HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. & OTHERS versus THE STATE OF HARYANA on 29 April 2019

SUPREME COURT REPORTS

[2019] 6 S.C.R.

AHINDUSTAN SANITARYWARE AND INDUSTRIESLTD. & OTHERS

v.

THE STATE OF HARYANA

B

(Civil Appeal No. 2539 OF 2010)

APRIL 29, 2019

[L. NAGESWARA RAO AND M.R. SHAH, JJ.]

Minimum Wages Act, 1948: s. 5(2) – Fixing or revising theCminimum rates of wages – Issuance of Notification dated 27.06.2007and 21.10.2015 by the State Government fixing/revising the minimumrates of wages in respect of different scheduled employments asmentioned in the schedule therein wef 01.07.2007 and 01.11.2015respectively – Writ Petition challenging the Notifications – Dismissedby the High Court – On appeal, held: Jurisdiction is conferred byDthe Act on the Government to fix/revise the minimum rate of wagesnotwithstanding the contract – Categorization of unskilled employeesas semi-skilled and semi-skilled as skilled on the basis of theirexperience is beyond the jurisdiction of the Government –Prohibition of segregation of wages into components in the form ofEallowances in the Notification is impermissible – Security inspector/security officer/ security supervisor cannot be included in theNotification – Trainees who are employed without payment of anyreward would not be covered by the Notification – Fixing the trainingperiod for one year is beyond the jurisdiction of the Government –Conclusion in respect of some parts of the Notification would notFaffect the Notification as such.

Allowing the appeals, the Court

HELD: 1.1 The appropriate government is empowered bySection 3 of the Minimum Wages Act, 1948 to fix the minimumGrates of wages payable to the employees employed in anemployment specified in Part I and Part I (b) of the Schedule.The procedure for fixing or revising the minimum rate of wagesis dealt with in Section 5 of the Act. After following the procedureprescribed under Section 5, the appropriate government can fix/revise the minimum rates of wages and issue notification to thatH

effect. An obligation is imposed on the employer by Section 12 ofthe Act to pay to every employee engaged in a scheduledemployment wages at a rate not less than the minimum rates ofwages fixed by the notification issued under Section 5 of the Act.[Paras 10, 11][1097-F; 1098-C-D]

1.2 There is no power vested in the Government by theAct to make alterations to the terms of a contract. Jurisdiction isconferred by the Act on the Government to fix/revise theminimum rate of wages notwithstanding the contract. TheNotification dated 21.10.2015 postulates that unskilled employeeshaving five years experience would be deemed categorized assemi-skilled “A”; that after three years of experience in semi-skilled “A”, the employees would be deemed categorized assemi-skilled “B”; that after three years of experience in skilled“A”, the employees would be deemed categorized as skilled “B”.Such categorization or classification by deeming workmen in onecategory to belong to another category is in direct contraventionof the contract between the employer and the employee and isbeyond the jurisdiction of the Government. Inclusion of Securityinspector/ Security officer/ Supervisor in the table “Minimumrates of wages in respect of all scheduled employment” in theNotification is ultra vires the provisions of the Act. They do notfall within the definition of “employee’ in s. 2(i) as they do notdischarge any skilled or unskilled, manual or clerical work.Similarly, not all trainees can be included in the Notification.Trainees who receive wages during the period of training wouldfall under the definition of “employee” as has been fairly admittedby the appellants. Only a person who is employed for “hire orreward” will fall under the definition of “employee”. The traineeswho are not paid wages cannot be included in the notification andthe fixation of minimum wages for such trainees at 75% is alsonot valid. The minimum wages fixed for trainees who are appointedfor reward is not interfered with. The period of training to beundergone by a trainee would depend upon the contract betweenthe employer and the employee. There is no power vested in theGovernment under the Act to decide the period of training andany stipulation with regard to the training period is ultra vires.[Para 13][1101-B-H; 1102-A-B]

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A1.3 The word “employee” as defined in the Act means anyperson who is employed for hire or reward in a scheduledemployment. There is no distinction made between a personemployed by the principal employer and a person employedthrough a contractor. Any person who employs, whether directlyor through any other person, one or more employees in aBscheduled employment falls within the definition of an “employer”.A close scrutiny of the definitions of the employer and theemployee would bring the workmen employed through thecontractors within the purview of the Act. It cannot be said thatthe contract workmen are not covered under the Act.C[Para 14][1102-B-C]

1.4 “Wages” is defined in s. 2(h) to mean all remuneration,capable of being expressed in terms of money, which would, ifthe terms of the contract of the employment, express or impliedwere fulfilled, be payable to a person in respect of his employmentDor of work done in such employment and includes house rentallowance. There are four exclusions in the definition relating totravelling allowance, value of housing accommodation, supply oflight, water, medical attendance, etc. If certain components ofthe remuneration are taken care of by the employer, he cannotbe asked to pay twice over such allowance/ payments which areEpart of the remuneration. Therefore, the prohibition onsegregation of the wages into components under the notificationis not a valid exercise of power. [Para 16][1102-F-G; 1103-A]

1.5 The prohibition of segregation of wages into componentsin the form of allowances in the Notification is impermissible.FThe security inspector/ security officer/ security supervisor cannotbe included in the Notification. Trainees who are employed withoutpayment of any reward cannot be covered by the Notification.Categorization of unskilled employees as semi-skilled and semi-skilled as skilled on the basis of their experience is ultra vires.GFixing the training period for one year is beyond the jurisdictionof the Government.” [Para 18][1103-D-F]

1.6 The conclusion in respect of some parts of theNotification would not affect the Notifications as such. The part H

HINDUSTAN SANITARYWARE AND INDUSTRIES LTD.v.STATE OF HARYANA

of the Notifications other than that which are dealt with by thisjudgment shall continue to be in force. The employers shall notbe entitled to recover any amounts paid under the Notificationsto the workmen on the ground that they have succeeded in thiscase. The workmen are not precluded from seeking redressal oftheir grievances by resorting to other remedies available to themunder law. [Para 17][1103-B-C]

Apparel Exporters & Manufacturers Association v. Stateof Haryana CWP No.9942 of 2007 dated 06.09.2007;Bidi, Bidi Leaves and Tobacco Merchants’ Associationv. State of Bombay [1962] 1 Supp l. SCR 381 ; HaryanaUnrecognised Schools’ Association v. State of Haryana(1996) 4 SCC 225 : [1996] 1 Suppl. SCR 253 ;Airfreight Ltd. v. State of Karnataka (1999) 6 SCC567 : [1999] 1 Suppl. SCR 22 – referred to.

Case Law Reference

[1962] 1 Suppl. SCR 381referred toPara 7[1996] 1 Suppl. SCR 253referred toPara 7[1999] 1 Suppl. SCR 22referred toPara 15

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2539of 2010

From the Judgment and Order dated 06.09.2007 of the HighCourt of Punjab and Haryana at Chandigarh in Civil Writ PetitionNo. 11326 of 2007.

With

Civil Appeal No. 4454 of 2019.

Kailash Vasdev, Sr. Adv., Siddharth Dias, Umrao Singh Rawat,Sumer Singh Sandhu, Ms. Limayinla Jamir, Ms. Nayantara, Ms. V. D.Khanna, Harvinder Singh, Ms. Meera Mathur, Vishal Sharma, Advs.for the Appellants.

Dr. Monika Gusain, Kamal Mohan Gupta, Raj Singh Rana, PankajKumar Singh, Vishwa Pal Singh, Advs. for the Respondent.

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AThe Judgment of the Court was delivered by

L. NAGESWARA RAO, J.

CIVILAPPEALNo. 2539 of 2010

1. The Appellant filed a Writ Petition challenging the NotificationBdated 27.06.2007 issued under Section 5 (2) of the Minimum WagesAct, 1948 (hereinafter, “the Act”). The said Writ Petition was dismissedby the High Court. Aggrieved by the judgment of the High Court, theAppellant has approached this Court.

2. In exercise of the powers conferred by Section 5(2) of theCAct, the Finance Commissioner and Principal Secretary to the Governmentof Haryana, Labour Department issued a Notification on 27.06.2007fixing/revising the minimum rates of wages in respect of differentscheduled employments as mentioned in the schedule therein with effectfrom 01.07.2007. The relevant provisions of the Notification dated27.06.2007 are as under:D

· Unskilled employees having 10 years’ experience would bedeemed categorized as semi-skilled “A”.

· After 3 years of experience in semi-skilled “A”, theemployees would be deemed categorized as semi-skilled “B”.

· After 3 years of experience in skilled “A”, the employeeswould be deemed categorized as skilled “B”.

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Note:

F1. The minimum rates of wages being fixed/ revised are linkedwith Haryana State Working Consumer Price Index Number(base year 1972-73=100) with July 2007 as the base month.The rate of neutralization will be Rs.2.31 per point on therise or fall of the Consumer Price Index Number, adjustmentin wages shall be made six monthly i.e. 1[st] January and 1[st]GJuly, every year after taking into account the average rise orfall in the Haryana State Working Class Consumer Price IndexNumber half-yearly ending December and June respectively.

2. The minimum rates of wages being now fixed/ revised shallnot be affected as a result of the linkage as much as the wagesshall not fall below those being fixed/ revised now.

3 The wages of apprentices appointed under the ApprenticesAct, 1961 (52 of 1961), shall be regulated under the said Act.

4. There shall be no difference between the wages for menand women workers.

5. Where any of the above categories of workmen areengaged/ employed through a Contractor, the Occupier/ thePrincipal Employer shall be personally responsible forensuring the payment of the minimum rates of wages by theContractor.

6. If any category of workers employed in the employment isnot mentioned specifically by name, he/she shall not be paidless than the minimum wages fixed for similar category havingsame skill.

7. While calculating the per day wages, the monthly wagesshall be divided by 26 days but for deduction, if any, shall becalculated monthly wages divided by 30 days.

8. The categorization of employment in Brick Kiln is placedat Annexure-A.

9. Above rates are without food. Wherever food is givencustomarily, it shall be extra.

10. Trainees will be paid 75% of the wages applicable to thecategory but it will not be less than the Minimum Wages foran unskilled category of worker. The period of training willnot be more than one year.”

3. The above Appeal was taken up along with the other WritPetitions which were filed for the same relief. Without a detaileddiscussion on the issues which arose in the Writ Petition, the High Courtdismissed the Writ Petition by observing that the contention raised bythe Petitioners relating to classification was misconceived and that thetrainees would fall within the purview of the Act.

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1092SUPREME COURT REPORTS

ACivil Appeal No. 4454 of 2019

(Arising out of Special Leave Petition (Civil) No. 5832 of

Leave granted.

4. This Appeal by Special Leave is filed against the judgment ofthe High Court dated 18.08.2017 by which the Writ Petition filed by theAppellant questioning the Notification dated 21.10.2015 issued underSection 5(2) of the Act was dismissed.

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5. By a Notification dated 21.10.2015, the Labour Department ofCthe Government of Haryana revised the minimum rates of wages inrespect of different scheduled employments as mentioned in theschedules therein with effect from 01.11.2015. It is necessary toreproduce the relevant portion of the Notification dated 21.10.2015 whichis as follows:

D“Unskilled employees having five years experience would bedeemed categorized as semi skilled “A”.

After 3 years of experience in semi skilled “A” the employeeswould be deemed categorized as skilled “B”

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Notes:

1. The minimum rates of wages notified herein above are basicrates of minimum wages which are not permitted to beFsegregated into components in the form of allowances by theemployer. The minimum rates of wages being fixed/ revisedare linked with Haryana State Working Class Consumer PriceIndex number (base year 1972-73=100) with July 2015, asthe base month. There shall be 100% neutralization of therise or fall of the consumer price index number on pro rataGbasis; the adjustment in wages shall be made six monthly i.e.on 1[st] January and 1[st] July every year, after taking intoaccount the average rise or fall in the Haryana State WorkingClass Consumer Price Index half yearly ending Decemberand June respectively.

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2. The minimum rates of wages now being fixed/ revised shallnot be affected as a result of the linkage as much as the wagesshall not fall below those being fixed/ revised now.

3. The wages of apprentices appointed under the ApprenticesAct, 1961 (52 of 1961), shall be regulated under the said Act.

4. There shall be no difference between the wages for menand women.

5. Where any of the above categories of workmen areengaged/ employed through a contractor, the occupier/ theprincipal employer shall be personally responsible forensuring the payment of the minimum rates of wages by thecontractor.

6. If any category of workers employed in the employment isnot mentioned specifically by name, he/she shall not be paidless than the minimum wages fixed for similar category havingsame skills.

7. While calculating the per day wages, the monthly wagesshall be divided by 26 days but for deduction, if any, shall becalculated as monthly wages divided by 30 days.

8. The categorization of employment in Brik Kiln is placedabove at Annexure-A.

9. Above rates do not include food charges. Wherever foodis given customarily, it shall be extra.

10. Trainees shall be paid 75% of the wages applicable tothe category, but it shall not be less than the Minimum Wagesfor an unskilled category of worker because an unskilledworker does not require any training. The period of trainingshall not be more than one year.

6. It was submitted on behalf of the Appellant before the HighCourt that segregation of wages into components in the form ofallowances was permissible. The further contention of the Appellantbefore the High Court was that Note 10 of the Notification which fixedthe minimum wages for trainees at 75% of the wages applicable to thatcategory and also limited period of such training to one year was ultravires the Act. The provision for categorization of unskilled employees as A

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Asemi-skilled and of semi-skilled employees as skilled on their acquiringexperience of a certain number of years was stated to be beyond thejurisdiction of the Government. Inclusion of Domestic Workers andSafai Karamcharis in the list of scheduled employment at Serial Numbers49 and 50 was also in challenge in the Writ Petition. The High Courtrejected the submission of the Appellants that there is prohibition ofBsegregation of wages into components in the form of allowances. Thechallenge to 100% neutralization was also not accepted by the HighCourt. The Act was held to be applicable to the trainees by the impugnedjudgment. Insofar as the categorization of workers was concerned, theHigh Court was of the opinion that the categorization was justified andCindeed necessary as the workmen were continued with their grades fora long number of years which resulted in stagnation. The contention ofthe Appellants that Domestic Workers and Safai Karamcharis could nothave been included in the list of scheduled employment at Serial Numbers49 and 50 was accepted by the High Court. In view of the aforesaidfindings, the High Court concluded that Notes 1, 9 and 10 of theDNotification dated 21.10.2015 were legal and valid. It is relevant tomention that the High Court relied upon the judgment of a Division Benchin Writ Petition (Civil) No.11326 of 2007[1] in support of its findings.

7. Mr. Kailash Vasdev, learned Senior Counsel appearing for theAppellants in Civil Appeal No. 2539 of 2010 submitted that theEclassification of workmen by the Notification dated 27.06.2007 amountsto an interference with the promotion policy of the Appellant which isbeyond the jurisdiction of the Government under the Act. He stated thatthe Government does not have the power to alter the conditions of service,contract or settlement between the employer and the employee. HeFreferred to a settlement between employees and the employer whichspecifies the regulation of wages. Mr. Vasdev argued that the HighCourt erred in not realizing the difference between a fair wage, a livingwage, and a minimum wage. He relied upon a judgment of this Court inBidi, Bidi Leaves and Tobacco Merchants’ Association v. State of

Bombay[2] in support of his submission that the power that is conferredGon the Government was only to deal with fixation and revision of wagesand not to interfere with the contractual rights and obligations. Mr.Harvinder Singh, learned counsel appearing for the Petitioner in Civil 1 Apparel Exporters & Manufacturers Association vs. State of Haryana - CWP No.9942 of 2007 dated 06.09.2007H2 1962 Supp (1) SCR 381

Appeal @ SLP (Civil) No.5832 of 2018 submitted that the Petitioner hasa grievance only regarding some portions of the Notification dated21.10.2015. His first objection to the Notification was relating to therevision of minimum rates of wages for Security inspector/ Securityofficer/ Supervisor by relying upon the definition of “employee” in Section2(i) of the Act. He submitted that Security inspector/ Security officer/Supervisors will not fall within the purview of the definition and hence,the State Government did not have the power to fix/ revise the minimumwages for the said categories. Similarly, the learned counsel submittedthat trainees cannot be brought within the purview of the Act as theyalso do not fall within the definition of “employee” under Section 2(i) ofthe Act as all the trainees are not employed for hire or reward. Thelearned counsel relied upon a judgment of this Court in HaryanaUnrecognised Schools’ Association v. State of Haryana[3] in which itwas held that teachers working in an educational institution cannot beheld to be discharging either skilled or unskilled or manual or clericalwork and as such they did not fall within the scope of “employee” underSection 2(i) of the Act. Mr. Singh submitted that the Government didnot have the power to place a restriction on the period of training whichaccording to the Notification cannot be more than one year. He furtherargued that the classification of employees was totally impermissible.He also submitted that different minimum rates of wages cannot befixed for the same class of work in the same scheduled employment.By the deemed categorization of an unskilled employee as a semi-skilledemployee after five years experience, the Government fixed higherminimum rate of wages for worker who has completed five years thoughhe continued to work as an unskilled employee. This would amount tohigher minimum wages being paid for a worker in the lower category onthe basis of deemed classification. He further submitted that theprohibition of segregation into components in the form of allowanceswas beyond the competence of the Government. By referring to Section2(h) of the Act which defines wages, the learned counsel for the Appellantsubmitted that the very definition of wages means all other remunerationin accordance with the terms of contract or employment. According toMr. Singh, there is no concept of basic rate of minimum wages. Hefurther argued that the concept of principal employer and contractor isforeign to the Act and the occupier/the principal employer cannot be AB

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Amade responsible for the payment of minimum rate of wages to a contractlabour. Allegations of exploitation of workmen by the employers cannotbe a ground for issuance of a notification under Section 5 of the Act ifthe Government lacks the jurisdiction.

8. Dr. Monika Gusain, learned counsel appearing for the State ofBHaryana referred to Article 43 of the Constitution of India to submit thatit is the duty of the State to secure a living wage to all workers. Shesubmitted that the Notifications were issued on the basis ofrecommendations made by an Advisory Committee after consultationswith the employers and the workmen. Splitting of the minimum wagesinto components is permissible as there is no prohibition in the Act. SheCcontended that the deemed promotion of an unskilled worker to a semi-skilled worker and a semi-skilled worker to a skilled worker, based onexperience, is only for the purpose of entitling them with the next gradeof minimum wages which cannot be construed as a deemed promotionor classification. Dr. Gusain stated that it has come to the notice of theDGovernment that trainees were not being paid even the minimum wagesapplicable to an unskilled workmen for which reason it was decided thattrainees should be protected. The learned counsel for the State ofHaryana defended the Notifications dated 27.06.2007 and 21.10.2015on the ground that they were issued to protect the fundamental rights ofthe workers. She also argued that the Appellants have not producedEany material to show the loss caused to them by the Notification, andhence, the judgment of the High Court does not warrant interference.

9. At this stage, it is necessary to refer to the relevant provisionsof the Act. “Wages” and “Employee” have been defined in Section 2(h)and 2(i) of the Act which reads as under:F

“2(h) “wages” means all remuneration, capable of beingexpressed in terms of money, which would, if the terms of thecontract of employment, express or implied, were fulfilled, bepayable to a person employed in respect of his employmentor of work done in such employment, [and includes houseGrent allowance], but does not include—

(i) the value of—

(a) any house-accommodation, supply of light, water, medicalattendance, or H

(b) any other amenity or any service excluded by general orspecial order of the appropriate Government;

(ii) any contribution paid by the employer to any PensionFund or Provident Fund or under any scheme of socialinsurance;

(iii) any travelling allowance or the value of any travellingconcession;

(iv) any sum paid to the person employed to defray specialexpenses entailed on him by the nature of his employment; or

(v) any gratuity payable on discharge;

2(i) “employee” means any person who is employed for hireor reward to do any work, skilled or unskilled, manual orclerical, in a scheduled employment in respect of whichminimum rates of wages have been fixed; and includes anout-worker to whom any articles or materials are given outby another person to be made up, cleaned, washed, altered,ornamented, finished, repaired, adapted or otherwiseprocessed for sale for the purposes of the trade or businessof that other person where the process is to be carried outeither in the home of the out-worker or in some other premisesnot being premises under the control and management of thatother person; and also includes an employee declared to bean employee by the appropriate Government; but does notinclude any member of the Armed Forces of the [Union].”

10. The appropriate government is empowered by Section 3 ofthe Act to fix the minimum rates of wages payable to the employeesemployed in an employment specified in Part I and Part I (b) of theSchedule. Section 4 of the Act provides that the minimum rate of wagesfixed or revised under Section 3 may contain:

“(i) a basic rate of wages and a special allowance at a rateto be adjusted, at such intervals and in such manner as theappropriate Government may direct, to accord as nearly aspracticable with the variation in the cost of living indexnumber applicable to such workers (hereinafter referred toas the “cost of living allowance”); or A

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(ii) a basic rate of wages with or without the cost of livingallowance, and the cash value of the concessions in respectof supplies of essential commodities at concession rates, whereso authorised; or

(iii) an all-inclusive rate allowing for the basic rate, the costBof living allowance and the cash value of the concessions, ifany.”

11. The procedure for fixing or revising the minimum rate of wagesis dealt with in Section 5 of the Act. After following the procedureprescribed under Section 5, the appropriate government can fix/reviseCthe minimum rates of wages and issue notification to that effect. Anobligation is imposed on the employer by Section 12 of the Act to pay toevery employee engaged in a scheduled employment wages at a ratenot less than the minimum rates of wages fixed by the notification issuedunder Section 5 of the Act. The authority conferred on the Governmentin fixing or revising the minimum rate of wages under the relevantDprovisions of the Act was dealt with by this Court in Bidi, Bidi Leavesand Tobacco Merchants’ Association (supra). This Court held:

“What is the extent of the authority conferred on therespondent in fixing or revising minimum rates of wages underthe relevant provisions of the Act? In dealing with this questionwe must necessarily bear in mind the definition of the term“wages” prescribed by Section 2(h). As we have already seenthe term “wages” includes remuneration which would, if theterms of the contract of employment, express or implied, werefulfilled, be payable to a person employed in respect of hisemployment. In other words, the term “wages” refers toremuneration payable to the employee as a result of the termsof employment. What would be the amount to which theemployee is entitled if the other terms of the contract areperformed? That is the question which has to be asked indetermining what the term “wages” means under Section 2(h).No doubt Sections 3, 4 and 5 authorise the appropriateGovernment to fix the minimum rates of wages. In other words,if the wages fixed by a contract which is either express orimplied are found to be low, authority is conferred on theappropriate Government to increase them so as to bring them E

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HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. v.STATE OF HARYANA [L. NAGESWARA RAO, J.]

to the level of what the said Government regards as theminimum wages in the particular scheduled employment inthe particular area concerned. This means that power isconferred on the appropriate Government to modify one termof the contract express or implied between the employer andthe employee and that is a term which has reference to thepayment of wages. If for a certain piece of work done by theemployee the employer has agreed to pay him either expresslyor by implication a certain amount of wages the appropriateGovernment can issue a notification and prescribe that forthe said work done under the contract the employer must payhis employee a much higher rate of wages and the higherrate of wages thus prescribed would be deemed to be theminimum rate of wages between the parties.

It would, however, be noticed that in defining “wages”clause 2(h) postulates that they would be payable if the otherterms of the contract of employment are fulfilled. That is tosay, in authorising the fixation of minimum rates of wages theother terms of the contract of employment have always to befulfilled. The fulfilment of the others terms of the contract is acondition precedent for the payment of wages as definedunder Section 2(h) and it continues to be such a conditionprecedent even for the payment of the minimum rates of wagesfixed and prescribed by the appropriate Government. Thesignificance of the definition contained in Section 2(h) lies inthe fact that the rate of wages may be increased but no changecan be made in the other terms of the contract. In other words, the Act operated on the wages and does not operate on theother terms of the contract between the employer and theemployee. That is the basic approach which must be adoptedin determining the scope and effect of the powers conferredon the appropriate Government by the relevant provisions ofthe statute authorising it to prescribe minimum rates of wagesor to revise them. What the appropriate Government isauthorised to do is to prescribe, fix or revise wages and wagesare defined to be remuneration payable to the employees ifthe terms of the contract of employment, express or implied,were fulfilled. This definition runs, as it inevitably must, A

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Athrough the material provisions of the Act and its importancecannot therefore be ignored.”

12. The learned counsel for the Government of Haryana arguedthat the workmen are exploited by the employers and the notificationwas issued after taking into account the recommendations of the expertBbody to protect the interests of the workmen. The point raised by theAppellants pertains to the jurisdiction of the Government in the issuanceof the notification. The grievances of the workmen can be redressed byfora constituted under the Industrial Disputes Act, 1948 if the Governmentdoes not have the competence to deal with certain issues in the notificationunder the Act. In Bidi, Bidi Leaves and Tobacco Merchants’CAssociation (supra), Justice Gajendragadkar, observed :- “It is well settled that industrial adjudication under theprovisions of the Industrial Disputes Act 14 of 1947 is givenwide powers and jurisdiction to make appropriate awards indetermining industrial disputes brought before it. An awardmade in an industrial adjudication may impose newobligations on the employer in the interest of social justiceand with a view to secure peace and harmony between theemployer and his workmen and full co-operation betweenthem. Such an award may even alter the terms of employmentif it is thought fit and necessary to do so. In deciding industrialdisputes the jurisdiction of the tribunal is not confined to theadministration of justice in accordance with the law ofcontract. As Mukherjea, J., as he then was, has observed inBharat Bank Ltd., Delhi v. Employees of the Bharat BankLtd., Delhi the tribunal “can confer rights and privileges oneither party which it considers reasonable and proper, thoughthey may not be within the terms of any existing agreement. Ithas not merely to interpret or give effect to the contractualrights and obligations between them which it considersessential for keeping industrial peace”. Since the decision ofthe Federal Court in Western India Automobile Association v.Industrial Tribunal, Bombay , it has been repeatedly held thatthe jurisdiction of Industrial Tribunals is much wider and canbe reasonably exercised in deciding industrial disputes withthe object of keeping industrial peace and progress (Vide:Rohtas Industries, Ltd. v. Brijnandan Pandey, Patna Electric D

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Supply Co. Ltd., Patna v. Patna Electric Supply Workers’Union). Indeed, during the last ten years and more industrialadjudication in this country has made so much progress indetermining industrial disputes arising between industries ofdifferent kinds and their employees that the jurisdiction andauthority of Industrial Tribunals to deal with such disputeswith the object of ensuring social justice is no longer seriouslydisputed.”

13. There is no power vested in the Government by the Act tomake alterations to the terms of a contract. The Act only confersjurisdiction in Government to fix/revise the minimum rate of wagesnotwithstanding the contract. The Notification dated 21.10.2015postulates that unskilled employees having five years experience wouldbe deemed categorized as semi-skilled “A”; that after three years ofexperience in semi-skilled “A”, the employees would be deemedcategorized as semi-skilled “B”; that after three years of experience inskilled “A”, the employees would be deemed categorized as skilled “B”.Such categorization or classification by deeming workmen in one categoryto belong to another category is in direct contravention of the contractbetween the employer and the employee and is beyond the jurisdictionof the Government. Inclusion of Security inspector/ Security officer/Supervisor at Serial No.9 in the table “Minimum rates of wages in respectof all scheduled employment” in the Notification is ultra vires theprovisions of the Act. They do not fall within the definition of “employee’in Section 2(i) as they do not discharge any skilled or unskilled, manualor clerical work.[4] Similarly, not all trainees can be included in theNotification. Trainees who receive wages during the period of trainingwould fall under the definition of “employee” as has been fairly admittedby the learned counsel for the Appellants. It is the Appellant’s case thatsuch of those trainees who are not paid any wages cannot be included inthe notification. We are in agreement with the said submission as only aperson who is employed for “hire or reward” will fall under the definitionof “employee”. Consequent upon the above finding, the trainees whoare not paid wages cannot be included in the notification and the fixationof minimum wages for such trainees at 75% is also not valid. To makeit clear, the minimum wages fixed for trainees who are appointed forreward is not interfered with. The period of training to be undergone by 4 See: Haryana Unrecognized Schools Association (supra)

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Aa trainee would depend upon the contract between the employer and theemployee. There is no power vested in the Government under the Actto decide the period of training and any stipulation with regard to thetraining period is ultra vires.

14. The word “employee” as defined in the Act means any personBwho is employed for hire or reward in a scheduled employment. Thereis no distinction made between a person employed by the principalemployer and a person employed through a contractor. Any person whoemploys, whether directly or through any other person, one or moreemployees in a scheduled employment falls within the definition of an“employer”.[5] A close scrutiny of the definitions of the employer and theCemployee would bring the workmen employed through the contractorswithin the purview of the Act. We reject the submission made on behalfof the Appellants that the contract workmen are not covered under theAct.

15. The only point that remains to be considered is regarding theDsegregation of wages into components in the form of allowances. It isuseful to refer to the judgment of this Court in Airfreight Ltd. v. State ofKarnataka[6] in which this Court observed:

“20. … … … Once rates of minimum wages are prescribedunder the Act, whether as all-inclusive under Section 4(1)(iii)Eor by combining basic plus dearness allowance under Section4(1)(i), are not amenable to split up. It is one pay package.Neither the scheme nor any provision of the Act provides thatthe rates of minimum wages are to be split up on the basis ofthe cost of each of the necessities taken into considerationFfor fixing the same.”

16. “Wages” is defined in Section 2(h) to mean all remuneration,capable of being expressed in terms of money, which would, if the termsof the contract of the employment, express or implied were fulfilled, bepayable to a person in respect of his employment or of work done inGsuch employment and includes house rent allowance. There are fourexclusions in the definition relating to travelling allowance, value of housingaccommodation, supply of light, water, medical attendance, etc. If certaincomponents of the remuneration are taken care of by the employer, he 5 Section 2(e), Minimum Wages Act, 1948H6 (1999) 6 SCC 567

cannot be asked to pay twice over such allowance/ payments which arepart of the remuneration. Therefore, we are of the opinion that theprohibition on segregation of the wages into components under thenotification is not a valid exercise of power.

17. Our conclusion in respect of some parts of the Notificationwill not affect the Notifications as such. The part of the Notificationsother than that which are dealt with by this judgment shall continue to bein force. We make it clear that the employers shall not be entitled torecover any amounts paid under the Notifications to the workmen onthe ground that they have succeeded in this case. As the findings recordedin this judgment pertain to the jurisdiction of the Government under theAct, the workmen are not precluded from resorting to redressal of otherremedies regarding their grievances.

18. The upshot of the above discussion is :

“(a) The prohibition of segregation of wages into components inthe form of allowances in the Notification is impermissible; (b) The security inspector/ security officer/ security supervisorcannot be included in the Notification;

(c) Trainees who are employed without payment of any rewardcannot be covered by the Notification; (d) Categorization of unskilled employees as semi-skilled and semi-skilled as skilled on the basis of their experience is ultra vires.

(e) Fixing the training period for one year is beyond the jurisdictionof the Government.”

19. For the aforementioned reasons, the appeals are allowed.

Nidhi Jain

Appeals allowed.

A

B

C

D

E

F

G

H