Breaking: Delhi High Court Quashes Govt. Notification Revising Minimum Wage [Read Judgment]

In a huge blow to the AAP government, the Delhi High Court on Saturday quashed its much-touted March 2017 order revising the minimum wages for all classes of workmen in scheduled employment, opining that the same was ultra vires Article 14 of the Constitution of India.

The Bench comprising Acting Chief Justice Gita Mittal and Justice C. Hari Shankar further opined that the impugned notification suffered from “non-application of mind”, was not based on any material and violated principles of natural justice.

It also declared the constitution of the Minimum Wages Advisory Committee for all scheduled employments by the Government as ultra vires Sections 5(1) and 9 of the Minimum Wages Act, 1948, opining that the formation of this committee was “completely flawed”.

The court’s verdict was issued on petitions filed by employers — associations of traders, petrol dealers and restaurants — who had challenged two notifications— one issued in September, 2016 reconstituting the Minimum Wages Advisory Committee for all scheduled employments, and another issued in March, 2017, revising the minimum rates of wages for all classes of workmen/employees in all scheduled employments.

“Hurried actions” of the Government

The judgment, authored by Acting Chief Justice Mittal, begins by quoting— “The hurrier I go, the behinder I get” from Alice in Wonderland, to assert that the quote “appropriately manifests the manner in which the hurried actions of the respondents would set back the entire workforce of the city.”

It then notes that while an attempt to revise wages was in fact “sorely needed”, the hurried attempt, without adherence to binding statutory requirements, without relevant material and in violation of principles of natural justice, disrupted the entire exercise.

Summary of conclusions

Here is a summary of the court’s conclusions:

I. The High Court under Article 226 of the Constitution of India can interfere with a notification fixing minimum wages only on “the most substantial grounds”. 

II.The purport and object of the Act in fixing the minimum wage rate is clearly to prevent exploitation of labour. The hardship caused to individual employers or their inability to meet the burden of minimum wages or its upward revision, has no relevance. 

III. The object, intendment and provisions of the Minimum Wages Act, 1948 are clear and unambiguous, and therefore, the applicability of the beneficent rule of interpretation is completely unnecessary. 

IV. Minimum wages have to be more than wages at the subsistence level, have to take into consideration all relevant factors and prescriptions made after due application of mind and must take into consideration the norms and component as approved by the Supreme Court in the Reptakos judgment. 

V.The Supreme Court has rejected challenges to the constitutionality of the Minimum Wages Act, 1948 for the reason that the legislation has ensured the mechanism provided under Section 5, 7 and 9 of the enactment. This places the requirement of compliance with the provisions thereunder on an extremely high pedestal and they had to be strictly adhered to by the respondents. 

VI. The appropriate government is required to take into account the report and advice rendered by the Committee/Advisory Board and to apply independent mind and take a balanced decision so far as fixation or revision of minimum wages is concerned. The Government is not bound by the recommendations of the Committee. It is open to the Government to accept (wholly or in part) or to reject the advice of the Board or report of the Committee. 

VII. While there is no absolute prohibition on an employee of the Government being nominated as an independent member of the Committee under Section 5 of the Minimum Wages Act, an objection to such nomination has to be decided on the facts and circumstances of the case. It is only when minimum wages are under consideration for an industry in which the State may be vitally interested as an employer, that it may not be proper to nominate an official to the Committee treating him to be an independent member. 

VIII. A defect in composition of the Committee under Section 5 would not per se vitiate either its advice or the decision taken thereon. A defect in the composition of the Committee would vitiate its advice, or the ultimate decision of the Government fixing the minimum wages, only if such illegality or defect has worked to the prejudice to a party, for example where the interest of a particular group of employer or employees has not been represented or has not been taken into consideration. 

IX. The Delhi Metro Rail Corporation is not an employer engaged in scheduled employment in Delhi and it could not have been appointed on the Committee under Section 5 as a representative of the employer. 

X. Though the eligibility of the officers of the Labour Department or the Director of Economics & Statistics as members of the Committee cannot be faulted, however they failed to conduct themselves dispassionately & did not apply their independent minds. The respondent has appointed the very officials as independent persons on a Committee, which had already taken a view in the matter and made recommendations as members of a Committee in the year 2016, therefore, when appointed for the second time, they were clearly close-minded and proceeded in the matter in a predetermined manner. 

XI.The respondents have denied the statutorily mandated representation to the actual employers in scheduled employments in Delhi which tantamounts to non-compliance of Section 9 of the Minimum Wages Act, 1948 and failure on the part of the respondents to constitute a Committee required by law to be constituted. 

XII. It is essential that under Section 5(1) of the MW Act, a Committee “properly constituted” is “genuinely invited” with an open (‘receptive’) mind to tender advice to the appropriate Government. 

XIII. It has to be held that employers in the scheduled employments as well as employees with divergent views stand ousted from the consideration and their interests certainly compromised to their prejudice. This prejudice to the employers and employees would constitute a ‘most’ substantial ground (Ref : (2008) 5 SCC 428 (para 14), Manipal Academy of Higher Education vs. Provident Fund Commissioner) justifying interference by this court in exercise of jurisdiction under Article 226. 

XIV. Clearly the Government of NCT of Delhi was aware of the requirement of law and consciously failed to comport to the same. 

XVI. The fixation of minimum wages in Delhi cannot be faulted simply because they are higher than the rates of minimum wages fixed in surrounding States and Towns. 

XVII. The Committee in making its recommendations, as well as the respondents in issuing the singular notification for uniform minimum wages for all scheduled employments, have completely ignored vital and critical aspects having material bearing on the issue. 

XVIII. Any change in the prescribed rates of minimum wages, is bound to impact both the industry and the workmen. The respondents were bound to meaningfully comply with the principles of natural justice especially, the principles of fair play and due process. The representatives of the employers, had a legitimate expectation of being heard as the advice of the Committee was to inevitably affect them, which has been denied to them before the decision to revise minimum wages was finalized. 

XIX. The constitution of the Committee was completely flawed and its advice was not based on relevant material and suffers from non-application of mind. The Government decision based on such advice is in violation of express statutory provision, principles of natural justice, denied fair representation to the employers well as the employees in fact without any effort even to gather relevant material and information. 

XX. The non-application of mind by the committee and the respondents, to the relevant material considerations, offends Article 14 of the Constitution of India.