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Chotanagpur Chamber Of Commerce And Industries v. The State Of Bihar And Ors.
Structured Summary of the Opinion (Roy, J.)
Factual and Procedural Background
The petitioner (the Chamber of Commerce, described as a union of employers) filed a writ petition seeking quashing of annexure 1, a notification dated 22nd June 1988 published in the Bihar Gazette which revised minimum rates of wages for certain categories of employees in the scheduled employment of "Hotels, Eating Houses and Restaurants" in Bihar under section 5(2) of the Minimum Wages Act, 1948.
Relevant factual and procedural points stated in the opinion:
- On 2nd March 1982 the Governor of Bihar, under section 7 of the Act, constituted the Bihar (Minimum Wages) Advisory Board with independent members and representatives of employers and employees; Hotels, Eating Houses and Restaurants are admitted to be a scheduled employment.
- Mahabir Prasad, General Secretary of Bihar Rajya Mishtan Bhojan Bikreta Sangh, was appointed to the Board as the employer representative for that scheduled employment.
- A draft proposal under section 5(1)(b) of the Act was published by notification dated 21st August 1987 (published in the Gazette on 10th September 1987) stating that the proposal would be taken into consideration after two months from the date of publication and that objections/suggestions received within that two-month period would be considered.
- The Board met on 9th May 1988 and minutes (annexure 4) were circulated to members; subsequently annexure 1 (the final notification revising wages) was issued.
- The writ petition challenged annexure 1 primarily on three grounds: (i) that the procedure under section 5 was not followed because a specific date for consideration of objections/suggestions was not notified; (ii) that the Board was not validly constituted because there was no representative specifically for Hoteliers/Restaurants; and (iii) that the final rates fixed in annexure 1 were higher than the rates in the draft proposal annexure 3.
- The Court noted procedural irregularity in the petition's averments (no employer of Hotels/Eating Houses/Restaurants was named as a petitioner) but, for the purposes of deciding the case, accepted the petitioner’s counsel’s assertion that hoteliers were members of the petitioner.
- The writ petition had an earlier interim order (admission on 7.10.1988) staying operation of annexure 1 subject to a condition that petitioners and constituents pay an extra Rs.75 to each category of workers; some employers relied on that stay and did not pay rates fixed by annexure 1.
- The Court ultimately dismissed the writ petition with costs of Rs.1,000 and directed defaulting employers to pay the balance wages and provided for recovery with interest at 12% per annum from the date of judgment if they failed to comply.
Legal Issues Presented
- Whether, under section 5(1)(b) of the Minimum Wages Act, 1948, the appropriate Government is obliged not only to publish a draft proposal and specify a period of at least two months for receipt of objections/suggestions but also to specify a particular date on which the objections/suggestions would be considered (i.e., must a specific hearing date be fixed in the draft notification?).
- Whether the Advisory Board constituted under section 7 was invalid because it lacked a representative specifically drawn from Hoteliers and Restaurant owners (i.e., whether the appointment of the General Secretary of the Sangh sufficed as employer representation for that scheduled employment).
- Whether the State Government, in issuing the final notification, could fix minimum wages at rates higher than those indicated in the draft proposal (annexure 3), or whether it was limited to fixing the proposed rates or lowering them.
Arguments of the Parties
Petitioner's Arguments (as presented by Dr. Pal)
- The notification publishing the draft proposal (annexure 3) was defective because it did not specify a particular date on which objections and suggestions to the draft would be considered by the State Government; the petitioner relied on Narottamadas Harjiwandas v. P.B. Gowarikar (A.I.R. 1961 Madhya Pradesh 182) in support of this contention.
- The Advisory Board was not validly constituted for the scheduled employment of Hotels, Eating Houses and Restaurants because there was no specific representative of hoteliers/restaurant owners; the General Secretary of the Sangh could not be treated as representing those employers (relying on A.S.D. Basha v. State of Madras A.I.R. 1963 Madras 138).
- The State Government could not lawfully fix minimum wages higher than those proposed in the draft notification; the final rates should either match the draft or be lower.
Respondent / State Arguments (as reflected in the opinion)
- The State (through Government Pleader No.2) invited the Court to hear submissions on the point regarding specification of a particular consideration date and contended that annexure 3 satisfied section 5 by providing the statutory two-month period and stating the proposal would be taken into consideration after that period.
- The State relied on the position that the two-month period is the operative requirement of section 5 and that it suffices for the notification to provide that objections/suggestions may be received within that period and will be considered thereafter; the State pointed to later authority (Malavalam Plantations Ltd. v. The State of Kerala) that did not require a specific calendared date to be fixed.
- The State maintained that appointment of the General Secretary of the Sangh as employer representative was constitutionally and legally sufficient because the scheduled employment grouped Hotels, Eating Houses and Restaurants as one class and the representative had a nexus with that class; the Court also notes reliance on the Supreme Court's reasoning in Tiffin's Barytes regarding what suffices for employer representation.
- The State pointed out there was no averment (and no evidence on record) that any hotel or restaurant employer had made representations in response to the draft proposal; in the absence of such representations the Government has the power to increase rates as well as reduce them, a position supported by Chandra Bhawan Boarding and Lodging, Bangalore v. State of Mysore (A.I.R. 1970 S.C. 2042).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ministry of Labour and Rehabilitation v. Tiffin's Barytes Asbestos & Paints Ltd., A.I.R. 1985 S.C. 1391 | Notifications fixing minimum wages should not be lightly interfered with under Article 226; the committee is advisory and the Government makes the final notification; social welfare character of the enactment militates against striking down notifications on mere technicalities. | The Court relied on this authority to emphasise restraint in judicial interference and to support the conclusion that employer representation on the Board need only have a sufficient nexus with the scheduled employment (i.e., a representative need not be directly engaged for profit in that particular employment). |
| Narottamadas Harjiwandas v. P.B. Gowarikar, A.I.R. 1961 Madhya Pradesh 182 | Held that a particular date must be fixed in the notification for consideration of the draft proposal (as interpreted by the Court recounting petitioner's reliance). | The Court held that Narottamadas' rule was not correctly laid down and declined to follow it, stating section 5 does not enjoin that a particular date must be fixed; the Court found Malavalam Plantations to be the correct authority on this point. |
| Thankappan Asari v. Pankajakshi, A.I.R. 1960 Kerala 67 | Decision earlier relied upon in related jurisprudence (mentioned as relied on by the Madhya Pradesh High Court in Narottamadas). | The opinion notes that Thankappan's decision was subsequently overruled by a Full Bench in Malavalam Plantations and thus its earlier application was curtailed in that context. |
| Malavalam Plantations Ltd. v. The State of Kerala, 1975 L.I.C. 429 (Full Bench) | Supported the view that fixing a particular date in the notification for consideration of a draft proposal is not necessary; emphasised correct interpretation of section 5. | The Court relied on Malavalam to reject the petitioner's contention that a specific calendared date had to be fixed in annexure 3; Malavalam supported the Court's interpretation that providing the two-month period and stating consideration thereafter is sufficient under section 5. |
| A.S.D. Basha v. State of Madras, A.I.R. 1963 Madras 138 | Authority cited by the petitioner to challenge the sufficiency of an organisational representative as representing a class of employers. | The Court found the facts of A.S.D. Basha to be completely different and held its ratio inapplicable to the present case; it therefore did not follow that authority to invalidate the Board's constitution. |
| Chandra Bhawan Boarding and Lodging, Bangalore v. State of Mysore, A.I.R. 1970 S.C. 2042 | Authority for the proposition that if the State has power to reduce rates it inherently has power to enhance them; also contains the dictum that an industry unable to pay legitimately fixed minimum wages has no right to exist. | The Court relied on Chandra Bhawan to hold that the Government could lawfully fix revised minimum wages at rates higher than those proposed in the draft, and used the case to reject the petitioner's third point. |
Court's Reasoning and Analysis
The Court's analysis proceeds in a structured manner addressing each point raised by the petitioner and grounding its conclusions in statutory text and cited precedents.
1. Principle of judicial restraint. The Court began by citing the Supreme Court in Tiffin's Barytes to emphasise that notifications fixing minimum wages should not be lightly interfered with under Article 226, because the committees are advisory and the Government makes the final determination; social welfare considerations counsel against striking down notifications on mere technicalities. The Court noted this constraint as framing its review.
2. First point — requirement to fix a particular date for consideration. The Court examined section 5(1)(b) and section 5(2) of the Act and observed that the statutory requirement is to publish proposals, give a period of not less than two months for receipt of representations, and then consider representations received before the date specified. The Court found that annexure 3 gave the statutory two-month period (noting that the Gazette publication was on 10th September 1987, so objections could be received up to 10th November 1987 and consideration would occur thereafter) and concluded that section 5 does not require that a particular calendar date must be specified for the consideration of those representations. It held that Narottamadas (which required a particular date) was incorrectly decided in that respect and that Malavalam Plantations supported the Court's interpretation. Consequently, there was no merit in the petitioner's contention on this point.
3. Second point — validity of Board composition and sufficiency of representation. The Court observed that the scheduled employment grouped Hotels, Eating Houses and Restaurants as one class and that the General Secretary of the Sangh was appointed to represent employers of that class. Applying the reasoning in Tiffin's Barytes (that a nexus between the appointed representative and the scheduled employment suffices and direct profit-engagement is not necessary), the Court concluded that the General Secretary could validly represent the employers of the class. The Court also noted there was no averment in the petition that any hotel or restaurant employer had objected to that appointment at the relevant time and disallowed the belated objection in the writ petition. The Court therefore rejected the contention that the Board was invalidly constituted.
4. Third point — power to fix rates higher than in the draft proposal. The Court noted there was no averment that any hotel/restaurant employer had made representations in response to the draft proposal. Relying on Chandra Bhawan, the Court reasoned that if the State has power to reduce rates as desired by an employer it necessarily follows that it has power to enhance rates. The Court therefore rejected the argument that the final notification could not fix rates higher than the draft.
5. Substantive sufficiency of revised rates. The Court found nothing in the record to show that the revised minimum wages fixed by annexure 1 were fundamentally wrong or would adversely affect the scheduled industry or small units. It quoted Chandra Bhawan on the proposition that an industry unable to pay minimum wages has no right to exist and indicated there was no basis to set aside the notification on those grounds.
6. Relief and consequential directions. On the basis of the foregoing reasoning, the Court dismissed the writ petition with costs of Rs.1,000. The Court also addressed practical consequences arising from the earlier stay: employers who had relied on the interim arrangement and failed to pay wages at rates fixed by annexure 1 were ordered to pay the balance within two months. If they failed, specified persons (concerned employees, their union, the Labour Commissioner or Deputy Labour Commissioner or any authorised officer) were directed to take immediate recovery steps and defaulting employers would be liable to pay the amount with interest at 12% per annum from the date of the judgment until payment.
Holding and Implications
Holding: The Court DISMISSED the writ petition challenging annexure 1 (the June 22, 1988 notification revising minimum wages) and awarded costs of Rs.1,000 to be paid by the petitioner to the State.
Direct consequences and practical implications specified in the opinion:
- Employers who did not pay the full wages as fixed in annexure 1 during the interim period (when operation of annexure 1 had been stayed subject to conditions) are ordered to pay the balance amounts within two months from the date of the judgment.
- If defaulting employers fail to pay within the prescribed period, the concerned employees or their union or the Labour Commissioner or designated officers are authorised to initiate recovery proceedings; defaulting employers shall be liable to pay the recovered amount with interest at 12% per annum from the date of the judgment until payment.
Broader legal implications: The Court interpreted section 5 to require the statutory two-month period for representations but did not require that a particular calendar date for consideration be fixed in the draft notification; it also endorsed a practical view of employer representation on advisory boards (requiring a nexus rather than direct engagement) and affirmed the State's power to increase proposed wages in the final notification. The Court applied the Supreme Court's admonition against lightly setting aside minimum wages notifications on mere technicalities.
End of summary — all content strictly reflects the material contained in the provided opinion.
Roy, J.:— The petitioner in this writ petition has prayed for quashing annexure 1 dated 22nd June, 1988 published in the Bihar Gazette revising the minimum rates of wages under section 5(2) of the Minimum Wages Act, 1948 (the Act for short) payable to the concerned categories of employees employed in the employment of Hotels, Eating Houses, and Restaurants in the State of Bihar.
2. The admitted facts are that by notification dated 2nd March, 1982 published in the Bihar Gazette dated 14.4.1982, the Governor of Bihar under section 7 of the Act constituted Bihar (Minimum Wages) Advisory Board (the Board for short) consisting of independent members and members representing both the employees and employers of scheduled employment. Admittedly, Hotels, Eating Houses and Restaurants are the scheduled employment in the State of Bihar. For this scheduled employment, Mahabir Prasad, General Secretary, Bihar Rajya Mishtan Bhojan Bikreta Sangh (Sangh for short) was appointed to the Board as member representing the employer. By notification dated 21.8.1987 a draft proposal under section 5(1)(b) of the Act was published in the Bihar Gazette for information of persons likely to be affected whereby notice was given that the said proposal would be taken into consideration after two months from the date of publication of the notification in the Bihar Gazette Objections and/or suggestions received on or before the date of the said period of two months would be considered by the State Government. On 9.5.1988 meeting of the Board was held in which proposal for revising minimum rates of wages of the aforesaid scheduled industry was placed for consideration. The minutes of the meeting of the Board was circulated to all its members by annexure 4. Thereafter notification as contained in annexure 1 was issued revising the minimum rates of wages for certain categories of employees of the aforesaid scheduled industry.
3. The petitioner challenged the validity of the notification (annexure 1) on the ground that as the procedure made in section 5 of the Act was not followed by notifying the date on which objections and/or suggestions to the draft proposal would be considered, was notified in annexure 3, it was bad. The validity of annexure 1 was also challenged on the ground that as there was no representative in the Board representing the Hoteliers, Eating Houses and Restaurants, the Board was not validly constituted and any notification issued after constiting such Board cannot be enforced. Further ground on which the notification has been challenged is that the minimum wages fixed by annexure 1 is higher than the minimum rates of wages mentioned in the draft proposal as contained in annexure 3.
4. I may mention that this writ petition has been filed by the Chamber of Commerce, i.e the union of employers. Neither any employer of the Hotels, Eating Houses and Restaurants has joined as petitioner in the writ petition nor there is any averment in the writ petition that any such employer is a member of the petitioner. When we observed during course of hearing that in view of absence of any such averment in the writ petition, it would not be maintainable, Dr. Pal, learned counsel for the petitioner, submitted tint he may be allowed to withdraw this writ petition for filing a fresh one. As we had heard the learned counsel for the parties at length, we refused this prayer and observed that we shall accept in this case that Hotel employers are also members of the petitioner as submitted by Dr. Pal and dispose of the writ petition on merit. I proceed accordingly.
5. Before I take up the points, I may notice the observation of the Supreme Court in Ministry of Labour and Rehabilitation v. Tiffin's Barytes Asbestos & Paints Ltd.: A.I.R 1985 S.C 1391 regarding the power of this Court in interfering with the notification issued under the Act which runs as follows:
“We also wish to emphasise that notifications fixing minimum wages are not to be lightly interfered with under Art. 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 recommendation body and the final notification fining 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 Art. 226 of the Constitution except on the most substantial of grounds. The legislation is a social welfare legislation undertaken to further the directive principle of state policy and action taken pursuant it to it cannot be struck down on mere technicalities.”
6. That lays down the limitation of this Court.
7. With regard to the first point, Dr. Pal submitted that the State Government was not only required to notify the date within which the suggestion and/or objections to the draft proposal for revising the rate of minimum wages would be received, the State Government was also required to fix a date on which objections and/or suggestions received in reply to the draft proposal would be considered. There is no averment in the writ petition on this point. Learned Government Pleader No. 2 submitted that inspite of that fact, the parties be heard on this point and a decision be given.
8. Section 5 of the Act lays down the procedure for fixing and revising the rate of minimum wages and it reads as follows:
“5. Procedure for fixing and revising minimum wages.—(1) In fixing minimum rates of wages in respect of any scheduled employment for the first time under this Act or in revising minimum rates of wages so fixed, the appropriate Government shall either—
(a) appoint as many committees and sub-committees, as it considers necessary to hold inquiries and advise it in respect of such fixation or revision, as the case may be, or
(b) by notification in the Official Gazette, publish its proposals for the information of persons likely to be affected thereby and specify a date, not less than two months from the date of the notification, on which the proposal will be taken into consideration.
(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, revue 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”
9. Admittedly in this case mode specified in clause (b) was followed.
10. The notification dated 21st August, 1987 containing the draft proposal (annexure 3) reads as follows:
“S.O 809, dated the 10th September, 1987.—The following draft of a proposal to revise the minimum rates of wages fixed in the State Government's notification no. S.O 275, dated the 15th February, 1982 for certain categories of employees employed in the employment in ‘Hotels, Eating Houses and Restaurants' in the State of Bihar, which the Governor of Bihar proposes to make in exercise of the powers conferred by clause (b) of sub-section (1) of section 3 of the Minimum Wages Act, 1948 (1 of 1948), is hereby published as required by clause (b) of sub-section (1) of section 5 of the said Act for the information of persons likely to be affected thereby and notice is hereby given that the said proposal will be taken into consideration after two months from the date of publication of this notification in the Bihar Gazette.”
Any objection or suggestion which may be received from any person in respect of the said proposal on or before the date of the said period of two months shall be considered by the State Government.”
11. Dr. Pal submitted that in annexure 3 not only the date within which objections and/or suggestions would be received was required to be mentioned, a date on which the objections and/or suggestions along with the draft proposal would be considered by the State Government was also required to be mentioned. Reliance was placed by Dr. Pal in Narottamadas Harjiwandas v. P.B Gowarikar: A.I.R 1961 Madhya Pradesh, 182.
12. It will be noticed from annexure 3 that it was notified that objections/suggestions must be received on or before two months from the date of publication of notification in the Bihar Gazette and the proposal shall be taken into consideration after two months from the date of publication of the notification. The notification was published in the Bihar Gazette on 10th September, 1987. The objections and/or suggestions could, therefore, be received upto 10th November, 1987 and the consideration of the draft proposal along with the objection or suggestion would be after 10th November, 1987. Learned Government Pleader No. 2 submitted that in Narottamdasa's case, the Madhya Pradesh High Court relied in Thankappan Asari… v. Pankajakshi…Counter-Petitioner.: A.I.R 1960 Kerala 67 and a Full Bench of the Kerala High Court in Malavalam Plantations Ltd. v. The State of Kerala: 1975 L.I.C 429 overruled the Division Bench decision in Thankappan's case.
13. The appropriate Government under section 5 of the Act for the purpose of revising the minimum rates of wages is required to publish the draft proposal giving atleast two months' time computing from the date of notification within which the representation of the persons likely to be affected are to be received, specify the date not less than two months from the date of notification on which the proposal would be taken into consideration and issue final notification after considering all representations received before the date specified and after consulting the Board constituted under section 7 of the Act. What is important is that the appropriate Government can take up the draft proposal only after two months from the date of the notification. In this particular case, the State Government could not have considered the draft proposal before 10th November, 1987. This period of two months has been fixed to enable the persons likely to be affected to file representation and the representation received within the specified period must be taken into consideration by the appropriate Government.
14. The crucial facts, therefore, to be considered while deciding the validity of notification revising minimum rates of wages, is to see whether two months' time from the date of the publication of the draft notification in the gazette for filing representation has been provided or not and whether it has also been stated that representation received within two months will be considered thereafter. Section 5 does not enjoin that a particular date must also be fixed and stated in the notification by which draft proposal was published. In my opinion, this is not necessary becuase the appropriate Government is not required to hear public in general, but is required to consult the Board before publishing the final notification. With respect, the law has not been correctly laid down in Narottam Das (supra) which held that a particular date must be fixed in the notification for consideration of the draft proposal. My finding is supported by the decision in Malavalam's case. There is no merit in the first point raised by Dr. Pal.
15. With regard to the 2nd point, Dr. Pal submitted that the General Secretary of the Sangh could not have been treated as representative of the Hoteliers, and Restaurant owners and as those employers were not represented, the notification (annexure 1), was bad. I have already noticed that scheduled industry is Hotels, Eating Houses and Restaurants. All these three constitute one class and the General Secretary of the Sangh was appointed as member representing the employers of this class. I find no reason why the General Secretary of the Sangh cannot be said to be representing the employers of Hotels, Eating Houses and Restaurants. In support of his contention Dr. Pal relied on A.S.D Basha v. State of Madras: A.I.R 1963 Madras, 138. Facts of that case are completely different and ratio of that case does not apply to this case. Constitution of the Board was notified in the Bihar Gazette on 12.4.1982 There is no averment in the writ petition that any objection was taken by any Hotel and Restaurant employer with regard to appointment of the General Secretary of the Sangh to represent them. The petitioner cannot be allowed to take the point for the first time in the writ petition. I have already noticed that the Hotels, Eating Houses and Restaurants have been clubbed under one schedule employment. In Tiffin's Barytes (supra) the question was whether the person said to be appointed as ‘independent’ member could be so held. The Supreme Court held in the negative. Question also arose whether when no person was appointed to the Committee who had directly anything to do with Barytes mines, the notification for those mines was valid, the Supreme Court observed:
“……….For the purpose of appointing the Committee to represent the employers in a scheduled employment, it was not necessary that the person appointed should be engaged for profit in the particular employment. It is enough if a nexus exists between the persons so appointed to represent the employers in the particular employment and the particular employment concerned.”
16. There is no merit in the second point.
17. The rates at which the minimum wages were proposed to the notification revising the minimum rates be revised is contained in annexure 3. Dr. Pal contended that the State Government could not have fixed the revised minimum rates of wages at rates higher than the rates notified in the draft proposal; it could have been either fixed at the proposed rate or at lesser rates. I may notice that no where there is any averment in the writ petition that any representation was made in response to the draft proposal by any Hotels, Eating Houses and Restaurants employer. This question arose in Chandra Bhawan Boarding and Lodging, Bangalore v. State of Mysore: A.I.R 1970 S.C 2042 and it was observed that if the State Government has power to reduce the rates as desired by the employer, it necessarily follows that it has power to enhance it. There is no substance in the third point also raised by Dr. Pal.
18. Nothing has been shown that the minimum wages fixed are basically, wrong. Nothing has been stated that the rates prescribed would adversely affect the schedule industry or even the small unit. Even if they do, to quote the Supreme Court in Chandra Bhawan (supra) “then the industry or unit, as the case may be, has no right to exist. Freedom of trade does not mean freedom to exploit”.
19. In view of the findings recorded above, the writ petition is dismissed with cost quantified at Rs. 1000/- payable by the petitioner to the State.
20. It appears that on 7.10.1988 at the time of admission of this writ petition, operation of annexure 1 was stayed subject to the condition that the writ petitioner and its constituents will pay an extra amount of Rs. 75/- to each category of workers in addition to what they were paying under the earlier notification dated the 26th November, 1981 fixing the minimum wages without prejudice to their rights. The employers of Hotels, Eating Houses and Restaurants have taken advantage of this and did not pay the wages as fixed in annexure 1. They shall be liable to pay the balance amount for the period they have not paid the minimum wages at the rate notified in annexure 1 within two months from today. If they fail to do it, the concerned employees or their union or the Labour Commissioner or the Deputy Labour Commissioner, Burdwan Compound, Ranchi, or any other officer authorised under the Act shall take immediate steps for recovery of the amount from the defaulting employer and in such event the defaulting employer shall be liable to pay the same with interest at the rate of 12% per annum from the date of this judgment till payment.
21. Bisheshwar P.d Singh, J.:—I agree.
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