Karnataka HC Stays Govt Order Deferring Variable Dearness Allowance Payment [Read Order]

A division bench of Chief Justice Abhay Oka and Justice Ashok S Kinagi passed the order while hearing a petition filed by Karnataka Industrial and Other Establishments Employees Federation and others.

The counsel for the petitioners had argued that though a stand has been taken now by the State Government that the exercise of power while passing the impugned order is under sub-section (2) of Section 26 of the Minimum Wages Act, 1948 (for short, "the said Act"), the impugned order does not say so, and in any case, the power which could be exercised under sub-section (2) of Section 26 of the said Act is completely different. It is a power to direct that the provisions of the said Act or any of them shall not apply to all or any class of employees employed in any scheduled employment, or to any locality where a scheduled employment is being carried on.

Further, pointing to Section 12 it was submitted that once by virtue of a notification under Section 5 of the said Act, minimum wages are fixed, it is the obligation of every employer to pay to every employee wages at a rate not less than the minimum wages fixed. Moreover, the fixation of minimum wages is a legislative act.

The state government countered the argument by saying "It is not necessary that the order passed by the State Government must contain a reference to a particular provision under which the power is sought to be exercised. If the order can spell out exercise of power under a particular statutory provision of law, that is sufficient."

The state government though conceded that the order is only deferment of payment of VDA which is, undoubtedly, a part of the minimum wages.

Further, it was contended that by exercising the power under sub-section (2) of Section 26 of the said Act, the State Government can always specify that certain provisions of the said Act will not apply to all the classes of employees. This power which is exercised by directing that a part of the minimum wages which is payable under Section 12 of the said Act will not be paid and the payment thereof would be deferred. The exercise of power squarely falls within the purview of sub-section (2) of Section 26 of the said Act.

The bench said "The formation of an opinion regarding the necessity of passing an order under sub-section (2) of Section 26 is not reflected from any document produced by the State Government or the statement of objections of the State Government. The State Government has supported the order only by relying upon sub-section (2) of Section 26 of the said Act. Therefore, in our view, the impugned order is ex facie illegal."

It added that "For dealing with a situation created by the pandemic, employers and employees can always meet and arrive at a workable solution. But an order fixing minimum wages in exercise of power under Section 5 of the said Act cannot be set at naught in this fashion."

The bench concluded by holding that "A strong prima facie case is made out. The result of the impugned order is that the employees will not be entitled to VDA which is an integral part of the minimum wages fixed under the provisions of the said Act for the period specified in the impugned order and the employees will get VDA for the said period only after the expiry of the said period. This is something which is clearly impermissible under the said Act and especially, keeping in mind the object of the said Act. The impugned order, as observed earlier, is ex-facie illegal and deserves to be stayed."