U. Unichoyi And Others vs The State Of Kerala

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Petition No. 102 of 1958

Decision Date: 14 April, 1961

Coram: P.B. Gajendragadkar, A.K. Sarkar, K.N. Wanchoo, K.C. Das Gupta, N. Rajagopala Ayyangar

The matter titled U. Unichoyi and Others versus the State of Kerala was heard by the Supreme Court of India and the judgment was delivered on 14 April 1961. The judgment was authored by Justice P. B. Gajendragadkar, who sat with Justices A. K. Sarkar, K. N. Wanchoo, K. C. Das Gupta, and N. Rajagopala Ayyangar. The petitioners, who were representatives of certain tile factories, filed the petition under Article 32 of the Constitution of India seeking enforcement of fundamental rights. The State of Kerala was the respondent. The official citation of the decision is 1962 AIR 12 and 1962 SCR (1) 946, and the case appears in several subsequent law reports, including RF 1963 SC 806, RF 1967 SC 691, RF 1969 SC 182, RF 1970 SC 2042, R 1972 SC 605, R 1974 SC 526, D 1978 SC 1113, RF 1979 SC 25, and the relevant provisions of the Minimum Wages Act, 1948 (XI of 1948), Sections 5 and 9.

The petitioners challenged both the constitutional validity of the Minimum Wages Act, 1948 and the specific notification issued by the Kerala Government that fixed minimum wage rates for employment in the tile industry. The notification had been framed on the report of a committee constituted under the Act, a committee that included representatives of both employers and employees and whose recommendations the Government accepted. The petitioners argued that the notification did not merely prescribe a minimum wage but, in effect, fixed a “fair wage,” and that the committee and the Government had failed to consider the capacity of the employers to pay such rates; consequently they claimed the notification was void. The Court examined earlier decisions and held that the constitutional validity of the Minimum Wages Act could no longer be questioned. It further ruled that any difficulty an employer might experience in meeting the wage level, or any claim that the employer lacks the capacity to pay, is irrelevant to the determination of the minimum wage. The Court referred to the decisions in Edward Mills Co. Ltd. v. State of Ajmer [1955] 1 SCR 735, Bijay Cotton Mills Ltd. v. State of Ajmer [1955] 1 SCR 752, and Crown Aluminium Works v. Their Workmen [1958] SCR 651, emphasizing that while the minimum wage must not be reduced to the lower bound of a “fair wage,” it must nonetheless secure the sustenance of the employee and his family and preserve his efficiency as a worker. The Court rejected the view that the minimum wage is merely the amount needed for a worker’s physical needs and to keep him above starvation, and cautioned against treating the Minimum Wages Act as analogous to a statute that sets a “fair wage” standard requiring consideration of employer solvency. The Court also cited Express Newspapers (P.) Ltd. v. Union of India [1959] SCR in support of its reasoning.

The Court explained that it would normally decline to examine the substantive merits of a wage structure that has been established through a Notification issued on the basis of a committee’s recommendations and agreed to by representatives of both employers and employees. The Court observed that the existence of lower wages in other industries within the same State or in comparable concerns in other States does not automatically demonstrate that the rates set by the Notification are unduly high. It further held that a Notification made under the Minimum Wages Act must be applicable uniformly to every factory in the State, and that the State may not permit or be associated with any deviation from that uniform application, because such a deviation would constitute a violation of sections twenty‑two and twenty‑five of the Act. The Court added that, if a departure from the prescribed rates were deemed necessary, the correct procedure would be either to withdraw the Notification for the specific area concerned or to reconsider and modify the rates accordingly.

The case was instituted as an original jurisdiction petition, numbered one hundred and two of 1958, filed under article thirty‑two of the Constitution of India for the enforcement of fundamental rights. Counsel for the petitioners and respondents were respectively appointed, and the matter was heard on the fourteenth of April, 1961. Justice Gajendragadkar delivered the judgment of the Court. The Government of Kerala had, exercising the powers conferred by clause (a) of sub‑section (1) of section five of the Minimum Wages Act, 1948, constituted a Committee of eight members under section nine of the Act to conduct inquiries and advise the Government on fixing minimum wage rates for employment in the tile industry. A notification announcing the formation of this Committee was published on the fourteenth of August, 1957. The Committee submitted its report on the thirtieth of March, 1958, after which the Government of Kerala considered the findings and issued a further notification on the twelfth of May, 1958, prescribing the minimum wage rates listed in an annexed schedule. This second Notification was stipulated to become effective on the twenty‑sixth of May, 1958. On that same day, nine petitioners representing six tile factories located in Feroke, Kozhikode District, filed the petition challenging both the constitutionality of the Minimum Wages Act and the validity of the Notification issued by the Government of Kerala. The State of Kerala was impleaded as the respondent. The petitioners asserted that the wages prescribed by the Notification were substantially higher than what could be considered genuine minimum wages and contended that the employers’ capacity to pay had not been taken into account before the rates were fixed. They claimed that because the Committee and the Government had omitted this essential consideration, the Notification was ultra vires and therefore inoperative. The petitioners further maintained that the financial burden imposed by the Notification exceeded the overall capacity of the tile industry as well as the individual capacity of the petitioning factories, an assertion illustrated by the fact that nearly sixty‑two tile factories in Trichur had closed soon after the Notification’s publication.

In the petition, the claimants pointed out that several tile factories in Trichur ceased operations shortly after the notification had been published. They sought to invalidate the Act on a number of grounds enumerated in clauses (a) to (g) of paragraph twenty‑one of the petition. Their first contention was that the Act failed to define the components of a minimum wage, thereby granting the appropriate Governments unfettered discretion to impose unreasonable restrictions on employers. They argued that such arbitrary power contravened article nineteen sub‑paragraph one g of the Constitution. The petitioners further asserted that because the Act empowered the fixation of a wage that could cripple or destroy an industry, the provision could not be described as reasonable and therefore lay beyond the scope of article nineteen sub‑paragraphs one and six of the Constitution.

The petitioners also maintained that the Act did not prescribe any reasonable procedure for imposing restrictions through the fixation of a minimum wage, and consequently permitted any method, even those that might breach the principles of natural justice. They alleged that the Act was discriminatory in effect, because it subjected certain industries to this arbitrary procedure for fixing minimum wages while leaving other industries to the more orderly and regulated scheme provided by the Industrial Disputes Act. For these reasons, the petitioners challenged the validity of both the Act and the notification. They further claimed that the notification, in practice, fixed a “fair wage” rather than a minimum wage, and that it was essential to consider the employers’ capacity to bear the proposed burden. The failure to take this essential factor into account, they argued, rendered the notification void.

The respondent addressed each of these allegations. It contended that the validity of the Act could no longer be questioned because the question had already been settled by earlier decisions of this Court. It argued that the purpose of the notification was solely to fix a minimum wage and nothing more, making the employer’s capacity to pay irrelevant. The respondent cited established jurisprudence holding that, when fixing a minimum wage, the employer’s capacity to pay need not be considered, and that an employer who cannot meet the prescribed minimum wage has no right to continue his industry. It also observed that out of eighteen factories in Feroke, only six had approached this Court, suggesting that the petitioners’ grievance that the wage rates were beyond their capacity was neither genuine nor honest. Finally, the respondent emphasized that the Committee appointed by the State was a representative body, implying that its recommendations were made after careful consideration of relevant factors.

The Committee and its report indicated that the matter had been examined with great care. It was also submitted that the Committee’s report demonstrated that the question of the employers’ capacity to pay had not been disregarded, and that the impact of the minimum‑wage rates it proposed had been taken into account, leading the Committee to issue its recommendations on a regional basis. Regarding the shutdown of factories in Trichur, the respondent argued that those closures were not caused by the factories’ inability to meet the financial burden but were likely motivated by political considerations. The respondent further contended that, apart from a few factories in the Trichur area and one petitioner, all other factories in the State of Kerala had implemented the notification without raising any objection or protest, and therefore the grievance asserted by the petitioners lacked substance. In brief, these were the contentions advanced by the respondent in response to the petitioners’ case. At this point, it was appropriate to refer briefly to the Committee’s report to understand how the Committee carried out its task and the character of its recommendations. The Committee was composed of eight members: three representatives of employers, three representatives of employees, and two independent members, namely Chairman Mr V R Pillai and Mr G S Pillai, the District Labour Officer. Chairman Mr Pillai held an M.A. and an M.Sc. in Economics from the University of London, served as a Professor of Economics at University College, Trivandrum, and possessed extensive experience, having served on several similar committees previously. The Committee dispatched a questionnaire to every tile factory in the State and to other interested parties, examined the replies received, personally inspected selected factories, recorded evidence from various associations representing tile manufacturers as well as from individual witnesses, and considered all facts it deemed relevant. The Committee’s report showed that, notwithstanding minor divergences recorded in a dissenting note filed by Mr K Subramonia Iyer and the subsequent response by Mr A Karunakaran, the Committee’s recommendations were unanimous. Consequently, the recommendations received the approval of both independent members and also secured the concurrence of the employer and employee representatives. The report was organized into five chapters: Chapter I dealt with the development of the tile industry in Kerala; Chapter II addressed the problem of standardisation within the tile industry; Chapter III examined wage‑structure issues on a regional basis; Chapter IV discussed the principles, procedures, and challenges of fixing a minimum wage; and Chapter V set out the Committee’s conclusions and recommendations. In dealing with

The Committee observed that wage rates prevailing in the tile factories of the State varied markedly from one centre to another. It explained that these variations were attributable in part to historical circumstances and in part to the differing economic conditions of the workers residing in those areas. The Committee further expressed the view that, because alternative employment opportunities were scarce and were largely confined to low‑paid agricultural work, the bargaining power of the workers had been consistently weak. Consequently, wages had tended to remain at a relatively low level. On the basis of this background, the Committee proceeded to examine the problem of fixing a minimum wage. It accepted the observation of the Fair Wages Committee that a minimum wage must not only meet the bare necessities of life but also preserve the efficiency of the workers. In order to determine the workers’ food needs, the Committee applied the three consumption‑unit system formulated by Dr. Aykroyd. It then adopted the assessment of the Planning Commission regarding the requirements of employees in the cotton‑textile sector and fixed the per‑capita consumption of the worker at eighteen yards per unit. The Committee also considered the housing requirement of the workers and, noting the absence of a specific family‑budget enquiry, held that the additional expenditures for fuel, lighting and other miscellaneous items should generally be fixed at twenty per cent of the total wage.

Being conscious that the problem had to be approached from the standpoint of the minimum needs of workers in order to maintain a subsistence standard, the Committee enumerated the items that formed those needs. The list included food, clothing, fuel, lighting and other miscellaneous expenditures, the latter category further comprising rent, education, medical aid and entertainment. On this basis the Committee prepared a weekly food budget for the employee, added the estimated cost of clothing and the miscellaneous items, and arrived at a total weekly expenditure of Rs 13.03 for food, Rs 1.15 for clothing and Rs 2.84 for miscellaneous items, giving a grand total of Rs 17.02 per week. Calculating on the basis of a six‑day work week, the Committee concluded that a worker should receive a minimum of Rs 2.67 per day in order to maintain a “subsistence plus” standard of living.

Having arrived at this determination of the minimum requirement, the Committee recommended that the basic minimum wage for an unskilled worker in the “A” region, namely Quilon and Feroke, be fixed at Re 1. With a cost‑of‑living index for the tile centres averaging four hundred, and with the minimum requirement of the workers calculated at Rs 2.67, this basic wage corresponded to a cost‑of‑living index number of one‑hundred‑and‑fifty. Regarding the dearness allowance, the Committee advised that it should be linked to the cost‑of‑living index and that it should be fixed in accordance with that index.

The Committee specified that the dearness allowance would be calculated at the rate of one naya paisa for every two points of the cost‑of‑living index that exceed two hundred. Consequently, when the cost‑of‑living index is four hundred, an unskilled worker would receive a basic wage of Re 1 and a dearness allowance of Re 1, resulting in a total wage of Rs 2. The Committee further observed that if the increase in the cost of living were to be fully offset, the worker should be entitled to a dearness allowance of Rs 1.67 naya paisa. However, the actual dearness allowance fixed is only Re 1, which represents roughly sixty per cent of the required increase—specifically, one hundred divided by one hundred sixty‑seven, or about 60 %. Hence, the neutralisation of the cost‑of‑living rise amounts to sixty per cent. Recognising that living conditions differ across regions, the Committee introduced five wage grades—A, B, C, D and E—to structure the wage system. It expressed the hope that these regional classifications would help backward areas improve production and marketing efficiency, eventually enabling them to pay wages comparable to those in more advanced regions. The notification issued by the Government follows substantially the Committee’s recommendations. It categorises employees engaged in the tile industry and assigns minimum wage rates under clauses A through E. Regarding dearness allowance, the notification states that a uniform flat rate shall be paid to all workers, irrespective of sex or grade, at the rate of one naya paisa for every two points by which the cost‑of‑living index exceeds two hundred in any given year. Thus, the notification seeks to prescribe the minimum wage rates applicable to the tile industry within the State, and the present petition challenges the validity of that notification. Before addressing the arguments presented by counsel for the petitioners, it is necessary to outline briefly the relevant provisions of the Minimum Wages Act, 1948, which was enacted to enable the fixation of minimum wage rates in specified employments. Section 3 empowers the appropriate Government to fix minimum rates of wages for the employments listed in the schedule and to review them at intervals prescribed under subsection (1). Subsection (3) of Section 3 provides that, in fixing or refixing minimum rates, different rates may be fixed for different scheduled employments, for different classes of work within the same scheduled employment, for adults, adolescents, children and apprentices, and for different localities. Section 4 allows a minimum rate of wages, once fixed or revised, to consist of a basic rate of wages together with a special allowance that may be adjusted, or a basic rate with or without a cost‑of‑living allowance and the cash value of concessions on essential commodities where authorized, or an all‑inclusive rate that incorporates the basic wage.

The Act allowed the cost of living allowance and, where applicable, the cash value of any concessions to be included in the minimum wage composition. Section 5 laid down the procedure for fixing and revising minimum wages. Under that provision, the respondent in the present matter appointed a Committee to carry out the required procedure. Section 9 prescribed the composition of such a Committee. It required that the Committee contain an equal number of representatives of employers and of employees, and that independent persons could be appointed, but their number could not exceed one‑third of the total membership of the Committee.

Section 12(1) imposed a duty on every employer to pay the minimum rates of wages that had been fixed under the Act. Section 22 dealt with penalties for offences, while Section 22A provided a general provision for the punishment of offences that were not specifically covered elsewhere in the statute. Section 25 declared that any contract or agreement, whether executed before the commencement of the Act or after it, which attempted to diminish an employee’s right to the prescribed minimum wage would be void to the extent that it sought to reduce that minimum rate.

Section 27 empowered the appropriate Government, after issuing the notification prescribed in the Act, to add any employment to either part of the wage schedule whenever it was of the Government’s opinion that a minimum rate should be fixed for that employment. Once such a notification was given, the schedule was deemed to be amended for the State concerned.

The validity of Section 27 was challenged in The Edward Mills Co. Ltd., Beawar & Ors. v. The State of Ajmer. The challengers argued that the provision amounted to an excessive delegation of legislative power because the Act did not lay down any guiding principles or standards to direct the administrative authority when exercising its discretion under Section 27. They contended that the provision left the entire decision‑making to the discretion of the appropriate Government, allowing it to amend the schedule in any manner it chose, thereby surrendering the essential legislative function to the executive.

The Court, speaking through Justice Mukherjea, rejected that contention. The learned Judge observed that the Legislature had clearly intended the Act to apply only to those industries where, because of unorganized labour, the absence of effective wage‑regulation mechanisms, or other similar causes, the wages of labourers were exceptionally low. He further noted that labour conditions varied widely from one circumstance to another and from one State to another. Accordingly, the decision to include a particular trade or industry in the schedule depended on a range of facts that were not uniform and could best be ascertained by a person charged with administering the matter in the specific State. Consequently, the Court concluded that by enacting Section 27 the Legislature had not relinquished its essential powers nor conferred upon the administrative authority anything more than an ancillary, subsidiary power necessary to achieve the purpose and policy of the Act.

The Court observed that the power exercised by the legislature in enacting the statutory provisions was a subordinate power, necessary to achieve the purpose and policy of the Act. In the same year, another challenge to the validity of the Act was presented in the case of Bijay Cotton Mills, Ltd. v. The State of Ajmer (1). In that proceeding the provisions of sections 3, 4 and 5 of the Act were contested on the ground that the restrictions they imposed upon the freedom of contract infringed the fundamental right guaranteed under Article 19(1)(g) of the Constitution. Justice Mukherjea, speaking for the Court, rejected the challenge. He held that the restrictions were imposed in the interest of the general public and to give effect to a directive principle of State policy embodied in Article 43, and therefore the impugned sections were saved by clause (6) of Article 19. While addressing the contention that employers might be unable to meet the burden of the minimum wage rates, the Court observed that employers could not be allowed to complain simply because they were compelled to pay the minimum wages fixed by the Act, even if the labourers, owing to poverty and helplessness, were willing to accept lower wages. The Court further explained that the difficulty faced by individual employers could not be a basis for declaring the law unreasonable, as such difficulty might arise from the prevailing economic conditions of the employers. Consequently, the decisions in these two cases firmly established the constitutionality of the Act, making it clear that the hardship or inability of individual employers to bear the minimum wage burden was irrelevant to the validity of the legislation. Justice Mukherjea also observed, in a separate passage, that the labourers should be secured adequate living wages; however, in the context of the judgment he was referring to the minimum wages contemplated by the Act, not to a broader concept of a living wage.

In light of these precedents, the Court declined to permit Mr. Nambiar to raise any further contentions against the validity of the Act. Although Mr. Nambiar attempted to argue that certain aspects on which he relied had not been duly considered by the Court in Bijay Cotton Mills Ltd. (1), the Court considered such an attempt futile, as the matter had already been conclusively decided by the Supreme Court. Accordingly, the Court proceeded to address the present petition on the basis that the Act under which the dispute arose remained valid and enforceable.

The Court observed that the Committee appointed under the Act and the notification it eventually issued are valid. It reiterated that the purpose of the Act is to prevent the exploitation of labour, a purpose that empowers the appropriate Government to prescribe minimum rates of wages in the scheduled industries, as noted in the decision reported in 1955 S.C.R. 752. In a less‑developed country confronting extensive unemployment, it is conceivable that workers might be willing to accept wages that amount to starvation. The policy of the Act therefore seeks to bar the employment of such sweated labour for the benefit of the public at large, and consequently the capacity of the employer is not to be taken into account when fixing the minimum wage rates. What the Act mandates are minimum wage rates that a welfare state expects every employer to pay before employing any labour, a principle that is not contested, for example in the case of Crown Aluminium Works v. Their Workmen. Accordingly, it becomes necessary to examine the components that constitute a minimum wage under the Act. The evidence placed before the Committee on Fair Wages revealed that a minority of witnesses regarded the minimum wage as simply the amount required to meet the basic physical needs of a worker and his family. In contrast, the overwhelming majority of witnesses held that a minimum wage must also cover additional essential requirements, such as a basic level of education, medical facilities and other amenities. The Committee therefore concluded that a minimum wage must not only secure the bare subsistence of life but also preserve the efficiency of the worker; consequently it must provide for some measure of education, medical needs and other amenities. This conception of the components of a minimum wage, as articulated by the Committee, has been widely accepted by industrial adjudication in the country. Occasionally the term “bare minimum wage” is used to differentiate it from a wage structure described as “subsistence plus” or “fair wage,” but excessive emphasis on the word “bare” can lead to the mistaken belief that a maintenance wage merely enables a worker to stay just above starvation. That is not the intended meaning of a minimum wage. Moreover, because the employer’s capacity to pay is treated as irrelevant, it is appropriate that no additional elements be added to the minimum wage that would bring it close to the lower end of a fair wage. Nevertheless, the components of the minimum wage must ensure not only the sustenance of the employee and his family but also the preservation of his efficiency as a worker. The Act envisions that the rates fixed in the scheduled industries serve the dual purpose of providing sustenance and maintaining the worker’s efficiency.

The Court recognised that the purpose of the minimum‑wage provision is to ensure maintenance of the worker and his family and to preserve his efficiency as a worker. Mr Nambiar argued that when a statute purports to prescribe a minimum wage, it is in fact directing the fixation of a statutory minimum wage, and therefore the capacity of employers to pay must be taken into account before fixing that wage. He maintained that the impugned notification expressly prescribes minimum‑wage rates for the tile industry in the State of Kerala, and that those rates do not represent merely the industrial and economic minimum understood in industrial adjudication. Rather, he said, they constitute a statutory minimum that may be fixed only after considering the employers’ ability to meet it. To support this position, Mr Nambiar relied heavily on observations made by this Court in Express Newspapers (Private) Ltd. v. The Union of India (1). The Court will now refer to those observations, but first it is necessary to recall the factual backdrop of that case. In Express Newspapers, the Court was addressing the problem of fixing wages for working journalists under section 9 of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 (45 of 1955). Section 9 required that, in fixing rates of wages for working journalists, the Board must have regard to the cost of living, the prevailing rates of wages for comparable employments, the circumstances relating to the newspaper industry in different regions of the country, and any other circumstance which the Board may deem relevant (see [1959] S.C.R. 12). The Court held that the wage structure contemplated by section 9 was not a minimum‑wage structure; it was a wage structure that the statute permitted to be prescribed after taking account of several relevant factors. The scheme of the Act showed that this structure was intended to be well beyond a mere minimum wage and was close to the concept of a fair wage. Consequently, the Court interpreted the phrase “any other circumstance” in section 9 to expressly include the capacity of the industry to bear the burden, making the Board bound to consider that factor when fixing the wage structure. The Court observed that the Board had failed to consider this important element, which introduced a fatal infirmity in its decisions. Hence, the wage structure under consideration in that case was not a minimum‑wage structure at all. It is essential to keep this distinction in mind while evaluating Mr Nambiar’s argument, which rests on certain observations made by this Court in that judgment. In that judgment, Justice Bhagwati, speaking for the Court, gave an elaborate discussion of the relevant principles.

In its analysis, the Court examined several aspects of the wage‑structure concept, including the idea of a minimum wage. The Court accepted, with approval, the conclusions drawn by the Fair Wage Committee regarding what constitutes a minimum wage. It then distinguished between a bare subsistence wage, which merely provides for basic survival, and a statutory minimum wage, which is the minimum amount prescribed by legislation and may be set higher than the bare subsistence level in order to accommodate certain standards of education, medical needs and other amenities. Following this distinction, the judgment turned to the notion of a fair wage and referred to the Minimum Wages Act, noting that the Act was enacted to provide for the fixation of minimum rates of wages in specified employments. Under section 3(3) of that Act, the appropriate Government was empowered to fix different minimum rates of wages. The Court observed that a bare subsistence or minimum wage would have to be fixed without regard to the capacity of the industry to pay, whereas the wage structure contemplated by the Act postulated that the capacity of the industry to pay must be taken into account, and that no wage fixation ignoring this essential factor could ever be supported. Mr Nambiar submitted that the latter part of the observation referred specifically to the statutory minimum wage and required that the industry’s capacity be considered before prescribing that wage. The Court did not find this argument persuasive.

The Court explained that, in drawing the distinction between a minimum wage fixed by industrial adjudication and a statutory minimum wage, it had made clear that the statutory minimum could be higher than the bare subsistence wage and was therefore a different kind of wage. The Court rejected the suggestion that the observation intended to establish a rule that an industrial adjudication could set a minimum wage without reference to the employer’s capacity, while a statute could not. Such a rule would be illogical and unreasonable. The passages relied upon by Mr Nambiar, the Court noted, did not support his assumption and were not meant to create any such principle. Moreover, the Court observed that numerous cases demonstrate that statutes may prescribe a minimum that is not merely an economic or industrial minimum but includes several components that bring the prescribed minimum close to the level of a fair wage. In such statutes, consideration of the employer’s capacity to pay may indeed be necessary. It was a statutory wage structure of this nature that the Court had addressed in the Express Newspapers (Private) Ltd. case, where section 9 authorized a wage structure well above the minimum‑wage level. Consequently, the Court concluded that the observations could not be divorced from the statutory context in which they were made.

In the matter of Express Newspapers (Private) Ltd. (1), the Court explained that section 9 of the relevant Act authorised the establishment of a wage structure that was substantially higher than the statutory minimum wage. Consequently, the observations made in the earlier judgment could not be separated from the statutory context in which they were delivered. For this reason, the Court expressed no hesitation in rejecting the contention that, because the Act merely prescribes minimum‑wage rates, the employer’s capacity to bear the higher wage structure must necessarily be taken into account. Accordingly, the challenge to the validity of the notification on the ground that it failed to consider the employer’s capacity was dismissed.

The Court then turned to the question of whether the notification actually set a wage structure above the proper minimum‑wage level. The Court noted that if the notification indeed established a wage structure that approached the fair‑wage level and thereby exceeded the minimum wage, such a situation would reveal a defect in the notification, since neither the Committee nor the Government appeared to have examined the employer’s ability to meet the higher burden. This line of attack was founded on two separate allegations. Counsel for the petitioner argued that, in computing the minimum‑wage rates, the Committee had incorporated an entertainment component, which the counsel characterised as clearly inadmissible. The counsel further asserted that the Committee had described the daily minimum of Rs 2.67 nP as intended to maintain a “subsistence‑plus” standard, thereby indicating that the proposed wage structure lay above the minimum and moved toward the lower end of a fair‑wage calculation. The Court was not persuaded by this argument. It recalled that, among the miscellaneous items added by the Committee, an amount of Rs 2.84 nP was included for rent, education, medical aid and entertainment. The first three items are admissible; therefore, the objection could only be directed at the entertainment component. Even assuming that the entertainment item were inadmissible, the Court observed that its contribution to the overall calculation would have been minimal, and thus the grievance based on its inclusion could not be exaggerated.

Two additional considerations were relevant. First, the amount the Committee labelled as the “subsistence‑plus” standard should, on its own calculations, represent a daily minimum of Rs 2.84 nP, not Rs 2.67 nP. The lower figure appears to be the result of a miscalculation, which leads to the safe inference that the sum representing the daily minimum for maintaining a “subsistence‑plus” standard does not, in fact, contain any amount attributable to entertainment. Second, the Court noted that it must be remembered that

The Court observed that the Committee’s ultimate recommendation was not the award of Rs 2.67 per day, which the Committee described as the “subsistence‑plus” standard, but rather an amount of Rs 2 per day. This finding demonstrated that the recommendation itself fell below the “subsistence‑plus” threshold. The Court added that even if the entire miscellaneous item were excluded from the calculation and the permissible items were limited to Rs 14.18 per day, the resulting daily minimum would still exceed Rs 2. Consequently, the Court concluded that it was impossible to accept any argument that the wage structure finally recommended by the Committee was higher than the minimum‑wage structure the Committee had originally envisaged. Accordingly, the Court was not prepared to hold that the notification, which adhered to the Committee’s recommendations, prescribed wage rates above the minimum‑wage structure. The Court further noted that the failure to consider the industry’s capacity to bear the burden could not render either the Committee’s recommendations or the subsequent notification infirm.

Mr Nambiar had sought to challenge the merits of the notification on the ground that the wage rates fixed by it were unduly high. To support this challenge, he relied on the minimum‑wage rates issued by the Madras Government in its notification dated 25 February 1952, as well as on the lower wage rates prevailing in other Kerala industries. He also referred to wage rates awarded by industrial adjudication and to claims made by employees, arguing that these indicated the notification’s rates exceeded the prescribed minimum wages. The Court found that it could not entertain this contention. It explained that the determination of minimum wages must necessarily consider a range of relevant factors, and that the legislature had entrusted this determination to the Committee constituted under the Act. Having already examined the Committee’s composition and briefly reviewed its report, the Court held that when a Committee comprising industry and employee representatives considers the problem, makes recommendations, and those recommendations are accepted by the Government, the Court ordinarily could not scrutinise the merits of either the recommendations or the final wage structure notified. The notification had accepted the Committee’s recommendations for categorising workers, a step that was overdue. The Court observed that lower wages paid in other Kerala industries or in comparable concerns in other states would have been material for the Committee to consider when formulating its recommendations.

In this case, the Court observed that in certain locations and certain industries labour continued to be employed on wages that were far below the minimum rates prescribed. The Court further noted that the Committee’s own report had stated that in Kerala the workers’ bargaining position had historically been very weak and that wages had consequently remained at a deplorably low level. Consequently, the Court held that the fact that lower wages were paid in other industries or in other places did not necessarily demonstrate that the rates fixed by the notification were excessively high. The Court explained that such considerations were ordinarily beyond its jurisdiction because it was not hearing an appeal against the Committee’s recommendations or the subsequent government notification. For that reason, the grievance raised by Mr Nambiar on the merits of the wage structure endorsed by the notification could not succeed. The Court, however, turned to another aspect of the matter. It observed that soon after the notification was issued, as many as sixty‑two tile factories in Trichur ceased operations, resulting in the loss of employment for nearly six thousand workers. To address the resulting deadlock, the respondent referred the industrial dispute arising between those factories and their employees to industrial adjudication (industrial dispute number 45 of 1958). An interim award was subsequently made, followed by a final award on 26 September 1960. Both awards stemmed from a settlement reached between the parties, and the tribunal’s order recorded that the respondent, acting through the Labour Minister, “left aside the prestige of the Government, came to the scene and effected a settlement.” Mr Nambiar strongly criticised the respondent’s conduct in allowing a departure from the notification with respect to the sixty‑two Trichur factories, contrary to the provisions of the Act, while insisting on the notification’s implementation in the rest of the State. He advanced a two‑fold argument. First, he contended that the settlement in Trichur demonstrated that the minimum wage prescribed by the notification exceeded the legally permissible minimum and was beyond the capacity of those factories, thereby supporting his claim that the rates were not truly minimum. The Court expressed that it was not persuaded by this argument. As previously observed, the Court would ordinarily refuse to examine the merits of the wage structure laid down in the notification. Moreover, the Court noted that the closure of the Trichur factories might have been due to difficulties in complying with the wage structure or might have arisen from reasons unrelated to industrial matters; the Court therefore declined to pass any opinion on that point as it was not before it, and consequently the settlement could not affect the present petition. Nevertheless, the Court recognised that Mr Nambiar’s second argument raised a serious question.

The Court observed that the notification was required to apply uniformly to every tile factory operating within the State. It noted that any violation of the provisions contained in that notification attracted a penal consequence under section 22 of the governing Act. Furthermore, the Court explained that any agreement or contract that was inconsistent with the terms of the notification would be rendered void pursuant to section 25 of the same Act. The Court expressed regret that the respondent, through its Labour Minister, appeared to have facilitated a settlement that was contrary to the statutory requirements. In the Court’s view, if the respondent believed that such a settlement was indispensable for the factories located in Trichur, it could contemplate withdrawing the notification as it applies to that particular region. The Court also suggested that the respondent should, in the interest of fairness, review the situation in all other regions of the State and determine whether any amendment to the notification might be necessary to address the broader problem.

The Court further held that it was inappropriate for the respondent to be, even indirectly, linked to a settlement that contravened the provisions of the Act. Accordingly, the Court advised the respondent to give serious and thoughtful consideration to this aspect of the matter and to act in a manner that would be regarded as just, reasonable and fair after an objective assessment of the entire issue. Consequently, the petition was dismissed in its entirety. No order as to costs was made, and the petition stood dismissed.