Madras High Court
South India Cashew Nut vs Government Of Tamil Nadu on 22 January, 2011
Author: K.Chandru
Bench: K.Chandru
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 22/01/2011
CORAM
THE HONOURABLE MR.JUSTICE K.CHANDRU
W.P.(MD)No.8040 of 2010
and
M.P.(MD)Nos.2 and 5 of 2010
South India Cashew Nut
Manufacturers Association,
rep by its Secretary,
Mundakkal West,
Kochu Peelamoodu,
Kollam, Kerala-691 001. .. Petitioner
Vs.
1.Government of Tamil Nadu,
rep by its Secretary,
Department of Labour and Employment,
Chennai-600 009.
2.The Commissioner of Labour,
Chennai-600 006.
3.Labour Progressive Federation
rep by V.Elango, Joint Secretary,
The District Council Nagercoil,
Kanyakumari District.
4.Tamilnadu Munthiri Paruppu Thozhilalar
Sangam (CITU),
G.S.Bhavanam, Kuzhithurai,
Kanyakumari District
rep by its General Secretary
P.Sinkaran
(RR3 and 4 impleaded as party respondents
as per order dated 12.11.2010 in
M.P.(MD)Nos.3 and 4 of 2010) .. Respondents
This writ petition has been preferred under Article 226 of the
Constitution of India praying for the issue of a writ of certiorarified mandamus
to call for the records of the first respondent made in G.O.(2D)No.18, dated
22.4.2010 and to quash the same and to consequently to direct them to reconsider
the revision of minimum rates of wages and dearness allowances notified in the
impugned G.O., with reference to earlier revision made in 2007 vide the first
respondent Government notification issued by the Labour Commissioner, second
respondent herein on 22.6.2007 and after providing the petitioner and other
cashew nut industries in the State of Tamilnadu sufficient opportunity in
accordance with the suitable clause of section 5 of the Minimum Rates of Wages
Act, 1948.
!For Petitioner ... Mr.V.M.G.Ramakkannan
^For Respondents... Mr.S.C.Herold Singh, GA for RR1 and 2
Mr.K.Vamanan for R-4
Mr.N.Edwin Jayakumar for R-3
- - - -
:ORDER
The writ petitioner is the South India Cashew Nut Manufacturers Association represented by its Secretary. They have come forward to challenge an order of the first respondent State Government in G.O.(2D)No.18, Labour and Employment Department, dated 22.4.2010 and seeks for setting aside the same and consequently for a direction to reconsider the revision of minimum rate of wages and dearness allowance notified in the impugned Government Order with reference to the earlier revision made in the year 2007 made by the Government and notified by the Commissioner of Labour, dated 22.6.2007 and to provide an opportunity to the petitioner association and the other Cashew Nut industries in the State of Tamil Nadu in terms of Section 5 of the Minimum Wages Act, 1948.
2.The writ petition was admitted on 30.06.2010. An interim suspension of the operation of the impugned notification was granted by recording the submission of the learned Senior Counsel to the effect that objections of the petitioner association were not called for and therefore, it was prima facie case for interim suspension. At the time of filing the writ petition, the petitioner association made only the official respondents as parties. Subsequently, applications were taken out by third and fourth respondents Trade Unions in M.P.(MD)Nos.3 and 4 of 2010 to implead themselves. They were impleaded by this court vide order, dated 12.11.2010. The fourth respondent trade union had also filed a vacate stay application in M.P.(MD)No.5 of 2010 together with supporting counter affidavit, dated 3.11.2010. With the consent of parties, the main writ petition itself is taken up for hearing.
3.The facts leading to the filing of the writ petition are as follows:
The petitioner association is a registered association having membership of more than 75 Cashewnut factories and their employees were around 10000 workers, most of whom were women. Since there were not enough yield of Cashewnuts in Tamil Nadu and only 5% of raw cashews are available for processing, the industry is importing cashewnuts from many countries including from African Countries. According to the petitioner, 2,38,310 metric tonnes of raw cashew worth about Rs.968.14 crores were imported through Thoothukudi Port for process in the Tamil Nadu Cashewnut factories. After processing, the cashew kernals worth about Rs.754.69 crores are exported through the same Port. The cashew processing in Tamil Nadu has high overhead cost due to transportation charges and fluctuation in the market cost. The size of the factories in Tamil Nadu are also small. Since women workers are employed, there is an appreciable absenteeism. Because of low efficiency and availability of less skilled workers, the process cost goes up. Out of total number of cashew processing units, 460 units are in Kanyakumari District and 100 units are in and around Panruti. The balance 100 units are situated all over the State. The cashew industries in Tamil Nadu provide work throughout the year, whereas in the other States, number of days of work available are low.
4.It is stated that the Government of Tamil Nadu added employments in the Cashewnut industry into the Schedule to the Minimum Wages Act, 1948. In the year 1993, by G.O.(2D)No.13, Labour and Employment Department, dated 30.3.1993, the Government fixed the minimum rates of wages for the cashew industry. The Tamil Nadu Cashew Manufacturing Association filed a writ petition being W.P.(MD)No.10659 of 1993 and obtained an interim stay on 4.6.1993. Subsequently, the said interim order came to be confirmed on 5.8.1993. Thereafter, a Committee was constituted by the respondent Government comprising of the representatives of the employer and employees as well as representatives of the Labour Department in terms of Section 5(1)(a) of the Minimum Wages Act. On the basis of the recommendation made by the Committee, a fresh G.O was issued in G.O.(2D).No.20, Labour and Employment Department, dated 2.4.1996 prescribing minimum rates of wages. Even in that prescription of minimum wages, apart from the basic wage, the Government Order had prescribed variable dearness allowance linked to the consumer price index of Nagercoil centre. 247 points were fixed as starting point with 100 points as base year 1982. Every further increase over and above above 247 points, 2.50 paise per day has to be given as variable dearness allowance. Subsequently, the wage fixed by the order dated 2.4.1996 came to be revised by G.O.(2D) No.28, Labour and Employment Department, dated 24.4.2000. The variable dearness allowance was increased to 8 paise per point over and above 266 points. A further revision was also made in the year 2004 by G.O.(2D) No.22, Labour and Employment Department, dated 21.5.2004. In that G.O., fixed dearness allowance was granted at Rs.3.44 per day linked to 426 points of consumer price index.
5.Subsequently, when a further revision was not made, a demand of parity with wages paid in Kerala State was made. Due to the strike notice given by the fourth respondent trade union, the Commissioner of Labour by his proceedings, dated 22.6.2007 announced adhoc wage increase, advising the parties that appropriate wage revision will be made in the minimum wages. Thereafter, a settlement was entered into under Section 18(1) between the workmen and the employer dated 4.8.2005 and settlement was to expire after one year. Thereafter, a revision of minimum wage was sought for by the workers, including third and fourth respondents. The trade unions demanded constitution of committee for fixation of minimum wages for the employees in the cashew nut industry. The Commissioner of Labour while proposing revision of minimum rate of wages felt that whatever fixed in Tamil Nadu was less than the minimum rate of wages notified by the Government of Kerala. When he sent a proposal the State Government constituted a fresh committee for fixation of minimum rates of wages for employees in the cashew nut industries. The Government accepted the recommendations of the Commissioner of Labour and constituted a committee in terms of Section 5(1)(a) of the Minimum Wages Act, 1948 to hold an enquiry and to advice the Government in the matter of fixation of minimum rate of wages vide G.O.Ms.No.21, Labour and Employment Department, dated 27.2.2009. The Committee comprised of three representatives of employers, three representatives of trade unions and three representatives of independent persons. Subsequently, as it was felt that due representation was not given to the representatives of majority of workers in the industry, the Government issued a further Government Order in G.O.Ms.No.76, Labour and Employment Department, dated 24.6.2009 and added a representative of the CITU union on the workers' side and one B.Jayachandran as a representative of the employer. The committee conducted several field inspections including in the Marthandam area of Kanyakumari District as well as many places in Kerala. A field inspection was conducted in Cuddalore District on 25.2.2010 and at Pudukkottai on 26.2.2010. Further, the Committee had several rounds of discussions and recorded the views of the members vide its meeting held on 23.3.2010. It was in the sixth meeting, they decided to have a final meeting on 12.4.2010. After circulating the minutes, the final meeting was held on 15.4.2010 in which the Committee decided to forward its minutes to the State Government. The committee decided that the dearness allowance paid on 645 points of the consumer price index at Nagercoil centre to be merged with the basic wage including the fixed dearness allowance of Rs.3.44. Thereafter, it added 55% as the revision of basic wage and granted variable dearness allowance over and above 645 points at the rate of 100% neutralisation by calculating dearness allowance for each month. The majority of the members had agreed with the minutes.
6.On getting the minutes from the Committee constituted under Section 5(1)(a), dated 15.4.2010, the opinion of the Commissioner of Labour, dated 19.4.2010 was also obtained. The State Government on considering the report as well as the recommendations of the Commissioner of Labour decided to accept the proposal sent by the Commissioner of Labour and fixed minimum rates of wages by the impugned notification in G.O.2D.No.18, Labour and Employment Department, dated 22.4.2010. A variable dearness allowance at the rate of Rs.0.20 paise per point over and above 645 points on the basis of consumer price index. The dearness allowance was to be paid on the basis of minimum output in respect of each work to be done. The said G.O came to be published in the Tamil Nadu Government Gazette extraordinary on 22.4.2010 and came into force.
7.Challenging the said notification, it was contended by the petitioner that the impugned notification inasmuch as it had referred to 2004 notification and not the one made during 2007, it is invalid. It shows the non application of mind. It is not clear as to how the 2004 letter issued by the Commissioner can be said to be a notification. It is only an advice given pursuant to the strike notice. The second contention was that the notification issued under Section 5(1)(a) is arbitrary. The Government should have resorted the method by calling for objections under Section 5(1)(b) of the Minimum Wages Act. If that was done, then the grievance of the individual employers could have been put forth by the employes. The issuance of the notification and published in the Government Gazette on the same day was not proper and it shows bias on the part of the Government. Ordering of dearness allowance from Rs.0.11 paise to Rs.0.20 paise is unwarranted. In States like Andhra Pradesh, Karnataka and the other North Indian States, wages are very low and it gives them competitive edge over Tamil Nadu industry. Alternatively, Mr.V.M.G.Ramakkannan, the learned counsel for the petitioner submitted that the employers are ready to pay the minimum rate of wages but not variable dearness allowance. It was also stated that the high cost of production will ruin the industry.
8.The alternative contention that dearness allowance should be delinked from the fixation of minimum wages can be neither acceptable nor it will be realistic. Section 4(1)(1) of the Minimum Wages Act provides fixation of minimum wages linked with the cost of living index. The Cashewnut industries have paid such minimum wages right from the year 1996 till the impugned notification. Therefore, the clock cannot be put back. Without the payment of dearness allowance, if wages are paid it will make the labours suffer even to purchase regular day-today household necessities. With reference to not providing an opportunity, in the counter affidavit filed by the fourth respondent union, it was stated that the State had altogether eight meetings which comprised of representatives of all interests. Though initially the committee was to submit its report within six months, it took more than a year to submit its report since all the interest concerned have been taken into account.
9.In the counter affidavit, it is also stated that the workers for the last 3-1/2 years were receiving only Rs.85/- per day and by the increase, they may get Rs.94.40 per day which is a paltry increase ordered by the Government. Even the same has also been stalled due to the interim order obtained by the petitioner association.
10.It must be stated that the Supreme Court vide its judgment in Chandra Bhavan Boarding & Lodging, Bangalore v. State of Mysore reported in (1969) 3 SCC 84 has held that if the industry do not pay minimum wage, it has no right to exist. In that case, a similar question posed by the employe was set out in paragraph 12 which reads as follows:
"12..... We were told that if the prescribed rates are sustained, the hotel, industry would be crippled and the smaller units in that industry will be driven out of the trade."
In paragraph 13, the Supreme Court answered as follows:
"13..... We are not convinced that the rates prescribed would adversely affect the industry or even a small unit therein. If they do, then the industry or the unit as the case may be has no right to exist. 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."
11.On the question of employers seeking choice of constituted method of fixation of wages either under Section 5(1)(a) or under Section 5(1)(b), the Supreme Court had also answered the plea raised therein. The following passages found in paragraphs 8(1) and 9(b) may be usefully reproduced below:
"8..... It was contended that Section 5(1) of the Act is violative of Article 14 of the Constitution as it confers unguided and uncontrolled discretion to the Government to follow either of the two alternative procedures prescribed in that section in the matter of fixing minimum wages. It was urged that under clause
(a) of Section 5(1) the appropriate Government is required to appoint a committee representing all interests to hold a detailed enquiry regarding the concerned employment before advising the Government in the matter of fixing minimum wages but under clause (b) of Section 5(1) all that the appropriate Government need to do is to publish by notification in the Official Gazette its proposals for the information of the persons likely to be affected by those proposals and specify a date not less than two months from the date of the notification on which the proposals will be taken into consideration. It was urged that if the procedure prescribed in Section 5(1)(a) is adopted it would be advantageous to the employers because in the committee to be appointed, there will be the representatives of the employers who know the difficulties of the employers and hence are in a position to acquaint their colleagues about the same but if the procedure prescribed in Section 5(1)(b) is followed, the affected parties can only submit their written representations followed by some nominal oral representation in a crowded meeting. While dealing with that topic, assistance was sought from the rule laid down by this Court in Suraj Mall Mohta and Co. v. A.V. Viswanatha Sastri1 and the other decisions of this Court reiterating that rule. It is true that this Court has firmly ruled that the procedural inequality, if real and substantial is also within the vice of Article 14. But then, before a power can be held to be bad the same should be an unguided and unregulated one. But if a power is given to an authority to have recourse to different procedures under different circumstances, that power cannot be considered as an arbitrary power. It must also be remembered that power under Section 5(1) is given to the State Government and not to any petty official. The State Government can be trusted to exercise that power to further the purposes of the Act. It is not the law that the guidance for the exercise of a power should be gatherable from one of the provisions in the Act. It can be gathered from the circumstances that led to the enactment of the law in question, i.e. the mischief that was intended to be remedied, the preamble to the Act or even from the scheme of the Act.
9.... The legislature has determined the legislative policy and formulated the same as a binding rule of conduct. The legislative policy is enumerated with sufficient clearness. The Government is merely charged with the duty of implementing that policy. There is no basis for saying that the legislature had abdicated any of its legislative functions. The legislature has prescribed two different procedures for collecting the necessary data, one contained in Section 5(1)(a) and the other in Section 5(1)(b). In either case it is merely a procedure for gathering the necessary information. The Government is not bound by the advice given by the committee appointed under Section 5(1)(a). Discretion to select one of the two procedures prescribed for collecting the data is advisedly left to the Government. In the case of a particular employment, the Government may have sufficient data in its possession to enable it to formulate proposals under Section (5)(1)(b). Therefore it may not be necessary for it to constitute a committee to tender advice to it but in the case of another employment it may not be in possession of sufficient data. Therefore it might be necessary for it to constitute a committee to collect the data and tender its advice. If the Government is satisfied that it has enough material before it to enable it to proceed under Section 5(1)(b) it can very well do so. Which procedure should be adopted in any particular employment depends on the nature of the employment and the information the Government has in its possession about that employment. Hence the powers conferred on the Government cannot be considered as either unguided or arbitrary. In the instant case as seen earlier the question of fixing wages for the various categories of employees in residential hotels and eating houses was before the Government from 1960 and the Government had taken various steps in that regard. It is reasonable to assume that by the time the Government published the proposals in pursuance of which the impugned notification was issued it had before it adequate material on the basis of which it could formulate its proposals. Before publishing those proposals, the Government had consulted the advisory committee constituted under Section 7. Under those circumstances we are unable to accede to the contention that either the power conferred under Section 5(1) is an arbitrary power or that the same had been arbitrarily exercised."
Hence the questions raised by the petitioner are squarely answered in this decision.
12.On the question of comparing the wages fixed in Andhra Pradesh, Karnataka and the North Indian States, they are irrelevant. Insofar as fixing of minimum wages is concerned, this court is not inclined to accept the contentions raised by the petitioner. The Supreme Court vide its judgment in Ministry of Labour and Rehabilitation v. Tiffin's Barytes Asbestos & Paints Ltd., reported in (1985) 3 SCC 594 = AIR 1985 SC 1391 warned the courts exercising power under Article 226 of the Constitution from interfering with the minimum wages notified. In paragraph 3, the Supreme Court observed as follows:
"3.....We also wish to emphasise that notifications fixing minimum wages are not to be lightly interfered with under Article 226 of the Constitution on the ground of some irregularities in the constitution of the committee or in the procedure adopted by the committee. It must be remembered that the committee acts only as a recommendatory body and the final notification fixing minimum wages has to be made by the Government. A notification fixing minimum wages, in a country where wages are already minimal should not be interfered with under Article 226 of the Constitution except on the most substantial of grounds. The legislation 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."
13.Further, as noted in the Government order in G.O.Ms.No.21, Labour and Employment Department, dated 27.2.2009, the minimum rate of wages paid in Tamil Nadu is far below the rate of wages paid in Kerala which is a neighbouring State. In view of the above, there is no case made out to interfere with the impugned order. Hence the writ petition will stand dismissed with cost. It is directed that Rs.5000/- to be paid to each of the respondents 3 and 4 in the writ petition. Consequently, connected miscellaneous petitions stand closed.
vvk To
1.The Secretary, Government of Tamil Nadu, Department of Labour and Employment, Chennai-600 009.
2.The Commissioner of Labour, Chennai-600 006.