The Supreme Court held that under Section 3(2A) of the Minimum Wages Act, an Industrial Tribunal can fix minimum wages higher than government rates during a pending dispute. The Court ruled that minimum wages must preserve worker efficiency, making the employer's financial capacity irrelevant.
Appeal dismissed; no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
920
JA YDIP INDUSTRIES, TRANA
v.
THE WORKMEN
December 16, 1971
[C~ A. VAIDIALINGAM AND K. K. MATHEW, JI.]
Industrial Tribunal-Jurisdiction to fix minimum wages at rates higher than those f.xed by government during pendency of industrial disputeMlnimul?I Wages Act 1948 S, 3(2A). Industrial dispute-Minimum wages, what is. During the penilency of an industrial dispute betwen the appellant and its workmen, arising out of the demand of the workmen for higb;,r scales bf pay, the appropriate government fixed under section 3 of the Minimum Wages Act, 1948, the minimum rates of wages for the employees employed in sched_uled employments including the appellant's industry.. The tribunal found that the appellant-concern was not financially stable. It fixed the minimum wages at rates higher than the rate fix.ed by the government. In its award the tribunal referred to the minimum rates of wages fixed in the several awards passed by it from 1962 onwards and also considered the rist in the cost of living. It also took into account the consumer price index for the month of December, 1966, .an<! that for the month of January, 1967, for coming to the conclusion that rates ·higher than those specified in the notification published by government should be fixed as minimum wages. On the questiins whether the tribunal was right in fixing wages at rates higher than· the rates fixed by the goernment under s. 3 of the Act and whether what was fixed by the tribunal were minimum wages, HELD : (i) Sub-section (2A) of section 3 makes it clear that even after the fixation of minimum rates of wages by the appropriate government under s. 3 of the Act, it is open to an Industrial Tribunal adjudicating an industrial dispute relating to wages payable to the employees in a scb;,duled employment to fix minimum wages at higher or lower rates, if the dispute was pending at the time of fixation of minimum wages under s. 3. [924 Gl . (ii) Minimum wages can provide not only for the sustenance of life, but also for the preservation of the efficiency of the worker. The rates of wages fixed by the tribunal ,were neither fair wages nor wages bordering on fair wages. They were minimum \vag25 as explained by this Court. As such the capacity of the industry to pay was not a r!levant consideration. [925 Fl
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[), Unichovi v. State of Kera/c. f.1962] 1 S.C.R. at p. 957, applied.
The tribunal' \Vas not \Nrong in taking into '3.Ccount the rates of minimum wages fixed in the several awards for the workmen employed in the city of Bombay as affording criteria for fixing minimum rates of 'wages with suitable modification for !\le workmen employed under the appellant ~~ CIVIL APPELLATE JURl@ICTION : Civil App~al No. 912 of 1967.
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JAYDIP INDUSTRIES v. WORKMEN (Mathew, J.) 921
A
Appeal by Special Leave from the Award dated March 3, 1967 of the Industrial Tribunal, Maharashtra, Bombay in Reference (IT) No. 1 of 1968.
I. N. Shroff, for the appellant.
B The Judgment of the Court was delivered by
Mathew, J. This appeal, by special leave. is from an award passed by the Industrial Tribunal, Maharashtra, Bombay, on March 3, 1967.
The Government of Maharashtra referred to the Tribunal c on December 31, 1965, under section lO(i) (d) of the Industrial Disputes Act, 1947, the industrial dispute between M/s. Jaydip Industries, Thana, and the workmen employed under them, ansing eut of the following demands macle by the workmen :-
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| Rs. | |
|---|---|
| Unskilled | 150-5.00-200.00 |
| Semi-skilled | 175-·7.50-250.00 |
| Skilled | 225-10.00-325.00 |
| Highly skilled | 350-25.00-600.00 |
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(1972] 2 S.C.R.
922
SUPREME COURT REPORTS
A
The employer is a partnership concern consisting of five partners and is carrying on the business of manufactur.ing "paper~ board" at its factory srtuated in Majiwada within the hmits of the panchdyat of that village. The partnership was started in the year 1959, on a capital of Rs. 1,50,000/-. The capital has since then b~n increased al).d it was Rs. 2 lakhs in 1965. The number of workmen ~mployed in the concern, at the time of the reference, was about 150. The workmen were being paid fixed consolidated wages.
The employer contended before the Tribunal, . by its written statement dated February 8, 1966, that it has no financial capachy to pay any additional wages, as it has been suffering heavy losse~ year after year.
During the pendency of the disputes before the Tribunal, the Government of Maharashtra fixed the minimum rates of wages for the· employees employed in scheduled employments including the paper and paper-board manufacturing industry under section 3 of the Minimum Wages Act, 1948, hereinafter called the Act, b!Y notification published in the Maharashtra Government Gazette dated August 4, 1966. In implementation of the notification, the wages of the workmen concerned were raised with. effect from October, 1966. The workmen were being paid wages at the following rates, before the date of the award, in pursuance of the notification :-
Unskilled Rs. 90 per month Semi-skilled Rs. 100 per month Skilled-B Rs. 115 per month Skilled-A Rs. 130 per month
The Tribunal considered in detail the financial capacity of the employer on the basis of the balance sheets and profit and loss accounts of the employer for the years 1960 to 1965 and found that its total loss for those years amounted to Rs. 78,000/ -, and on that basis its annual average loss worked out to Rs. 13,000 and so the concern was not financialiy stable. The Tribunal then came to the conclusion, on the basis of the minimum rates of wages fixed by it in the awards in the case bf Ml s. Kondivitta: Paper and Board Mills (Private) Limited, Bombay, published in Maharashtra Government Gazette, dated November 14, 1963, page 3 750), in the case of Bombay Metal Factory, published in the Maharashtra Government Gazette dated May 27, 1965 (page 1963), and in the case of Ratan Industries. Bombay, published
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JAYDIP INDUSTRIES v. WORKMEN (Mathew, l.)
923
A in Maharashtra Government Gazette dated June 23, 1966 (page 1974), that the rates of wages for the workmen employed in question should be fixed at the following rates:-
B
| Daily-rated | Mon:hly-r | att?d | |
|---|---|---|---|
| Unskilled | Rs.4·50 | Un-skilled | R;.117·00 |
| Semi-skilled | Rs.6·00 | Semi-skilled | Rs.156·00 |
| Skilled | Rs.7·50 | Skilled | Rs.195·00 |
| Highly-skilled | Rs.9·50 | Highly-skilled | Rs.247·00 |
and said that
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"The above wage rates shall be deemed to be fixed as at Bombay Consumer Price Lndex figure 660. For a rise of every ten points in the Index Figure the workmen shall be given an increase in the wages at foe rate of seven paise per day. And for a fall of every ten points in the Index Figure there shall be a reduction in the wages at the rate of seven paise per day."
The Tribunal also held that wages it fixed were the minimum rates of wages for t"e workmen in question and, therefore, the capacity of the employer to pay was irrelevant.
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It was argued for the appellant that the Tribunal was wrong in fixing minimum wages at higher rates than those fixed by the Government under section 3 of the Act without taking into account the financial capacity of the employer to pay. In other words, the argument was that when once the appropriate Government has fixed minimum rates of wages in the employment under section 3 of the Act, it was not open to the Tribunal to fix higher rates of wages as minimum wages and, therefore, the rates of wages fixed by the Tribunal were not minimum wages, but fair wages, or at any rate wages bordering on fair wages, and so, the financial capacity of the employer to bear the additional ourden should have been taken into account.
The short question for consideration, therefore, is whether the Tribunal was right in fixing wages at rates higher than the rates fixed by the Gover·nment under section 3 of the Act, and whether what was fixed by the Tribunal were minimum wages.
II
Section 3 ( I) of the Act provides that the appropriate Government may fix the minimum rates of wages payable to employees employed in employments specified in Part I or Part II of the Schedule thereof and in any employment added to either
[1972] 2 S.C.R.
SUPREME COURT REPORTS
924
A
part by notification under section 27. By clause (b) of section 3 ( 1), the appropriate Government is given power to review at such intervals as it may thLnk fit, such intervals not exceeding five years, the minimum rates of wages so fixed and revise the minimum rates, if necessary. Sub-section (2A) of section 3 provides :
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"(2A) -Where in respect of an industrial dispute relating to the rates of wages payable to any of the employees employed. in a scheduled employment, any proceeding is pending . before a Tribunal or National Tribunal under the Industrial Disputes Act, 194 7, or before any like authority under any other law for the time being in force, or an award made by a!Jy Tribunal, National Tribunal or such authority is in operation, and a notification fixing or revising 'the minimum rates of wages in respect of the scheduled employment is issued during the pendency of such proceeding or the operation of the award, then, notwithstanding anything contained in this Ac't, the minimum rates of wages so fixed or so revised shall not apply to those employees during the period in which the proceeding is pending and the award made therein is in operation, or, as the case may be, where the notification is issued during the period of operation of an award, during that period; and where such proceeding or awafd relates to the rates of wages payable to all the employees in the scheduted employment, no minimum rates of wages shall be fixed or revised in respect. oi that employment during the said period."
It is, therefore, clear that the minimum wage can provide ceedings before the Tribunal that the notification by the Maharashtra Government fixing minimum rates of wages came into operation. The sub-section would make it clear that even after the fixation of minimum rates of wages by the appropriate Government under section 3 of the Act, it is open to an Industrial Tribunal adjudicating an industrial dispute relating to wages payable to the employees in a scheduied employment to fix minimum wages at higher or lower rates, if the dispute was pending at the tirne of fixation of minimum wages under section 3 of the Act. So it was open to the Tritiunal to fix rates of minimum wages at rates higher than the rates fixed b{y 'the Government under section 3 of the Act. In other words the Tribunal was not bound by the fixation of the minimum rates of wa~es by the Government under the provisions of section 3 of the Act and could fix higher rates as minimum wages in its award.
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JAYDIP INDUSTRIES v. WORKMEN (MO!thew, J.)
925
A
In considering the question what are the component elements of minimum wages, this Court observed as follows in U. Unichoyi v. State of Kera/a(') :-
"Sometimes the minimum wage is described as a bare minimum wage in order to distinguish it from the B wage structure which is 'subsistence plus' or fair wage, but too much emphasis on the adjective 'bare' in rc:lation to the minimum wage is apt to lead to the erroneous assumption that the maintenance wage is a wage which enables the worker to cover his bare physical needs and keep himself just above starvation. That clearly is not c intended by the concep't of minimum wage. On the other hand, since the capacity of the employer to pay is treated as irrelevant, it is bµt right that no addition should be made to the cdmponents of the minimum wage which wol!ld take the minimum wage near the lower level of the fair wage, but the contents of this concept D must ensure for the employee not only his subsistence and that of his family but must also preserve his efficiency as a worker. The Act contemplates that minimum wage rates should be fixed in the scheduled industrial with the dual object of providing sustenance and maintenance of the worker and his family and E preserving his efficiency as a worker."
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It is, therefore, clear that the minimum wage can provide 1101 only for the bare sustenance of li(e but also for the preservation of the efficiency of the worker. We do not think that the rates of wages fixed by the Tribunal were fair wages or wages bordering on fair wages. The Tribunal has referred to the mini' mum rates of wages fixed in the several awards passed by it from 1962 onwards. and also considered the rise in the cost of living. In particular, the Tribunal was earful to take into account the Consumer Price Index for the month of December, 1966. and that for the month of January, 1967, for coming to the conclusion that rates higher than those specified in the notification published G by Government should be fixed as minimum wages. As the rates ~xed by the Tribunal were minimum rates of wages as explained m the case of U. Unichoy v. State of Kera/a('), we do not think that the capacity of the industry to pay was a relevant consideration.
There was also no material before the Tribunal to come to the H conclusion that the Government in fixing the miriimum rates of wages, took into consideration all the components in the fixation (!) [196') l S.C.R. 957.
[1972] 2 S.C.R.
Q26
SUPREME COURT REPORTS
A
of minimum wages as explained by this Court in U. Unichoyi v. State of Kera/a(1 ).
In the light of the provisions of section 3 ( 2A) of the Act, we hold that the Tribunal was not bound by the rates uf minimum wages fixed by the Government under section 3 of the Act. and that i_t was open to the Tribunal to fix rates of minimum wages to be paid to the workmen concerned in the disputes at figures higher than those fixed by the Government.
It was contended on behalf of the appellant that the employer has his place of business outside the city of Bombay and that in the city of Bombay, the. wages for workmen are generally higher than those outside the city, and therefore, the Tribunal went wrong in taking the minimum rates of wages fixed in the various awards for workmen in the city of Bombay as criteria for fixing the minimum wages for workmen outside the city. The Tribunal considered this question and held that the rates of minimum wages fixed by the Government for the city of Bombay, the town of Thana and also for the village of Majiwada, wher<!::the appellant's factory is situate, are the same and so, the rates of wages at Majiwada are not lower than the wage rates obtaining in the city of Bombav and Thana. We do not, therefore, think that the Tribunal \vent wrong in taking into account the rates of minimum wages fixed in the several awards for the workmen employed in the city of Bombay as affording criteria for fixing minimum rates of wages with suitable modification for the workmen employed under the appellant.
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We dismiss the appeal but, since there is no appearance for the respondent, we make no· order as to costs.
K.B.N.
Appeai dismissed.
(I) [1962] IS.CR. 957
2 issues framed by the court
Whether an Industrial Tribunal can fix minimum wages higher than those fixed by the Government under Section 3 of the Minimum Wages Act, 1948 when a dispute is pending.
Whether the Tribunal was correct in holding that the employer's financial capacity is irrelevant when fixing minimum wages.
Colour shows how this judgement treated each authority
Unichoyi v. State of KeralaApplied¶75
[1962] 1 S.C.R. at p. 957 · Who else cites this
M/s. Kondivitta: Paper and Board Mills (Private) LimitedReferred¶44
M/s. Kondivitta: Paper and Board Mills (Private) Limited
Bombay Metal FactoryReferred¶44
Bombay Metal Factory
Ratan Industries. BombayReferred¶44
Ratan Industries. Bombay
3 provisions across 2 enactments
Jaydip Industries
The Workmen
A. Vaiyalingam
K.K. Mathew
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
