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Case Number

C.M.W.P No. 2086 of 1990

Attorney(S)

S.N.Agarwal
S.G.Hasnain
Neeraj Agrawal
N.K.Srivastava
J.N.Singh
Anil Shukla

Judges

M. Katju
R.S Tripathi, JJ.

Acts

Section 3(b) of the U.P. Industrial Disputes Act, 1947.
Section 3(b) of the U.P. Industrial Disputes Act. 15.
Section 3(b) of the U.P. Industrial Disputes Act
Section 4-K of the U.P. Industrial Disputes Act,
Section 3(b)

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Smart Summary

Judicial Opinion — Structured Summary

Factual and Procedural Background

This writ petition was filed challenging an impugned notification dated November 21, 1989 (Annexure A-III to the writ petition). The petitioners are manufacturers of bidis who engage labour for rolling bidis. Earlier, the State Government had fixed minimum wages by notification dated May 21, 1982 under Section 3(b) of the U.P. Industrial Disputes Act at Rs. 7.50 per thousand bidis (Annexure A-I). Subsequent revisions by Madhya Pradesh had raised their rates to Rs. 10.50 (1987) and Rs. 14/- (1989) per thousand bidis (Annexures A-II and A-III).

The petitioners allege that a tripartite settlement in U.P. on October 25, 1989 (Annexure A-VI) had fixed parity at Rs. 14/- per thousand bidis, but the U.P. Labour Minister issued the impugned notification of November 21, 1989 fixing the rate at Rs. 15/- per thousand bidis, made retrospective to October 25, 1989 (Annexure A-VII). The petition therefore challenges that notification as contrary to the tripartite settlement and allegedly mala fide.

The respondents filed a counter-affidavit explaining prior wage revision (last revision before impugned notification being August 11, 1987 fixing Rs. 11.50 per thousand bidis), a rise in the Consumer Price Index, representations by labour unions, and a tripartite conference on October 25, 1989 where a consensus was recorded leading to the November 21, 1989 notification. The respondents also stated that the impugned notification was later superseded by a notification dated June 21, 1991 under Section 3(b).

The Court noted that an interim order had been passed on September 11, 1990 staying operation of the impugned notification. The petition remained pending for thirteen years and is now dismissed.

Legal Issues Presented

Whether the impugned notification dated November 21, 1989 issued under Section 3(b) of the U.P. Industrial Disputes Act is legally valid.
Whether the impugned notification contravened the tripartite settlement dated October 25, 1989 and whether parity between wages in the same Zone was required.
Whether the notification could be issued retrospectively (it was made retrospective to October 25, 1989).
Whether the Court should interfere with delegated legislation of the character exercised under Section 3(b), particularly in view of threats of industrial unrest and emergency considerations.
Whether the employers should be directed to pay arrears and interest resulting from the difference between wages under the impugned notification and wages actually paid.

Arguments of the Parties

Petitioners' Arguments

The petitioners (bidi manufacturers) asserted that a tripartite settlement dated October 25, 1989 fixed the minimum wage at Rs. 14/- per thousand bidis for U.P., placing U.P. wages on parity with Madhya Pradesh (Annexure A-VI).
They alleged mala fide action by the U.P. Labour Minister in issuing the notification of November 21, 1989 fixing the rate at Rs. 15/- per thousand bidis and making it retrospective to October 25, 1989 (Annexure A-VII), contrary to the settlement.
They contended that there ought to be parity between wages in the same Zone (U.P., Bihar, Madhya Pradesh).

Respondents' Arguments

The respondents stated that the last revision prior to the impugned notification was on August 11, 1987 fixing Rs. 11.50 per thousand bidis.
They asserted that there had been a substantial rise in the Consumer Price Index (a rise of 50 index points, and 67 index points between January and June 1989) which prompted labour unions to demand revision and threaten agitation; about 5.5 lac workers were engaged in the industry in U.P.
To avoid disruption, the State convened a Tripartite Conference under the Labour Minister on October 25, 1989, a consensus was recorded and the November 21, 1989 notification was issued; that notification was subsequently substituted by one dated June 21, 1991 under Section 3(b).
They contended that a difference of Re. 1.00 per thousand bidis was not material for causing industry shift, and that parity with Madhya Pradesh was not necessary because total cost of production (not merely minimum wage) was the relevant consideration.
The respondents relied on the need to act swiftly in face of an abrupt increase in the cost of living index to avoid agitation and maintain employment and law and order.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Basti Sugar Mills v. State of U.P. (1954-II-LLJ-279 (All))	That a notification under Section 3(b) of the U.P. Industrial Disputes Act is a piece of delegated legislation.	The Court relied on this to assert that it should not ordinarily interfere with such notifications because they are intended to maintain peace and harmony in industry.
State of U.P. and Ors. v. Basti Sugar Mills Company Ltd. and Ors., AIR 1961 SC 420 : 1961-I-LLJ-220	The Supreme Court upheld the validity of Section 3(b) of the U.P. Industrial Disputes Act.	The Court referred to this decision to support the validity and statutory character of notification-making power under Section 3(b).
Basti Sugar Mills Company Ltd. v. State of U.P., AIR 1979 SC 262 : 1979 (2) SCC 88 : 1978-II-LLJ-412	That a notification under Section 3(b) may be statutory and operates irrespective of the recommendation of a tripartite Committee; the notification cannot be struck down because the company did not agree to it.	The Court used this authority to state that an order under Section 3(b) can be issued even if the company disagrees and that the notification has statutory operation independent of committee recommendations.
Mahalakahmi Sugar Mills v. State of U.P. and Anr., AIR 1967 All 330	That adjudication under Section 4-K and orders under Section 3(b) operate in different fields; Section 3(b) can be used in emergency situations.	The Court cited this distinction to justify the use of Section 3(b) in circumstances of urgency as distinct from ordinary adjudication.
British India Company Ltd. v. State of U.P., 1976 (33) FLR 129	That a threat of agitation and strike is sufficient for the Government to exercise power and issue orders under Section 3(b).	The Court relied on this to support the proposition that governmental action under Section 3(b) may be justified by a real threat of industrial unrest.
E. Sefton and Company v. Textile Mill Mazdoor Union, AIR 1958 All. 80	That no writ of certiorari lies for quashing a notification under Section 3(b) as it does not embody a decision by a judicial or quasi-judicial authority.	The Court cited this authority to emphasize the limited role of certiorari in challenging Section 3(b) notifications.
Kanpur Aloo Arhati Association and Anr. v. State of U.P. and Ors., Writ Petition No. 43985 of 1997 (decided July 1, 2003)	That courts should not ordinarily interfere with delegated legislation unless there is a clear violation of the parent Act or the Constitution; judges should exercise restraint in wage fixation matters.	The Court invoked its own prior holding to reinforce judicial restraint when reviewing delegated wage-fixation measures.
Rai Bahadur Diwan Badri Das v. Industrial Tribunal, AIR 1963 SC 630 : 1962-II-LLJ-366	That the doctrine of absolute freedom of contract yields to higher claims for social justice; industrial law aims to protect workers in weaker bargaining positions.	The Court relied on this principle to contextualize statutory wage regulation as social-justice driven, justifying protective measures for workers.
West Coast Hotel Co. v. Parrish, 1937 (300) US 379	That legislature may correct bargaining inequalities between employers and workers and legislate for a living wage; cited for the principle that protective labour legislation is legitimate.	The Court quoted this passage to illustrate and support the social-justice rationale behind labour legislation and wage regulation.

Court's Reasoning and Analysis

The Court's analysis proceeded from facts to legal principles as follows:

The Court observed that notifications under Section 3(b) of the U.P. Industrial Disputes Act are delegated legislation (citing Basti Sugar Mills) and thus courts should not ordinarily interfere with them because they are aimed at maintaining industrial peace and harmony.
The respondents' factual account — that there was a significant rise in the Consumer Price Index (including an abrupt 67 index-point rise between January and June 1989), the threat of large-scale agitation by about 5.5 lac workers, and the convening of a Tripartite Conference on October 25, 1989 — was relied upon by the Court as legitimate grounds for the Government to act swiftly to avoid disruption of employment and law and order.
The Court relied on authorities (including Basti Sugar Mills, British India Company Ltd., and Mahalakahmi Sugar Mills) to hold that in an emergency or where there is threat of agitation, the State is empowered to issue an order under Section 3(b) without affording prior opportunity of hearing.
The Court noted legal limitations recognized by precedents: while Section 3(b) notifications are valid and statutory, certain authorities have held that an order under Section 3(b) cannot be retrospective (as noted in the Basti Sugar Mills line of decisions). The Court also acknowledged that adjudication through a Labour Court (reference under Section 4-K) remains available, but that Section 3(b) and Section 4-K operate in different fields.
The Court concluded that there was no violation of the parent Act or the Constitution by the impugned notification. The Court further noted the substitution of the impugned notification by a later notification dated June 21, 1991, and on that ground indicated the petition deserved dismissal.
In view of the long pendency (the interim stay of the impugned notification had been in force since September 11, 1990 and the petition remained pending for thirteen years), the Court addressed the equitable consequences: it directed employers to pay arrears between the wages payable under the impugned notification and wages actually paid, together with interest at 10% per annum from the date of the impugned notification until payment, within two months.

Holding and Implications

Holding: The writ petition is DISMISSED.

Direct Effects and Orders

The Court directed that employers shall pay the arrears of the difference between the wages payable under the impugned notification and the wages actually paid to the bidi rollers (or to their heirs, if the worker is dead) within two months from the date of this judgment.
The employers were ordered to pay interest on these arrears at the rate of 10% per annum from the date of the impugned notification until the date of payment; such interest must also be paid within two months.
The Registrar General was directed to send a copy of this order to the District Magistrate, Farrukhabad forthwith, and the District Magistrate was to ensure prompt payment as directed.

Broader Implications

The Court emphasized judicial restraint in reviewing delegated wage-fixation measures and reaffirmed existing principles: delegated legislation under Section 3(b) is to be treated cautiously by courts and is permissible in emergencies to maintain industrial peace. The opinion does not purport to set a new legal precedent; rather, it applies existing authorities and principles to the facts of this case.

Note: This summary is strictly confined to the content of the provided opinion. No information has been added beyond what appears in the text.

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Dilpasand Bidi Co. And Others v. State Of U.P And Others

1. This writ petition has been filed against the impugned notification dated November 21, 1989 (Annexure A-III to the writ petition).

2. We have heard learned counsel for the parties.

The petitioners are manufacturers of Bidis. They engage labour for rolling the Bidis. It is alleged in para 2 to the writ petition that the Central Government created various Zones in India for regulating the wages of Bidi Rollers. It is alleged in para 3 that a settlement was arrived between the State Government, representatives of the Labour Unions, and the employers in 1982 and the State Government by notification dated May 21, 1982 fixed the minimum wage at Rs. 7.50 per thousand Bidis (vide Annexure A-I to the writ petition) which has been issued under Section 3(b) of the U.P. Industrial Disputes Act, 1947.

3. It is alleged in para 4 of the petition that in 1987 the prices of the commodities rose up and hence the State Government of Madhya Pradesh raised the minimum wages of Bidi Rollers to Rs. 10.50 per thousand Bidis (vide Annexure A-II to the writ petition). Again in 1989 on account of rise in prices of commodities and the price index, the State of Madhya Pradesh raised the minimum wages of Bidi Rollers to Rs. 14/- per thousand Bidis (vide Annexure A-III to the writ petition).

4. It is alleged in paragraph 6 that since the wages in U.P. was only Rs. 11/- per thousand Bidis, the Labour Unions made representations to the State Government that in Madhya Pradesh the wages were higher, and the rate for one Zone consisting of Madhya Pradesh, Bihar and Uttar Pradesh should be the same. True copy of the representation is Annexure A-1V. On this representation the U.P. Labour Minister issued letters to various Union Representatives and employers (vide Annexure A-V to the writ petition).

5. It is alleged in paragraph 8 to the petition that a settlement was reached on October 25, 1989 and the U. P. Labour Minister agreed that the minimum wage should be Rs. 14/- per thousand Bidis. This was settled between the Labour Minister, the representatives of Labour Unions, and the employers. True copy of the settlement dated October 25, 1989 is Annexure A-VI to the writ petition. By this notification the wages in U.P. for Bidi Rollers was put on parity with that in Madhya Pradesh.

6. In paragraph 10 of the petition it is alleged that for mala fide reasons, the U.P. Labour Minister got a notification issued in the U.P. Gazette on November 21, 1989 fixing the minimum rate at Rs. 15/- per thousand Bidis (vide Annexure A-VII) which was made retrospective from October 25, 1989.

7. It is alleged in paragraph 14 that this notification is totally against the tripartite settlement mentioned above. It is alleged in paragraph 15 that there should be parity between the wages in the same Zone. Aggrieved this petition has been filed.

8. A counter Affidavit has been filed on behalf of respondent Nos. 1, 2 and 3 and we have perused the same.

9. In paragraph 5 it is stated that in respect of revision of minimum rate of wages in Bidi Industry, the last revision before the issuance of the impugned Notification was done by notification dated August 11, 1987 fixing minimum rate of Rs. 11.50/- per thousand Bidis.

10. In paragraph 6 it is alleged that there was a rise of 50 index points in the Consumer Price Index, and hence the Labour Unions sent representations to the State Government for. revision of minimum rate of wages for employment of Bidi making in U.P., failing which a large scale agitation would be started. It may be mentioned that about 5.50 lac workers are engaged in the State of U.P. in this industry, and therefore the State Government thought that it would not be appropriate to allow work stoppages, as it may disrupt employment as also the law and order situation. Accordingly, a Tripartite Conference was convened under the Chairmanship of the Labour Minister on October 25, 1989 whereby a consensus was reached vide (Annexure C.A.I to the Counter Affidavit) and notification dated November 21, 1989 was issued. This has been substituted by notification dated June 21, 1991 under Section 3(b) of the U.P. Industrial Disputes Act, 1947 because the rise in the cost of living index was over 50 index points. There was a rise of 67 index points between January to June, 1989 alone as mentioned in the All India Consumer price index number. This was an abrupt increase in the cost of living index, and the Government had to act very fast in this connection to avoid agitations. The impugned notification has been superseded by another notification dated June 21, 1991 and hence on this ground also the petition deserves to be dismissed.

11. In paragraph 11 of the counter-affidavit, it is stated that in the Tripartite Conference it was noted that a difference of Rs. 1.00/- per thousand Bidis is not very relevant for shift of the industry from U.P. to Madhya Pradesh.

12. In paragraph 16 it is stated that it is not necessary to have parity with the rise in Madhya Pradesh, because the relevant consideration was not only the minimum rate of wages but also the total cost of production. We have also perused the Rejoinder Affidavit.

13. On the facts of the case, we find no merit in this petition. It may be mentioned that a notification under Section 3(b) of the U.P. Industrial Disputes Act is a piece of delegated legislation vide Basti Sugar Mills v. State of U.P. I954-II-LLJ-279 (All). Hence this Court should not ordinarily interfere with such notifications as they are intended to maintain peace and harmony in the Industry.

14. In State of U. P. and Ors. v. Basti Sugar Mills Company Ltd. and Ors. AIR 1961 SC 420 : 1961-I-LLJ-220 the Supreme Court upheld the validity of Section 3(b) of the U.P. Industrial Disputes Act.

15. The impugned notification was evidently issued because of the fear that there may be industrial unrest, strife and agitations, which may disrupt the industry and make lacs of workers unemployed and also create a law and order situation. An order under Section 3(b) is a piece of delegated legislation and hence no opportunity of hearing need be given before issuing it.

16. No doubt adjudication can be done by a Labour Court in a reference under Section 4-K of the U.P. Industrial Disputes Act, but in an emergency an order under Section 3(b) can also be issued vide State of U.P. v. Basti Sugar Mill (supra). The two provisions therefore operate in different fields vide Mahalakahmi Sugar Mills v. State of U.P. and Anr. AIR 1967 All 330. The impugned notification has been issued under Section 3(b) of the U.P. Industrial Disputes Act and it is a statutory notification as held in Basti Sugar Mills Company Ltd. v. State of U.P. AIR 1979 SC 262 : 1979 (2) SCC 88 : 1978-II-LLJ-412. In that decision it was also held that even though the notification under Section 3(b) may be based on the recommendation of a tripartite Committee, the notification operates on its own irrespective of the recommendation of the Committee. The notification cannot be struck down on the ground that the company was not agreeable to issue of such notification. In British India Company Ltd. v. State of U.P. 1976 (33) FLR 129 it was held that a threat of agitation and strike is sufficient for the Government to exercise power and issue orders under Section 3(b). However, it has been held that an order under Section 3(b) cannot be retrospective vide State of U. P. v. Basti Sugar Mills (supra).

17. In E. Sefton and Company v. Textile Mill Mazdoor Union AIR 1958 All. 80 it was held that no certiorari lies for quashing a notification under Section 3 (b) as it does not incorporate in it any decision or determination by any judicial or quasi judicial authority.

18. We have already held in Kanpur Aloo Arhati Association and Anr. v. State of U. P. and Ors., writ petition No. 43985 of 1997 decided on July 1, 2003 that the Court should not ordinarily interfere with delegated legislation unless there is clear violation of the parent Act or the Constitution. The judiciary must maintain self restraint in such matters. Wage fixation is a complex exercise and Judges are not experts in such matters.

19. We find no violation of any provision of the parent act or the constitution by the impugned notification.

20. It may be mentioned that much of Labour Laws infringe the freedom of contract, but as held by the Supreme Court in Rai Bahadur Diwan Badri Das v. Industrial Tribunal AIR 1963 SC 630 : 1962-II-LLJ-366 "the doctrine of the absolute freedom of contract has to yield to the higher claims for social justice." Industrial Law is based on the belief that the bargaining strength of the employer and the worker are not equal, and hence the workers, being in a weaker bargaining position, have to be protected from exploitation. As observed by the U.S. Supreme Court in West Coast Hotel Co. v. Parrish 1937 (300) US 379. "The legislature has recognized the fact that the proprietors of these establishments and their operatives do not stand upon an equality, and that their interests are, to a certain extent conflicting."

21. In that decision the Court also observed:

"The exploitation of a class of workers who are in an unequal position with respect to bargaining power and are thus relatively defenceless against the denial of a living wage is not only detrimental to their health and well being, but also casts a direct burden for their support upon the community. What these workers lose in wages the taxpayers are called upon to pay. The community is not bound to provide what is in effect a subsidy for unconscionable employers. The community may direct its law making power to correct the abuse."

22. In this case an interim order was passed by the Court on September 11, 1990 staying operation of the impugned notification till further orders. Unfortunately the petition remained pending for 13 years, and is only now being dismissed.

23. Since we are dismissing this petition now we direct that the arrears of the difference between the wages payable to the Bidi rollers under the impugned notification and the wages actually paid to them shall be paid to them or their heirs (if the worker is dead) within two months from today by the employers. The employers must also pay interest on these arrears at 10% per annum from the date of the impugned notification till the date of payment, and such interest must also be paid within two months.

24. We may mention that there is a misconception about interest. Interest is not a penalty or punishment, but is the normal accretion on capital. If A has to pay a certain amount to B at a particular time, then had he paid it at that time B would have invested it somewhere and earned interest thereon. But if A delays making this payment he himself earns interest on it. Money doubles in six years (because of interest), and hence in twelve years Rs. 100/- becomes Rs. 400/-. Hence ordinarily interest should be awarded, unless a statutory provision forbids it, otherwise even by winning a case a party may really lose it if there is several years delay in deciding a case and an interim order continues during this period.

25. With these observations the petition is dismissed.

26. Let the Registrar General of this Court send copy of this order to the D.M., Farrukhabad forthwith, and the said authority will ensure prompt payment as directed in this judgment.

Dilpasand Bidi Co. And Others v. State Of U.P And Others

Judicial Opinion — Structured Summary

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioners' Arguments

Respondents' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Direct Effects and Orders

Broader Implications

Dilpasand Bidi Co. And Others v. State Of U.P And Others

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