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2003 Supreme(Kar) 421
Karnataka High Court
Judges : S.R.Nayak,K.Ramanna
MANGALORE GANESH BEEDI AND ALLIED BEEDI FACTORIES WORKERS ASSOCIATION - Appellant
Versus
STATE OF KARNATAKA - Respondent
Writ Appeal 3553 Of 2000
Decided On : 06/03/2003
Advocates Appeared :
A.G.HOLLA, C.PRABHAKAR, G.NAGARAJULU NAIDU, K.CHANNABASAPPA, K.D.CHANNABASAPPA, Kaleemullah Shariff, M.C.NARASIMHAN, P.D.VISHWANATH, SUBRAMANYA, T.S.ANANTHRAM, V.H.UPADYAYA
Headnote:
The Karnataka High Court, in a batch of writ appeals, upheld the minimum wage notification issued by the State Government for workers employed in the Beedi Manufacturing Industries, rejecting challenges from management associations. The Court held that the Government had the authority to fix minimum wages under the Minimum Wages Act, 1948, and that the fixation of minimum wages was not subject to judicial review on the ground of the quantum of wages fixed. The Court also held that the Government was not required to consider the capacity of the industry to pay while fixing minimum wages, and that the concept of minimum wages under the Act was not contractual but statutory, binding the employer to pay the notified wages. The Court further held that the Government was not required to give reasons for accepting or rejecting objections/suggestions made by affected persons during the notification process, and that the Government had the power to issue a notification revising the wages with retrospective effect. The Court also rejected the contention that the Government could not fix minimum wages at a higher rate than that proposed in the draft notification, and that the Government was required to take into account the rates of minimum wage prevailing in neighboring States while fixing the minimum wage for employees of the Beedi Manufacturing Industries. The Court also held that there could be more than 100% neutralization of Variable Dearness Allowance in fixing minimum wages, and that the fixation of minimum wages was a legislative act and not a quasi-judicial proceeding, and therefore, the Government was not required to give reasons for either accepting or rejecting the objections/suggestions made by the affected persons.
Fact of the Case:
The management associations of Beedi Manufacturing Industries in Karnataka challenged a minimum wage notification issued by the State Government under the Minimum Wages Act, 1948, arguing that the Government did not take into account relevant factors such as the capacity of the industry to pay, the cost of raw materials, and the prevailing minimum wages in neighboring States. The management associations also contended that the Government acted ultra vires the Act in bringing into force the final minimum wage notification with retrospective effect.
Finding of the Court:
The Court held that the Government had the authority to fix minimum wages under the Minimum Wages Act, 1948, and that the fixation of minimum wages was not subject to judicial review on the ground of the quantum of wages fixed. The Court also held that the Government was not required to consider the capacity of the industry to pay while fixing minimum wages, and that the concept of minimum wages under the Act was not contractual but statutory, binding the employer to pay the notified wages. The Court further held that the Government was not required to give reasons for accepting or rejecting objections/suggestions made by affected persons during the notification process, and that the Government had the power to issue a notification revising the wages with retrospective effect. The Court also rejected the contention that the Government could not fix minimum wages at a higher rate than that proposed in the draft notification, and that the Government was required to take into account the rates of minimum wage prevailing in neighboring States while fixing the minimum wage for employees of the Beedi Manufacturing Industries. The Court also held that there could be more than 100% neutralization of Variable Dearness Allowance in fixing minimum wages, and that the fixation of minimum wages was a legislative act and not a quasi-judicial proceeding, and therefore, the Government was not required to give reasons for either accepting or rejecting the objections/suggestions made by the affected persons.
Issues: 1. Whether the Government had the authority to fix minimum wages under the Minimum Wages Act, 1948? 2. Whether the fixation of minimum wages was subject to judicial review on the ground of the quantum of wages fixed? 3. Whether the Government was required to consider the capacity of the industry to pay while fixing minimum wages? 4. Whether the concept of minimum wages under the Act was contractual or statutory? 5. Whether the Government was required to give reasons for accepting or rejecting objections/suggestions made by affected persons during the notification process? 6. Whether the Government had the power to issue a notification revising the wages with retrospective effect? 7. Whether the Government could fix minimum wages at a higher rate than that proposed in the draft notification? 8. Whether the Government was required to take into account the rates of minimum wage prevailing in neighboring States while fixing the minimum wage for employees of the Beedi Manufacturing Industries? 9. Whether there could be more than 100% neutralization of Variable Dearness Allowance in fixing minimum wages? 10. Whether the fixation of minimum wages was a legislative act or a quasi-judicial proceeding?
Ratio Decidendi: 1. The Government had the authority to fix minimum wages under the Minimum Wages Act, 1948. 2. The fixation of minimum wages was not subject to judicial review on the ground of the quantum of wages fixed. 3. The Government was not required to consider the capacity of the industry to pay while fixing minimum wages. 4. The concept of minimum wages under the Act was not contractual but statutory. 5. The Government was not required to give reasons for accepting or rejecting objections/suggestions made by affected persons during the notification process. 6. The Government had the power to issue a notification revising the wages with retrospective effect. 7. The Government could fix minimum wages at a higher rate than that proposed in the draft notification. 8. The Government was not required to take into account the rates of minimum wage prevailing in neighboring States while fixing the minimum wage for employees of the Beedi Manufacturing Industries. 9. There could be more than 100% neutralization of Variable Dearness Allowance in fixing minimum wages. 10. The fixation of minimum wages was a legislative act and not a quasi-judicial proceeding.
Final Decision: The Court allowed the writ appeals filed by the State Government and Trade Unions representing the workers, and set aside the order of the learned Single Judge quashing the impugned minimum wage notification. The Court dismissed the writ petitions filed by the management associations of the Beedi Manufacturing Industries with no order as to costs.
( 2 ) BEEDI industries is spread throughout the State of Karnataka and the employees in the said industry number more than 8 lakhs. Employment in Beedi Manufacturing Industries is a scheduled employment as per the provisions of the Act. Under Section 3 of the Act, the appropriate Government is empowered to fix and revise minimum wages in the scheduled employment. This is an obligation in terms of the provisions of Section 3 of the Act.
( 3 ) THE Government of Karnataka issued draft notification bearing No. LD 249 LMW 91, dated 9-5-1995 under Section 5 (1) (b) of the Act and the same was published in the Karnataka Gazette special Issue vide Part IV, Section 2-C (ii), dated 31-7-1995 notified suggestions/objections from the affected/likely to be affected persons to the revision of minimum rates of wages in respect of workers employed in Beedi industry in the State of Karnataka. Karnataka Beedi Industries' association (Regd.) submitted its suggestions/objections vide its letter dated 26-9-1995. The government of Karnataka after receipt of objections and suggestions sought the opinion/comments of the Labour Department and sectored its opinion. The opinion of the Labour department as well as ejections/suggestions received from the Karnataka Beedi Industries association (Regd.) and others were placed before the Karnataka State Minimum Wages advisory Board (for short, "the Advisory Board") by the Government for its consideration. The advisory Board after considering the suggestions and objections received and the opinion of the labour Department has recommended revision at the rate of 3 paise per point for every increase of Consumer Price Index over and above 1513 points for the purpose of payments of Variable dearness Allowance (VDA ). The State Government after considering the recommendation of the advisory Board have revised the minimum rates of wages to come into effect from 1-11-1996 for workers employed in any employment in Beedi Manufacturing Industries in exercise of power conferred on them under Sub-section (1) (b) of Section 3 read with Sub-section (2) of section 5 of the Act and the same was published in the Karnataka Gazette, Notification No. LD 2'49 LMW 93, Bangalore, dated 24th October, 1996 fixing revision at the rate of 3 paise per point for every increase of Consumer Price Index.
( 4 ) THE managements of the Beedi Manufacturing Industries, being, aggrieved by the above revision of minimum wage effected by the Government of Karnataka preferred Writ Petition No. 1793 of 1997 and batch assailing the validity of the notification dated 24-10-1996. During the pendency of the writ petitions, LA. No. II was filed by the management to take additional ground, such as: (i) that the constitution of the Advisory Board was not in accordance with law; (ii) that the Government having constituted a tripartite committee vide notification dated 24-2-1994 could not have acted upon the recommendation of the Advisory Board and it ought to have awaited the report of the tripartite committee; (iii) that there was no application of mind by the Government to the relevant factors before revising the minimum wage; (iv) that the revision of the minimum wage suffers from the vice of arbitrariness and unreasonableness. The petitioners, also filed another interlocutory application to implead the Director of Statistics, government of Karn
