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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Tukaram S. Pai for Petitioners
  • Mr. N. Devadas, HCGP for R-1
  • Mr. A.G Holla for R-2
Judges
  • Bopanna, J.
Acts
  • Section 5(2) of the Minimum Wages Act (in short Act)
  • Section 12(3) of the industrial Disputes Act,
  • clause (b) of sub-section 1,
  • INDUSTRIAL DISPUTES ACT
  • Section 3(b)
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Tukaram S. Pai for Petitioners
  • Mr. N. Devadas, HCGP for R-1
  • Mr. A.G Holla for R-2
Judges
  • Bopanna, J.
Acts
  • Section 5(2) of the Minimum Wages Act (in short Act)
  • Section 12(3) of the industrial Disputes Act,
  • clause (b) of sub-section 1,
  • INDUSTRIAL DISPUTES ACT
  • Section 3(b)
See more information ...
Smart Summary

Structured Summary of Opinion (Bopanna, J.)

Factual and Procedural Background

The petitioners are employers engaged in the cashewnut processing industry. There had been no revision of minimum wages for this industry since 1975. The State Government, exercising powers under Section 5(1)(a) of the Minimum Wages Act, constituted a Committee (including employer representatives, employee representatives and independent members) to consider revision of minimum wages. That Committee recommended revised minimum wages with effect from 1 January 1983.

The State Government published the impugned notification in the Gazette on 26 November 1983, stating that the revised minimum wages would come into effect from 1 January 1983. The petitioners (employers) challenged the notification, contending that under Section 5(2) of the Minimum Wages Act the notification could only have prospective effect (i.e., come into force on expiry of three months from its date), and therefore a notification purporting to operate with retrospective effect was invalid.

Because the Government had delayed issuing the notification, the parties had entered into a settlement in the course of conciliation under Section 12(3) of the Industrial Disputes Act. That settlement (Annexure R-1) contained clauses including Clause 5 (stating the settlement would operate for one year and would become inoperative if and when the Government notified revised minimum rates) and Clause 2 (which the Court found indicated an intention that the revised rates should be given effect from 1 January 1983).

Thus the petitions question the validity of the retrospective effect given by the impugned notification and, alternatively, whether the court should interfere under Article 226 of the Constitution.

Legal Issues Presented

  1. Whether the State Government, in exercise of its power under Section 5(2) of the Minimum Wages Act, has the power to issue a notification revising the minimum wages with retrospective effect.
  2. Alternatively, whether the issuance of the impugned notification (or its retrospective effect) is a fit matter for interference by this Court under Article 226 of the Constitution.

Arguments of the Parties

Appellants / Petitioners (Employers) — submissions of Sri Tukaram S. Pai

  • Relying on the plain language of Section 5(2) of the Minimum Wages Act, the Government could issue a notification only with prospective effect; the statutory default is that a notification comes into force on the expiry of three months from its issue "unless such notification otherwise provides", and that phrase cannot be read as permitting retrospective operation.
  • There is no express or necessarily implied power in Section 5(2) that would allow the Government (as a delegatee of Parliament's power) to give retrospective effect to a notification; therefore the impugned notification is bad in law.
  • Relied upon decisions of the High Courts of Madhya Pradesh and Calcutta as supporting the view that Section 5(2) does not permit retrospective notifications.

Respondent / Workmen / Union — submissions of Mr. Holla

  • The phrase "unless such notification otherwise provides" in Section 5(2) can be interpreted to permit the Government to issue a notification with retrospective effect; the language is capable of allowing retrospective operation.
  • The settlement between the parties (Annexure R-1) supports the view that the revised rates were intended to operate from 1 January 1983.
  • Alternatively, even if the notification could not be given retrospective effect, the matter was not a fit case for the Court's interference under Article 226, particularly because the difference between the settlement wages and the revised minimum wages was marginal.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Jyothi Home Industries v. State of Karnataka, 1983 2 Lab. I.C 1876 That the connotation of "minimum wages" is statutory and not contractual (i.e., employers are bound under Section 3 by minimum wages fixed or revised by Government). The Court used this principle to emphasize that revision of wages is a statutory mode of fixing minimum rates higher than earlier rates and to support a purposive interpretation of Section 5(2) (i.e., the words "unless such notification otherwise provides" can be read to allow retrospective effect).
Decisions of the Madhya Pradesh High Court (unnamed) Interpreted Section 5(2) as permitting only prospective effect to a notification (relying on the plain language of Section 5(2)). The Court noted these decisions but declined to follow them because, in the view of this Court, they did not take into account the scheme and object of the Act and relied solely on plain language.
Decisions of the Calcutta High Court (unnamed) Interpreted Section 5(2) as permitting only prospective effect to a notification (relying on the plain language of Section 5(2)). The Court observed these decisions similarly rest on plain language alone and did not consider the statutory scheme; the Court held that, on a purposive reading of the Act, Section 5(2) permits retrospective operation.

Court's Reasoning and Analysis

The Court proceeded by examining the statutory scheme and object of the Minimum Wages Act rather than relying exclusively on the literal words of Section 5(2). The key steps of the Court's analysis were:

  • Statutory framework:
    • Section 3 empowers the appropriate Government to fix and to review (at intervals not exceeding five years) minimum rates of wages, and the proviso to Section 3(b) permits review even after the expiry of the five-year period, with the earlier rate continuing until revision occurs.
    • Section 5(1) provides for constitution of Committees to consider revision; Section 9 prescribes the composition of such Committees (equal employer and employee representatives plus independent members, chaired by an independent person nominated by Government).
  • Practical consequences of delay:
    • The Court noted that constitution and functioning of Committees can be time-consuming (changes in membership, resignations, deaths, disqualifications), and any rule that rendered the Government powerless to make revisions effective from an earlier date could enable employers to benefit from governmental delay to the detriment of employees.
    • This practical reality, combined with a significant rise in cost of living since 1975, justified a purposive reading permitting retrospective effect so that employees are not deprived of increases due to administrative procrastination.
  • Interpretation of Section 5(2):
    • The statutory phrase in Section 5(2), "and unless such notification otherwise provides, it shall come into force on the expiry of three months from the date of its issue," was read purposively: the words "unless such notification otherwise provides" can contemplate both prospective and retrospective provisions.
    • The Court held that the power to provide a different commencement date (including retrospective commencement) is either expressly allowed by that phrase or can be implied from the scheme and object of the Act.
  • Role of prior authorities and settlements:
    • The Court acknowledged earlier High Court decisions (Madhya Pradesh and Calcutta) that favored a plain-language approach, but observed that those decisions did not sufficiently consider the Act's scheme or object; accordingly, the Court declined to follow them in this matter.
    • The Court held that it would be improper to construe the statutory provision by relying upon the terms of a settlement under the Industrial Disputes Act; the settlement cannot be used to limit or interpret the statutory power conferred on the Government.
  • Alternative (exercise of discretion under Article 226):
    • The Court also considered the parties' settlement terms. It observed that Clause 2 and Clause 5 of Annexure R-1 showed the parties expected the revised rates to operate from 1 January 1983 and that the settlement had been entered into because of governmental delay.
    • Given the marginal difference between the settlement wages and the revised minimum wages and the settlements' terms, the Court concluded that this was not an appropriate case for interference under Article 226 in any event.

The Court therefore accepted a purposive interpretation allowing the Government to issue a notification under Section 5(2) with retrospective effect, and it declined to permit the petitioners to challenge the notification on the ground that the settlement had intended prospective operation only.

Holding and Implications

Holding: The Court held that a power is conferred on the State Government under Section 5(2) of the Minimum Wages Act to make a notification revising wages with retrospective effect. For these reasons, the petitions are dismissed.

Implications:

  • Direct effect on the parties: The impugned notification (published 26 November 1983 declaring the revised wages effective from 1 January 1983) was held valid; the petitioners' challenge to the retrospective operation failed and the petitions were dismissed.
  • Interpretive consequence: The Court adopted a purposive reading of Section 5(2), concluding that the phrase "unless such notification otherwise provides" may permit retrospective commencement. The Court contrasted this with other High Court decisions that relied solely on literal language and declined to follow those decisions in this instance.
  • Settlement considerations: The Court held that terms of a conciliation settlement under the Industrial Disputes Act cannot be used to construe statutory provisions so as to defeat a statutory power; however, on the facts (marginal wage difference and settlement terms), the Court alternatively found no need to exercise its Article 226 jurisdiction.

No information beyond the text of the provided opinion has been added. This summary adheres strictly to matters stated in the opinion.

Show full summary ...

    M/S. Mizar Govinda Annappa Pai v. State Of Karnataka

    Bopanna, J.:—

    The short point which arises for consideration in this batch of petitions is: Whether the State Government in exercise of its power under Section 5(2) of the Minimum Wages Act (in short Act) has the power to issue a notification revising the minimum wages with retrospective effect?

    2. The petitioners are engaged in cashewnut processing industry in which the minimum wages was revised by the impugned notification for the benefit of the employees of the cashew-industry. The petitioners are the employers in these petitions. It transpires that there was no revision of minimum wages since the year 1975 and therefore a Committee was constituted by the State Government in exercise of its power under Section 5(1)(a) of the Act to go into the question of revision of minimum wages for this industry. That Committee made its recommendation prescribing the minimum wages in terms of the impugned notification with effect from First January 1983. The Committee, as required under Section 5(1) of the Act, consisted of the employers amongst whom were the petitioners, the representatives of the employees and independent members. There is no dispute about the constitution of the Committee and there is also no dispute about the rate of wages recommended by the Committee. The only dispute now is whether it should come into effects from 1-1-1983 as recommended by this Committee or whether it should come into effect from 1-12-1983 i.e, after 3 months from the date of notification. The impugned notification in question was published in the Gazette on the 26th of November 1983 to come into effect from 1-1-1983. That means to say the State Government had given retrospective effect to the proposals made by the Committee constituted for the revision of wages.

    3. Sri Tukaram S. Pai, Learned Counsel appearing for the petitioners submitted that regard being had to the plain language of Section 5(2) of the Act, the Government could have issued the notification only with prospective effect and in the absence of anything in Section 5(2) of the Act which expressly or by the implication confers on the Government the power to issue notification with retrospective effect, the impugned notification is bad in law. He submitted that the Government being a delegatee of the power under Section 5(2) of the Act, unless by express words in Section 5(2) or by necessary implication such power is conferred on the Government it cannot in the exercise of its rule making power give restrospective effect to the impugned notification.

    4. I am unable to accept this submission of the Learned Counsel. The scheme of the Act, for the revision of wages should be noticed. Under Section 3 of the Act the appropriate Government, and in this case the State Government have the power to fix the minimum wages to employees of the cashew industry. Under Section 3(b) of the Act it has the power to review if it thinks fit at such intervals not exceeding five years, the minimum rates of wages so fixed and revise the minimum rates, if necessary. The proviso to Section 3(b) should also be noticed. The proviso reads as under:

    “Provided that where for any reason the appropriate Government has not reviewed the minimum rates of wages fixed by it in respect of any scheduled employment within any interval of five years, nothing contained in this clause shall be deemed to prevent it from reviewing the minimum rates after the expiry of the said period of five years and revising them, if necessary and until they are so revised the minimum rates in force immediately before the expiry of the said period of five years shall continue in force”.

    In this case it is not in dispute that the minimum wages were not revised by the Government since 1975. Consequently for a period of nearly 8 years till the impugned notification was made, the workmen employed in the cashew industry by virtue of the provisions of the proviso to Section 3(1) of the Act, were paid the minimum wages at the last revised rate fixed in the year 1975. This Court should take judicial notice of the fact that there had been a very high rise in the cost of living since 1975 and therefore the workmen were fully justified in demanding the revision of minimum wages. But despite the recommendation of the Committee constituted under Section 5(2) of the Act, the Government had not issued the necessary notification as required under Section 5(2) revising the minimum wages. That is the very reason the parties were constrained to enter into a settlement in the course of conciliation as provided under Section 12(3) of the industrial Disputes Act, and in that settlement the parties had agreed that the revised wages agreed to between them in terms of the said settlement should continue in force till the Government issued the necessary notification fixing the date on which the revised minimum wages would come into force. Section 5(2) of the Act reads as under:

    5(2):—“After considering the advise of the committee or committees appointed under clause (a) of sub-section (1), or as the case may be, all representations received by it before the date specified in the notification under Clause (b) of that sub-section, the appropriate Government shall, by notification in the Official Gazette, fix, or, as the case may be, revise the minimum rates of wages in respect of each scheduled employment, and unless such notification otherwise provides, it shall come into force on the expiry of three months from the date of its issue:

    Provided that where the appropriate Government proposes to revise the minimum rates of wages by the mode specified in clause (b) of sub-section 1, the appropriate Government shall consult the Advisory Board also.

    Mr. Tukaram S. Pai, Learned Counsel for the petitioners placing reliance on the language of Section 5(2) of the Act, contended that the words “…. and unless such notification otherwise provides” should be understood in the context of the words ‘on the expiry of 3 months from the date of issue’ and thus understood they could only mean that the State Government could not issue notification with retrospective affect. He relied on the decisions of the High Courts of the Madhyapradesh and Calcutta on this point. Mr. Holla, Learned Counsel appearing for the second respondent-Union relied on the very same provision as also on the terms of the settlement of the parties produced as Ext. R-1 and submitted that the words “unless such notification otherwise provides,” could also be interpreted as to mean that the Government had the power to issue a notification with retrospective effect and it is also clear from the terms of the settlement between the parties namely Annexure-R-1. The second limb of his argument is that even assuming that the notification cannot be issued with retrospective effect, it is not a fit matter for my interference under Article 226 of the Constitution.

    5. The question whether a power could be exercised with retrospective effect or not touches upon the competency of the legislature or of the State Government as the case may be. In this case it is a case of subordinate legislation and that raises a substantial question of law which has to be decided by this Court. That apart, the legal effect of Section 5(2) will come up for consideration again and again and should be considered when the matter comes up in a given case. Therefore, it becomes necessary for this Court to consider whether the power conferred on the Government under Section 5(2) could be exercised with retrospective effect. In my view, the decision on this point should be rendered after taking into consideration the scheme and object of the Act. The scheme for the revision of the wages, as noticed earlier, is found in Section 5(1) of the Act. The appointment of the Committees under that sub-section is governed by Section 9 of the Act. Under Section 9, each of the Committees, Sub-Committees and the Advisory Board shall consist of persons to be nominated by the appropriate Government representing employer and employees in the scheduled employments, who shall be equal in numbers, and independent persons not exceeding one third of the total number of members; one of such independent persons is appointed the Chairman by the appropriate Government. This Committee in practice undergoes considerable change from time to time either by resignation, or by death or by including disqualification by not attending 3 consecutive meetings fixed for the deliberations of the Committee. So the very process of the proper constitution of the Committee takes time and therefore any delay in the proper constitution of the Committee and consequent delay in revising the wages cannot enure to the benefit of the employer and to the disadvantage of the employees. If it is held the Government has got the power to issue the notification only with prospective effect, then the rights of the workman for the increased wages consequent on the revision could be denied by procrastination in the issue of the notification and in the deliberations of the Committee. That could not have been the intention of the Parliament while constituting the Committee for revision of wages and that is the reason under Section 5(2) the words unless ‘such notification otherwise provides’ were introduced. That power could be recognised by implication also if the scheme of the Act is kept in view. It should also be noticed that as observed by this Court in Jyothi Home Industries v. State of Karnataka . 1983 2 Lab. I.C 1876. the connotation of ‘Minimum wages’ is not contractual but statutory. The employer would be bound under Section 3 of the Act, by the minimum wages fixed or revised. Revision of wages is one mode of fixing the minimum rate of wages at the rate higher than what was fixed earlier under the Act. If this scheme of the Act is understood then it will not be difficult for this Court to adopt the purpose approach in interpreting Section 5(2) and to come to the conclusion that the words ‘otherwise provides’ are both prospective and retrospective.

    6. In the circumstances, without going into the correctness of the decision of the Madhya Pradesh High Court and the Calcutta High Court on this point, it could be held that a power is conferred on the State Government under Section 5(2) to make a notification revising the wages with retrospective effect.

    7. Those decisions do not take into consideration the scheme of the Act or the object but rest on the plain language of Section 5(2). The terms of the settlement between the parties support the case of the management as also the case of the workmen but it would not be proper while construing the provisions of a statute to call in aid the terms of a settlement under another enactment namely the Industrial Disputes Act. Therefore it is not open to the petitioners to challenge the impugned notification on the ground that the parties had intended not to give retrospective effect to that notification.

    8. The Learned Counsel Mr. Holla submitted that alternatively it is not a fit case for my interference since the difference between the wages agreed to by the employer under the settlement Annexure R-1 and the minimum wages as revised under the impugned notification is very marginal. The settlement came into existence on account of the delay on the part of the Government in issuing the impugned notification. The Committee's recommendation was that the revision should come into effect from 1-1-1983. Obviously there was considerable pressure on the Managements for increasing the minimum wages and that is the reason the Managements had agreed to increase the minimum wages pending the issue of the notification by the State Government. This is also clear from the preamble to the terms of settlement and Clause 2 of the settlement. The parties had agreed and were also aware that the minimum wages as recommended by the committee should be given effect to from 1-1-1983. However, the Government having not issued the notification as expected of them on 1-1-1983 or earlier to that date, the parties were constrained to enter into a settlement as per Annexure R-1. Clause 5 of the settlement reads as under:—

    “5. This settlement will be in operation for a period of one year and if in the meanwhile the Government notifies minimum rates of wages, this settlement will be inoperative from the date on which the revised Minimum Wages will come into force.”

    That means to say, the Management had agreed to give effect to the Government Notification on the date on which it came into force. Mr. Tukaram Pai submitted that the intention of the Management under Clause 5 was to give effect to the minimum wages notification as if it had prospective effect. Clause 5 by itself may support the case of Mr. Tukarm Pai but if Clause 5 is read with Clause 2 there is some indication in the settlement, that the parties had agreed to give effect to the revised rates of wages with effect from 1-1-1983 and therefore in terms of this settlement, it cannot be said that any prejudice has been caused to the petitioners by the impugned notifications. In that view of the matter, alternatively, this is not a fit matter for this Court to exercise its jurisdiction under Article 226 of the Constitution. For these reasons petitions are dismissed.

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    M/S. Mizar Govinda Annappa Pai v. State Of Karnataka
    (Dec 4, 1985)