Karnataka HC Challenges State Government’s Wage Hike: A Legal Collision with the Repealed 1948 Act

In a high-stakes legal battle over the financial future of Karnataka’s industrial sector, the High Court of Karnataka has intervened in a dispute regarding the State government's recent move to revise minimum wages. On June 2, 2026, a single-judge bench led by Justice Jyothi M issued notice to the State of Karnataka, following a petition challenging a final notification dated May 22, 2026, which prescribes a drastic hike in minimum wages across 81 scheduled employments.

The Core of the Dispute The petitioners, the Karnataka Employers’ Association (KEA) and Ethereal Machines Private Limited, argue that the State government has committed a "patent error of jurisdiction." At the center of the conflict is the legal status of the Minimum Wages Act, 1948 . The petitioners contend that because this Act was officially repealed and superseded by the Code on Wages, 2019 on November 21, 2025, any legislative action purportedly taken under the old Act post-repeal is legally hollow—or "non-est" in the eyes of the law.

Case Background: A Timeline of Judicial Friction The path to this confrontation has been marked by repeated legal skirmishes. In 2022-23, the government attempted a revision for 34 categories, which was later challenged by trade unions and eventually reached a deadlock that required intervention by the Division Bench.

While the petitioners were navigating the fallout of previous litigations, the State issued a draft notification in April 2025 intended to cover 84 employments. Employers rushed to the High Court, which issued several interim orders in 2025, creating a bar on implementing any final notification resulting from the Advisory Board’s deliberations without prior leave of the court. The petitioners now allege that the government’s May 2026 final notification—issued without seeking such leave—constitutes a brazen violation of judicial orders.

Arguments: Jurisdictional Overreach vs. Labor Protection For the Petitioners: Represented by Senior Counsel S.S. Naganand and B.C. Prabhakar, the petitioners argue that by invoking the 1948 Act, the government is operating under a "non-existent statute." Furthermore, they claim that the concept of "Scheduled Employments," which formed the basis of the 1948 Act, has been completely abolished under the new Code. They characterize the ~60% hike as "astronomical" and "confiscatory," asserting that it ignores inflationary adjustments made via the Variable Dearness Allowance (VDA) and threatens the economic stability of small manufacturing units.

For the Respondents: The State of Karnataka, represented by Advocate General K. Shashikiran Shetty, faces opposition from several major trade unions, including AITUC, AICCTU, and CITU. While the state’s detailed counter-affidavit is awaited, the unions maintain that worker compensation must keep pace with the rising cost of living and that earlier legislative actions remain valid under the savings clauses of the new Code.

Legal Analysis: The Shadow of Repeal The key legal question hinges on Section 69 of the Code on Wages, 2019 , and its interplay with Section 6 of the General Clauses Act, 1897 . While saving clauses generally protect actions taken under a prior law, the petitioners argue this protection is limited, stating that prior actions can only be preserved to the extent they are "not contrary to the provisions of this Code." By attempting to fix uniform wages across diverse industries—contrary to the 1948 Act’s original industry-specific structure—the petitioners claim the state has overstepped its bounds.

Key Observations

"The First Respondent has exercised powers under a non-existent statute, rendering the impugned notification non-est in the eyes of law." — Contention of the Petitioners

"The Order that would be passed by the meeting of the Advisory Board on 29.07.2025 or subsequently, shall not be implemented till the next date of hearing." — Order of the High Court of Karnataka (July 29, 2025)

"Any quinquennial revision of minimum wages ought to be reasonable and measured – typically restricted to an increase of 10 to 15 per cent as consistently done in the past." — Petitioners' Argument on Economic Arbitrariness

The Path Forward The High Court has allowed the impleadment of the Central Government, acknowledging the significant implications of harmonizing State-level wage policies with the new federal Labor Code. As the matter is listed for further hearing on June 9, 2026, all eyes remain on whether the court will pause the notification, providing a reprieve for industries claiming the hike is "economically ruinous."

The practical effect of this challenge is significant: it places the State’s labor policy under strict judicial scrutiny, forcing the government to reconcile its old administrative habits with the updated statutory framework of the Code on Wages. For now, the implementation of the sharp wage hike remains shrouded in judicial ambiguity.