Subsidize 70% Wages From PM CARES Fund : 11 MSMEs Move SC Against Direction To Pay Full Wages During Lockdown [Read Petition]

Another petition has been filed in Supreme Court challenging Government advisories and orders asking private employers to retain their employees and pay them full wages during the operation of the nationwide lockdown.

The petitioners, 11 Micro, Small and Medium Enterprises (MSMEs), have moved the Top Court specifically against the advisory notified by the Secretary (Labour & Employment) on March 20 and clause (iii) of the order notified by the Ministry of Home Affairs (MHA) on March 29 for being violative of Articles 14 and 19(1)(g) of the Constitution.

To this end, it has been prayed that private employers be relieved of paying 70% of each employee's wages, and the Centre be directed to subsidize this amount and pay workers 70% of their wages by using funds collected through Government schemes such as the Employees' State Insurance Corporation (ESIC) or the PM CARES Fund.

Direct the "respondents to subsidize the wages of workers to the tune of 70% for lockdown period by utilizing the funds collected by the Employees' State Insurance Corporation (ESIC) or the PM Cares Fund or through any other Government Fund / Scheme", urges the plea.

The petitioners, represented by advocate Jeetender Gupta, buttress their contention by arguing that the Government does not have the power to impose any financial obligations on the private establishments by invoking the Disaster Management Act, 2005 (DMA). It is the Government's obligation to ensure the same under Article 43 of the Constitution.

It is thus suggested that the Government may invoke its powers under Sections 46, 47, 65 and 66 of DMA to raise and direct funds and resources towards mitigation of the emergency. The onus to compensate workers is on the Government, which cannot be shifted upon employers in the private sector, asserts the plea.

Highlighting their grievance, the petitioners iterate that the Chief Secretary of Haryana circulated the March 29 to all concerned authorities in the State, on the same date, for necessary action to be taken. Registered under the MSME Development Act, 2006, all 11 of these Companies affirm that they have at least one of their factories/work place in the state of Haryana. Therefore, the Order has caused them 'extreme financial and mental stress'.

"The Petitioners have already paid the wages to all workers including for the month of March 2020. On one hand, the business of the Petitioners has come to a stand still due to lock down and on the other hand the Petitioners are being compelled under the Impugned Notifications to pay for the wages to workers for entire lockdown period. The Petitioners are being further restrained from reducing their workforce especially the casual or contract or migrant workers. The Petitioners are under extreme financial & mental stress because of the Impugned Notifications."

The effect of these notifications is such that "an otherwise stable and solvent industrial establishment, especially an MSME establishment, can be forced into insolvency and loss of control of business", assert the petitioners.

Thus, alluding to the said notifications as arbitrary, illegal, irrational and unreasonable, the petitioner seeks the same to be declared ultra vires Articles 14 and 19(1)(g)of the Constitution.

This is the latest in a slew of petitions which have challenged the Government notifications. The first company to approach the Court with their grievance, Maharashtra-based Nagreeka Exports, decided to withdraw its plea with a view to avoid any conflicting submissions with subsequent petitions. However, the Apex Court earlier in the day heard similar pleas filed by companies from Punjab and Karnataka and asked the government to place on record its policy regarding the application of the said notification in two weeks.

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