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2025 Supreme(Ker) 645
IN THE HIGH COURT OF KERALA AT ERNAKULAM
N.NAGARESH, J.
Star Health And Allied Insurance Company Limited - Appellant
Versus
State Of Kerala - Respondents
WP(C) No. 6617 of 2021
Decided on : 20-03-2025
Advocate Appeared:
For the Appellant : BY ADVS. P.RAMAKRISHNAN PREETHI RAMAKRISHNAN (P-212) T.C.KRISHNA C.ANIL KUMAR ASHA K.SHENOY PRATAP ABRAHAM VARGHESE
For the Respondent:BY ADVS. SHRI.N.MANOJ KUMAR, STATE ATTORNEY SMT.SABEENA P. ISMAIL, GOVERNMENT PLEADER SHRI.ASOK M.CHERIAN, ADDL. ADVOCATE GENERAL
IMPORTANT POINT
The Minimum Wages Act applies to insurance agents classified under private financial institutions, affirming their status as employees despite commission-based remuneration.
Headnote:
(A) Minimum Wages Act, 1948 - Section 3 - Insurance Act, 1938 - Notification GO(P) No.8/2020/LBR dated 16.01.2020 - Petitioners challenged the fixation of minimum wages for insurance agents, arguing that insurance business is not included in scheduled employment under the Minimum Wages Act - The court found that the insurance sector can be classified under private financial institutions for wage purposes. (Paras 1 - 25 )
(B) Employment Classification - The court ruled that insurance agents, while receiving commission, can still be considered employees for the purpose of minimum wage legislation. (Paras 23 - 25 )
Facts of the case:
The petitioners, companies providing health insurance, contested a government notification prescribing minimum wages for insurance agents, asserting that such agents are not employees under the Minimum Wages Act.
Findings of Court:
The court upheld the notification, affirming that insurance agents can be classified under private financial institutions for minimum wage purposes.
Issues: The legality of the notification prescribing minimum wages for insurance agents and the classification of insurance agents as employees.
Ratio Decidendi: The court concluded that the Minimum Wages Act applies to insurance agents as they are part of the financial sector, despite their commission-based remuneration.
Result: Writ petitions dismissed.
JUDGMENT :
(N. NAGARESH, J.)
The petitioners in both these writ petitions are Companies engaged in the business of providing health insurance services to the general public. The petitioners seek to set aside Notification GO(P) No.8/2020/LBR dated 16.01.2020 of the Government of Kerala, Labour and Skills (E) Department to the extent it provides fixation of minimum wages for insurance agents.
2. The petitioners state that minimum wages were prescribed for insurance agents as per the Notification dated 16.01.2020. The petitioners submit that as per Section 3 of the Minimum Wages Act, the appropriate Government can fix minimum wages payable to the employees employed only in scheduled employment. Insurance business has not been included either in Part I or Part II of the scheduled employment. By a Notification GO(MS) No.177/2012/LBR dated 31.12.2012, the Government of Kerala has notified only “Financial Institutions”. Insurance business is different from the business carried out by financial institution.
3. The petitioners would further submit that the term “insurance agent” is defined under Section 2(10) of the Insurance Act and Section 42 of the Act provides for appointment of insurance agents. The appointment of an insurance agent is regulated by Insurance Regulatory and Development Authority of India (Appointment of Insurance Agents) Regulations, 2016 made in exercise of power under Section 114A of the Insurance Act. The payment of remuneration to insurance agents is governed by Insurance Regulatory and Development Authority of India (Payment of Commission or Remuneration or Reward to Insurance Agents and Insurance Intermediaries) Regulations, 2016. The Regulations, 2016 provide for payment of commission to insurance agents.
4. The Notification dated 31.12.2012 had included “Employment in Private Financial Institution” in Part I of the Schedule to the Minimum Wages Act, 1948. The petitioners are aggrieved by the Minimum Wages Notification dated 16.01.2020 which is ultravires the powers of the Government.
5. The petitioners state that as per Section 3 of the Minimum Wages Act, the appropriate Government can fix minimum rates of wages payable to employees employed only in scheduled employment. Insurance business has not been included either in Part I or Part II of the scheduled employment. Institutions running insurance business cannot be considered as financial institutions. Insurance business is regulated by distinct and different enactments.
6. The petitioners further argued that the Insurance Act defines the term “insurance agent” and permits an insurance agent to act as an agent for more than one insurer. There are statutory provisions prescribing wages for insurance agents. Therefore, a Notification issued under the Minimum Wages Act applicable to financial institutions cannot be made applicable to insurance agents.
7. The petitioners further submit that Ext.P6 Notification totally ignores the distinct nature of work of insurance agents. Insurance agents are independent individuals. There is no employer-employee relationship between an insurer and insurance agents. The insurance agents receive commission, and not wages. As there is separate Act governing insurance sector and separate statutory regulations governing insurance agents, the well settled doctrine of generalia specialibus non derogant would apply and the Insurance Act, 1938 will prevail over the provisions of the Minimum Wages Act. Ext.P6 is therefore liable to be set aside to the extent it provides for fixation of minimum wages for insurance agents.
8. The State of Kerala resisted the writ petitions filing counter affidavit. Ext.P6 Notification is issued to ensure minimum wages to employees employed in private financial institutions. The petitioners in the writ petitions are doing health insurance business. The petitioners are effecting contracts as part of their business, which provides for sickness benefits or medical or surgical or hospital expense benefits, travel co
