Andhra HC (Pre-Telangana)
Andhra Pradesh Hotels Association vs Government Of Andhra Pradesh And Anr. on 17 July, 2002
Equivalent citations: 2002(4)ALD545, 2002(5)ALT33, [2001(91)FLR717], (2002)IIILLJ623AP
JUDGMENT S.R. Nayak, J.
1. This writ appeal preferred by the unsuccessful writ petitioner is directed against the order of the learned single Judge dated 12.6.2001 made in WP No. 25172 of 2000. The petitioner filed the above writ petition for mandamus declaring G.O. Ms. No. 53 Labour, Employment, Training and Factories (Lab-II) Department dated 17-10-2000 issued by Government of Andhra Pradesh, the 1st respondent herein, as illegal, arbitrary and unconstitutional and to issue appropriate consequential directions to the respondents. The learned single Judge, by the order under appeal, has dismissed the writ petition.
2. The petitioner is the A.P. Hotels Association represented by its Secretary, G. V. Krishniah. The Government of Andhra Pradesh issued draft notification in G.O. Rt. No. 599 Labour, Employment, Training and Factories (Lab-II) Department dated 23-3-1999 published in the A.P. Gazette on 25-3-1999 proposing revision of minimum wages in the hotel industry under Section 5(2) of the Minimum Wages Act, 1948 (for short, the Act). The previous revision of minimum wages had taken place under G.O Ms. No. 89 dated 15-5-1991. The present revision was proposed by taking the cost of living index at 309 points (base year 1982 =100 series). It was also proposed that for any rise in cost of price index over the 309 points the cost of living allowance shall be paid as shown in the G.O. It was shown that Rs. 3/- shall be the cost of living allowance in respect of basic wage of Rs. 500/- whenever there is an increase of a point in the cost of living index above 309 points. It was also proposed that for the basic wage above Rs. 500/- the cost of living allowance shall be calculated at the rate of Rs. 0-25 ps. for every Rs. 50/- of the basic wage subject to an upper limit of Rs. 10-50 ps. for the basic wage of Rs. 2000/-. The employees were categorized into six categories, the post of Manager carrying a basic wage of Rs. 2376/-, Category A drawing basic wage of Rs. 1901/-, Category B drawing Rs. 1663/- Category C drawing Rs. 1496/-, Category D drawing Rs. 1426/- and Category E drawing Rs. 1320/-.
3. The petitioner-association submitted its objections on 21-7-1999 in writing to the Government raising various aspects to be considered by the Advisory Board before finalizing the wage revision. The Government of Andhra Pradesh, after having consulted the State Minimum Wages Advisory Board issued G.O.Ms. No. 53 Labour, Employment, Training and Factories (Lab-II) Department, dated 17-10-2000 in exercise of the powers conferred by Subsection (1) of Section 3 and Sub-section (2) of Section 5 of the Act revising the minimum wages in the Employment in Hotels, Restaurants and Eating Houses, Being aggrieved by the said Government Order, the petitioner-association filed the writ petition.
4. Although it was pleaded in the writ affidavit and contended before the learned single Judge that the difference between the basic wage fixed in the draft notification and the final notification in respect of several categories of employees in the Employment of Hotels, Restaurants and Eating Houses is very steep and high and, therefore, it is unreasonable, exorbitant and arbitrary, that contention was not pressed before us. Therefore, there is no necessity to deal with that contention. The other contention raised before the learned single Judge was that fixation of Variable Dearness Allowance (VDA) is only for the purpose of neutralizing the price rice on account of the increase in the Cost of Living Index (CLI) and the Government while revising the minimum wages can fix the VDA in such manner that the neutralization can be 100% but not more than that and in the instant case, the State Government has revised the minimum wages by prescribing the minimum wages at the Consumer Price Index of 411 points and, therefore, the VDA to be paid for further rise in the Consumer Price Index has to be fixed in the manner of neutralizing the effect of Consumer Price Index by 100 points only but not beyond that. It was contended that in the instant case, the Government has fixed the uniform rate of cost of living index at Rs. 10.25 ps. per point over and above 411 points for all categories of employees since the lowest category is also provided with the basic wage of Rs.2,020/-; the fixation of cost of living allowance at Rs. 10-50 per point is erroneous and on high side as the neutralization is clearly above 100%. In support of the above contention, the learned Counsel placed reliance on the Judgment of the Supreme Court in Management of Shri Chalthan Vibhag Khand Udyog Sahakari Mandli Limited v. G.S. Barot, . The learned single Judge rejected the above contention of the petitioner-association and dismissed the writ petition by observing as follows:
As rightly contended by the second respondent Union the decision relied on by the petitioner in Shri Chalthan Vibhag Khand Udyog Sahakari Mandali Limited case (supra) is not applicable to the facts and circumstances of the case as it relates to grant of clearness allowance in sugar factories of U.P. State. When the Labour Minister gave the award as a result of that award, an order was passed under Section 3(b) of the U.P. Industrial Disputes Act, 1947 by the Government of Uttar Pradesh. This order relating to U.P, Pattern of Pay, Graduated Dearness Allowance, Variable Dearness Allowance came into force from October 31, 1974. As the sugar factories were seasonal factories a retention allowance for unskilled seasonal workmen for off-season at the rate of 10% of the basic wage and dearness allowance payable during the crushing year 1974-75 was also provided for. The demand put forward by the workmen in all these appeals is for payment according to the U.P. Pattern. The purpose of grant of dearness allowance is to neutralize the increase in the cost of living due to rise in prices. Neutralization may be such as to neutralize fully the increase in cost of living or may be restricted to neutralize only a portion of the increase. Full or cent percent neutralization can be achieved if the increase in the cost of living is fully compensated so that the pay of the worker is not adversely affected. But an award of more than 100% of an increase in the cost of living would be more than neutralization and would in effect give the worker an increased wage. The result would be the worker would be getting an increased wage packet whenever there is a price rice a result which would not have been envisaged in making provision for grant of dearness allowance. In the present case, the issue involved is revision of minimum wages to the employees working in hotels, restaurants and eating houses as contemplated under the provisions of the Act. Wage includes basic pay and dearness allowance and the dearness allowance is one of the components of the sage. Therefore, I see no relevancy to apply the principle laid down in Shri Chalthan Vibhag Khand Udyog Sahakari Mandali Limited case (supra)."
5. We have heard Sri Vedula Srinivas, learned Counsel for the appellant, learned Government for Labour for first respondent and Sri G. Vidyasagar for the 2nd respondent-Union. The only contention of Sri V. Srinivas, learned Counsel for the appellant, is that the Government of Andhra Pradesh, in fixing the VDA exceeding 100% has exceeded its jurisdiction under Sections 3, 4 and 5 of the Act, In other words, according to the learned Counsel, under no circumstance, neutralization of VDA can be more than 100%. On the other hand, learned Government Pleader for Labour and Sri G. Vidyasagar, learned Counsel appearing for the 2nd respondent-Union supported the impugned notification.
6. Learned Government Pleader contended that the impugned G.O Ms. No. 53 dated 17-10-2000 revising the minimum wages has been issued strictly in accordance with Sections 3 and 4 of the Act duly following the procedure prescribed under section 5 of the Act and in consultation with the Advisory Board and also keeping in view the prevailing economic conditions, cost of living and nature of work. The learned Government Pleader contended that the difference of 309 points in draft notification and 411 points in final notification comes to 102 points and it constitutes increase of only 33% of VDA above the draft notification. Alternatively, the learned Government Pleader contended that even assuming that the neutralization rate is more than 100%, such a practice has been in vogue from the beginning and such practice, when assailed, has been upheld by this Court in Secunderabad Club v. State of A.P., 1996 (4) ALD 62 (DB).
7. Sri G. Vidyasagar, learned Counsel appearing for the 2nd respondent-Union contended that neutralization of 100% has no relevance while fixing minimum wages under the Act and, therefore, the ratio of the Judgment of the Supreme Court in the case of Shri Chalthan Vibhag Khand Udyog Sahakari Mandli Limited's case (supra) has no application to the facts of the present case. Sri G. Vidyasagar submitted that the cost of living allowance is part of the wage as prescribed under the Act. As per Section 4 of the Act, minimum wages consist of basic wages with or without cost of living and cash value of concessions. The Act also provides computation of cost of living allowance provided by the competent authority at intervals. The Government of Andhra Pradesh has been computing cost of living allowance at 6 monthly intervals. Sri Vidya Sagar submitted that the said cost of living allowance is applicable to all the scheduled appointments notified in the Act.
8. In the light of the above contentions of the learned Counsel for the parties, the only question that arises for our consideration and decision is whether neutralization of the VDA exceeded 100% and if it has exceeded whether it is in accordance with law.
9. With the advent of development of socio-economic culture and the concept of social justice, the basic features of wages have undergone progressive change. In the modern system of economy the concept of wages can never be absolute and shall have to be viewed comparatively. The periodical revision of minimum wages and wage structure is, therefore, absolutely necessary. That is why the Act does not define minimum wages. While a good deal of discussion could be found in different reports on what constitutes "subsistence wages", "minimum wages", "fair wages", and "living wages", a precise definition of any of the terms has not been found feasible and practicable and they have to be defined with reference to time and place and taking into account all relevant attendant factors and circumstances. In other words, they cannot be defined so as to applicable to all places and all times to come. The fixation of minimum wages is the first step to carry on wages to living wages, which is one of the "Directive Principles of State Policy". Article 43 of the Constitution lays down that "the State shall endeavour to secure, by suitable legislation or economic organization or in any other way, to all workers, agricultural, industrial or otherwise, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities ......." It is because of this that the Act authorizes the Central and the State Governments to fix minimum rates of wages and also to establish a machinery for the revision of such wages. So long as the stage of a living wage is not reached it would be the duty of the Government to continue its efforts in that direction.
10. The Constitution of India, inter alia, has solemnly resolved to secure economic justice to the people of India, and with that end in view has laid down certain Directive Principles to be observed in the governance of the country. The object of the Act is to provide social justice to the workmen employed in the scheduled employment by prescribing minimum rates of wages. The minimum rates of wages should be fixed in respect of scheduled employments keeping in twin objects of providing sustenance and maintenance of the worker and his family and preserving his efficiency as a worker in view. Though the Directive Principles of State Policy enshrined in the Constitution are not enforceable by any Court, it is the duty of the Slate to apply these principles in its governance which includes making laws also. According to Articles 38, 39(e), 42 and 43 of the Constitution, the State shall direct its policy towards securing, that the citizens have the right to an adequate means to livelihood, that there is equal pay for equal work for both men and women and that the health and strength of workers are not abused. The preamble of the Constitution coupled with the Directive Principles constitutes the conscience of the Constitution; in other words, the constitutional policy of the Republic of India. If the labourers are to be secured in the enjoyment of minimum wages and they are to be protected against exploitation by their employers, it is absolutely necessary that restraint should be imposed on the freedom of contract and such restrictions cannot, in any sense, be said to be unreasonable. The Act, it is held, is not repugnant to the provisions of the Constitution vis-a-vis the fundamental right to carry on any business. The restrictions imposed under the Act are reasonable and in public interest. The employers cannot be heard to complain if they are compelled to pay minimum wages, even though the labourers, on account of their poverty and helplessness or disabilities, are willing to work on lesser wages. According to the Universal Declaration of Human Rights everyone as a member of society has the right to social security and is entitled to realization, through national efforts and international co-operation and in accordance with the organization and resources of each State, of economic, social and cultural rights indispensable for one's dignity and the free development of one's personality. Likewise everyone has the right to a standard of living, adequate for the health and well-being of oneself, including food, clothing, housing and medical care and necessary social services and the right to security in the event of Unemployment, sickness, disability, widowhood, old age or other lack of livelihood or circumstances beyond one's control.
11. The concept of a minimum wage is a wage which is somewhat intermediate to a wage which is just sufficient for bare sustenance and a fair wage. The concept of minimum wage includes not only the wage sufficient to meet the bare sustenance of an employee and his family It also includes expenses necessary for his other primary needs such as medical expenses and education for his children etc. The concept of minimum wage is a dynamic concept and, therefore, is likely to undergo a change with the growth and development of economy and also with the change in the standard of living. It is not a static concept. Therefore its concomitants must necessarily increase with the progress of the society. It is likely to differ from place to place and from industry to industry. That is clear from the provisions of the Act itself and is inherent in the very concept of minimum wage.
12. In Workmen v. Reptakos Brett & Co., Ltd, , the Supreme Court observed that the following five norms for the fixation of minimum wage had been accepted by the Tripartite Committee of the Indian Labour Conference (held in New Delhi in 1957) and approved by the Supreme Court in Standard Vacuum Refining Co. of India v. Its Workmen, ; (i) In calculating the minimum wage, the standard working class family should be taken to consist of 3 consumption units for one earner, the earnings of women, children and adolescents should be disregarded; (ii) Minimum food requirement should be calculated on the basis of a net intake of calories, as recommended by Dr. Aykroyd for an average Indian adult of moderate activity; (iii) Clothing requirements should be estimated at per capita consumption of 18 yards per annum which would give for the average workers' family of four, a total of 72 yards; (iv) in respect of housing, the rent corresponding to the minimum area provided for under Government's Industrial Housing Scheme should be taken into consideration in fixing the minimum wage and (v) Fuel, lighting and other 'miscellaneous' items of expenditure should constitute 20 per cent of the total minimum wage. Keeping in view the socio-economic aspect of the wage structure, the Supreme Court observed that it was necessary to add the following additional component as a guide for fixing the minimum wage in the industry : (vi) children's education, medical requirement minimum recreation including festivals/ceremonies and provision for old age marriages etc., should further constitute 25 per cent of the total minimum wage."
The Supreme Court further observed :
"The wage structure which approximately answers the above six components is nothing more than a minimum wage at subsistence level. The employees are entitled to the minimum wage at all times and under all circumstances. An employer who cannot pay the minimum wage has no right to engage labour and no justification to run the industry".
In Express Newspapers (P) Ltd v. Union of India, , the Supreme Court considered the concept of 'minimum wage" as contained in the report of the Committee on Fair Wages, part of which runs as follows;
"As a rule, though the 'living wage' is the target, it has to be tempered even in advanced countries, by other considerations, particularly to general level of wages in other industries and the capacity of the industry to pay This view has been accepted by Bombay Textile Labour Enquiry Committee...."
Thereafter, the Supreme Court proceeded to observe :
"In India, however, the level of national income is so low at present that it is generally accepted that the country cannot afford to prescribe by law a minimum wage which would correspond to the concept of living wage.... We consider that a minimum wage must provide not merely for the bare sustenance of life but for the preservation of the efficiency of workers. For this purpose the minimum wage must also provide for some measure of education, medical requirements and amenities "
The Supreme Court added :
"There is also a distinction between a bare subsistence and statutory minimum wage. The former is a wage which would be sufficient to cover the bare minimum needs of a worker and his family, that is, a rate which has got to be paid to the worker irrespective of the capacity of the industry to pay. If an industry is unable to pay its workmen at least a bare minimum wage it has no right to exist....."
The Supreme Court further observed that the statutory minimum wage might be higher than the bare subsistence wage or minimum wage providing for measure of education, medical requirements and amenities as per connotation of 'minimum rate of wages' in Section 3 of the Act.
13. In Crown Aluminium Works v. Workmen, , the Supreme Court dealing with the problem of industrial adjudication dealt also incidentally with the Minimum Wages Act which it described as a piece of labour welfare legislation. The Supreme Court has observed :
"In India as well as in England and other democratic welfare states great inroad has been made on this view of the Common Law by labour welfare legislation such as the Minimum Wages' Act and the Industrial Disputes Act. With the emergence of the concept of a welfare state, collective bargaining between trade unions and capital has come into its own and has received statutory recognition; the state is no longer content to play the part of a passive onlooker in an industrial dispute.
The old principle of the absolute freedom of contract and the doctrine of laissez faire have yielded place to new principles of social welfare and common good. Labour naturally looks upon the constitution of wage structures as affording "a bulwark against the dangers of a depression, safeguard against unfair methods of competition between employers and a guaranty of wages necessary for the minimum requirements of employees".
It was further pointed out:
"There can be no doubt that in fixing wage structures in different industries, industrial adjudication attempts, gradually and by stages though it may be, to attain the principal objective of a welfare state, to secure "to all citizens justice social and economic". To the attainment of this ideal the Indian Constitution has given a place of pride and that is the basis of the new guiding principles of social welfare and common good".
To the same effect is the observation of K.S. Hegde. J., speaking for the Bench of the Supreme Court in the case of Chandra Bhavan Boarding and Lodging v. The State of Mysore, . While delivering the judgment of the Court, His Lordship pointed out:
"Freedom of trade does not mean freedom to exploit. The provisions of the Constitution are not erected as the barriers to progress. They provide a plan for orderly progress towards the social order contemplated by the preamble to the Constitution. They do not permit any kind of slavery, social, economic or political. It is a fallacy to think that under our Constitution there are only rights and no duties. While rights conferred under Part III are fundamental, the directives given under Part IV are fundamental in the governance of the country. We see no conflict on the whole between the provisions contained in Part III and Part IV. They are complimentary and supplementary to each other. The provisions of Part IV enable the legislatures and the Government to impose various duties on the citizens. The provisions therein are deliberately made elastic because the duties to be imposed on the citizens depend on the extent to which the directive principles are implemented. The mandate of the Constitution is to build a welfare society in which justice social, economical and political shall inform all institutions of our national life. The hopes and aspirations aroused by the Constitution will be belied if the minimum needs of the lowest of our citizens are not met."
Thus, it is quite clear that the object of the Act is to prevent the exploitation of the workers and for that purpose, it aims at fixation of minimum wages which the employers must pay. The Legislature undoubtedly intended to apply the Act to those industries or localities in which by reason of causes such as unorganized labour or absence of machinery for regulation of wages, the wages, paid to workers were, in the light of general level of wages, and subsistence level, inadequate.
14. A notification fixing minimum wages, in a country like ours where wages are already minimal should not be interfered with under Article 226 except on the most substantial of grounds. The Act is a social welfare legislation undertaken to further the Directive Principles of State Policy and action taken pursuant to it cannot be struck down on mere technicalities such as some irregularities in constitution of, or in procedure followed by, the committee appointed under Sections 5(1)(a) and 9. In Sree Kalyanarama Co. Mine v. Government of India, (1980) 56 FJR 79 (AP) (DB), the minimum wages notification was impugned, inter alia, on the ground that the increase in the minimum wages fixed by that notification as compared to the earlier one was disproportionate and highly unreasonable. Rejecting that plea, a Division Bench of this Court observed :
"...It is not competent for this Court to go into and say as to what is the minimum wages vis-a-vis a particular industry or for that matter, vis-a-vis a particular category of employees. It is well-settled that it is perfectly competent for the concerned authorities to fix the minimum wage if it is in compliance with statutory requirements."
15. The fixation of minimum rates of wages in respect of any Scheduled employment by the appropriate Government is an administrative act which is final and not subject to judicial review on the question of the quantum of wages fixed on humanitarian ground. The notification fixing the minimum wages can be interfered by the Court only where the fixation of minimum wages by the appropriate Government is ultra vires the Act.
16. In Kamani Metals & Alloys Ltd. v. Workmen, , the Supreme Court held:
"Broadly speaking the first principle is that there is a minimum wage which, in any event, must be paid, irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen on lower wages. The minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity."
17. In the case of U. Unichoyi v. State of Kerala, , the Supreme Court stated the purpose of the Act thus :-
"The Act purports to achieve is to prevent exploitation of labour and for that purpose authorises the appropriate Government to take steps to prescribe minimum rates of wages in the scheduled industries. In an underdeveloped country which faces the problem of unemployment on a very large scale it is not unlikely that labour may offer to work even on starvation wages. The policy of the Act is to prevent the employment of such sweated labour in the interest of general public and so in prescribing the minimum wage rates the capacity of the employer need not be considered. What is being prescribed is minimum wage rates which a welfare State assumes every employer must pay before he employs labour."
Further, in the same case, the Apex Court while considering the components of minimum wages in the context of the Act and after considering the evidence led before the Committee on Fair Wages in that case observed as under;
"The Committee came to the conclusion that a minimum wage must provide not merely for the bare subsistence of life but for the preservation of the efficiency of the worker, and so it must also provide for some measure of education, medical requirements and amenities. The concept about the components of the minimum wage thus enunciated by the Committee has been generally accepted by industrial adjudication in this country. Sometimes the minimum wage is described as a bare minimum wage in order to distinguish it from the wage structure which is 'subsistence plus' or fair wage, but too much emphasis on the adjective 'bare' in relation 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 intended by the concept of minimum wage. On the other hand since the capacity of the employer to pay is treated as irrelevant it is but right that no addition should be made to the components of the minimum wage which would take the minimum wage near the lower level of the fair wage, but the contents of this concept must ensure for the employee not only his sustenance 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 industries with the dual object of providing sustenance and maintenance of the worker and his family and preserving his efficiency as a worker."
Thus, it is well-settled that the notification fixing the minimum wages cannot lightly be interfered with by the High Court under Article 226 and that the High Court can interfere with such notification only where it finds the concerned appropriate Government has exceeded its jurisdiction and/or acted ultra vires the provisions of the Act.
18. Before considering the contention of Sri Srinivas, learned Counsel for the appellant-petitioner, it is necessary to refer to relevant statutory provisions.
19. The definition of the word "wages" and the manner prescribed under Sections 3 and 4 of the Act for fixing the wages would make it clear that "minimum wage" is one unit of fixed amount and for fixing the same, the authority is required to take into consideration various components of costs so that the worker gets minimum remuneration which can provide for sustenance and maintenance of the worker and his family and preserve his efficiency.
Section 2(h) defines "wages" as under:
"2. (h) 'wages' means all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes house rent allowance, but does not include--
(i) the value of--
(a) any house-accommodation, supply of light, water, medical attendance, or
(b) any other amenity or any service excluded by general or special order of the appropriate Government;
(ii) any contribution paid by the employer to any pension fund or provident fund or under any scheme of social insurance;
(iii) any travelling allowance or the value, ofany travelling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(v) any gratuity payable on discharge."
20. Section 3, inter alia, provides that the appropriate Government shall in the manner provided, fix the minimum rates of wages payable to the employees employed in any employment specified in Part I or in Part Ii of the Schedule and in an employment added to either part by a notification under Section 27 and the said minimum wages are required to be reviewed at such intervals as the appropriate Government may think fit, but it is required to be reviewed and revised within 5 years.
Section 4 of the Minimum Wages Act reads as follows :
"4. Minimum rate of wages.--(1) Any minimum rate of wages fixed or revised by the appropriate Government in respect of scheduled employments under Section 3 may consist of--
(i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the "cost of living allowance'); or
(ii) a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorised; or
(iii) an all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any (2) The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rates shall be computed by the competent authority at such intervals and in accordance with such directions as may be specified or given by the appropriate Government."
21. It is well-settled that minimum wage must provide not merely for the bare subsistence of life but for the preservation of the efficiency of the worker and so it must also provide for some measure of education, medical requirements and amenities of himself and his family. While fixing the minimum wages, the capacity of the employer to pay is treated as irrelevant and the Act contemplates that rates of minimum wage should be fixed in scheduled industries with a dual object of providing sustenance and maintenance for the worker and his family and preserving his efficiency as a worker. So it is required to take into consideration the cost of bare subsistence of life and preservation of efficiency of the workers and for some measure of education, medical requirements and amenities. This cost is likely to vary depending upon the cost prevailing in the market of various items. If there are inflationary conditions prevailing in the country, then minimum wages fixed at a particular point of time would not serve the purpose Therefore, Section 4 contemplates that minimum wages fixed at a particular point of time should be revised from time to time. Section 4 postulates that minimum wage fixed or revised by the appropriate Government under Section 3 may consist of basic rates of wages and special allowance at a rate to be adjusted at such intervals in such manner as the appropriate Government may direct to accord as nearly as practicable with a variation in the cost of living index number applicable to such workers; alternatively, it permits the fixation of basic rate of wages with or without the cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concessional rates where so authorised; or in the alternative, it permits an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of concessions, if any.
22. The object of Section 4 is to see that minimum wage can be linked with increase in cost of living so that increase in cost of living can be neutralised or all inclusive rates of minimum wages can be fixed. From the combined reading of Sections 3 and 4, it becomes clear that what is fixed is total remuneration which should be paid to the employees covered by the Schedule and not for payment of costs of different components which are taken into consideration for fixation of minimum rates of wages. The concept of minimum wages does take in the factor of the prevailing cost of essential commodities whenever such minimum wage is to be fixed. The idea of fixing such wage in the light of the cost of living at a particular juncture of time and of neutralising the rising prices of essential commodities by linking up scales of minimum wages with the cost of living index is provided for in Section 4. The term "cost of living index number" is defined under Section 2(d) of the Act. It is defined as follows :
"2(d). Cost of Living Index numbed in relation to employees in any scheduled employment in respect of which minimum rates of wages have been fixed means the index number, ascertained and declared by the competent authority by notification in the Official Gazette to be the cost of living index number applicable to employees in such employment,"
The consumer price index numbers are also known as cost of living index numbers which are generally intended to represent the average change over time in the prices paid by the ultimate consumer of a specified basket of goods and services. The need for constructing consumer price index numbers arises because the general index numbers fail to give an exact idea of the effect* of change in the general price level on the cost of living of different classes of people since a given change in the prices affect different classes in different manners.
23. The concept "cost of living allowance" is popularly called as dearness allowance. The Minimum Wages Act makes no specific mention of the term "dearness allowance", but it refers to an allowance paid on rise of cost of living. VDA is part and parcel of wages. Once the rates of minimum wages are prescribed under the Act, whether as all inclusive under Section 4(1)(iii) or by combining basic plus dearness allowance under Section 4(1)(i), are not amenable to split up. It is one pay package. Neither the scheme nor any provision of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each of the necessities taken into consideration for fixing the same. Section 2(h) which defines the term "wage" specifically provides that the value of the items given thereunder is not required to be computed for finding out whether the employer pays minimum wages as prescribed under the Act. Therefore, while deciding the question of payment of wages, the Competent Authority is not required to bifurcate each component of the costs of each item taken into consideration for fixing minimum wages, as lump sum amount is determined for providing adequate remuneration to the workman so that he can sustain and maintain himself and his family and also preserve his efficiency as a worker. In other words, dearness allowance is part and parcel of cost of necessities of life. In cases where the minimum rates of wages is linked up with VDA, it would not mean that it is a separate component which is required to be paid separately nor can it be said that such component does not form a part of the minimum wage.
24. The Supreme Court in Airfreight Ltd. v. State of Karnataka, , has opined that where the minimum rate of wages is linked with VDA, it would not mean that it is a separate component which is required to be paid separately where the employer pays a total pay package which is more than the prescribed minimum rate of wages. The Supreme Court in para (22) of the judgment held :
"But while deciding the question of payment of minimum wages, the Competent Authority is not required to bifurcate each component of the costs of each item taken into consideration for fixing minimum wages, as lumpsum amount is determined for providing adequate remuneration to the workman so that he can sustain and maintain himself and his family and also preserve his efficiency as a worker. Dearness allowance is part and parcel of cost of necessities. In cases where the minimum rates of wages is linked up with VDA, it would not mean that it is a separate component which is required to be paid separately where the employer pays a total pay package which is more than the prescribed minimum rate of wages."
Further, the Supreme Court held :
"Minimum rate of wages fixed under the Act is remuneration payable to the worker as one package of fixed amount. In cases where minimum wage is linked with the cost of living index, the amount paid on the basis of dearness allowance is not to be taken as an independent component of the minimum wages but as part and parcel of the process of computing the rates of minimum wages which is to be determined after taking into consideration the cost of various necessities"
25. As pointed out supra, the cost of living allowance is a part or component of the wage as prescribed under the Minimum Wages Act. The Act also provides computation of cost of living allowance provided by the competent authority at intervals. The Government of Andhra Pradesh has been computing the cost of living allowance at 6 monthly intervals and it is applicable to all the scheduled employments notified under the Minimum Wages Act. Therefore, the judgment of the Supreme Court in Management of Sri Chatta Vibhag Khan Udyog Sahakari Mandi Ltd. and Ors. v. G.S. Barot and Ors. (supra) on which Sri Srinivas placed strong reliance is not on the point. Neutralisation of 100% has no relevance while fixing the minimum wage under the Minimum Wages Act. The judgment of the Supreme Court in Management of Sri Chatta Vibhag Khan Udyog Sahakari Mandi Ltd, (supra) is with regard to industrial dispute raised by the workmen and award of the Industrial Court, Gujarat. The said judgment cannot be taken into consideration for the fixation of minimum wage under the Act. Although the contention is that the neutralization of VDA should not exceed 100%, that ground, in turn, in logic and substance, is based on the main ground that if neutralization at the rate of more than 100% is allowed, that would cause heavy financial burden on the managements of the hotel industry.
26. It is well-settled that the capacity of the employer to pay minimum wage is totally irrelevant consideration while reviewing the notification fixing or revising the minimum wages. The Supreme Court in U. Unichoyi's case (supra) held that the scope and purpose of Minimum Wages Act is different and that principle of capacity of industry to pay has no relevance in fixation of minimum wages under the Act. The Court also observed that the Act is introduced for fixation of minimum wages irrespective of capacity of the industry. The said view was reiterated by the Supreme Court in a catena of decisions.
27, This Court also in the case of T.G. Lakshmaiah Setty & Sons, (1981) Lab IC 960, held that while fixing the minimum wages the State is only discharging constitutional obligation imposed upon it by the Directive Principles of State Policy. This performance of a sacred constitutional duty towards the economically weaker sections of the society cannot be allowed to be defeated on a theory of the capacity of the industry to pay which is a judicial blast placed on the meaning of Article 19(1)(f) and 19(1)(g) of the Constitution of India. The theory of capacity of industry to pay has no application to the State activity in fixing the minimum wage. It can scarcely be disputed that securing of living wages to labourers which ensure not only bare physical subsistence but also maintenance of health and decency, is conducive to the general interest of the public. This is one of the Directive Principles of State Policy embodied in Article 43 of the Constitution. The material provisions of the Minimum Wages Act contained in Sections 3, 4 and 25 are held to be constitutionally valid by a Constitution Bench of the Supreme Court in Bijay Cotton Mills Ltd. v. State of Ajmer, , In that case, the Supreme Court held that the restrictions imposed by Sections 3, 4 and 25 of the Act, though they interfere to some extent with the freedom of trade or business guaranteed under Article 19(1)(g) of the Constitution are reasonable and being imposed in the interest of general public are protected by the terms of Clause (6) of Article 19. The Supreme Court observed :
"If the labourers are to be secured in the enjoyment of minimum wages and they are to be protected against exploitation by their employers, it is absolutely necessary that restraints should be imposed upon their freedom of contract and such restrictions cannot in any sense be said to be unreasonable. On the other hand, the employers cannot be heard to complain if they are compelled to pay minimum wages to their labourers even though the labourers, on account of their poverty and helplessness are willing to work on lesser wages."
It is well-known that in 1928 there was a Minimum Wages Fixing Machinery Convention held at Geneva and the resolutions passed in that convention were embodied in the International Labour Court. The Minimum Wages Act is said to have been passed with a view to give effect to these resolutions.
28. Minimum rate of wages fixed under the Act is remuneration payable to the worker as one package of fixed amount and that in cases where the minimum wage is linked with the cost of living index, the amount paid on the basis of dearness allowance is not to be taken as an independent component of minimum wages but as part and parcel of the process of computing the rates of minimum wages which is to be determined after taking into consideration the cost of various necessities of life at a particular point of time and place. It may not be permissible or possible for the Court to precisely say what all should go into decision making in fixing minimum wages. The Court lacks necessary expertise to decide what should be the minimum wages in any particular industry. The Court should not be called upon to embark on an investigation into questions which are appropriately the functions of the Government. The appropriate Government is assisted in the process of fixing the minimum wages by its own machinery and even more either by the advice of a competent committee under Section 5(1)(a) of the Act or a well informed Advisory Board consisting of representatives of the employers and employees and independent persons under Section 5(2). In Malayalam Plantations Limited v. State of Kerala, 1975 Lab IC 429 = (1976) 1 LLJ 114 (Ker) (FB), a Full Bench of the Kerala High Court held :
"... If prima facie the fixation appears to be fair there is nothing more for the Court to do. If the wage structure prevalent in the industry is more or less in line with the minimum wages fixed from time to time as revised by settlements and there has only been reasonable modification to this structure in the minimum wage revisions it would be difficult to say that prima facie the revisions are bad. This Court exercising its jurisdiction under Article 226 of the Constitution is not sitting as an appellate authority and is not sitting in judgment over the views of the appropriate Government. Keeping in view the limited sphere of this Court's jurisdiction, we feel unless jurisdictional error is shown interference may not be possible."
We are in respectful agreement with the above holding of the Kerala High Court. In Secunderabad Club's case (supra), the appellants therein filed the WP No. 9248 of 1991 assailing various final notifications issued in 1991 by the Government of Andhra Pradesh in exercise of the power conferred under Sections 3(1) and 5(2) of the Act revising the minimum rates of wages payable to various categories of employees in different establishments as specified in Part I of the Schedule. One of the contentions was that the neutralization rate is more than 100% and therefore notification could not be sustained. The learned single Judge rejecting that contention dismissed the writ petition by his order dated 29.1.1994. The Writ Appeal Nos. 292 and Batch of 1994 filed against the said judgment of the learned single Judge was also dismissed by a Division Bench of this Court in Secunderabad Club's case (supra). In that context, the Division Bench observed :
"In respect of the present case, it cannot be denied that there was material in the form of notifications issued earlier in respect of same scheduled employments. It cannot, therefore, be said that the procedure followed by the Government in issuing draft notifications, calling for objections from the employers and employees and appointing advisory committee is not proper and is in any way contrary to Section 5(1) of the Act..."
29. In K. Sobhanachalam v. State of A.P., 1978 Lab IC (NOC) 33 (AP) (DB) this Court held that unless the formula followed by the Advisory Board to work out the figures in minimum wages is totally arbitrary or capricious, the High Court will not interfere with such figures.
30. In the backdrop of the above noticed principles governing fixation of minimum wages and scope of judicial review of such fixation, we will proceed to consider the contention of Sri Vedula Srinivas. The petitioner has annexed to the writ petition a chart showing neutralization effect on rise in cost of living at page (81) of the material papers. It is as follows :
Neutralisation Effect On Rise In Cost Of Living Comparative Statement of cost of livine allowance on variable dearness allowance Sl. No. Category of Employee Basic pay fixed under G.O. 53 CLA at rates fixed in the G.O. 53 (per point increase above 411 points subject to a limitation of Rs. 10.50 ps.
CLA per point at rates calculated as per the formula applied by tbis Hon'ble Court in Writ Petition No.9248/91 for 100% neutralisation Difference of column 4 and 5 Percentage of legalisation (1) (2) (3) (4) (5) (6) (7)
1.
Manager 3625 10.50 3625/411 - 8.81 1.69 118.11
2. Category-A employees 2909 10.50 2909/411 - 7.07 3.43 148.51
3. Category-B employees 2544 10.50 2544/411 - 6.18 4.32 169.90
4. Category-C employees 2289 10.50 2289/411 - 5.56 4.94 198.84
5. Category-D employees 2182 10.50 2182/411 -5.30 5.20 198.11
6. Category-E employees 2020 10.50 2020/411 -4.91 5.59 213.84
31. Sri Srinivas basing on the above chart contended that as the chart shows that the increase of neutralization of VDA is more than 100% in respect of all six (6) categories of employees, such increase cannot be sustained in view of the judgment of the Supreme Court in Shri Chalthan Vibhag Khand Udyog Sahakari Mandli Limited (supra) and the judgments of the Karnataka, Maharashtra and Gujarat High Courts in Aspinwal & Co. Ltd. v. State of Karnataka (Kar.), (ASPINWAL), (1986) 69 FJR 15 (Kar.), in Sangli Distt. Powerioom Owners' Association Ltd v. State of Maharashtra, (1989) 58 FJR 68 (Bombay), and in Saurashtra Paper and Board Mills Pvt. Ltd v. State of Gujarat, (1995) Supp. III LLJ 540 (Gujarat). The correctness of calculation as, reflected in the above extracted chart is hotly contested by the Government as well as the 2nd respondent union. In the additional counter-affidavit filed on behalf of the Government, it is contended that the increase of neutralization of VDA works out to 33% only. Similarly, Sri Vidya Sagar, in the course of his submission before us on behalf of the 2nd respondent-trade union sought to show the wrong calculation made by the petitioner association. In para (5), (6) and (7) of the additional counter-affidavit filed on behalf of the Government, it is stated thus:
"5. It is pertinent to note that the last revision of minimum wages in the employment of Hotels, Restaurants and Eating Houses was made vide G.O. Ms. No. 89, Women Development, Child Welfare and Labour (Lab. II) Department, dated 25-5-1991. When the minimum wages were fixed in G.O. Ms. No. 89, the CPI numbers were neutralized at 186 points (base 1982-100). In the year 1998, when the Draft Notification was issued vide G.O. Rt. No. 599, Labour, Employment, Training and Factories (Lab.II) Department, dated 23-3-1998, the wages were proposed neutralizing the Consumer Price Index numbers at 309 points. This Draft Notification was placed before the A.P. State Minimum Wages Advisory Board in its 13th Meeting held on 27-6-2000 for its recommendations. By that time the existing CP1 is at 411 points i.e., there is an increase of 102 points and the same shall be taken into consideration for fixing the special allowance. It is pertinent to note that by virtue of G.O. Ms. No. 36, dated 15-3-1989 and G.O. Ms. No. 37, dated 15-3-1989, the workmen are entitled to draw special allowance in accordance with the VDA notifications issued periodically by the Commissioner of Labour, basing on the Industrial Workers C.P.I, numbers. Thus, the workmen have already been drawing special allowance up to 411 points (i.e., from 186 points to 411 points on the existing G.O. Ms. No. 89, dated 25-5-1991) by June 2000 basing on the relevant C.P.I, numbers. The Minimum Wages Advisory Board recommended 20% increase on draft wages at 309 points i.e., taking into consideration the C.P.I, number as on 23-3-1998.
6 It is submitted that when the Board suggested 20% increase over the draft wages, the Board wanted that the neutralization of C.P.I, numbers should be at 309 points. If the same was implemented, it would result in decrease of wages since the VDA at C.PI numbers 411 points has already been allowed to the workmen. In the circumstances, it is felt that it is not in the interest of the workmen and, therefore, Government while issuing final notification took into consideration the latest CPI numbers at 411 points. The difference of 309 points and 411 points comes to 102 points and it constitutes the increase of 33% of VDA above the draft notification.
7. As submitted above, the action of the Government in taking into consideration the C.P.I, at 411 points as on the date of final notification is in accordance with the Law and in the interest of workmen. The Government is competent to issue the final notification on the basis of the C.P.I, and it cannot said to be arbitrary or illegal."
Thus, it could be seen that the Government and the petitioner association have stated two different methods in their pleadings to arrive at the rate of neutralization. The method adopted and the reasons stated in paras (5), (6) and (7) of the Additional Counter Affidavit of the State Government are not only appropriate and sound for fixation of rates of minimum wages having regard to the practices earlier followed by the Government but they also constitute a fair and reasonable method to determine the rates of minimum wages in the hotel industry keeping in mind the social objective of the Act. In adopting that method, the State Government has not violated provisions of Sections 3, 4 and 5 of the Act. On the other hand, the method suggested by the petitioner as reflected in the Chart extracted above is not the proper method to be adopted in the circumstance of the case, because, as stated in the Additional Counter-Affidavit of the State Government, if the Government were to effect 20% increase over the draft wages after causing neutralization only at 309 CPI points, it would have resulted in decrease of wages for VDA at CPI number 411 points had already been allowed to the employees of the hotel industry covered by the impugned notification. The High Court while reviewing the validity of minimum wages notification issued under Section 5 cannot assume the role of an appellate authority and reappreciate each and every factor which has gone into the fixation of minimum wages or the mode and method adopted by the expert body like the Advisory Board to find out what is the minimum wage payable to the employees in a scheduled industry which is intended to achieve a laudable social objective to improve their standard of living step-by-step and if the Court were to do so, the Court will be out-stepping its legitimate domain of judicial power and usurp the power which legitimately belongs to the concerned and the appropriate Government. Nowhere in the pleading, the petitioner association has shown how the neutralization formula adopted by the Government is not in accordance with the law except stating that the neutralization effected by the Government is contrary to the judgment of the Supreme Court in Shri Chalthan Vibhag Khand Vdyog Sahakari Mandli Limited (supra). Having regard to what is stated by the State Government in paras (5), (6) and (7) of the additional counter-affidavit extracted above, it cannot be said that the method adopted by the appropriate Government is irrational or arbitrary or not in accordance with the provisions of Section 4 of the Act. In Karnataka Film Chamber of Commerce v. State of Karnataka, (1987) I LLJ 182, a learned single Judge of the Karnataka High Court on consideration of the earlier judgment in ASPINWAL 's case (supra) on which Sri Srinivas placed strong reliance and referring to two alternative formulae available for the neutralization of VDA and pointing out that there were two different modes of working out the neutralization factor, held, according to us, quite rightly, that the judgment in ASPINWAL's case (supra) does not indicate that the method of neutralization as proposed by the workmen in that case was not in accordance with law.
32. In ASPINWAL's case (supra), the Karnataka High Court among other contentions was called upon to decide the challenge to the rate of dearness allowance on the ground that it was highly excessive and, therefore, invalid. In that case, the learned single Judge referring to the judgment of the Supreme Court in Bengal Chemical and Pharmaceutical works v. Its Workmen, , summed up the principles which are as follows :
"1. Full neutralisation is not normally given, except to the very lowest class of employees.
2. The purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on the rise in the cost of living and a decrease on a fall in the cost of living.
3. The basis of fixation of wages and dearness allowance is industry-cum-region,
4. Employees getting the same wages should get the same dearness allowance, irrespective of whether they are working as clerks or members of subordinate staff or factory workmen.
5. The additional financial burden which a revision of the wage structure or dearness allowance would impose upon an employer, and his ability to bear such burden, are very material and relevant factors to be taken into account,"
33. Having summed up the principles, the learned Judge proceeded to hold :
"Out of the five principles, the exception set out to the first principle is applicable to those for whom the minimum wages are fixed under the Act, for, under the Act, wages are fixed for the lowest strata of employees (See Killick Nixom Ltd. v. K & A. Co. Employees Union - [1975] 47 FJR 412 (SC). The rates of minimum wages fixed are necessary for their subsistence. With the increase of cost of living, they would be unable to subsist. Unlike persons drawing higher salary, they will have no surplus money to make any adjustment, i.e., by cutting down expenses, other than those required for food and clothing and other non-essential expenses. Therefore, cent percent, neutralization is a must and that is what is required to be provided by Section 4(1)(i).
As far as principles 2 and 4 are concerned, they are also relevant to the fixation of rates of deamess allowance under the Minimum Wages Act. The impugned notification shows that the said bases have boon adopted in fixing the rates of dearness allowance. The third principle is also relevant, but it goes with the fourth principle and the minimum wages have to be fixed, having due regard to the nature of the employment and its location wherever relevant as has been done in the impugned notification, as a resuit of which employees who get similar rate of basic minimum wages, would also be getting similar rate of dearness allowance.
Question, however, is whether the fifth principle is also relevant to the fixation of the rates of clearness allowance as part of statutory minimum wages for there is a distinction between bare minimum wages and statutory minimum wages as is evident from the judgment of the Supreme Court in the case of Express Newspapers v. Union of India - [1958] 14 FJR 211. Relevant portion reads: (p. 245) There is also a distinction between a bare subsistence and statutory minimum wage. The former is a wage which would be sufficient to cover the bare minimum needs of a worker and his family, that is, a rate which has got to be paid to the worker irrespective of the capacity of the industry to pay. If an industry is unable to pay its workmen at least a bare minimum wage it has no right to exist. As was observed by us in Civil Appeal No. 235 of 1996 - Crown Aluminium Works v. Their Workmen, [1957] 13 FJR 292 (SC) (at p. 300) "It is quite likely that in underdeveloped countries, where unemployment prevails on a very large scale, unorganized labour may be available on starvation wages, but the employment of labour on starvation wages cannot be encouraged or favoured in a modern democratic welfare state. If an employer cannot maintain his enterprise without cutting down the wages of his employees below even a bare subsistence or minimum wages he would have no right to conduct his enterprise on such terms'.
The statutory minimum wage, however, is the minimum which is prescribed by the statute and it may be higher than the bare subsistence or minimum wage, providing for some measure of education, medical requirements and amenities, as contemplated above. (Cf. also the connotation of 'minimum rate of wages' in Section 4 of the Minimum Wages Act, XI of 1948)."
In Unichoyi v. State of Kerala, [1961] 20 FJR 347, the Supreme Court reiterated the ratio in Express Newspapers' case, (supra) [1958] 14 FJR 211, and observed that hardship caused to an individual employer to meet the liability was not a relevant consideration. The judgment of the Supreme Court in Hydro (Engineers) P. Ltd. v. Their Workmen, [1969] 35 FJR 130 (SC), however, indicates mat for fixing statutory minimum wages also, the financial capacity of the industry may not be a relevant consideration. However, what is authorised to be fixed under Section 3 read with Section 4 of the Act as statutory minimum wages should be such as would be sufficient not merely for the subsistence of the life of the employee but also for preservation of the worker and so must provide for some measure of education, medical expenses and amenities. It is settled law that in fixing minimum wages, a family of three members has to be taken as the basis (see Chandra Bhavan v. State of Mysore - [1970] 38 FJR 1 (SC)].
Even on the basis that financial capacity of an industry is not relevant for fixation of statutory minimum wages also, there can be no doubt that the capacity of an industry to pay more than statutory minimum wages is not a relevant consideration for fixing such higher wages as minimum wages. Higher than minimum wages could be secured from such employers by way of settlement or by raising an industrial dispute. In the light of these principles, the validity of the submissions made for the petitioners has to be examined.
As basic wages plus the dearness allowance fixed under the Act together constitutes "minimum wages", they have to be fixed in conformity with the Act. The petitioners have calculated the percentage of neutralization, as indicated earlier, and say that it works out to 300 per cent, on the ground that the basic wages fixed in the impugned notification is "minimum wages" legitimately payable, if the cost of living index does not cross 600. Therefore, they submit that the extent of neutralization provided for has to be calculated by comparing the wages per point as fixed in the impugned notification with the extent of increase provided for."
34. On facts the learned Judge found 250% neutralization of VDA and, therefore, held that the impugned notification is arbitrary and contravenes Section 4(1) of the Act. We are at a loss to understanding the said judgment of a learned single Judge of the Karnataka High Court, in any way, would advance the case of the petitioner herein. The petitioner should fail on the basis of fact itself. As pointed out supra, according to Advisory Board and the Government for the reasons set-out by them, the rate of neutralization works out to 33% only. Secondly, as a statement of law, it cannot be said that under no circumstance in fixing the minimum wages to the employees of the scheduled industries, the rate of neutralization should not exceed 100%. Such a contention may be a tenable contention only where the Court finds that the 'minimum wage' fixed is actually not a 'minimum wage', but it is either 'fair wage' or 'living wage'. It is neither pleaded nor otherwise substantiated by the petitioner that the minimum wages fixed, under the impugned notification inclusive of all components, that is to say, including neutralization of VDA cannot be as regarded as minimum wages within the meaning of that term and in contemplation of the Act.
35. In Shri Chalthan Vibhag Khand Udyog Sahakari Mandli Limited v. G.S. Barot's case (supra), on the expiry of the Second Wage Board's Report for Sugar Industry in U.P. on October 31, 1974, an order relating to the U.P. Pattern of Pay, Graduated D.A. and variable DA, being based on the Labour Minister's award, was passed under Section 3(b) of the U.P. Industrial Disputes Act, 1947, which came into force on October 31, 1974. A retention allowance for the unskilled seasonal workmen of the sugar factories for off-season at 10% of the basic wage and D.A. was also provided for. The demand of the workmen of the appellant sugar factories in Gujarat is for payment according to U.P. Pattern. The Industrial Court, Gujarat increased the graduated D.A. of the unskilled employees from Rs. 21 to Rs. 40 as also revised rates of variable DA. from 83 paise per point on the rise over 301 points of All India Average Consumer Price Index Number for Industrial Workers (Base 1960 = 100) to Re. 1 per point for skilled B operatives and for clerks drawing up to Rs. 150 per month and from Rs. 0.95 to Rs. 1.12 for All India Average Consumer Price Index for other employees by spreading the same over for a period of three years. It gave a retention allowance of 10% as demanded of the basic wage and D.A. payable during the crushing season 1974-75 and also for tbe subsequent years. On appeal, the Gujarat High Court quashed the award and set it aside. Before the Supreme Court the appellants inter alia contended that the grant of neutralization of the variable D.A. at 125% is far in excess of what is permissible under the industrial law. In those facts and circumstances, the Supreme court held :
"Dearness allowance was primarily intended as a protection of persons whose salaries are at the subsistence level to protect them against the adverse effects of the rise in prices. The Commission on Dearness Allowance in May, 1967, stated that historically DA was regarded as applicable to those employees whose salaries are at the subsistence level or at a little above in order to enable them to face the increase in dearness of essential commodities. The National Commission of Labour, 1969, observed that unless money wages rise as fast as consumer prices it will result in an erosion of real wages. But the extent of its impact will depend on the margin of cushion available at different levels of income. The Commission recommended that 95% neutralisation should be granted against rise in cost of living to those drawing minimum wage in non-scheduled employments."
36. In that case the crux of the contention was that in fixing fair wages and clearness allowance financial capacity of the co-operative societies should be arrived after taking into account the depreciation and the financial capacity of sugar industry. The Apex Court on consideration of the provisions of Sub-Section (1) of Section 66 of the Gujarat Co-operative Societies Act, 1961 and on consideration of the judgment of the Supreme Court in Ahmedabad Mill Owners' Association v. Textile Labour Association, , held :
"The financial capacity of the industry will have to be decided in the context of the wage problems and the methods adopted in determining financial capacity of the industry for other purposes need not be followed. While examining the financial capacity in detail we must ultimately base our decision on a broad view which emerges from a consideration of all relevant factors, such as financial position of the employer, the interests of the consumer, etc."
While doing so, the Apex Court has to add in para (16):
"16. The wages due to a worker is in the nature of expenses Just like payment for raw materials. In this sense the wages are expenses which have to be met whether the company works, makes a profit or not. So far as the minimum wages due to a worker are concerned, the law requires that they should be paid first and if the industry cannot pay them it may as well close. The payment of dearness allowance as prescribed under the Minimum Wages Act should also be provided for in any event."
37. From the above observation of the Supreme Court in para (16), it is quite clear that an employer is bound to pay the minimum wages due to a worker and also dearness allowance as prescribed under the Minimum Wages Act in all event. Secondly, in that case, the Supreme Court was not called upon to decide the question whether in fixation of the minimum wages, the rate of neutralization of VDA can exceed 100% or not? However, the observation of the Supreme Court "the payment of dearness allowance as prescribed under the Act should also be provided for in any event" in para (16) of the judgment clearly indicates that if dearness allowance forms part of minimum wage such wage should be provided to the employees of the scheduled industry in any event thereby meaning in all events. In other words, the provision for neutralization of VDA is also a component of the minimum wage fixed under the notification. Its validity, therefore, cannot be questioned merely on the ground that the rate of neutralization works out to more than 100%. In Saurashira Paper and Board Mills Pvt. Ltd. v. State of Gujarat (supra), the Gujarat High Court placing reliance on the decision of the Apex Court in Shri Chalthan Vibhag Khand Udyog Sahakari Mandli Limited's case (supra) held that the neutralization sought to be achieved in the categories of employees, namely, unskilled, semi-skilled and clerical-B which is more than 100% is not permissible. From the judgment of the Gujarat High Court, it seems that the attention of the Court was not drawn to the observation of the Apex Court in para (16) of the very same judgment Therefore, with respect, we say, the view taken by the learned Judges of the Gujarat High Court is not acceptable to us.
38. A minimum wage is a wage, which, in any event, must be paid irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen on lower wages. The minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity. Thus, fair wage or a reasonable wage is different from the minimum wage. In U. Unichoyi's case (supra) the Supreme Court held, that in fixing minimum wage, capacity of management to pay is not a consideration. It may be a relevant consideration where demand of workmen is for 'fair wage' or 'living wage'. In Ahmedabad Industries and other Employees Union v. State of Gujarat, (2000) I LLJ 1424, it was held that the paying capacity of the industry while revising the statutory minimum wage is not relevant. The principle of minimum wage has no reference either to the value of the work done by the worker, or to the capacity of the industry to pay. It has to be determined on the cost of living and normal or reasonable needs of the worker and his family on the bare subsistence level. The employees are entitled to the minimum wage at all times and under all circumstances. In Workmen represented by Secretary v. Reptakos Brett & Co. Ltd, , it was held that the employer who cannot pay the minimum wage lias no right to engage labour and no justification to run the industry. As already pointed out supra, minimum wages may consist of basic wages and a special allowance with increase or decrease in basic wages when question of neutralization of cost of living arises by way of dearness allowance. The concept of minimum wages under the Act is not contractual but statutory and therefore the employer would be bound by the notification under Section 3 fixing either minimum rate of wages or remuneration. In Secunderabad Club's case (supra), this Court held that Cost of Living Allowance cannot be said to be illegal or bad nor can it be said that it would amount to double payment.
39. One more factor which weighs with us not to interfere with the fixation of minimum wages is that the Act is a beneficial piece of social legislation which protects the day-to-day living condition of the workers employed at the lowest level of wages in sweated labour. It is trite, though the minimum wages are fixed statutorily, it does not measure up either to the fair wage or to the living wage particularly due to high rate of increase in the Consumer Price Index (CPI). In Kamani Metals and Alloys Ltd. 's case (supra), the Supreme Court held that in the fixation of either a minimum wage or a fair wage or a living wage, the workmen should receive their proper share of the national income which they help to produce with a view to improve their standard of living. The idea seems to be : Take care of the legitimate needs of the workers and they will take care of the national wealth.
40. The petitioner Association has utterly failed to make out any permissible ground to quash the impugned minimum wages notification. As held in Ministry of Labour and Rehabilitation v. Tiffin's Barytes Asbestos and Paints Ltd. & Government of India v. Barium Chemicals Ltd., (1985) II LLJ 412, the notifications fixing minimum wages are not to be lightly interfered with under Article 226 on the ground of some irregularities in a country where the wages are already minimum except on the most substantial grounds. We do not find any substantial ground to quash the impugned notification.
41. In the result, writ appeal is dismissed with no order as to costs.