Partly allowed

The Kerala Automobile Dealers Association v. State of Kerala

Kerala HC18 Nov 2022WP(C)/15539/2022

Case brief

AI extract

What is this about?

The Court held that automobile workshop staff (servicing and repairing) fall under Minor Engineering Industry under Section 30 of the Minimum Wages Act, but showroom sales employees are covered under the Shops and Commercial Establishment Act. The notification was allowed partially to resolve this ambiguity.

What did the court decide?

Writ petition allowed to the limited extent that the notification is in-applicable to showroom employees but valid for workshop staff; government directed to issue clarification.

The Kerala Automobile Dealers Association Vs… — Pension and Retirement Benefits | Kerala HC (2022)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE AMIT RAWAL WEDNESDAY, THE 18^TH DAY OF NOVEMBER 2022 / 27TH KARTHIKA, 1944

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WP(C) NO. 15539 OF 2022

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PETITIONER:

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THE KERALA AUTOMOBILE DEALERS ASSOCIATION
AT C/O. M/S. POPULAR VEHICLES AND SERVICES LTD., KUTTUKARAN
CENTRE, MAMANGALAM, KOCHI - 682 025, REPRESENTED BY ITS
PRESIDENT SRI. JOHN K PAUL.

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BY ADVS.
K.ANAND
BENNY ANTONY PAREL
AMEER SALIM

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RESPONDENTS:

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1 STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY TO GOVERNMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

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2THE ADDL. CHIEF SECRETARY,
LABOUR AND SKILLS (E) DEPARTMENT,
GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

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3MINIMUM WAGES ADVISORY BOARD,
REPRESENTED BY ITS SECRETARY, OFFICE OF THE MINIMUM WAGES
ADVISORY BOARD, TOZHIL BHAVAN, PMG JUNCTION,
THIRUVANANTHAPURAM - 695 033.
4KERALA AUTOMOBILE SALES AND SERVICE EMPLOYEES ASSOCIATION
(CITU) REG NO. 12.01.2015,
KANNUR DISTRICT COMMITTEE C. KANNAN SMARAKA MANDIRAM, KANNUR -
670001,
REPRESENTED BY ITS PRESIDENT SRI. P. PURUSHOTHAMAN.
BY ADVS.
SHRI.ASOK M.CHERIAN, ADDL. ADVOCATE GENERAL
S.KRISHNA MOORTHY(ERNAKULAM)
MARIAMMA MERCY KANJANAPILLY
V.KRISHNAN KUTTY
BALAGOPALAN B.

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
16.11.2022, THE COURT ON 18.11.2022 DELIVERED THE FOLLOWING:

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WP(C) NO. 15539 OF 2022

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JUDGMENT

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Petitioners, are the Association of Kerala Automobile Dealers, having around 145 members, through instant writ petition, have laid challenge to the notification dated 18.04.2022 issued by the Department of the Labour and Skill, Government of Kerala, whereby the minimum rates of wages payable to the employees employed in “Minor Engineering Industry sector” in the State of Kerala, specified in the schedule, have been revised on various grounds.

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The aforementioned notification has been issued in exercise of the powers conferred by Clause (b) of sub section (1) of Section 3 of the Minimum Wages Act, 1948 read with sub section (2) of Section 5. The contention of the petitioner laying challenge to the aforementioned notification are summarised hereinbelow:

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I. Notification has been taken without adhering to the provisions of Section 5(1)(b) of the 1948 Act.

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WP(C) NO. 15539 OF 2022

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II. It has been issued without taking into consideration

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the objections/suggestions received on the draft proposal and objections raised at the time of meeting of Minimum Wages Advisory Board.

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III. Objection pointed out that the proposed rate of increase wages was exorbitant as increase was at the rate of 58% to 78% when compared to wages fixed by earlier notification, for the reason that there was already a provision for Dearness Allowance based on increase in the cost of living index.

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IV. There is a huge disparity in the salary of employees working in the same establishment with wages given in other state.

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V. Before implementation of Ext.P1, as per the provisions Section 9 of the Act, Minimum Wages Advisory Board was constituted but no consensus could be arrived at, therefore advice mandated under Section 7 of the Minimum Wages Act by the Advisory Board is conspicuously absent.

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WP(C) NO. 15539 OF 2022

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VI. 4^th respondent union had already issued a notice to

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the District Labour Officer, Kannur for seeking implementation of notification Ext.P1.

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VII. There are about three lakhs employees working in the sector discharging different types of duties like Manager, Sales Manager, Sales Executive Class, General Manager in the sales department viz. the separate staff in service and repairing centers.

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VIII. Automobile showroom have already been brought under the purview of Scheduled Employment for shops and commercial establishment and vide notification dated 15.09.2015 whereby minimum rate of wages have already been fixed. The inclusion of the same very employees working in the automobile showrooms in the schedule of Minor Engineering thus is wholly illegal.

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IX. The salary paid to the employees falling under the provisions of Shops and Commercial Establishment is Rs.10,500/- whereas the rate for service centers as per the

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notification have now been exponentially increased to Rs.15,000/-.

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X. The notification also envisage of giving promotion after fixed period which cannot be introduced as per the provisions of Minimum Wages Act which only deals with fixing the wages.

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XI. The schedule has been drawn by taking in the provisions of Section 2(g) defining the employments to be covered under the provisions of the Minimum Wages Act and

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as per Clause 30 only there is employment in Minor Engineering Industry, but there is no provisions of automobile dealers, showrooms and service centers.

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XII. There is an utter ambiguity in the notification as automobile engineers including servicing and repairing have also been brought under the provisions of the Act, which includes sales executive, sales co-ordinator and manager under the head office staff.

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On the other hand, learned Additional Advocate

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WP(C) NO. 15539 OF 2022

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General Sri.Ashok.M. Cheriyan submitted that the writ petition is not maintainable as petitioners have failed to file any objections or suggestions to the draft proposal. Objections were filed only after promulgation of notification under Section 5(1)(b) which is not sustainable in the eyes of law.

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The objections received by the Government on preliminary notification but duly communicated to the Advisory Board, conducted the hearing on 16.10.2019 and after discussion in detail, the Board, by majority strength decided to send recommendation for issuance of final notification. The rate of minimum wages currently in force for Minor Engineering Sector was fixed in the year 2009 ie., 16.12.2009 which has to be revised every five years but it could not be carried out because of unending litigation initiated by the employers. The minimum wages of the workman, as per, Shops And Commercial Establishments, employed in the automobile showroom were last fixed vide notification dated 21.12.2016 and steps have already been

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7

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initiated to revise the same by constituting the subcommittee and on revision, there will be consequential increase, thus there would not any disparity. Nature of work in automobile engineering includes servicing and repairing and automobiles showrooms are totally different. Though sale is a commercial activity whereas serving and repairing is a manufacturing activity and both are under same ownership and same building would not be a relevant factor. The servicing and repairing would fall within the definition of 'manufacturing' as per the provisions of Section 2 of the Factories Act and automobile engineering thus has rightly been included under the 'Minor Engineering Industry Sector' as it is an 'employment' rendering different service than in a showroom.

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Government included the automobile engineering including servicing and repairing under the category of Minor Engineering Industry by exercising the powers stipulated under Section 27 of the Minimum Wages Act. The procedure prescribed for revising the Minimum Wages is contemplated

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WP(C) NO. 15539 OF 2022

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under Section 5 of the 1948 Act. A sub-committee was constituted in accordance with the procedure contemplated under Section 5(1)(a) but the Government later went ahead with the procedure under Section 5(1)(b) by issuing Ext.P1 notification calling for objections from the stakeholders within time specified in the notification and if it is a notification under Section 5(1)(a) of the Minimum Wages Act, then there was no requirement for calling the objection. The wages have been revised taking into view the living index based on the consumer price index. There is no violation of rights under Article 14, 19(1)(g) and 21 of the Constitution of India.

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In support of the contention, learned Advocate

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General relied upon the judgment of Supreme Court in The Edward Mills Co. Ltd., Beawar v. State of Ajmer AIR 1955 SCC SC 25 (paragraph 17) to contend that the conditions of labour vary under different circumstances and from state to state. The expediency of including a particular trade or industry within the schedule depends upon variety of facts which are by no means uniform and can best be

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ascertained by the person placed in charge of administration of particular State.

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Counsel for the trade union also countered the

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argument of Sri.K.Anand representing the petitioner on the ground that it is not the first time that they have been covered under the Minimum Wages Act as in the previous notification promulgated in 2009 petitioners have been paying the minimum wages. He also adopted the argument of learned Additional Advocate General.

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I have heard the learned counsel for the parties and appraised the paper book.

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Section 2(g) of the Minimum Wages Act defines a 'schedule employment' which would mean an employment specified in the schedule or any process or branch of work forming the part of such employment. Serial number 30 in the schedule carved out under Section 2(g) covered under the Minimum Wages Act “Employment in Minor Engineering Industry”. Procedure for fixing and revising of minimum wages has been envisaged in Section 5 of the Act, the same

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reads as under:

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“Section 5 -Procedure for fixing and revising minimum wages.

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(1) In fixing minimum rates of wages in respect of any scheduled employment for the first time under this Act or in revising minimum rates of wages so fixed, the appropriate Government shall either-

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(a) appoint as many committees and sub-committees as it considers necessary to hold enquiries and advise it in respect of such fixation or revision, as the case may be, or

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(b) by notification in the Official Gazette, publish its proposals for the information of persons likely to be affected thereby and specify a date, not less than two months from the date of the notification, on which the proposals will be taken into consideration.

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(2) After considering the advice of the committee or committees appointed under clause (a) of sub-section (1), or as the case may be, all representations received by it before the date 'Specified in the notification under clause (b) of that sub-section, the appropriate Government shall, by notification in the Official Gazette, fix, or, as the case may be, revise the minimum rates of wages in respect of each schedule employment, and unless such notification otherwise provides, it shall come into force on the expiry of three months from the date of its issue:

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Provided that where the appropriate Government proposes to revise the minimum rates of wages by the mode specified in

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clause (b) of sub-section (1), the appropriate Government shall consult the Advisory Board also.”

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Provisions extracted above would reveals that an appropriate Government which is defined under Section 2(b) being Central or State Government shall either appoint as many committees or sub committees considering and necessary to hold enquiries in fixational revision or by notification in official gazette publish proposal for information of persons “likely to be affected” and specify a date not less than two months from the date of notification on which the proposal may be taking into consideration.

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It is only after considering the advice of subcommittee or committees appointed under Clause (a) of sub section 1 Or all the representation received by it before the date specified in notification as per clause (b) of the subsection, an appropriate Government shall by notification official gazette fix or as the case may be revise the minimum rate of wages in respect of each schedule employment and unless such notification otherwise provides which shall come

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WP(C) NO. 15539 OF 2022

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into force on expiry of three months from the date of issue of notification. For appreciating whether there has been a compliance of provisions of Section 5 ibid, it would be expedient to extract the relevant notification under challenge dated 18.04.2022.

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“In exercise of the powers conferred by clause (b) of sub-section (1) of section 3 of the Minimum Wages Act, 1948 (Central Act 11 of 1948) read with sub-section (2) of section 5 thereof and in supersession of the notification issued under G.O.(Ms.) No.175/2009/LBR. dated 16^th December, 2009 and published as S.R.O. No.1098/2009 in the Kerala Gazette Extraordinary No.2415 dated 22 December, 2009, the Government of Kerala after considering the objections and suggestions received on the draft proposals published as notification No El/230/2018LBRD dated 2^nd May, 2019 in the Kerala Gazette Extraordinary No.1305 dated 31^st May, 2019 as required under clause (b) of sub- section (1) of section 5 of the said Act and in consultation with the Minimum Wages Advisory Board constituted under section 7 of the said Act, hereby revise the minimum rates of wages payable to the employees employed in the Minor Engineering Industry sector in the State of Kerala, as specified in the Schedule annexed hereto and fix the date of publication of this notification in the official Gazette as the date from which the revised rates shall come into force.”

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WP(C) NO. 15539 OF 2022

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The notification envisaged that the proposal was published vide notification dated 02.05.2019. Petitioners have submitted their objections Ext.P2 to the said proposal on 01.07.2019. The relevant portion of the objection pertaining to subject and reference reads as under:

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“To

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The Additional Chief Secretary Government of Kerala Labour & Skills (E) Dept Trivandrum

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Sub: Regarding fixation of Minimum Wages for employees in the automobile sector

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Ref: Kerala Government notification No. El/230/2018-LBRD dated 02.05.2019.”

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The submissions and arguments of the learned Additional Advocate General that petitioners did not file any objections to the proposed notification is wholly thus misplaced as notification dated 02.05.2015 was under the provisions of Section 5(1)(b) extracted above. The present notification under challenge is under Section 5(2) wherein

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WP(C) NO. 15539 OF 2022

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serial number 2 Automobile Engineering including Service and Repairing have been brought within in its purview. Relevant

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portion is extracted hereinbelow:

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2. Automobile Engineering (including Servicing and Repair)

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Sl.No. Work Monthly Daily wage wages (for 8 hour work)

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1. Supervisory Staff

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Chief Mechanic/ Mason/ Foreman Rs.16,760

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Sales Executive

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2. Highly Skilled

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Diesel Pump Mechanic 2. Crank shaft Grinding Machine Operator

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Cylinder Boring Rs.15,340 Rs.590/Machine Operator Mechanic Sales Co-ordinator

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3. Skilled Grade-III 1. Turner 2. Fitter Rs.13,780/Rs.530/3. Assistant Mechanic

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WP(C) NO. 15539 OF 2022

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Welder 5. Carpenter 6. Painter (Hand) 7. Black Smith 8. Diesel Pump Mechanic 9. Battery setting/ Re-Conditioning Worker

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Armature Winder 11. Spray Painter Rs.13,780/Rs.530/12. Electrician 13. Valve Grinding Worker 14. Sleeve Polisher 15. Pump Worker 16. Upholstery (Art) Worker 17. Fuel Injection Mechanic 18. Auto Electrician 19. Cylinder Borer 20. Driver

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3(A) Skilled Grade-II Rs.14,300/Rs.550/- 3(B) Skilled Grade -1 Rs.14,820/Rs.570/-

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Note: The Grade-III employees in the Skilled category who have completed 2 years of service will be paid the wages fixed for Grade - II employees and Grade II employees who have completed 3 years of service will be paid the wages fixed for Grade - I employees, in the cited category.

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WP(C) NO. 15539 OF 2022

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4.	*Semi-Skilled Grade-II*
1.	Fuel Injection Assistant
2.	Radiator Worker	Rs.12,740/-	Rs.490/-
3.	Vulcaniser
4.	Machinist
*4(A)*	_Semi-Skilled Grade-I _	Rs.13,260/-	Rs.510/-
	Note: The Grade II employees
	in the Semi-skilled category who have completed 3 years of
	service will be paid the wages
	fixed for Grade - I employees in the cited category.
5.	*Un-Skilled*
1.	Tyre Fitter
2.	Cleaner
3.	Helper	Rs.12,220/-	Rs.470/-
4.	Upholstery Assistant
5.	Greaser/Oiler
6.	Mazdoor
	Office Staff
Group-I
	Manager	Rs.14,360/-
Group-II
	Head Clerk
	Accountant	Rs.13,260/-
	Stenographer Draftsman

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WP(C) NO. 15539 OF 2022

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Group-III

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Clerk Cashier Clerk-cum-Typist Typist Store Keeper Time Keeper Rs.12,850/Driver Telephone Operator cum Front Office Staff

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Group-IV (A) Attender Peon Watchman Rs.12,480/Security Guard (B) Sweeper Scavenger Rs.12,050/-

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Note-From 21 year of service the apprentices shall be given 50% of the wages prescribed for skilled category and from third year onwards they shall be given 75% and from 4th year they shall be given the full wages prescribed for unskilled category,

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14. From perusal of the extracted portion above, had

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there been an intention to bring the automobile

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engineering/automobile dealers under the purview, there was no need for the Government to include services and repairs as is a matter of record that many or few automobile dealers either have the workshops in the showroom or separately for servicing and repairs of the vehicle, thus for all intends and purpose, the staff in the sales office viz. the staff in service and repair have been brought within the purview ,without any distinction vis-a-vis the employees working in the showroom as they are covered by minimum wages promulgated under the Kerala Shops and Commercial Establishment Act, 1960. There cannot be any position of Sale Executive, Sales Coordinator and Office staff as Manager, Typist, Clerk-cumTypist, Stenographers, Accountants, Head Clerk, Draftsman in workshops. Normally in the service and repair shop, one has a clerk and a cashier or at best store keeper and mechanics, and there may be facility of an Accountant. But it is yet to be decided whether the Accountant working under the service and repair shop would be covered under the Act or the Accountant in the showroom. Government thus abdicated by

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envisaging an ambiguous situation instead should have at threshold or when had notice of petition published a subsequent clarification or corrigendum to overcome coverage viz. the minimum wages prescribed under the Shops and Commercial Establishment Act and Minimum Wages Act.

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Attention of this Court was also drawn to the definition of 'manufacturing process' defined under Section 2(k) of the Factories Act by submitting that alteration repairing would also fall in serial number 30 of schedule 2 ie., employment in Minor Engineering Industry, as expression 'Minor Engineering Industry' has not been defined under the Minimum Wages Act. It is in that context reliance has been laid to the definition of manufacturing process. But I am afraid the said definition would not come to the rescue of respondents for, by looking at the definition of 'factory' in section 2(m) would mean any premises including the precincts where ten or more workers are working in any part where a manufacturing process is being carried out with the

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aid or without of power. Sections 2(m) and 2(k) reads as under:

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“Section 2(m) :- “factory” means any premises including the precincts thereof—

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(i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or

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(ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on,—

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but does not include a mine subject to the operation of [the Mines Act, 1952 (35 of 1952)], or [a mobile unit belonging to the armed forces of the Union, railway running shed or a hotel, restaurant or eating place].

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[Explanation [I].—For computing the number of workers for the purposes of this clause all the workers in [different groups and relays] in a day shall be taken into account;]

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[Explanation II.—For the purposes of this clause, the mere fact that an Electronic Data Processing Unit or a Computer Unit is installed in any premises or part thereof, shall not be construed to make it a factory if no manufacturing process is being carried on in such premises or part thereof;]

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Section 2(k) :- “manufacturing process” means any process

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for—

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(i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal,

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[(ii)pumping oil, water, sewage or any other substance; or]

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(iii) generating, transforming or transmitting power; or [(iv)composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding;] [or]

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(v)constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels;[or]

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[(vi) preserving or storing any article in cold storage;]”

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The argument that the respondents have never assailed their inclusion under the provisions of the Minimum Wages Act by referring to the serial number 30 in the schedule 2 covering the employment in the Minor Engineering Sector Industry would pale insignificant as the showrooms of the automobiles dealers in view reasoning would not fall under Minor Engineering Industry. It is purely an act of sale

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and purchase of the vehicles manufactured by the manufactures.

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As an upshot, it is held that employees working in workshops i.e. services and repairs would definitely fall under the expression 'Minor Engineering' and as per the serial number 2 (of the notification) those in showrooms would not be covered under the provisions of the Minimum Wages Act 1948. The notification qua such employees is held to be in-applicable particularly when such establishments are being covered under the Shops and Commercial Establishment wherein minimum wages have been defined and revised and being paid. It will not denude the Government from issuing any clarification or corrigendum in terms of the observations recorded therein to eradicate the ambiguity as noticed above. The writ petition to the limited extent stands allowed.

Sd/-

AMIT RAWAL JUDGE

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WP(C) NO. 15539 OF 2022

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APPENDIX OF WP(C) 15539/2022

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PETITIONER EXHIBITS

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`Exhibit P1`	`TRUE COPY OF THE SAID NOTIFICATION BEARING` `NO. GO(P) NO. 25/2022/LBR (SRO NO.` `372/2022) DATED 18.04.2022 OF THE 2ND` `RESPONDENT.`
`Exhibit P2`	`TRUE COPY OF THE OBJECTION FILED BY THE` `PETITIONER ASSOCIATION DATED 01.07.2019.`
`Exhibit P3`	`TRUE COPY OF THE MINUTES OF THE MEETING OF` `THE 3RD RESPONDENT 'MINIMUM WAGES ADVISORY` `BOARD' DATED 07.11.2019.`
`Exhibit P4`	`TRUE COPY OF THE MINUTES OF THE MEETING OF` `THE 3RD RESPONDENT "MINIMUM WAGES ADVISORY` `BOARD' DATED 20.01.2020.`
`Exhibit P5`	`TRUE COPY OF THE NOTICE ISSUED BY THE 4TH` `RESPONDENT UNION HAS ALREADY TO THE` `DISTRICT LABOUR OFFICER KANNUR DATED` `04.05.2022.`
`Exhibit P6`	`TRUE COPY OF THE PRESENT LIST OF DEALERS` `AND THE MEMBER OF EMPLOYEES OF THE` `PETITIONER ASSOCIATION`
`Exhibit P7`	`TRUE COPY OF THE G.O(P) NO 196/2016/LBR` `DATED 21.12.2016 IF LBR DATED 21.12.2016 OF` `THE LABOUR AND SKILLS DEPARTMENT`
`RESPONDENT EXHIBITS`
`EXHIBIT R1(a)`	`TRUE COPY OF THE RECOMMENDATION OF THE` `ADVISORY BOARD VIDE LETTER DATED 22.01.2022`
`EXHIBIT R1(b)`	`True copy of the notification dated` `30.03.2022`

The Kerala Automobile Dealers Association v. State of Kerala

Case brief

What is this about?

What did the court decide?

The Kerala Automobile Dealers Association v. State of Kerala

Case brief

What is this about?

What did the court decide?

What the court decided

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