Case Laws Minimum Wages Act Unichoyi And Others Vs The State of Kerala

Case Laws Minimum Wages Act

Unichoyi And Others Vs The State of Kerala

 

DATE OF JUDGEMENT: 14/04/1961

 

BENCH: GAJENDRAGADKAR, P.B.

BENCH: GAJENDRAGADKAR, P.B. SARKAR, A.K. WANCHOO, K.N. GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA

 

CITATION:
 1962 AIR   12   1962 SCR  (1) 946
 CITATOR INFO :
 RF     1963 SC 806

3

 RF     1967 SC 691

-66

 RF     1969 SC 182

-8

 RF     1970 SC2042

-9

 R     1972 SC 605

 (11,12)

 R     1974 SC 526

-14

 D     1978 SC1113

-17

 RF     1979 SC  25

-30

 

ACT: Minimum  Wages-Notification fixing wage  structure-If  ultra vires-Validity of enactment-Capacity of employer to pay,  if relevant consideration-Minimum Wages Act, 1948 (XI of 1948), SS. 5, 9.

HEADNOTE: The   petitioners,  representing  certain  tile   factories, challenged  the validity of the Minimum Wages Act, 1948,  as also  the  notification  issued  by  the  Kerala  Government prescribing minimum rates of wages in respect of  employment in   the  tile  industry  on  the  report  of  a   committee constituted   under   the   Act  and   consisting   of   the representatives  both  of the employers  and  employees  who agreed   with   its  recommendations.   The  case   of   the petitioners  was that the notification had in  effect  fixed not  minimum  wages  but fair wages and  since  neither  the committee  nor the Government in fixing them had  considered the  capacity of the employers to pay, the notification  was void.

 

Held,  that in view of the decisions of this Court the  con- stitutional validity of the Act could no longer be in  doubt and  any  hardship that may be caused to  employers  by  the wages  fixed  under the Act or their incapacity to  pay  the same are irrelevant considerations in fixing such wages. 947 The  Edward Mills Co. Ltd. v. The State of Ajmer,  [1955]  1 S.C.R.  735,  Bijay  Cotton Mills Ltd. v.  State  of  Ajmer, [1955] 1 S.C.R. 752 and M/s.  Crown Aluminium Works v. Their Workmen,[1958] S.C.R. 651, referred to. While, therefore, in fixing the minimum wage nothing can  be added  to  its components that may take it  near  the  lower level  of  the fair wage, the minimum wage must  ensure  not only the sustenance of the employee and his family but  also preserve  his  efficiency as a worker and that  is  what  is contemplated  by the Act.  It is an error to think that  the minimum  wage  is just what a worker requires to  cover  his physical needs and to keep himself above starvation. There can be no analogy between the Minimum Wages Act  which prescribes the economic and industrial minimum and a statute which  prescribes its own minimum that approximates more  or less to the fair wage standard and so makes it necessary  to consider the employer’s capacity to pay. Express  Newspapers (P.) Ltd. v. The Union of India,  [1959] S.C.R. 12, explained and distinguished.

This Court would ordinarily refuse to consider the merits of the  wage  structure  set  up by  the  Notification  on  the recommendations   of  the  committee,  agreed  to   by   the representatives  of  the employers and the  employees.   The fact that wages paid in other industries in the State or  in other  States  in  comparable concerns are  lower  does  not necessarily   show   that  the  rates  prescribed   by   the Notification are unduly high. A notification under the Act must apply to all the factories in  the State and the State cannot permit or  be  associated with  a  departure  from  it for  that  would  amount  to  a contravention  of SS. 22 and 25 of the Act.  If a  departure is  considered  necessary,  the proper course  would  be  to withdraw  the notification in respect of the area  concerned or to reconsider and modify it if necessary.

JUDGMENT: ORIGINAL JURISDICTION: Petition No. 102 of 1958. Petition  under  Art. 32 of the Constitution  of  India  for enforcement of Fundamental Rights. M. K. Nambiar, and S. N. Andley, for the petitioners. H. N. Sanyal, Additional Solicitor-General of India, M.  P.  Balagavgadhar  Menon and  Sardar  Bahadur,  for  the respondents. 1961.  April 14.  The Judgment of the Court was delivered by GAJENDRAGADKAR,  J.-The  Government of Kerala(  appointed  a Committee in exercise of its powers 948

conferred  by cl. (a) of sub-s. (1) of s. 5 of  the  Minimum Wages Act, 1948 (Act XI of 1948) (hereafter called the Act), to  hold  enquiries  and advise  the  Government  in  fixing minimum rates of wages in respect of employment in the  tile industry and nominated eight  persons to constitute the said Committee  under  s. 9 of the Act.   This  notification  was published on August 14, 1957.  The Committee made its report on March 30, 1958.  The Government of Kerala then considered the  report  and  issued a notification  on  May  12,  1958, prescribing  minimum  rates  of wages as  specified  in  the schedule annexed thereto.  This notification was ordered  to come  into effect on May 26,1958.  On that date the  present petition was filed under Art. 32 by the nine petitioners who represent  six tile factories in Feroke Kozhikode  District, challenging the validity of the ‘Act as well as the validity of the notification issued by the Government of Kerala.

The State of Kerala is impleaded as respondent to the petition. The petitioners allege that the minimum wage rates fixed  by the  notification are very much above the level of what  may be  properly regarded as minimum wages and it was  essential that  before  the impugned wage rates  were  prescribed  the employers’  capacity  to pay should  have  been  considered. Since this essential element had not been taken into account at  all  by the Committee as well as by the  respondent  the notification  is ultra vires and inoperative.  According  to them  the burden imposed by the notification is  beyond  the financial  capacity of the industry in general and of  their individual  capacity in particular, and this is  illustrated by the fact that nearly 62 tile factories in Trichur  closed soon after the notification was published.   The petitioners seek to challenge the validity of the   Act    on    several grounds set out by them in clauses (a)  to (g) of  paragraph 21  of  the  petition.  It is urged that the  Act  does  not define what the minimum wage is to comprise or to comprehend and  as such confers arbitrary authority on the  appropriate Governments  to  impose  unreasonable  restrictions  on  the employers.   ‘The  law conferring such  arbitrary  power  is violative  of Art. 19(1)(g) of the Constitution.  Since  the Act 949

Empowers the fixation of a wage which may disable or destroy the industry it cannot be said to be reasonable and as  such is  beyond  the  purview  of  Art.  19(1)  and  (6)  of  the Constitution.   The  Act does not lay  down  any  reasonable procedure  in the imposition of restrictions by fixation  of minimum  wage and so authorises any procedure to be  adopted which  may even violate the principles of  natural  justice. It is also alleged that the Act is discriminatory in  effect inasmuch  as  it submits some industries  to  its  arbitrary procedure  in  the matter of fixation of minimum  wages  and leaves  other industries to the more orderly  and  regulated procedure  of the Industrial Disputes Act.  It is  on  these grounds that the validity of the Act is impugned.

The petitioners impugn the validity of the notification also for  the  same  reasons.   Besides, it  is  urged  that  the notification has in effect fixed not minimum wages but  fair wages  and  so  it was essential that the  capacity  of  the employers to bear the burden proposed to be imposed ought to have  been considered.  Failure to consider  this  essential aspect  of  the  matter  has,  it  is  urged,  rendered  the notification  void.  That in substance is the nature of  the case set out by the petitioners in their present petition. The  respondent has traversed all these allegations.  It  is urged  that  the validity of the Act is no  longer  open  to challenge  since the question is concluded by the  decisions of this Court; and it is alleged that what the  notification purports to do is to fix the minimum wage and no more and as such the capacity of the employer to pay such a minimum wage is irrelevant.  It is further alleged that decisions of this Court  have  firmly established the principle  that  in  the matter of fixing minimum wages the capacity of the  employer to  pay need not be considered and that if any  employer  is unable  to pay what can be regarded as minimum wages to  his employees  he has no right to carry on his industry.  It  is further pointed out that out of 18 factories in Feroke  only six  factories have come to this Court and it  is  suggested that  the  grievance made by the petitioners that  the  wage rates fixed are 950

beyond  their  capacity  is  not  genuine  or  honest.   The respondent  also points out that the Committee appointed  by it was a representative Committee and its report showed that it had considered the matter very carefully.   Alternatively it  is  urged that the  report of the said  Committee  would show  that the capacity to pay had not been ignored  by  the Committee.   The impact of the minimum wage, rate  suggested by  it  had  been considered by the  Committee  and  so  the Committee made its recommendations area-wise.  In regard  to the  closure of factories in Trichur the  respondent’s  case was  that the said closure was not the result  of  financial inability  of  the  factories to bear  the  burden  but  was probably actuated by political motives.  The respondent also put in a general plea that in fact all the factories in  the Kerala  ‘State except some of the factories in  the  Trichur area  and  one  of  the  petitioners  had  implemented   the notification without any objection or protest; and so it was argued that there was no substance in the grievance made  by the  petitioners.   That  in  brief is  the  nature  of  the contentions  raised  by  the  respondent  in  reply  to  the petitioner’s case.

At  this stage it would be relevant to refer briefly to  the Committee’s  report  in  the  order  to  find  out  how  the Committee  proceeded to discharge its task and what  is  the nature  of its recommendations.  The Committee consisted  of eight   members   three   of  whom   were   the   employers’ representatives  and  three the  employees’  representatives while the Chairman Mr. V. R. Pillai and Mr. G. S.Pillai, the District Labour Officer, were nominated on the Committee  as independent members.  The Chairman Mr. Pillai is a M.A.,  M. Sc.  in  Economics  of  the  London  University.   He  is  a Professor   of  Economics  in  the  University  College   at Trivandrum  and has had considerable experience inasmuch  as he  has served on several such Committees in the past.   The Committee  issued a questionnaire to all the tile  factories in  the State and other persons interested,  considered  the replies  received  from  them,  personally  visited  certain factories,   recorded  evidence  of   various   associations representing the 951

tile  factories  as well as of individuals,  and  took  into account  various  facts  which the  Committee  thought  were relevant.   The report of the Committee shows that,  subject to  minor  differences disclosed in the  minute  of  dissent filed by Mr. K. Subramonia Iyer and the reply to it filed by Mr.  A.  Karunakaran, the recommendations of  the  Committee were  unanimous  and so prima facie we start with  the  fact that the recommendations of the Committee were approved  not only  by  the two independent members but they  secured  the concurrence of the representatives of the employers as  well as the employees.

The  report  of  the Committee consists  of  five  chapters. Chapter 1 deals with the development of the tile industry in Kerala, chapter 11 deals with the problem of standardisation in  the tile industry, chapter III considers the problem  of wage-structure  area wise, chapter IV discusses the  problem of minimum wage fixation, its principles and procedure,  and chapter V records the conclusions and recommendations of the Committee.   In dealing with the problem of  wage  structure the Committee has observed that the prevailing wage rates in the tile factories in the State show considerable difference from  one  centre  to another, and that,  according  to  the Committee, is partly due to historical factors and partly to the  economic status of the workers in the areas  concerned. The  Committee  formed  the opinion that  there  being  very little  scope for alternative employment except in low  paid agricultural  occupations  the bargaining  position  of  the workers  has  all along been very weak and  wages  too  have tended  to remain at a relatively low level.  It is  in  the light  of  this  background  that  the  Committee  naturally proceeded to consider the problem of the fixation of minimum wage rates.

 

The Committee has accepted the observation of the Fair Wages Committee that the minimum wage “must provide not merely for the bare subsistence of life but for the preservation of the efficiency  of  the  workers.” Then  it  examined  the  food requirements   of  the  employee  on  the  basis  of   three consumption  units recognized in Dr. Aykroyd’s formula.   It then adopted 952 the assessment made by the Planning Commission in regard  to the  requirements  of the employees in cotton  textiles  and placed   the  employee’s  requirement   at  a   per   capita consumption of 18 yards per unit, then it took into  account the requirement of housing  and it held that the  additional requirements  of workers for fuel, lighting  and  additional miscellaneous items of expenditure should generally be fixed at  20%  of  the  total  wage  in  cases  where  the  actual percentage  has  not  been  found out  by  a  family  budget enquiry.   The  Committee  was  conscious  that  it  had  to approach  the problem from the point of view of the  minimum needs  of  workers  in  order  to  maintain  a   subsistence standard,  and so it enumerated the requirements of  workers in  that behalf as food, clothing, fuel, lighting and  other miscellaneous  items  in  which  are  also  included   rent, education, medical aid and entertainment.  On this basis the Committee formulated the weekly food budget of the employee, added  to it the requirement of clothing  and  miscellaneous items.   According to the Committee the total weekly  expen- diture on this basis would be food 13.03, clothing 1.15  and miscellaneous  2.84,  the  total being Rs.  17.02  nP.

The Committee  then  observed “calculating on the basis  of  six days per week a worker should get a minimum of Rs. 2.67  nP. per   day  to  maintain  a  ‘subsistence  plus’   standard.” Ultimately the Committee recommended that the minimum  basic wage of an unskilled worker in the “A” region, viz.,  Quilon and Feroke, should be Re. 1. With a cost of living index for the  tile  Centers  at an average figure  of  400,  and  the minimum  requirements  of the workers at Rs. 2.67  nP.  this basic  wage corresponds to 150 in the cost of  living  index number.  As to dearness allowance the Committee  recommended that  it should be related to the cost of living  index  and that the dearness allowance should be fixed at the rate of 1 nP.  for every two points for all points above  200.   Thus, when  the  cost of living index is 400 an  unskilled  worker will get Re. 1 as basic wage and Re. 1 as dearness allowance making  a  total of Rs. 2. The Committee added that  if  the rise in the cost of living had to be completely 953

neutralised he should get Rs. 1.67 nP as dearness allowance, but he gets only Re. 1 that is to say 100/ 167 or 60% of the increase  in the cost of living.  Therefore, the  extent  of the neutralisation of the increase in the cost of living  is 60%.   The Committee recognised regional differences and  so introduced  five Grades classified as A, B, C, D and  E  for the  purpose  of fixing the wage structure.   The  Committee hoped that the regional differences recommended by it  would enable  the  backward  areas to come  up  by  improving  the efficiency  of production and marketing so  that  eventually they will be in a position to pay the same wages as advanced areas.

The notification issued is substantially on the lines of the recommendations made by the Committee.  Employees engaged in the  tile industry have been categorised and  their  minimum wage  rates  have been classified into clauses A  to  E.  In regard to dearness allowance the notification provides  that a   flat  rate  of  dearness  allowance  for   all   workers irrespective  of sex or grade shall be paid at the  rate  of one  naya paisa for every two points in the cost  of  living index  in  each  year  in  excess  of  Rs.  200.   Thus  the notification  purports  to prescribe the  minimum  rates  of wages  in  regard to tile industry in the State; it  is  the validity of this notification that is impugned before us  by the present petition.

Before  dealing  with the points raised by  Mr.  Nambiar  on behalf  of  the petitioners it is necessary  to  refer  very briefly to the material provisions of the Act.  This Act was passed in 1948, because it was thought expedient to  provide for  fixing minimum rates of wages in  certain  employments. Under  s. 3 the appropriate Government is empowered  to  fix mini. mum rates of wages in regard to employments as therein specified,  and  review  the  same  at  such  intervals   as specified  by  s. 3(1).  Section 3(3) contemplates  that  in fixing or refixing minimum rates of wages different  minimum rates  of  wages  may  be  fixed  for  different   scheduled employments, different classes of work in the same scheduled employments, adults, 120 954 adolescents,   children  and  apprentices,   and   different localities.   Under s. 4 any minimum rate of wages fixed  or revised  may, inter alia, consist of a basic rate  of  wages and a special allowance at a rate to be adjusted, or a basic rate  of wages with or without the cost of living  allowance and the cash value of the concessions in respect of supplies of  essential  commodities  at  concession  rates  where  so authorised  or an all-inclusive rate allowing for the  basic rate, the cost of living allowance and the cash value of the concessions if any.  Section 5 prescribes the procedure  for fixing and revising minimum wages.  It is under this section that  a  Committee was appointed by the  respondent  in  the present case.  Section 9 makes provision for the composition of the Committee.  Such Committees have to consist of  equal number of representatives of employers and employees and  of independent  persons not exceeding. one-third of  the  total number  of members.  Section 12(1) imposes on  the  employer the obligation to pay the minimum rates of wages  prescribed under  the  Act.   Section 22  provides  for  penalties  for offences and s. 22A makes a general provision for punishment of offences not otherwise expressly provided for.  Under  s. 25  any contract or agreement whether made before  or  after the  commencement  of this Act which affects  an  employee’s right  to a minimum rate of wages prescribed under  the  Act shall  be null and void so far as it purports to reduce  the said  minimum  rate  of  wages.   Section  27  empowers  the appropriate   Government,  after  giving   notification   as prescribed,  to  add  to either part  of  the  schedule  any employment in respect of which it is of opinion that minimum rates  should be fixed, and thereupon the schedule shall  be deemed to be amended accordingly in regard to that State. In  the case of The Edward Mills Co. Ltd., Beawar & Ors.  v. The State of Ajmer (1), the validity of s. 27 of the Act was challenged  on  the ground of excessive delegation.  it  was urged that the Act prescribed no principles and laid down no standard which could furnish an intelligent guidance to  the administrative (1) [1955] 1 S.C.R. 735. 955

 

authority  in making selection while acting under s. 27  and so  the  matter was left entirely to the discretion  of  the appropriate  Government which can amend the schedule in  any way  it  liked and such delegation virtually amounted  to  a surrender  by the Legislature of its  essential  legislative function.  This contention was rejected by Mukherjea, J., is he  then  was, who spoke for the Court.  The  learned  Judge observed that the Legislature undoubtedly intended to  apply the  Act  to those industries only where by  reason  of  un- organised   labour  or  want  of  proper  arrangements   for effective regulation of wages or for other causes the  wages of  labourers  in a particular industry were very  low.   He also  pointed  out  that conditions  of  labour  vary  under different  circumstances  and from State to  State  and  the expediency  of  including at particular  trade  or  industry within  the schedule depends upon a variety of  facts  which are by no means uniform and which can best be ascertained by a person who is placed in charge of the administration of  a particular  State.  That is why the Court concluded that  in enacting s. 27 it could not be said that the Legislature had in  any  way  stripped itself of  its  essential  powers  or assigned  to  the administrative authority anything  but  an accessory or subordinate power which was deemed necessary to carry out the purpose and the policy of the Act.

In  the same year another attempt was made to challenge  the validity of the Act in Bijay Cotton Mills, Ltd. v. The State of  Ajmer (1).  This time the crucial sections of  the  Act, namely, ss. 3, 4 and 5 were attacked, and the challenge  was based  on the ground that the restrictions imposed  by  them upon the freedom of contract violated the fundamental  right guaranteed  under Art. 19(1)(g) of the  Constitution.   This challenge was repelled by Mukherjea, J., as he then was, who again spoke for the Court.  The learned Judge held that  the restrictions  were  imposed in the interest of  the  general public  and  with a view to carry out one of  the  directive principles of State policy as embodied in Art. 43 and so the impugned sections (1) [1955] 1 S.C.R. 752. 956 were  protected  by  the terms of cl. (6) of  Art.  19.   In repelling  the argument of the employers’ inability to  meet the  burden of the minimum wage rates it was  observed  that “the  employers  cannot  be heard to complain  if  they  are compelled  to  pay  minimum wages to  their  labourers  even though  the  labourers  on  account  of  their  poverty  and helplessness  are willing to work on lesser wages, and  that if individual employers might find it difficult to carry  on business  on the basis of minimum wages fixed under the  Act that  cannot be the reason for striking down the law  itself as unreasonable.  The inability of the employers may in many cases  be due entirely to the economic conditions  of  those employers.”  It would thus be seen that these two  decisions have  firmly established the validity of the Act, and  there can  no longer be any doubt that in fixing the minimum  wage rates  as  contemplated by the Act the  hardship  caused  to individual  employers or their inability to meet the  burden has no relevance.  Incidentally, it may be pointed out  that in dealing with the minimum wage rate,,; intended to be pre- scribed by the Act Mukherjea, J., has in one place  observed that the labourers should be secured adequate living  wages. In  the context it is clear that the learned Judge  was  not referring  to  living wages properly so-called  but  to  the minimum  wages  with which alone the Act is  concerned.   In view of these two decisions we have not allowed Mr.  Nambiar to  raise any contentions against the validity of  the  Act. It is true that Mr. Nambiar attempted to argue that  certain aspects  of  the matter on which he wished to rely  had  not been  duly  considered by the Court in  Bijay  Cotton  Mills Ltd.’s case (1).  In our opinion it is futile to attempt  to reopen an issue which is clearly concluded by the  decisions of this Court.  Therefore, we will proceed to deal with  the present  petition,  as we must, on the basis  that  the  Act under   which   the  Committee  “-as   appointed   and   the notification was ultimately issued is valid. We have already seen what the Act purports to achieve is  to prevent exploitation of labour and for (1) [1955] 1 S.C.R. 752. 957

that  purpose authorises the appropriate Government to  take steps  to prescribe minimum rates of wages in the  scheduled industries.   In an under-developed country which faces  the problem  of  unemployment on a very large scale  it  is  not unlikely  that labour may offer to work even  on  starvation wages.   The policy of the Act is to prevent the  employment of such sweated labour in the interest of general public and so in prescribing the minimum wage rates the capacity of the employer  need not be considered.  What is being  prescribed is  minimum wage rates which a welfare state  assumes  every employer must pay before he employs labour.  This  principle is  not  disputed (Vide: Messrs.  Crown Aluminium  Works  v. Their Workmen(1)

it  is,  therefore,  necessary  to  consider  what  are  the components of a minimum wage in the context of the Act.  The evidence led before the Committee on Fair Wages showed  that some  witnesses  were  inclined to take the  view  that  the minimum  wage is that wage which is essential to  cover  the bare physical needs of a worker and his family, whereas  the overwhelming  majority  of witnesses agreed that  a  minimum wage   should   also  provide  for  some   other   essential requirements  such  as  a  minimum  of  education,   medical facilities  and other amenities.  The Committee came to  the conclusion  that a minimum wage must provide not merely  for the bare subsistence of life but for the preservation of the efficiency  of the worker, and so it must also  provide  for some   measure  of  education,  medical   requirements   and amenities.  The concept about the components of the  minimum wage  thus enunciated by the Committee have  been  generally accepted   by  industrial  adjudication  in  this   country. Sometimes  the minimum wage is described as a  bare  minimum wage  in  order to distinguish it from the,  wage  structure which  is  ‘subsistence  plus or fair  wage,  but  too  much emphasis on the adjective “bare” in relation to the  minimum wage  is  apt to lead to the erroneous assumption  that  the maintenance wage is a wage which enables the worker to cover his bare (1) [1958] S.C.R. 651. 958

physical  needs  and ]Keep himself  just  above  starvation. That clearly is not intended by the concept of minimum wage. On the other hand, since the capacity of the employer to pay is  treated as irrelevant, it is but right that no  addition should be made to the com ponents of the minimum wage  which would take the minimum wage near the lower level of the fair wage,  but the contents of this concept must ensure for  the employee not only his sustenance and that of his family  but must  also  preserve his efficiency as a  worker.   The  Act contemplates that minimum wage rates should be fixed in  the scheduled  industries  with  the dual  object  of  providing sustenance and maintenance of the worker and his family  and preserving his efficiency as a worker.

Mr.  Nambiar  contends  that when the  statute  purports  to prescribe  a minimum wage in effect it directs the  fixation of  a  statutory minimum wage and as such, capacity  to  pay must  be considered before such minimum wage is fixed.   His argument  is  that in any event  the  impugned  notification statutorily prescribes such minimum wage rates for the  tile industry  in  the State of Kerala and as such the  rates  so recommended  do  not constitute merely  the  industrial  and economic  minimum as understood by  industrial  adjudication but  it constitutes a statutory minimum which can  be  fixed only  after taking into account the employers’  capacity  to pay  the same.  In support of this argument Mr. Nambiar  has strongly  relied on some observations made by this Court  in the  case of Express Newspapers (Private) Ltd. v. The  Union of  India  (1).   We  will  presently  refer  to  the   said observations  but in appreciating the nature and  effect  of the said observations it is necessary to recall that in that case  the Court was dealing with the problem of fixation  of wages in regard to Working Journalists as prescribed by s. 9 of  the  Working  Journalists (Conditions  of  Service)  and Miscellaneous Provisions Act, 1955 (45 of 1955).  Section  9 of  the said Act required that in fixing rates of  wages  in respect of working journalists the Board had to have  regard to the cost of living, the prevalent (1) [1959] S.C.R. 12. 959

Rates of wages for comparable employments, the circumstances relating, to newspaper industry in different regions of  the country and to any other circumstance which to the Board may deem  relevant.   It  was  held  that  the  wage   structure contemplated  by s. 9 was not the structure of minimum  wage rates, it was a wage structure permitted to be prescribed by that  statute  after taking into  account  several  relevant facts  and  the  scheme of that Act  showed  that  the  wage structure thus contemplated was very much beyond the minimum wage rates and was nearer the concept of a fair wage.   That is  why  the Court took the view that  the  expression  “any other  circumstance” specified by s. 9  definitely  included the  circumstance, namely, the capacity of the  industry  to bear  the  burden and so the Board was bound  to  take  that factor  into  account  in fixing  the  wage  structure.   It appeared  to the Court that this important element  had  not been  considered by the Board at all and that  introduced  a fatal  infirmity in the decisions of the Board.   Thus,  the wage  structure with which the Court was concerned  in  that case  was  not the mini. mum wage structure at all.   It  is essential   to  remember  this  aspect  of  the  matter   in appreciating  the  argument  urged by  Mr.  Nambiar  on  the strength  of certain observations made by this Court in  the course of its judgment.

In  the course of his judgment Bhagwati, J., who  spoke  for the Court, has elaborately considered several aspects of the concept  of wage structure including the concept of  minimum wage.   The conclusion of the Fair Wage Committee as to  the content of the minimum wage has been cited with approval (p. 83).   Then  a  distinction has been drawn  between  a  bare subsistence  or minimum wage and a statutory  minimum  wage, and  it is observed that the statutory minimum wage  is  the minimum  which  is prescribed by the statute and it  may  be higher  than the bare subsistence or minimum wage  providing for  some  measure of education,  medical  requirements  and amenities  (p.  84).   This observation  is  followed  by  a discussion about the concept of fair wage; and in 960

dealing  with the said topic the Minimum Wages Act has  also been referred to and it is stated that the Act was  intended to  provide  for fixing minimum rates of  wages  in  certain employments  and  the  appropriate  Government  was  thereby empowered  to  fix  different  minimum  rates  of  wages  as contemplated by s. 3(3).  Then it is stated that whereas the bare  minimum  or subsistence wage would have  to  be  fixed irrespective  of  the capacity of the industry  to  pay  the minimum  wage thus contemplated postulates the  capacity  of the  industry to pay and no fixation of wages which  ignores this essential factor of the capacity of the industry to pay could ever be supported.  Mr. Nambiar contends that the last part   of  the  observation  refers  to  the  minimum   wage prescribed   by  the  Act  and  it  requires   that   before prescribing the said wage the capacity of the industry  must be  considered.  We do not think that this argument is  well founded.   It  would  be noticed  that  in  considering  the distinction   drawn  between  the  minimum  wage  fixed   by industrial adjudication and the minimum wage prescribed by a statute  which is called statutory minimum it has been  made clear   that  the  latter  can  be  higher  than  the   bare subsistence or minimum wage and as such is different in kind from the industrial minimum wage.  We do not think that  the observation  in  question  was  intended  to  lay  down  the principle that whereas a minimum wage can be laid down by an industrial  adjudication without reference to an  employer’s capacity  to  pay the same it cannot be fixed by  a  statute without considering the employer’s capacity to pay.  Such  a conclusion would be plainly illogical and unreasonable.  The observations on which Mr. Nambiar relies do not support  the assumption made by him and were not intended to lay down any such rule.  Cases are not unknown where statutes prescribe a minimum  and  it  is  plain  from  the  relevant   statutory provisions  themselves that the minimum thus  prescribed  is not the economic or industrial minimum but contains  several components  which  take the statutorily  prescribed  minimum near the level of the fair wage,and when that is the  effect of the statutory provision capacity to pay may no doubt have to be 961 considered.

It was a statutory wage structure of this  kind with  which  the Court was dealing in the  case  of  Express Newspapers  (Private) Ltd. (1), because s. 9 authorised  the imposition of a wage structure very much above the level  of the  minimum  wage and it is obvious that  the  observations made  in  the judgment cannot, and should not,  be  divorced from the context of the provisions with respect to which  it was pronounced.  Therefore, we feel no hesitation in reject- ing  the  argument that because the Act  prescribes  minimum wage rates it is necessary that the capacity of the employer to  bear  the  burden of the said  wage  structure  must  be considered.    The  attack  against  the  validity  of   the notification made on this ground must therefore fail.

It  still  remains  to consider whether in  fact  the  noti. fication has prescribed a wage structure which is above  the level  of  the  minimum  wage  properly  socalled.   If  the notification  has in fact prescribed a wage structure  which is nearer the fair wage level and is above the minimum  wage structure that no doubt would introduce an infirmity in  the notification  since it does appear that the capacity of  the employer  to bear the burden has not been considered  either by  the  Committee or by the Government.  This part  of  the attack  against  the notification is based on  two  grounds. Mr.  Nambiar contends that in making its calculations  about the minimum wage rates the Committee has taken into  account an  item  of entertainment, and that, says Mr.  Nambiar,  is clearly inadmissible.  He also points out that the Committee has  described the daily minimum of Rs. 2.67 nP.  ultimately deduced  by  it  as  intended  to  maintain  the  employee’s subsistence  plus’  standard and that again shows  that  the wage  structure  is  above the minimum,  standard  and  goes towards  the  lower  level of the fair  wage.   We  are  not impressed  by  this  argument.  It would  be  recalled  that amongst the miscellaneous items in respect of which Rs. 2.84 nP. are added by the Committee in its calculations are rent, education, (1) [1959] S.C.R. 12. 121 962 medical  aid  and entertainment.

The first  three  are  not inadmissible, and so the attack is against the inclusion  of the  last item alone.  Even assuming that the last  item  is inadmissible  it  is  not  difficult  to  imagine  that  the addition  of this last item could not have     meant much in the calculations of the Committee, and so the grievance made on  account  of  the inclusion of the said  item  cannot  be exaggerated.   There are, however, two other  factors  which are  relevant  in this connection.  What the  Committee  has described  as the subsistence plus’ standard should  on  its own  calculations  represent the daily minimum of  Rs.  2.84 nP., not Rs. 2.67 nP.  Rs. 2.67 nP. is plainly the result of miscalculation  so  that it can be safely assumed  that  the said  sum which is taken to represent the daily  minimum  to maintain  a  ‘subsistence plus’ standard in  fact  does  not include an amount which may be attributed to  entertainment. Besides, it is necessary to remember that what the Committee has ultimately recommended is not the award of Rs. 2.67  nP. which   according  to  it  represents  ‘subsistence.   plus’ standard  but only Rs. 2 and that itself shows that what  is re.  commended  is below the  ‘subsistence  plus’  standard. There  is  yet  another  point  which  leads  to  the   same conclusion.  Even if the whole of the miscellaneous item  is excluded  and  calculations are made on the basis  that  the total  permissible  items amount to Rs. 14.18 nP.  we  would still  reach the figure for the daily minimum which is  more than  Rs.  2.  Therefore,  look at it  how  we  may,  it  is impossible  to accept the argument that the  wage  structure ultimately  recommended by the Committee is anything  higher than  what  the Committee thought to be  the  minimum  wage- structure.  Therefore, we are not prepared to hold that  the notification which is in conformity with the recommendations of the Committee has prescribed wage rates which are  higher than the minimum wage structure.  If that be so, failure  to take  into account the capacity of the industry to bear  the burden   can   introduce   no  infirmity   either   in   the recommendations  of’  the Committee or in  the  notification following upon them. 963

Mr.  Nambiar  no doubt wanted to attack the  merits  of  the notification  on the ground that the wage rates fixed by  it are  unduly high.  In that connection he relied on the  fact that  the  minimum  wage  rates  prescribed  by  the  Madras Government  by  its notification published on  February  25, 1952,  as  well  as  the  wage  rates  prevailing  in  other industries  in Kerala were slightly lower.  He also  pointed out  that the wage rates awarded by industrial  adjudication and  even the claims made by the employees themselves  would tend to show that what has been awarded by the  notification is  higher  than the prescribed minimum wages.   It  is  not possible   for  us  to  entertain  this   contention.    The determination  of  minimum wages must inevitably  take  into account  several relevant factors and the decision  of  this question  has been left by the Legislature to the  Committee which  has to be appointed under the Act.  We  have  already referred  to  the  composition of  the  Committee  and  have reviewed   very  briefly  its  report.   When  a   Committee consisting  of the representatives of the industry  and  the employees    considers   the   problem   and    makes    its recommendations  and  when  the  said  recommendations   are accepted  by  the  Government it  would  ordinarily  not  be possible for us to examine the merits of the recommendations as well as the merits of the wage structure finally notified by  the  Government.   The  notification  has  accepted  the recommendations  of the Committee to categorise the  workers and that obviously was overdue.  The fact that wages paid in other industries in Kerala, or in other States in comparable concerns,  are lower would have been relevant for  the  Com- mittee  to  consider when it made its  recommendations.   In appreciating the effect of the prevalence of lower rates  it may also be relevant to bear in mind that in some places and in  some industries labour is still employed on  wages  much below the standard of minimum rates.  In fact, in its report the Committee has pointed out that in Kerala. the bargaining position  of  the workers has all along been very  weak  and wages  have  tended  to remain in a  deplorably  low  level. Therefore, the fact that lower wages are paid in other 964

industries or in some other places may not necessarily  show that  the rates prescribed by the notification are    unduly high.   In  any  event  these  are  considerations     Which ordinarily cannot be entertained by us because obviously  we are  not sitting in appeal over the recommendations  of  the Committee or the notification following upon them.  That  is why  the grievance made by Mr. Nambiar on the merits of  the wage   structure  prescribed  by  the  notification   cannot succeed. There  is, however, one aspect of this problem to  which  we must  refer before we part with this case.  It appears  that soon  after the notification was issued as many as  62  tile factories  in  Trichur closed their works and  that  led  to unemployment of nearly 6,000 employees.  In order to resolve the  deadlock  thus  created  the  respondent  referred  the industrial dispute arising between the Trichur factories and their  employees  for industrial adjudication  (I.D.  45  of 1958).   On this reference an interim award was made and  it was  followed by a final award on September 26, 1960.   Both the  interim  and  the  final  awards  were  the  result  of settlement  between the parties and the order passed by  the tribunal  shows  that the respondent,  acting,  through  its Labour Minister, “left aside the prestige of the Government, came  to the scene and effected a settlement.”  Mr.  Nambiar has  strongly  criticised the conduct of the  respondent  in permitting  a departure from the notification in respect  of 62  tile factories at Trichur contrary to the provisions  of the Act, and in insisting upon its implementation in respect of the other parts of the State.  His argument is  two-fold. He suggests that the settlement reached between the  parties in  Trichur  shows  that  the  minimum  prescribed  by   the notification  was above the legally permissible minimum  and beyond the capacity of the Trichur factories, and that would support his grievance that the rates prescribed are not  the minimum but they are such above that level.  We are not  im- pressed  by this argument.  As we have already  observed  we would  ordinarily refuse to consider the merits of the  wage structure  prescribed  by the  notification.   Besides,  the closure of the factories in Trichur may 965

either be because the factories there found it difficult  to pay  the  wage structure or may be for  reasons  other  than industrial.  We propose to express no opinion on that  point because  that is not a point in issue before us, and so  the settlement  can have no bearing on the fate of  the  present petition; but the other argument urged by Mr. Nambiar raises a  serious question.  Under the Act the notification has  to apply  to all the tile factories in the State and breach  of the  provisions of the notification is rendered penal  under s. 22 of the Act.  An agreement or contract contrary to  the notification would be void under s. 25 of the Act.  It is to be regretted that the respondent, acting through its  Labour Minister,  appears  to  have assisted in  bringing  about  a settlement contrary to the terms of the Act.  If the respon- dent thought that such a settlement was necessary in respect of  Trichur  factories  it  may  consider  the  question  of withdrawing the notification in respect of that area and  in fairness  may also reconsider the problem in respect of  all the other areas and decide whether any modification. in  the notification  is required.  It is not appropriate  that  the respondent should be associated, though indirectly, with the settlement which is in breach of the provisions of the  Act. We  would,  therefore, suggest that  the  respondent  should seriously consider this aspect of the matter and should  not hesitate  to do what may appear to be just,  reasonable  and fair on an objective consideration of the whole problem. In the result, the petition fails and is dismissed. There would be no order as to costs.

Petition dismissed. 966

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