KANAK INDUSTRIES v. STATE OF MAHARASHTRA — 1987 DIGILAW 142 (BOM)

JUDGMENT : S.M. Daud, J.—This petition under Article 226 of the Constitution takes exception to Notification bearing No. MWA 3277/1742/Lab-7 of the Industries, Energy and Labour Department, Government of Maharashtra, dated 12th November, 1982 (Notification) fixing the minimum wages payable unto employees in establishments engaged in manufacture of readymade garments or its accessories (excluding hosiery articles) and tailoring establishments in the State of Maharashtra. 2. The Minimum Wages Act, 1948 (Act) is designed to fix minimum rates of wages in certain employments. These employments are referred to as a "scheduled employment" because they are listed as such in the schedule appended to the Act. On 11.1.1977, the following was added to the schedule being item No. 46 therein:- "Employment in any establishment engaged in manufacturing readymade garments or its accessories (excluding hosiery articles) and tailoring establishments". About 11 months later, to be precise on December 6, 1977, the first respondent - State of Maharashtra - appointed a Committee vide GR No. MWA 4277/Lab-7. This Committee was-- "to hold enquiries into the conditions prevailing in the employment in any establishment engaged in manufacturing readymade garments or its accessories (excluding hosiery articles) and tailoring establishments in the State of Maharashtra and to advise Government in the matter of fixation of minimum rates of wages in the said employment". The personnel of the Committee consisted of two independent members, one being the Chairman, Mr. Hans Bhugra and the other being a Government servant designated as Member-Secretary of the Committee. Besides these two persons, the Committee consisted of six persons, three each representing the industry and workmen respectively. The representatives of the industry included Mr. Navin Kapoor and the labour component included Dr. Datta Samant. On 11.1.1980, pursuant to a request made by Mr. Nayin Kapoor, the membership vacated by him was filled in by the appointment of one K.V. Doshi. Mr. Doshi submitted his resignation on 14.2.1981 and he and the segment that he was representing, requested the Government to appoint in his place Mr. Harikrishnan. In the meantime, it appeared that M/s. Doshi and Datta Samant had failed to attend three consecutive meetings of the Committee. This attracted Rule 9 of the Maharashtra Minimum Wages Rules, 1963, which reads thus:- "(1) If a member of the Committee or the Board fails to attend three consecutive meetings, he shall, subject to the provisions of Sub-rule (2), cease to be a member thereof. This attracted Rule 9 of the Maharashtra Minimum Wages Rules, 1963, which reads thus:- "(1) If a member of the Committee or the Board fails to attend three consecutive meetings, he shall, subject to the provisions of Sub-rule (2), cease to be a member thereof. (2) A person who ceases to be a member under Sub-rule (1) shall be given intimation of such cessation by a letter sent to him by registered post within fifteen days from the date of such cessation. The fetter shall indicate that if he desires restoration of his membership, he may apply, therefore, within thirty days from the receipt of such letter. The application for restoration of membership, if received within the said period, shall be placed before the Committee or as the case may be, the Board, and if a majority of members present at the next meeting is satisfied that the reasons for failure to attend three consecutive meetings are adequate, the member shall be restored to membership immediately after a resolution to that effect is adopted". On July 23, 1981, the Government issued Resolution No. MWA- 4281/4046/Lab-7. Therein it was recited that M/s. Doshi and Datta Samant had ceased to be members of the Committee under Rule 9(1) of the Rules, that Doshi's resignation had been accepted, that the membership of Datta Samant was not to be restored and that the vacancies created by M/s. Doshi and Datta Samant were not to be filled up. Pursuant to this decision, the Resolution dated December 6, 1977 was amended by the deletion of the names of M/s. Doshi and Datta Samant from the array of members constituting the Committee. The Committee met on a number of occasions, solicited and received the views of various persons and associations and after deliberating, submitted a report. This report was unanimous. It divided the State into three zones and the employees into five categories. The monthly and daily wages to be paid to the employees, category and zone wise, were specified. Apart from the basic wages, the employees were to get a special allowance which was to revolve around the Bombay consumer price index number (new series) at CPI No. 364. The report submitted by the Committee was considered by respondent No. 1 and this was followed by the Notification assailed in this petition. Respondent-the State Government has accepted the recommendation of the Committee in toto. The report submitted by the Committee was considered by respondent No. 1 and this was followed by the Notification assailed in this petition. Respondent-the State Government has accepted the recommendation of the Committee in toto. This has given rise to a number of objections by employers and the two petitions before me are by a group describing themselves as manufacturers of readymade garments for export. 3. Petitioners contend that they represent a distinct and different segment by themselves. They could not be mixed up with garment manufacturers catering to the national market or tailoring establishments. Their problems were kept unto themselves. The Committee constituted by the State Government had no representative of theirs after the acceptance or the resignation of K.V. Doshi. No action had been taken by Government upon the recommendation to fill up Mr. Doshi's vacancy by appointing Mr. Harikrishnan. Petitioners and their companions in the garment export industry had to compete with manufacturers in the State of Karnataka and the Union Territory of Delhi. These competitors enjoy a distinct cost advantage over garment exporters located in Manarashtra. A major advantage which the competitors derived there, was the low minimum wages prevalent in their regions as was clear from Exs. D and E (accompaniments to W.P. No. 265 of 1983). Garment exporters like the petitioners operated in a wholly buyers market. They had to compete with manufacturers from countries like Hong Kong, Korea, Taiwan, Singapore, Sri Lanka and China. The manufacturers from these countries offered a stiff competition to the Indian exporters. The latter operated in a market which was seasonal in character, inasmuch as Indian made garments were found suitable only as summer wear. The Indian exporters could not effectively work for more than seven months in a year. For a variety of reasons, the Indian exporters were finding it more and more unprofitable to work. The Notification impugned rested upon the recommendations made by the Committee which had failed to take into consideration a number of relevant factors. The Committee had not borne in mind the distinction between manufacturers of readymade garments and tailoring establishments. The exporters operated in a highly competitive and unremunerative environment. The production pattern in their establishments followed the assembly line system. That was not the case with the pattern followed in tailoring establishments and the manufacturers of ready-made garments catering to the national market. The exporters operated in a highly competitive and unremunerative environment. The production pattern in their establishments followed the assembly line system. That was not the case with the pattern followed in tailoring establishments and the manufacturers of ready-made garments catering to the national market. The non-representation of the exporters after the resignation of K.V. Doshi made the Committee wholly unrepresentative which was a violation of Section 9 of the Act. The minimum wage recommended by the Committee and accepted by the Government approximated to a fair or living wage. This was ultra vires the powers vested in the Government under the Act. In the Notification, tailors had been divided into three grades and there were no guidelines to indicate what the grades meant. In the same fashion, ironers had been divided into different grades. The gradation was irrational and arbitrary showing non-application of mind. In the export segment of the employment employees were paid on a piece rate basis. This was because the nature of work was such as to exclude payment by time rating. Despite this, the Committee had recommended and Government accepted the time rating basis for computing wages payable to the employees. The State had been divided into three zones and various areas placed in these zones without any reasons to explain the demarcation and classification. Also arbitrary was the categorisation of employees into five categories. The five categories did not prevail in the establishments of those manufacturing readymade garments. Before accepting the report of the Committee, the Government should have objectively considered the situation. This was not done, with the result that a number of infirmities in the Committee's report were overlooked. The Notification be quashed. 4. The second respondent in Writ Petition No. 265 of 1983 is a representative Union of the employees in Bombay. So far as the State Government is concerned, it has not filed a return in Writ Petition No. 265 of 1983. In the other writ petition, a belated attempt was made to tender a return yesterday when the hearing had already begun. It has to be pointed out that Writ Petition No. 149 of 1983 was lodged in January 1983. Rule was issued in February 1983. There was no explanation for the long silence of nearly four years from the Government. It was for this reason that I refused to take the return tendered on 6.4.1987. It has to be pointed out that Writ Petition No. 149 of 1983 was lodged in January 1983. Rule was issued in February 1983. There was no explanation for the long silence of nearly four years from the Government. It was for this reason that I refused to take the return tendered on 6.4.1987. The return tendered by the Association refutes the contentions advanced to impugn the report of the Committee and the Notification issued by the Government. It is contended that the Committee was properly constituted, that it functioned properly and effectively, that it considered all the relevant factors, that the report submitted by it was a well considered document, that the Government was right in accepting the report in toto and that Article 226 could not be used to assail the report or the Notification. 5. Regardless of the grounds urged in the petition, [earned Counsel representing the petitioners have restricted themselves to those which are considered below: 6. Petitioners first attack the notification by pointing to an alleged contravention of Section 9 of the Act. This section enjoins equality in the representation to employers and employees in a Committee appointed to recommend minimum wages in a Scheduled employment. It is not disputed that this requirement had not been violated until 14.2.1981. Petitioners submit that the violation lay in events which took place between 14.2.1981 and 23.7.1981. K.V. Doshi had resigned on the former date and his place had not been filled in by the appointment of Harikrishnan. Thus the Committee became imbalanced, in that, while the workmen had three representatives, the employers had only 2. When this was sought to be refuted by referring to the recitals of the resolution, dated 23.7.1981, the reply given was that forfeiting membership was distinct from resigning a membership. The latter took effect with the conveying of the resignation to the appointing authority. As against this, forfeiture on account of non-attendance was not automatic. It has to be followed up by an intimation and the person losing membership could seek restoration by applying therefor. It is not possible to accept either submission. Setting one's signature to a letter of resignation or delivering the letter to the appointing authority is not enough to evict the appointee. The appointing authority has to accept the resignation. Until this event takes place, the proffered resignation is no more than an offer. It is not possible to accept either submission. Setting one's signature to a letter of resignation or delivering the letter to the appointing authority is not enough to evict the appointee. The appointing authority has to accept the resignation. Until this event takes place, the proffered resignation is no more than an offer. The person resigning may with the leave of the appointer, withdraw it. The latter also may persuade him to withdraw it. As against this, though Rule 9(1) of the Rules, makes the cesser subject to intimation as provided by Sub-rule (2), the cesser is final unless condoned, once intimation pursuant to the stipulated non-attendance is established. It was argued that there was no material to show as to since when Dr. Samant stopped attending the meetings. In the absence of this material, it could not be said that he had not participated in the affairs of the Committee in between 14.2.1981 and 23.7.1981. No purpose is served by lamenting the remissness of the Government in not coming forth with a return disclosing the true position. Some information as to what transpired is available from the report of the Committee and the resolution of 23.7.1981. The latter recites that Dr. Samant had not attended three consecutive meetings of the Committee. These meetings had to be the ones immediately preceding 23.7.1981. These meetings according to the report, were held on 23.12.1980, 8.1.1981 and 27.2.1981. K.V. Doshi also had not attended these meetings. Factually, therefore, there was no imbalance in the number of participants from the two sides. Petitioner rely on the authorities reported in 1979 L.I.C. 640 and 1981 L.I.C. 474 to buttress their argument. These only lay down the obvious viz. that Section 9 requires an equal number of representatives of capital and labour on a Committee and that an imbalance in the number vitiates the report submitted by it. Here, the non-attendance by K.V. Doshi matched that of Dr. Samant Theoretically, both continued to be members till 23.7.1981. Both had incurred the Rule 9(1) disqualification, though one does not know if they had been intimated as required by Rule 9(2). For invalidating a Committee report, it is not enough to rest upon technical propositions. The imbalance must be established as a fact and not by resort to legal fictions. Petitioners' challenge on this ground has thus to fail. 7. For invalidating a Committee report, it is not enough to rest upon technical propositions. The imbalance must be established as a fact and not by resort to legal fictions. Petitioners' challenge on this ground has thus to fail. 7. While on the constitution of the Committee, I have also to deal with the plea that petitioners represented a distinct and different segment in the trade. They were in the export segment. This was a separate class by itself having a work environment and problems different from those of their counterparts catering to the internal market, not to speak of the totally different grouping of tailoring establishments. With the exit of K.V. Doshi, the exporters went totally unrepresented. This non-representation had a deleterious effect upon their interests. Exporters, it is said, operate in a buyer's market. They make garments according to designs and patterns supplied by foreign dealers. Even after getting such orders, they can execute the same only upon the allotment of quota by the Government. The market being uncertain, their labour is paid on a piece rate basis. All this was overlooked by the Committee which assumed the work -pattern of tailoring establishments as the norm for all groups. Exporters may be having problems which are peculiar to them and which do not beset the caterers to the domestic market or tailoring establishments. Counsel argues that even the legislature recognises this distinction when it phrases Item 46 as embracing two classes viz. makers of readymade garments and tailoring establishments. But this is not recognition of a difference. On the other hand, it may be a declaration of the legislative intent to treat both classes as springing from the same genus. There may be some force in the argument to treat the makers of readymade garments as different from tailoring establishments. On the other hand, the affinity between the species should not be overlooked. This may be too simplistic an approach to a fairly complex question. But the power to add to the Schedule u/s 27 of the Act has been conferred upon the Government. The legislature's delegate should be credited with the competence to grade employments into appropriate groups. In so far as Item No. 46 is concerned, the insertion was made in 1977. No exception was then taken to the lumping together of different trades. The legislature's delegate should be credited with the competence to grade employments into appropriate groups. In so far as Item No. 46 is concerned, the insertion was made in 1977. No exception was then taken to the lumping together of different trades. The association of K.V. Doshi and Kapoor with the Committee was a fairly long one. Their participation in the deliberation of the Committee during their respective tenures must have been utilised by them to acquaint their colleagues with the special problems encountered by the exporters. The minutes of the Committee's meetings between the 10th and 13th January, 1982 show that even at the late stage, an attempt was made by the representatives of the industry to question the feasibility of imposing minimum wages upon them. However viewed, it is just not possible to hold that exporters had to be provided separate representation in the employers quota. Nor is it possible to hold that were not represented or that the non-representation prejudiced their cause. 8. The next point urged by petitioners is that the Committee and the Government committed blatant violations of Article 14. This was done by an unwarranted lumping of all the three species as one. Factors relevant to the readymade garments were ignored and those pertaining to tailoring establishments were foisted upon the former. This was arbitrariness by treating unequals as equals. Counsel argued that the very division into five categories showed that the Committee was carried away by the pattern prevalent in tailoring establishments. Most of these categories were not to be found in the readymade garments industry. Now, something on these lines was urged before the Committee also. It held that though there were differences, the base of the two species was common, in that, both involved cutting of cloth according to design and measurement and stitching the different pieces to turn out a wearable garment. This is the view of a Committee which included persons conversant with the industry, in the sense, not only of representing the two limbs thereof, but who had also the benefit of going through the material received and collected from various sources. The common features mentioned above are not a myth. It is argued that in the garments trade, labour is paid on a piece rate basis. This aspect was wholly lost sight of, and, to an extent where even labour could make a grievance. The common features mentioned above are not a myth. It is argued that in the garments trade, labour is paid on a piece rate basis. This aspect was wholly lost sight of, and, to an extent where even labour could make a grievance. The exporters functioned in an uncertain setting. Receipt of Orders and allotment of quotas were events over which they had no control. Designs and fashions kept changing with an unpredictable rapidity. The trade perforce could not have workmen paid on a time-rated basis. All this has been considered by the Committee at paras 2.8 to 2.32 of its report. That it has disagreed with the stand taken by the exporters would not be a reason justifying judicial intervention. In disregarding the piece rating system, the Committee has exercised a choice in keeping with the times. The argument that the categorisation of employees made by the Committee is inapposite to the petitioners class if true-should pose no difficulties. If petitioners have workers who do not fall into this or that category, they can so urge, as and when, a dispute arises. The argument that the categorisation and specification without definitions will lead to endless wrangles is not of any consequence. Litigation is an alternative to civil strife and that is all, there is, to the understandable desire to avoid endless visits to Courts. The contention that divorcing wages from piece rating will affect productivity and in the long run act as a disincentive to workmen, now remains to be considered. The first part of the submission is something which favours capital. Those running the enterprise naturally emphasis productivity. But enlightened entrepreneurs nave come round to the belief that a contented labour force is more productive than one governed by the iron law of wages. That time rating will generate ennui amongst workmen is something that time alone can establish or falsify. If proved, there can be a revision in the basis of payment. The submission that time rating is entirely un-suited to establishments working on the assembly line pattern, is one way of looking at the question. The other and equally weighty way, is, that time rating is a more humane method of paying labour for its toil. It certainly prevents over-exertion and stills the anxiety as to how the basic needs of the worker will be met. The other and equally weighty way, is, that time rating is a more humane method of paying labour for its toil. It certainly prevents over-exertion and stills the anxiety as to how the basic needs of the worker will be met. I was referred to the judgment of Rama Jois J. of the Karnataka High Court in a batch of writ petitions impugning notifications relating to minimum wages fixed for different industries. In that judgment, the learned Judge struck down the gradation made in respect of tailors. Though definitions had been given of the different grades, the learned Judge held that the definitions of at least two grades were arbitrary. The judgment is to be found in group Writ Petition Nos. 10480 to 10498 of 1984 and others decided on January 24, 1985. With respect to the learned Judge, I find it difficult to subscribe to his view. In any case, as far back as 1955 the Supreme Court had this to say- "Article 14 does not authorise the striking down of a law of one State on the ground that in contrast with the law of another State on the same subject, its provisions are discriminatory. Nor does it contemplate a law of a Centre or of the State dealing with similar subjects being held to be unconstitutional by a process of comparative study of the provisions of the two enactments. The sources of authority for the two statutes being different. Article 14 can have no application." The State of Madhya Pradesh Vs. G.C. Mandawar, The trade which had its representatives on the Committee graded Tailors and Ironers into different categories, Where the numerical classification is adopted, the normal rule of construction is that the ranking goes from the higher to the lower grades. This is because a Grade I Tailor would be higher than a Grade 2, and, the latter, higher than a Grade 3 Tailor. That also would be the position of Ironers. The representatives of the industry and workers had no difficulty in accepting the gradation. It will not, therefore, be permissible for a writ Court to imagine and speculate upon the possible ambiguity that exists in the gradation and the quibbling that this can occasion in the future. 9. A more serious objection based upon Article 14, raised by the petitioners, is, with regard to the alleged overlooking of comparable minimum wages. It will not, therefore, be permissible for a writ Court to imagine and speculate upon the possible ambiguity that exists in the gradation and the quibbling that this can occasion in the future. 9. A more serious objection based upon Article 14, raised by the petitioners, is, with regard to the alleged overlooking of comparable minimum wages. It is submitted that neither the Committee nor the Government looked into the minimum wages prescribed for the workers of the same employment in Delhi and Karnataka. The short answer to this is that the industries were located in the State of Maharashtra and it was the conditions prevalent here that had to be taken into consideration. The attempt made to show that the readymade garments industry was national in scope and that wages prevailing in other regions could not be ignored is of no avail. The petitioner in Writ Petition No. 265 of 1983 has relied upon draft guidelines in relation to fixation of minimum wages drawn up by the Indian Labour Conference held in November 1985. These guidelines are at Ex.1 to the rejoinder. They do not really help the petitioners because the preface itself makes it clear that the guidelines do not have any statutory backing. Next, it is made very clear that having regard to the vital differences in the different regions, it is impossible to conceive of any such thing as a uniform minimum wage in regard to any trade or establishment. With all this, the Conference expressed the hope that some way would be found to have uniformity in minimum wages for the same employments. This was with a view to prevent the flight of industries from one region to another. No exception can be taken to the generalisations which abound in the draft guidelines. But at the end we are left nothing of any consequence. It is not possible to deduce therefrom, that in fixation of minimum wages, the rates prevalent in one State should have any bearing upon wages to be settled for another. If the industry in Maharashtra is required to pay higher wages, it certainly should not be forgotten that the availability of finance, raw material and transport facilities in this State, are far superior to the other regions where competitors of the petitioners are working. 10. If the industry in Maharashtra is required to pay higher wages, it certainly should not be forgotten that the availability of finance, raw material and transport facilities in this State, are far superior to the other regions where competitors of the petitioners are working. 10. Petitioners refer to the great disparity in the minimum wages they are required to pay vis-a-vis those payable in other employments. A chart to show this disparity has been produced and it is at Ex.4 to the rejoinder in Writ Petition No. 265 of 1983. To lend support to the contention that the minimum wages in other employments had to be taken into consideration, petitioners rely upon Express Newspapers (Private) Ltd. and Another Vs. The Union of India (UOI) and Others,. That case arose out of Working Journalists (Conditions of Service) and Miscellaneous Provisions Act 45 of 1955. The said case arose out of wages fixed for working Journalists, Mr. Shetye relies upon para 73 of the judgment which reads thus: "The principles which emerge from the above discussion are: (1) that in the fixation of rates of wages which include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity"; (2) that the capacity of the industry to pay is to be considered on an industry-cum-region basis after taking a fair cross section of the industry; and (3) that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity or demand for the product, the possibility of tightening up the organisation so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business". Now the very first principle makes the ratio clear. It is that the capacity of the industry to pay is not relevant in cases of a bare subsistence or minimum wage. Now the very first principle makes the ratio clear. It is that the capacity of the industry to pay is not relevant in cases of a bare subsistence or minimum wage. Here, it is the minimum wage in the employment which was being fixed, and that, for the first time. Respondents have referred to a number of decisions in support of the principle that the employers' capacity to pay has not to be taken into consideration in the matter of fixation of minimum wages. I need not refer to this for it is obvious that the financial capacity of the employer is of no consequence when the issue is as to the minimum wages payable to the workmen in the industry concerned. What minimum wages were fixed in industries like saw milling, canteens, glass, plastics, engineering etc. is not germane. Those employments may not be requiring the skill, concentration or monotony that is to be found in the garments and tailoring trade. What should be the appropriate test, and, what minimum wage should be paid to the workers in any employment, is for the Committee and the Government to decide. If they did not consider the minimum wages fixed in other trades as having a bearing upon the minimum wage payable to the workers in the garments industry, I do not see how a Writ Court can take a different view. Theoretically of course, much can be said on either side. But that is beyond the confines of the limited jurisdiction conferred upon this Court in exercise of its extraordinary jurisdiction under Article 226. 11. Last, is the argument that the three zones fixed by the Committee are totally arbitrary because they have been so fixed without taking into consideration the gross revenue, products manufactured and the total labour force employed by different establishments. That some sort of stratification was essential, is not disputed. The zoning adopted by the Committee and accepted by the Government cannot be said to be totally arbitrary. To be brief, the three zones consist of (1) Bombay and its vicinity, (2) the larger towns in Maharashtra and (3) the rest of the State. This obviously is on the basis of the cost of living experienced by people residing in the different zones. As a rough and ready measure, it cannot be said that the zoning is irrational. To be brief, the three zones consist of (1) Bombay and its vicinity, (2) the larger towns in Maharashtra and (3) the rest of the State. This obviously is on the basis of the cost of living experienced by people residing in the different zones. As a rough and ready measure, it cannot be said that the zoning is irrational. Judicial notice can be taken of the fact that the zoning rationally corresponds to the cost of living factor in the three different regions. If the Committee chose this rough and ready system to classify the State, it cannot be said that exclusion of other factors, rendered the classification arbitrary or irrational. After all, that is a matter for the experts to decide. Alternatively, there was no error in assuming that the industry in the three zones would have different earnings and that the labour force was required to be compensated on a sliding scale. In this indirect way, the factors referred to by Mr. Shetye, are, in reality included, in the zoning pattern adopted by the Committee. 12. The result of the foregoing discussion is that the challenge levelled against the Notification fails. Petitioners will want to test the correctness of my verdict in a higher Court. For that reason, it is but proper that the interim relief given at the stage of admission of the petition is made to continue for a period of two more months as from today. Hence the order. ORDER Rule discharged, with parties being left to bear their own costs. The interim relief granted at the stage of admission shall continue for a further period of two months as from today.