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High Court of Patna
S.B. Sinha, J.
Eastern Bihar Chamber of Commerce and Industries, Bhagalpur and others – Petitioners
Versus
State of Bihar and another – Respondents
Civil writ Jurisdiction Case No. 242 of 1982
Decided On : 31.10.1987
MINIMUM WAGES ACT, 1948 - CONSTITUTION OF ADVISORY BOARD - SECTION 9 - VALIDITY OF NOTIFICATION - FIXATION OF MINIMUM WAGES - SECTION 3 - BASIS OF POPULATION - VAGUENESS - VARIABLE DEARNESS ALLOWANCE - SECTION 5(2) - NEUTRALIZATION - MAXIMUM LIMIT.
Fact of the Case:
The petitioners, representing employers in shops and establishments, challenged the notification issued by the State of Bihar under the Minimum Wages Act, 1948, which revised minimum wages and variable dearness allowance. They contended that the constitution of the Advisory Board was not in accordance with the law, the basis of fixation of wages based on population was vague, and the variable dearness allowance exceeded 100% neutralization.
Finding of the Court:
The court held that the constitution of the Advisory Board was illegal as the number of independent members exceeded 1/3 of the total number of representatives, in violation of Section 9 of the Act. The court also held that the fixation of minimum wages based on population was not vague, as 'area' in the context of the Act meant a particular place as a unit, such as a municipal corporation or village panchayat. However, the court upheld the decision in Chatanagpur Chamber of Commerce and Industries v. State of Bihar, which held that variable dearness allowance cannot exceed 100% neutralization.
Issues: 1. Whether the constitution of the Advisory Board was in accordance with the law? 2. Whether the basis of fixation of wages based on population was vague? 3. Whether the variable dearness allowance exceeded 100% neutralization?
Ratio Decidendi: 1. The court interpreted Section 9 of the Minimum Wages Act, 1948, and held that the number of independent members on the Advisory Board cannot exceed 1/3 of the total number of representatives. The court found that in this case, the number of independent members exceeded the prescribed limit, rendering the constitution of the Board illegal. 2. The court interpreted the term 'area' in the context of the Act and held that it meant a particular place as a unit, such as a municipal corporation or village panchayat. The court found that the basis of fixation of wages based on population was not vague, as it referred to specific areas with defined boundaries. 3. The court relied on the decision in Chatanagpur Chamber of Commerce and Industries v. State of Bihar, which held that variable dearness allowance cannot exceed 100% neutralization.
Final Decision: The court allowed the writ petition and quashed the notification issued by the State of Bihar, which revised minimum wages and variable dearness allowance.
S.B. Sinha, J. – This writ petition is directed against the notification dated 26th November, 1981 as contained in Annexure 1 to the writ petition.
2. The aforementioned purported notification has been issued by the State of Bihar in exercise of its power conferred upon it by subsection (1) of section 3 of the Minimum Wages Act, 1948 (Act No. 11 of 1948) (hereinafter referred to as the said Act) read with sub-section (2) of section 5 of the said Act. The petitioners no. 1, 2 and 3 are the representative bodies of employers in relation to shops and establishments which are allegedly affected by reason of the aforementioned notification. The petitioners no. 4 to 6 are said to be the members of the petitioners no. 1, 2 and 3 respectively and they deal in cloth either in whole sale or in retail trade at Bhagalpur and Muzaffarpur. It is submitted that by reason of the notification dated 25th June, 1975 as contained in Annexure 2 to the writ petition, the provisions of the Minimum Wages Act were made applicable in respect of the shops and establishments of persons whose representatives the petitioners are. By virtue of or under the said notification all places having a population of more than two lakh, a higher amount of minimum wages are to be paid. The basis of the said notification as contained therein reads as follows : -
Sl. Category of Areas having Areas having Areas having Areas having
No. workers population population population population
below 30,000 above 30,000 above one above two
and below lakh and lakh
one lakh below two
lakh
1 2 3 4 5 6
1. Unskilled Rs.100.00 Rs.110.00 Rs.125.00 Rs.140.00
per month per month per month per month
2. Semiskilled Rs.110.00 Rs.120.00 Rs.140.00 Rs.160.00
per month per month per month per month
3. Skilled Rs.125.00 Rs.140.00 Rs.160.00 Rs.200.00
per month per month per month per month
From a perusal of the schedule appended to the aforementioned notification, it would appear that classification of employees has also been made therein and it has clearly been mentioned which class of employees would come within which category.
On or about 24th February, 1981 another purported notification was issued with a view to make upward revision in minimum wages of the different categories of employees and by reason thereof objections and suggestions had been invited for being filed within two months from the date of publication thereof in the gazetee.
3. Thereafter, the aforementioned notification dated 26th November, 1981 was issued as contained in Annexure 1 to the writ application whereby and whereunder the minimum wages payable to the different categories of employees were enhanced. The learned counsel appearing on behalf of the petitioners submitted that the aforementioned purported notification as contained in Annexure 1 is bad in law as allegedly the board was not properly constituted.
It was further submitted that the basis of fixation of different wages for different areas with reference to population being vague, the same cannot be Implemented.
It has further been contended so far as the notification fixing variable dearness allowance is concerned, the same is also bad in law as on the basis thereof the manner in which the same will have to be paid to the concerned workmen, neutralisation will be more than 100%.
4. Before discussing the points involved in this petition, it is necessary to consider the scope and object of the Act, 1948. The said Act is a beneficiary legislation so far as the workmen are concerned. The appropriate Government has been empowered by reason of the provisions of the said Act to fix the minimum wages in the scheduled employments. The appropriate Government is also empowered to make necessary addition in the list of the scheduled employments.
In terms of section 3 of the said Act, the appropriate Government has been empowered to fix or revise the minimum wages payable by the employer in a scheduled employmen
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