Karnataka High Court
The Cloth Manufacturers Association vs The Secretary on 6 April, 2023
Author: Hemant Chandangoudar
Bench: Hemant Chandangoudar
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WP No. 19931 of 2014
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF APRIL, 2023
BEFORE
THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR
WRIT PETITION NO. 19931 OF 2014 (L-MW)
BETWEEN:
1. THE CLOTH MANUFACTURERS ASSOCIATION
OF INDIA, GEETA MANSION,
6TH FLOOR
40/1, KEMPEGOWDA ROAD
BANGALORE-560 009
REPRESENTED BY ITS REGIONAL CHAIRMAN
SRI A.S. SUBRAMANIYAN, MAJOR.
2. M/S. GARTEX INSTA APPARELS
NO.180, VI MAIN, IV CROSS
III PHASE, PEENYA INDUSTRIAL SUBURB
(NEAR MODERN BREAD FACTORY)
BANGALORE-560 058
REPRESENTED BY ITS MANAGING DIRECTOR
SRI A.S. SUBRAMANIYAN, MAJOR.
3. M/S. GOKALDAS EXPORTS LTD
Digitally signed by
R HEMALATHA
NO.70, MISSION ROAD
Location: HIGH BANGALORE-560 027
COURT OF
KARNATAKA REPRESENTED BY ITS DIRECTOR & CHIEF EXECUTIVE
OFFICER
SRI GOWTAM CHAKRAVARTHI, MAJOR.
4. M/S. TEXPORT OVERSEAS PVT LTD
86D-I, INDUSTRIAL SUBURB, II STAGE
YESHWANTHAPUR
BANGALORE-560 022
REPRESENTED BY ITS HEAD HR & COMPLIANCE
SRI K.S. RANGARAJ, MAJOR.
5. M/S. GOKULDAS IMAGES PVT LTD
NOS.7 & 12, 2ND STAGE, INDUSTRIAL SUBURB
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WP No. 19931 of 2014
TUMKUR ROAD, YESHWANTHAPUR
BANGALORE-560 022
REPRESENTED BY VICE PRESIDENT-HR
SRI G. UNNIKRISHNAN, MAJOR.
6. SHAHI EXPORTS PVT LTD
NO.13, 14, 15, BELANDUR GATE
SARJAPUR MAIN ROAD
BANGALORE-560 103
REPRESENTED BY ITS GENERAL MANAGER-HR
SRI H.N. RAMAPRASAD, MAJOR.
...PETITIONERS
(BY SRI. B.C. PRABHAKAR, ADVOCATE)
AND:
1. THE SECRETARY
LABOUR DEPARTMENT
GOVERNMENT OF KARNATAKA
VIKASA SOUDHA
BANGALORE-560 001.
2. THE LABOUR COMMISSIONER
GOVERNMENT OF KARNATAKA
KARMIKA BHAVANA
BANNERGHATTA ROAD
BANGALORE-560 029.
3. GARMENT AND TEXTILE WORKERS UNION
AFFILIATED TO NEW TRADE UNION
INITIATIVE-NTUI)
NO.17/1, FIRST FLOOR, NEAR BMTC BUS STOP
NEW GUDDADA HALLI, MYSORE ROAD
BANGALORE-560 026
REPRESENTED BY ITS VICE PRESIDENT
...RESPONDENTS
(BY SRI. BHOJEGOUDA T. KOLLER, AGA FOR R-1 & R-2;
SRI K.B. NARAYANASWAMY, ADVOCATE FOR R-3)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA PRAYING TO DECLARE AND
STRIKE DOWN CLAUSE 3 OF THE NOTIFICATION DATED
21.2.2014 VIDE ANNEXURE-A AS UNCONSTITUTIONAL AND
ULTRA VIRES OF ARTICLE 14 OF THE CONSTITUTION OF INDIA
AND ALSO CONTRARY TO THE PROVISIONS OF MINIMUM
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WP No. 19931 of 2014
WAGES ACT 1948 AND RULES MADE THERE UNDER IN SO FAR
AS THE PETITIONERS ARE CONCERNED AND ETC.
THIS PETITION, COMING ON FOR HEARING, THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
This petition is filed challenging the notification dated 21.2.2014 issued by the 1st respondent in exercise of power under Sections 3(1)(a) and 5(1)(a) of the Minimum Wages Act, by which, minimum wages payable to workers working in the employment of tailoring was revised insofar as it relates to Clause No.3, which specifies that, if the workmen's wage rates are higher, it shall be continued to be paid, and increased dearness allowance from time to time shall also be paid.
2. Heard the learned counsel for the parties.
3. The petitioner's contention is that the workers are being paid wages more than minimum wages fixed by the State Government, and there is no requirement of paying dearness allowance separately. The Hon'ble Supreme Court in the case of Airfreight Ltd. -vs- State of Karnataka and others (AIR 1999 SC 2459) at paras-21 and 23 has held as follows.
21. 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 lump sum amount is determined for providing adequate -4- WP No. 19931 of 2014 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.
22. In the result, it is held that:
(1) The appellant Company would be covered by the expression "shops" and/or "commercial establishment" as it is carrying out various systematic commercial activities with profit motive and also it sells services on a retail basis.
(2) The Notification issued under the Act prescribing minimum wages applies to all kinds of shops and commercial establishments big or small- and that payment of more than prescribed minimum rates of wages is not relevant for deciding its applicability. It cannot be stated that as they are paying more than the prescribed minimum wages, the Act or the Notification would not be applicable. For determining whether they are paying minimum rate of wages or not, the amount paid for the value of items which are excluded under Section 2(h) of the Act is not be taken into consideration.
(3) 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 -5- WP No. 19931 of 2014 component of the minimum wages which is to be determined after taking into consideration the cost of various necessities.
23. In this view of the matter, the order passed by the High Court holding that the State Government has fixed two separate categories of minimum rates of wages to be paid to the employees - one basic and the other "other allowance", that is, DA, is erroneous and is set aside. The matter is remanded to the Labour Officer (the Competent Authority under the Minimum Wages Act) for fresh decision in accordance with law. The appeal is allowed to the aforesaid extent with no order as to costs.
4. This Court in the case of Karnataka Film Chamber of Commerce, Bangalore -vs- State of Karnataka (ILR 1986 (Karnataka) 2183) has held at para-18 as follows:
"18. Thus there were two different modes of working out the neutralisation factor. Though, in my view, the pattern adopted by the LIC for working out the neutralisation factor appears to be based on the principles laid down by the Supreme Court in Ahmedabad Mill Owners' Association [1966 (1) LLJ
1.] it is unnecessary to go into the controversy in this case since the percentage of neutralisation, in my view, will not be more than 100%, if this Court is satisfied that 470 CPI should be taken into consideration along with basic wage which remained unchanged for a period of four years. If that be so, the next point for consideration would be whether ASPINWAL had stayed the hands of the State Government while directing it to re-do the notification by working out the percentage of neutralisation in the manner suggested by the petitioners and accepted as correct. No finding was given in ASPINWAL on the relative merits of the -6- WP No. 19931 of 2014 neutralisation formula suggested by both the parties. A reading of the entire Judgment in ASPINWAL does not indicate that the method of neutralisation as proposed by the workmen is not in accordance with law. In the circumstances, it is not possible for the petitioners to contend that there was a binding precedent on the method of neutralisation and therefore, the impugned notification is bad because, the State Government did not comply with the directions made by this Court. The State Government also had in view the decision of this Court in ASPJNWAL as could be made out in the letter dated 18-11-1985 the relevant portion of which I have already excerpted above."
5. In view of the ratio enunciated by the Hon'ble Supreme Court and this Court in the aforesaid cases, there is no requirement to pay dearness allowance separately when the wages paid to the workmen is more than minimum wages fixed by the Government. Hence, the impugned Clause No.3 of the notification issued by the State Government is arbitrary and discriminatory. Accordingly, I pass the following:
ORDER
i) Writ petition is allowed.
ii) Clause No.3 of the notification dated 21.2.2014 in No.KE 1 LMW 2013 issued by the 1st respondent at Annexure-A is held to be arbitrary and discriminatory and unenforceable.
Sd/-
JUDGE BKM