction beyond a limit and there was maximum percentage fixed beyond which the employer could not reject the final product. It was found by the Court that there would not have been serious criticism against the scheme as such, but for the fact that such schemes to mitigate hardship of labourers were squarely coming within the ambit of an industrial adjudication under the provisions of the Industrial Disputes Act, 1947. An industrial adjudication it was found, could impose new obligations on the employer and even alter the terms of employment in the interest of social justice, with a view to secure industrial peace. On the question of prescription of minimum wages it was held 'if the relevant provisions of the Act confer upon the respondent the power to check the evil against which the workers complain then of course the validity of the impugned clauses would be beyond challenge. If, on the other hand, the power to prescribe or revise minimum rates of wages does not either expressly or by necessary implication include the power to provide for the machinery to check the evil in question, then the impugned clauses would be ultra vires however necessary it may be to check and control the said evil in question (sic- para10).
21. The extent of the authority under the M.W Act was stated by the Hon'ble Supreme Court in paragraph 17, which is extracted hereunder: "17. What is the extent of the authority conferred on the respondent in
fixing or revising minimum rates of wages under the relevant provisions of the Act? In dealing with this question we must necessarily bear in mind the definition of the term "wages" prescribed by S.2(h). As we have already seen the term "wages" includes remuneration which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of is employment, in other words, the term "wages" refers to remuneration payable to the employee as a result of the terms of employment, what would be the amount to which the employee is entitled if the other terms of the contract are performed. That is the question which has to be asked in determining what the term "wages" means under S.2(h). No doubt S.3,4 and 5 authorise the appropriate Government to fix the minimum rates of wages. In other words, if the wages fixed by a contract which is either express or implied are found to be low, authority is conferred on the appropriate Government to increase them so as to bring them to the level of what the said Government regards as the minimum wages in the particular scheduled employment in the particular area concerned. This means that power is conferred on the appropriate Government to modify one term of the contract express or implied between the employer and the employee and that is a term which has reference to the payment of wages. If for a certain piece of work done by the employee the employer has agreed to pay him either expressly or by implication a certain amount of wages the appropriate Government can issue a notification and prescribe that for the said work done under the contract the employer must pay his employee a much higher rate of wages and the higher rate of wages thus prescribed would be deemed to be the minimum rate of wages between the parties."
22. It was also held that the 'significance of the definition contained in S.2(h) lies in the fact that the rate of wages may be increased but no change can be made in the other terms of the contract. In other words, the Act operated on the wages and does not operate on the other terms of the contract between the employer and the employee'. [sic para 18]. It was held in paragraph 23 as follows:
"23. There is yet another consideration which is relevant in dealing with the question about the implied powers. The doctrine of implied power can be invoked where without the said power the material provision of the Act would become impossible of enforcement. In the present case all that S.5 requires is the fixation of minimum rates of wages and that has been done by the notification by Cls.1 and 2. What the subsidiary clauses purport to do is to make the enforcement of the fixed rate effective by providing for a machinery to deal with the possible disputes arising between the parties as a result of the practice of discarding chhat bidis. In other words, cls. 1 and 2 fix the minimum rates of wages and thus S.5 has been complied with and enforced. The remaining clauses purport to make the implementation of the provisions of cls.1 and 2 effective. That is very different from giving effect to S.5 itself. The enforcement of the notification is clearly not the same thing as exercising the power of fixing or revising the minimum rates of wages under S.5. A power may be implied, if necessary, in discharging the duty imposed upon the appropriate Government or in exercising the power conferred on the State Government in the matter of fixing or revising the minimum rates of wages; but surely no power can be implied for making effective the implementation of the notification issued under the said power or in the discharge of the said duty. The purpose of the Act cannot be said to have failed after the minimum rates of wages are prescribed and notified. What may turn out to be ineffective is the provision for payment of the said wages by reason of the rejection of good bidis, but that is a matter of an industrial dispute which has to be adjudicated upon under Ss.20 and 21 or under other provisions of the law. It is true that a large section of the workers in the bidi trade is illiterate, uneducated and unorganised; and there can be no doubt that their grievance on the ground of improper rejection of the bidis deerves to be redressed but, in our opinion, the procedure adopted by the respondent in redressing the said grievance is outside the scope of the Act, and therefore beyond the powers conferred on it buy S.5. The proper remedy in such a case may be to make a comprehensive reference of the dispute to the competent industrial tribunal and invite the tribunal to make a proper award in that behalf. We are, therefore, inclined to take the view that cls. 3 to 7 which form an integral scheme are outside the purview of the powers conferred on the respondent by S.5 of the Act and must therefore be declared to be ultra vires. It is common ground that these clauses are severable from cls. 1 and 2 and that their invalidity does not affect the validity of the said two clauses."
{underlining by us for emphasis}
23. Before we proceed further, we have to look at Kerala Rubber Footware Manufacturers and Export Association, which one of us authored. The aspects dealt with in that decision with which we are concerned is "service weightage" and "the prescription of wages for Managers and Supervisors". On service weightage the contention of the employer, writ petitioner therein, was that it went against uniformity of wages to all employees by providing an incentive for experience and that the same was not included in the proposals issued by the Government under Section 5(1)(b) of the M.W. Act. On the second aspect it was found that admittedly there were deliberations by the Advisory Board, in which the representatives of the stake-holders were participated. Reliance was also placed on the Full Bench decision in Malayalam Plantations Ltd., that no oral hearing is contemplated on the proposals, with which aspect we are not concerned. The provision for service weightage was to reckon continuous service in an establishment, @1% of the basic wages for every completed year subject to the employee having three years' continuous service on the date of commencement of notification. It was held that this is not a component in the nature of incentive, but would only be a variable, which every employee would be uniformly entitled to on completing certain years of service. As far as the prescription of wages for Managers and Supervisors, it was held that they would not come under the definition of employee and that their inclusion under the definition of employer would in any event take them away from the ambit of the Act.
24. The above finding on service weightage has to be tested on the anvil of the decisions of the Apex Court, now placed before us, which obviously was not considered in Kerala Rubber Footware Manufacturers and Export Association. We have already looked at Bidi, Bidi Leaves and Tobacco Merchants Association [supra]. In Hindustan Sanitaryware and Industries Ltd. which followed the Constitution Bench decision cited above, the question inter alia was as to categorisation of unskilled employees as semi-skilled and skilled with grading of 'A' and 'B' on their acquiring experience of a certain number of years; which is akin to service weightage. The employer therein challenged the said categorisation on the ground that under the M.W. Act the Government does not have the power to alter the conditions of service, contract or settlement between the employer and the employee. The definition of wages, employer and employee were specifically noticed by the Hon'ble Supreme Court and the Constitution Bench decision was copiously quoted from, which we have also extracted above. The argument of the Government of Haryana was that the prescription that a workman would be raised from semi-skilled 'B' category to semi-skilled 'A' category and then to the skilled category on completion of specific years of experience. This is to ensure that the workmen are not exploited by the employees. This was also on the recommendation of the expert body constituted to protect the interest of the workmen. The Hon'ble Supreme Court held "the grievances of the workmen can be redressed by fora constituted under the Industrial Disputes Act, 1947, if the Government does not have the competence to deal with certain issues in the notification under the Act [sic paragraph-12].
25. Again, Bidi, Bidi Leaves and Tobacco Merchants Association was noticed to find so in paragraph 13:
"13. There is no power vested in the Government by the Act to make alterations to the terms of a contract. The Act only confers jurisdiction in Government to fix/revise the minimum rate of wages notwithstanding the contract. The Notification dated 21.10.2015 postulates that unskilled employees having five years experience would be deemed categorized as semi-skilled "A"; that after three years of experience in semi-skilled "A", the employees would be deemed categorized as semi-skilled "B"; that after three years of experience in skilled "A", the employees would be deemed categorized as skilled "B". Such categorisation or classification by deeming workmen in one category to belong to another category is in direct contravention of the contract between the employer and the employee and is beyond the jurisdiction of the Government."
26. We also notice the various decisions relied upon by the State Attorney. Y.A. Mamarde [supra] was in the context of an overtime wage provided at the double of the normal rate, in the notification under the M.W. Act. The Hon'ble Supreme Court looked at Section 14 of the M.W. Act to find the Government to be competent to fix the rate of overtime wages by a notification under the Act. We observe that no such overtime wage has been prescribed in the instant notification. Reptakos Brett & Co. Ltd. was relied on to argue that the Hon'ble Supreme Court had expanded the definition of minimum wage to include certain other factors also. It has now been established and accepted that in the light of the expanding horizons of right to life, it is deemed to be a right to live with dignity.
27. We notice that Reptakos Brett & Co referred to the norms for fixation of minimum wage as accepted by the Tripartite Committee of the Indian Labour Conference held in New Delhi in 1957 and keeping in view the socio-economic aspect of the wage structure added one more additional component as a guide for fixing the minimum wage in the industry. Briefly stated, these six factors are:
(i) the standard working class family to be taken to consist of three consumption units for one earner,
(ii) minimum food requirement should be that essential for an average Indian Adult of moderate activity,
(iii) clothing requirements to be estimated at per capita consumption of 18 yards per annum,
(iv) rent with respect to housing should correspond to the minimum area provided under Government's Industrial Housing Scheme
(v)fuel, lighting and other 'miscellaneous' items of expenditure constituting 20% of the total minimum wage and
(vi) children's education, medical requirement, minimum recreation and provision for old age marriages etc. constituting a further 25% of the total minimum wage.
28. Reptakos Brett & Co. Ltd. though provides for the components to be looked into while fixing the minimum wage does not provide for components in addition to the minimum wages fixed. By providing for reckoning fuel, lighting, education, medical requirement etc. as factors to be reckoned in prescribing minimum wages; constituting another 20% & 25% of the total minimum wages, the indication is clear and explicit. The Government, while fixing the minimum wages, could take into account the many factors and fix the basic wages at a certain extent, of which 20% would take care of that one factor and 25% would constitute that other factor. For example if on the first four factors the Government fixed Rs. 1000/- then Rs.200/- should be added for that one factor and Rs. 25O/- for that other factor; which brings the total minimum wages to Rs.1,450/-. The Government cannot separately provide specific amounts for housing, lighting, fuel, travel on official work or medical reimbursement. It does not provide for a separate component to be granted. That is the declaration made in Bidi, Bidi Leaves and Tobacco Merchants Association and Hindustan Sanitaryware and Industries Ltd.
29. With the above precedents in the background, when we look at Ext.P3, we find ourselves unable to agree with the finding on service weightage in Kerala Rubber Footware Manufacturers and Export Association; which we are entitled to overrule as a Division Bench. We had already found that the Constitution Bench decision of the Supreme Court was not placed before Court when that matter was considered by one of us [KVC.J], sitting single. That one of the members of the Division Bench held otherwise does not preclude the Bench from taking a different view. I confess, of having erred and my learned Brother agrees.
30. We look at the English version, which was asserted to be having more clarity by the learned Counsel for the Employees' Association. By sub-clause (1) every employee, who has not less than 5 years of service, on implementation of the notification has to be fixed with the basic wages by adding on the increments for the five completed years of service. Sub-clause (2) provides for an employee fixed at the maximum of a pay-scale being entitled to be paid an annual increment at the rate prescribed in the higher time scale for every completed year of service. This goes beyond the scope of prescription of minimum wages. The categorisation of employees on the basis of their completed years of service also would not be a power, which could be validly exercised by the Government under the M.W. Act as held in Hindustan Sanitaryware and Industries Ltd.
31. The prescription of service weightage for each completed year of service is a matter, which has to be thrashed out in bilateral negotiations between the management and the workmen or in an industrial adjudication. The arguments advanced by the employees association is that otherwise there will not be effective implementation of the notification. We refer to paragraph 23 of Bidi, Bidi Leaves and Tobacco Merchants Association, which we extracted herein above. We notice the first of the underlined portion in the said extract, which declares that the implied power is to implement the provisions of the Act and not that of the terms of the notification.
32. Here we pause, to add a word of caution that, it is not as if, on the implementation of the minimum wages now prescribed, every employee working in a NBFC will be fixed at the minimum of the scale. The argument of all being entitled to the same wages, on implementation of the notification, is based on incorrect assumption that the employer is obliged to adopt the scales of pay in the notification. The prescription is of minimum wages and the obligation on the employer is to ensure that the payment of wages is not lesser than that prescribed. There could also be bilateral agreements or contracts of employment fixing better wages for the employees, which cannot be altered. We would also think that the increments available to a workman having more than five years service, cannot be restricted to five; if he is entitled to more as per the agreement or his individual contract. Minimum wages, it is fairly well established, takes in much more aspects than the bare sustenance or mere living wage, of an individual employee. But the Government prescribing minimum wages, all the same cannot provide for the weight of experience translated into terms of money. Neither the Management nor the representative Associations of the workmen can be fettered by a service weightage provided by the Government under the M.W. Act. This would be a matter which is ideally covered under the conciliation exercise, which could also be the subject matter of an industrial adjudication, where the employee may get a better bargain.
33. Coming next is the special allowance for extra duty. By the words employed of 'extra duty', it is not to be confused with or misunderstood as overtime wages prescribed under Section 14 of the M.W. Act. What is provided therein is an extra wage of 10% of the basic wage prescribed for an employee, if he is asked to discharge duties assigned to another post in the schedule under the notification. This is in fact detrimental to the interest of workmen since Section 16 of the M.W. Act provides a better deal when an employee is asked to discharge duties in another post, which can only be a post higher to that of the one regularly occupied. Section 16 of the M.W. Act provides for an employee engaged in more than one class of work, to be paid wages at not less than the minimum rate in force in respect of each such class for the time he is occupied in each such class of work. Hence, when a Cashier or Accountant [category
(vi) in the schedule] is asked to work as an Assistant Manager or Business Manager [category (vii) in the schedule], he would be paid the wages applicable to the Assistant Manager or Business Manager for the time he is entitled to discharge such duties. But, if a Cashier or Accountant is asked to discharge the duties of a Clerk or Junior Officer, he would still be paid the amounts due to him as a Cashier or Accountant, since what is payable is the minimum rate in force in respect of the class of his regular engagement. A different employment can affect the pay and wages only if it is in a higher post; which otherwise will attract the vice of a reversion. A 10% addition to the basic wages prescribed for a Clerk would be detrimental to him, for the period he is asked to work as a Cashier; since otherwise jurisprudentially he is entitled to the wages for the duties discharged in the higher post at the rates applicable to that post.
29. With the above precedents in the background, when we look at Ext.P3, we find ourselves unable to agree with the finding on service weightage in Kerala Rubber Footware Manufacturers and Export Association; which we are entitled to overrule as a Division Bench. We had already found that the Constitution Bench decision of the Supreme Court was not placed before Court when that matter was considered by one of us [KVC.J], sitting single. That one of the members of the Division Bench held otherwise does not preclude the Bench from taking a different view. I confess, of having erred and my learned Brother agrees.
30. We look at the English version, which was asserted to be having more clarity by the learned Counsel for the Employees' Association. By sub-clause (1) every employee, who has not less than 5 years of service, on implementation of the notification has to be fixed with the basic wages by adding on the increments for the five completed years of service. Sub-clause (2) provides for an employee fixed at the maximum of a pay-scale being entitled to be paid an annual increment at the rate prescribed in the higher time scale for every completed year of service. This goes beyond the scope of prescription of minimum wages. The categorisation of employees on the basis of their completed years of service also would not be a power, which could be validly exercised by the Government under the M.W. Act as held in Hindustan Sanitaryware and Industries Ltd.
31. The prescription of service weightage for each completed year of service is a matter, which has to be thrashed out in bilateral negotiations between the management and the workmen or in an industrial adjudication. The arguments advanced by the employees association is that otherwise there will not be effective implementation of the notification. We refer to paragraph 23 of Bidi, Bidi Leaves and Tobacco Merchants Association, which we extracted herein above. We notice the first of the underlined portion in the said extract, which declares that the implied power is to implement the provisions of the Act and not that of the terms of the notification.
32. Here we pause, to add a word of caution that, it is not as if, on the implementation of the minimum wages now prescribed, every employee working in a NBFC will be fixed at the minimum of the scale. The argument of all being entitled to the same wages, on implementation of the notification, is based on incorrect assumption that the employer is obliged to adopt the scales of pay in the notification. The prescription is of minimum wages and the obligation on the employer is to ensure that the payment of wages is not lesser than that prescribed. There could also be bilateral agreements or contracts of employment fixing better wages for the employees, which cannot be altered. We would also think that the increments available to a workman having more than five years service, cannot be restricted to five; if he is entitled to more as per the agreement or his individual contract. Minimum wages, it is fairly well established, takes in much more aspects than the bare sustenance or mere living wage, of an individual employee. But the Government prescribing minimum wages, all the same cannot provide for the weight of experience translated into terms of money. Neither the Management nor the representative Associations of the workmen can be fettered by a service weightage provided by the Government under the M.W. Act. This would be a matter which is ideally covered under the conciliation exercise, which could also be the subject matter of an industrial adjudication, where the employee may get a better bargain.
33. Coming next is the special allowance for extra duty. By the words employed of 'extra duty', it is not to be confused with or misunderstood as overtime wages prescribed under Section 14 of the M.W. Act. What is provided therein is an extra wage of 10% of the basic wage prescribed for an employee, if he is asked to discharge duties assigned to another post in the schedule under the notification. This is in fact detrimental to the interest of workmen since Section 16 of the M.W. Act provides a better deal when an employee is asked to discharge duties in another post, which can only be a post higher to that of the one regularly occupied. Section 16 of the M.W. Act provides for an employee engaged in more than one class of work, to be paid wages at not less than the minimum rate in force in respect of each such class for the time he is occupied in each such class of work. Hence, when a Cashier or Accountant [category
(vi) in the schedule] is asked to work as an Assistant Manager or Business Manager [category (vii) in the schedule], he would be paid the wages applicable to the Assistant Manager or Business Manager for the time he is entitled to discharge such duties. But, if a Cashier or Accountant is asked to discharge the duties of a Clerk or Junior Officer, he would still be paid the amounts due to him as a Cashier or Accountant, since what is payable is the minimum rate in force in respect of the class of his regular engagement. A different employment can affect the pay and wages only if it is in a higher post; which otherwise will attract the vice of a reversion. A 10% addition to the basic wages prescribed for a Clerk would be detrimental to him, for the period he is asked to work as a Cashier; since otherwise jurisprudentially he is entitled to the wages for the duties discharged in the higher post at the rates applicable to that post.
34. As to risk allowance, it has to be noticed that this again is a matter to be agreed upon by the employer and the representative associations of employees and there cannot be any assumption by the Government that the appraisers and Cashiers would be negligent and then be made liable for the loss caused to the employer, so as to prescribe a 10% addition to the basic wages for the risk undertaken by them. An employee, who is involved in a work for which there is an element of risk, also is engaged for the particular skill he has in discharging such work, which definitely has been taken into account by the Government in placing Cashier in category (vi) at a higher level than Clerks in category (v) as per the impugned proposals at Ext.P3. On this aspect pertinent is also the exclusion by clause (iv) of the definition of wages; 'any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment'(sic- S.2(h)(iv)).
35. We reiterate that service weightage, special allowance for extra duty and risk allowance are not permissible to be prescribed under the M.W. Act, since it does not involve the prescription of a minimum wage. The M.W Act only confers the power to prescribe the minimum living wage for an employee, taking into consideration a standard family and the attendant expenses, which any normal human being, who lives with dignity, has to bear in his life at a given point of time. It cannot take into account or reckon the various situations that may arise in employment, which are necessarily in the nature of an incidence of service. Every incidence of service whether it be as a benefit, like a higher pay scale on stagnation or a rigour, as in the case of transfer, is regulated by the contract of employment varied only by bilateral settlements entered into on conciliation or the terms modified on industrial adjudication. The second clause under 'service weightage' seeks to mitigate stagnation, not permissible under M.W.Act.
36. Sri. Sohan, has a contention that
Hindustan Sanitaryware and Industries Ltd held that
segregation of wages is permissible to sustain the various components prescribed in Ext. P3 in addition to the minimum wages and dearness allowance. The State Attorney obviously takes cue from the declaration in para 18(a) "That the prohibition of segregation of wages into components in the form of allowances in the Notification is impermisible"(sic). The contention brings forth the evil of reading the dictum out of context and without reference to the facts on which a declaration is made. There the notification issued by the State Government under the M.W Act, provided the prohibition, which the employers challenged. In para 16, the learned Judges looked into the definition of wages in the Act and observed that there are certain exclusions as seen from clauses (i) to (v). Some of these relate to housing, supply of light, water, medical attendance, travelling allowance etc. These as we saw, the State Government was competent to include in the minimum wages, by the various precedents noticed herein above, since the very concept of minimum wages, as now existing, means that required for a decent living; a life with dignity. The declaration is to the effect that when these components are taken care of by the employer, he cannot be asked to pay twice over of such amounts already paid, which has to be reckoned as the wages paid to the employee in the context of the M.W. Act. Hence when it is verified whether a particular employer is paying the prescribed wages, any allowance made for these specific components should be reckoned, to compute the wages he pays to the employee. The prohibition of such segregation by the notification, was that interfered with by the Hon'ble Supreme Court. No corollary can be drawn that it permits other components like service weightage, risk allowance or extra duty allowance to be provided separately. These components are completely alien to the concept of minimum wages as has been found in the very same decision, where categorisation as graded skilled and un-skilled workers, based on years of service was struck down.
37. We hence interfere with the components provided in the proposal at Ext.P3 of service weightage, special allowance for extra duty and risk allowance. Looking at the scales of pay, admittedly we do not have the expertise or the wherewithal to meddle with it or suggest anything more or less. A Committee had examined the issues and submitted proposals to the Government. The Government in its wisdom and using its administrative machinery, has despite its power to make a final notification as per the Committee's recommendations, issued a proposal in the nature of Ext.P3. The representatives of the employers were heard elaborately and objections were considered and rejected. We do not think that we could, in any manner, interfere with the basic wages prescribed by the State Government in the notification. We hence uphold the rejection of the objections except to the extent of the interference we made to the proposals at Ext.P3, herein above.
37. We hence interfere with the components provided in the proposal at Ext.P3 of service weightage, special allowance for extra duty and risk allowance. Looking at the scales of pay, admittedly we do not have the expertise or the wherewithal to meddle with it or suggest anything more or less. A Committee had examined the issues and submitted proposals to the Government. The Government in its wisdom and using its administrative machinery, has despite its power to make a final notification as per the Committee's recommendations, issued a proposal in the nature of Ext.P3. The representatives of the employers were heard elaborately and objections were considered and rejected. We do not think that we could, in any manner, interfere with the basic wages prescribed by the State Government in the notification. We hence uphold the rejection of the objections except to the extent of the interference we made to the proposals at Ext.P3, herein above.
38. One other contention is that the Managers and Supervisors cannot be termed to be employees under the M.W Act and hence the prescription of minimum wages for the supervisory staff is beyond the power conferred under the Act. Reliance is placed again on Hindustan Sanitaryware and Industries Ltd. and Kerala Rubber Footware Manufacturers and Export Association. It is also argued that the definition of employer includes in so far as an establishment, other than a factory or one under the control of Government or a local authority, 'any person responsible to the owner for the supervision and control of the employees"[sic- S2(e)(iv)]. We cannot agree since the inclusive definition is only to ensure implementation of the Act and make liable any supervisory personnel also to the penalties under the Act. This ensures that the Supervisory staff, who are part of the Management take appropriate action to ensure that those employees under them are paid the minimum wages. They become employers only vis a vis employee, which employee is in their charge; the former being the immediate supervisory staff. This cannot change the essential nature of their relationship with the management or the persons in ultimate charge of the affairs of the establishment. A supervisory staff also vis a vis their management is an employee. We also have to pertinently notice that the Parliament while enacting the M.W Act of 1948 had experience of enacting another welfare legislation , a more comprehensive one, The Industrial Dispute Act of 1947 [for brevity, 'the I.D. Act']. The I.D. Act in its definition of workman excluded any person employed in a supervisory capacity drawing wages beyond a limit. Such an exclusion though could have been made; was consciously not made.
39. The Hindustan Sanitaryware and Industries Ltd. considered the prescription of wages to security personnel and found their engagement to be not in a skilled or unskilled, manual or clerical work. The same cannot be said of Managers or supervisors engaged in this particular industry, where an amount of accounting skill is necessarily required. As to the second decision of one of us [KVC,J], sitting single, we again, sitting Division, disagree with the declaration made therein, on the findings herein above.
40. On the above findings, we strike down the prescription of service weightage, allowance of extra duty and risk allowance prescribed by the State Government in the Notification produced at Ext. P3, for reason of it being beyond the competence of the State Government acting under the Minimum Wages Act, but sustain the notification on all other aspects.
We partly allow the writ petition, leaving the parties to bear their respective costs.
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