Reportable  

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL   No  . 2539   of   2010

Hindustan Sanitaryware and Industries Ltd. &   Others.

....  Appellants    

Versus

The State of Haryana  …. Respondent

WITH  

CIVIL APPEAL   No  . 4454_   of   2019 (Arising out of Special Leave Petition (Civil) No. 5832 of

2018)

Faridabad Industries Association       ....  Appellant    

Versus

The State of Haryana & Another    …. Respondents

J U D G M E N T

L. NAGESWARA RAO, J.

CIVIL APPEAL   No  . 2539   of   2010  

1. The  Appellant  filed  a  Writ  Petition  challenging  the

Notification  dated 27.06.2007 issued under Section 5 (2) of

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the  Minimum  Wages  Act,  1948  (hereinafter,  “the  Act”).

The  said  Writ  Petition  was  dismissed  by  the  High  Court.

Aggrieved by the judgment of the High Court, the Appellant

has approached this Court.   

2. In exercise of the powers conferred   by Section 5(2) of

the Act, the Finance Commissioner and Principal Secretary to

the Government  of  Haryana,  Labour  Department  issued a

Notification on 27.06.2007 fixing/revising the minimum rates

of wages in respect of different scheduled employments as

mentioned  in  the  schedule  therein  with  effect  from

01.07.2007.   The  relevant  provisions  of  the  Notification

dated 27.06.2007 are as under:   

 Unskilled employees having 10 years’ experience would be deemed categorized as semi-skilled “A”.

 After 3 years of experience in semi-skilled “A”, the employees would be deemed categorized as semi- skilled “B”.

 After  3  years  of  experience  in  skilled  “A”,  the employees  would  be  deemed  categorized  as skilled “B”.

xxx Note: 1. The minimum rates of wages being fixed/ revised are  linked  with  Haryana  State  Working  Consumer

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Price Index Number (base year 1972-73=100) with July  2007  as  the  base  month.   The  rate  of neutralization will be Rs.2.31 per point on the rise or fall of the Consumer Price Index Number, adjustment in wages shall be made six monthly i.e. 1st January and 1st July, every year after taking into account the average  rise  or  fall  in  the  Haryana  State  Working Class  Consumer  Price  Index  Number  half-yearly ending December and June respectively.   

2.  The  minimum rates  of  wages  being  now  fixed/ revised  shall  not  be  affected  as  a  result  of  the linkage as much as the wages shall  not fall  below those being fixed/ revised now.

3  The  wages  of  apprentices  appointed  under  the Apprentices  Act,  1961  (52  of  1961),  shall  be regulated under the said Act.  

4. There shall be no difference between the wages for men and women workers.  

5. Where any of the above categories of workmen are  engaged/  employed  through  a  Contractor,  the Occupier/ the Principal Employer shall be personally responsible  for  ensuring  the  payment  of  the minimum rates of wages by the Contractor.   

6.  If  any  category  of  workers  employed  in  the employment is not mentioned specifically by name,

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he/she  shall  not  be  paid  less  than  the  minimum wages fixed for similar category having same skill.  

7. While calculating the per day wages, the monthly wages shall be divided by 26 days but for deduction, if any, shall be calculated monthly wages divided by 30 days.  

8. The categorization of employment in Brick Kiln is placed at Annexure-A.

9. Above rates are without food.  Wherever food is given customarily, it shall be extra.  

10.  Trainees  will  be  paid  75%  of  the  wages applicable to the category but it will not be less than the  Minimum  Wages  for  an  unskilled  category  of worker.  The period of training will not be more than one year.”    

3. The above Appeal was taken up along with the other

Writ Petitions which were filed for the same relief.  Without a

detailed discussion  on the issues  which  arose  in  the Writ

Petition,  the  High  Court  dismissed  the  Writ  Petition  by

observing  that  the  contention  raised  by  the  Petitioners

relating  to  classification  was  misconceived  and  that  the

trainees would fall within the purview of the Act.   

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Civil Appeal No. 4454  of 2019  (Arising out of Special Leave Petition (Civil) No. 5832 of 2018)

Leave granted.  

4. This  Appeal  by  Special  Leave  is  filed  against  the

judgment of the High Court dated 18.08.2017 by which the

Writ  Petition  filed  by  the  Appellant  questioning  the

Notification dated 21.10.2015 issued under Section 5(2) of

the Act was dismissed.  

5. By   a  Notification  dated  21.10.2015,  the  Labour

Department  of  the  Government  of  Haryana  revised  the

minimum rates of wages in respect of different scheduled

employments  as  mentioned in  the  schedules  therein  with

effect  from  01.11.2015.  It  is  necessary  to  reproduce  the

relevant portion of the Notification dated 21.10.2015 which

is as follows:  

“Unskilled employees having five years experience

would be deemed categorized as semi skilled “A”.

After 3 years of experience in semi skilled “A” the

employees would be deemed categorized as skilled

“B”

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xxx xxx

Notes:

1.  The  minimum  rates  of  wages  notified  herein

above are basic rates of minimum wages which are

not permitted to be segregated into components in

the  form  of  allowances  by  the  employer.   The

minimum  rates  of  wages  being  fixed/  revised  are

linked with Haryana State Working Class Consumer

Price Index number (base year 1972-73=100) with

July 2015, as the base month.  There shall be 100%

neutralization of the rise or fall of the consumer price

index number on pro rata basis; the adjustment in

wages shall be made six monthly i.e. on 1st January

and 1st July every year, after taking into account the

average  rise  or  fall  in  the  Haryana  State  Working

Class  Consumer  Price  Index  half  yearly  ending

December and June respectively.   

2.  The  minimum rates  of  wages  now  being  fixed/

revised  shall  not  be  affected  as  a  result  of  the

linkage as much as the wages shall  not fall  below

those being fixed/ revised now.   

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3.  The  wages  of  apprentices  appointed  under  the

Apprentices  Act,  1961  (52  of  1961),  shall  be

regulated under the said Act.   

4. There shall be no difference between the wages

for men and women.  

5. Where any of the above categories of workmen

are  engaged/  employed  through  a  contractor,  the

occupier/ the principal employer shall be personally

responsible  for  ensuring  the  payment  of  the

minimum rates of wages by the contractor.  

6.  If  any  category  of  workers  employed  in  the

employment is not mentioned specifically by name,

he/she  shall  not  be  paid  less  than  the  minimum

wages fixed for similar category having same skills.   

7. While calculating the per day wages, the monthly

wages shall be divided by 26 days but for deduction,

if any, shall be calculated as monthly wages divided

by 30 days.  

8. The categorization of employment in Brik Kiln is

placed above at Annexure-A.

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9.  Above  rates  do  not  include  food  charges.

Wherever food is given customarily, it shall be extra.

10.  Trainees  shall  be  paid  75%  of  the  wages

applicable to the category, but it  shall  not be less

than the Minimum Wages for an unskilled category

of  worker  because  an  unskilled  worker  does  not

require any training.  The period of training shall not

be more than one year.  

6. It was submitted on behalf of the Appellant before the

High Court that segregation of wages into components in the

form of allowances was permissible.  The further contention

of the Appellant before the High Court was that Note 10 of

the Notification which fixed the minimum wages for trainees

at 75% of the wages applicable to that category and also

limited period of such training to one year was ultra vires the

Act.                 The provision for categorization of unskilled

employees as semi-skilled and of semi-skilled employees as

skilled on their acquiring experience of a certain number of

years  was  stated  to  be  beyond  the  jurisdiction  of  the

Government.   Inclusion  of  Domestic  Workers  and  Safai

Karamcharis in the list of scheduled employment at Serial

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Numbers  49  and  50  was  also  in  challenge  in  the  Writ

Petition.   The  High  Court  rejected  the  submission  of  the

Appellants that there is prohibition of segregation of wages

into components in the form of allowances. The challenge to

100%  neutralization  was  also  not  accepted  by  the  High

Court.  The Act was held to be applicable to the trainees by

the impugned judgment.   Insofar  as  the  categorization of

workers was concerned, the High Court was of the opinion

that the categorization was justified and indeed necessary

as the workmen were continued with their grades for a long

number  of  years  which  resulted  in  stagnation.   The

contention  of  the  Appellants  that  Domestic  Workers  and

Safai Karamcharis could not have been included in the list of

scheduled employment  at  Serial  Numbers  49 and 50 was

accepted  by  the  High  Court.   In  view  of  the  aforesaid

findings, the High Court concluded that Notes 1, 9 and 10 of

the Notification dated 21.10.2015 were legal and valid.  It is

relevant  to  mention  that  the  High  Court  relied  upon  the

judgment  of  a  Division  Bench  in  Writ  Petition  (Civil)

No.11326 of 20071 in support of its findings.   

1 Apparel Exporters & Manufacturers Association vs. State of Haryana –  CWP No.9942 of 2007 dated 06.09.2007

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7. Mr. Kailash Vasdev, learned Senior Counsel appearing

for  the  Appellants  in  Civil  Appeal  No.  2539  of  2010

submitted  that  the  classification  of  workmen  by  the

Notification  dated  27.06.2007  amounts  to  an  interference

with the promotion policy of the Appellant which is beyond

the jurisdiction of the Government under the Act.  He stated

that the Government does not have the power to alter the

conditions  of  service,  contract  or  settlement  between  the

employer and the employee.  He referred to a settlement

between employees and the employer which  specifies the

regulation of wages.  Mr. Vasdev argued that the High Court

erred in not realizing the difference between a fair wage, a

living  wage,  and  a  minimum  wage.   He  relied  upon  a

judgment of this Court in  Bidi, Bidi Leaves and Tobacco

Merchants’ Association v. State of Bombay2  in support

of his submission that the power that is  conferred on the

Government was only to deal with fixation and revision of

wages and not to interfere with the contractual rights and

obligations.  Mr. Harvinder Singh, learned counsel appearing

for the Petitioner  in Civil  Appeal  @ SLP (Civil)  No.5832 of

2018  submitted  that  the  Petitioner  has  a  grievance  only

2 1962 Supp (1) SCR 381

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regarding  some  portions  of  the  Notification  dated

21.10.2015.   His  first  objection  to  the  Notification  was

relating  to  the  revision  of  minimum  rates  of  wages  for

Security  inspector/  Security  officer/  Supervisor  by  relying

upon the definition of “employee” in Section 2(i) of the Act.

He  submitted  that  Security  inspector/  Security  officer/

Supervisors will not fall within the purview of the definition

and hence, the State Government did not have the power to

fix/  revise  the  minimum  wages  for  the  said  categories.

Similarly,  the  learned  counsel  submitted  that  trainees

cannot be brought within the purview of the Act as they also

do not fall within the definition of “employee” under Section

2(i) of the Act as all the trainees are not employed for hire or

reward.  The learned counsel relied upon a judgment of this

Court in Haryana Unrecognised Schools’ Association v.

State  of  Haryana3 in  which  it  was  held  that  teachers

working in an educational institution cannot be held to be

discharging either skilled or unskilled or manual or clerical

work  and  as  such  they  did  not  fall  within  the  scope  of

“employee”  under  Section  2(i)  of  the  Act.   Mr.  Singh

submitted that the Government did not have the power to

3 (1996) 4 SCC 225

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place a restriction on the period of training which according

to the Notification cannot be more than one year.  He further

argued  that  the  classification  of  employees  was  totally

impermissible.   He also submitted that  different minimum

rates of wages cannot be fixed for the same class of work in

the  same  scheduled  employment.   By  the  deemed

categorization  of  an  unskilled  employee  as  a  semi-skilled

employee after five years experience, the Government fixed

higher  minimum   rate  of  wages  for  worker  who  has

completed  five years  though he continued to  work  as  an

unskilled employee.  This would amount to higher minimum

wages being paid for a worker in the lower category on the

basis of  deemed classification.   He further submitted that

the prohibition of segregation into components in the form of

allowances was beyond the competence of the Government.

By referring to Section 2(h) of the Act which defines wages,

the  learned  counsel  for  the  Appellant  submitted  that  the

very  definition  of  wages  means  all  other  remuneration  in

accordance  with  the  terms  of  contract  or  employment.

According to Mr. Singh, there is no concept of basic rate of

minimum wages.   He  further  argued  that  the  concept  of

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principal employer and contractor is foreign to the Act and

the  occupier/the  principal  employer  cannot  be  made

responsible for the payment of minimum rate of wages to a

contract labour.  Allegations of exploitation of  workmen by

the  employers  cannot  be  a  ground  for  issuance  of  a

notification under  Section 5 of  the Act  if  the Government

lacks the jurisdiction.   

8. Dr. Monika Gusain, learned counsel appearing for the

State of Haryana referred to Article 43 of the Constitution of

India to submit that it is the duty of the State to secure a

living  wage  to  all  workers.   She  submitted  that  the

Notifications were issued on the basis of recommendations

made by an Advisory Committee after consultations with the

employers  and  the  workmen.   Splitting  of  the  minimum

wages  into  components  is  permissible  as  there  is  no

prohibition  in  the  Act.    She contended that  the  deemed

promotion of  an unskilled worker  to  a semi-skilled worker

and  a  semi-skilled  worker  to  a  skilled  worker,  based  on

experience, is only for the purpose of entitling them with the

next grade of minimum wages which cannot be construed as

a deemed promotion or classification.  Dr. Gusain stated that

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it has come to the notice of the Government that trainees

were not being paid even the minimum wages applicable to

an unskilled workmen for which reason it was decided that

trainees should be protected.  The learned counsel for the

State  of  Haryana  defended  the  Notifications  dated

27.06.2007 and 21.10.2015 on the ground that they were

issued to protect the fundamental rights of the workers.  She

also  argued  that  the  Appellants  have  not  produced  any

material to show the loss caused to them by the Notification,

and hence, the judgment of the High Court does not warrant

interference.   

9. At this stage,  it  is  necessary to refer to the relevant

provisions of the Act.  “Wages” and “Employee” have been

defined in Section 2(h) and 2(i) of the Act which reads as

under:

“2(h) “wages” means all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied,  were  fulfilled,  be  payable  to  a  person employed in respect of his employment or of work done in such employment, [and includes house rent allowance], but does not include—

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(i) the value of— (a)  any  house-accommodation,  supply  of  light, water, medical attendance, or

(b)  any other  amenity  or  any service excluded by general  or  special  order  of  the  appropriate Government;

(ii)  any  contribution  paid  by  the  employer  to  any Pension Fund or Provident Fund or under any scheme of social insurance;

(iii)  any  travelling  allowance  or  the  value  of  any travelling concession;

(iv) any sum paid to the person employed to defray special  expenses entailed on him by the nature of his employment; or (v) any gratuity payable on discharge;

2(i) “employee” means any person who is employed for hire or reward to do any work, skilled or unskilled, manual  or  clerical,  in  a  scheduled  employment  in respect of which minimum rates of wages have been fixed;  and  includes  an  out-worker  to  whom  any articles or materials are given out by another person to  be  made  up,  cleaned,  washed,  altered, ornamented,  finished,  repaired,  adapted  or otherwise processed for sale for the purposes of the trade  or  business  of  that  other  person  where  the process is to be carried out either in the home of the out-worker  or  in  some  other  premises  not  being

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premises under the control and management of that other  person;  and  also  includes  an  employee declared  to  be  an  employee  by  the  appropriate Government;  but  does not  include any member of the Armed Forces of the  [Union].”

10. The appropriate government is empowered by Section

3 of the Act to fix the minimum rates of wages payable to

the employees employed in an employment specified in Part

I and Part I (b) of the Schedule.  Section 4 of the Act provides

that  the  minimum  rate  of  wages  fixed  or  revised  under

Section 3 may contain:

“(i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the “cost of living allowance”); or

(ii) a basic rate of wages with or without the cost of living  allowance,  and  the  cash  value  of  the concessions  in  respect  of  supplies  of  essential commodities  at  concession  rates,  where  so authorised; or

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(iii) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any.”

11. The procedure for fixing or revising the minimum rate

of wages is dealt with in Section 5 of the Act.  After following

the procedure prescribed under Section 5, the appropriate

government can fix/revise the minimum rates of wages and

issue notification to that effect.  An obligation is imposed on

the  employer  by  Section  12  of  the  Act  to  pay  to  every

employee engaged in a scheduled employment wages at a

rate not less than the minimum rates of wages fixed by the

notification issued under Section 5 of the Act.  The authority

conferred  on  the  Government  in  fixing  or  revising  the

minimum rate of wages under the relevant provisions of the

Act was dealt with by this Court in  Bidi, Bidi Leaves and

Tobacco  Merchants’  Association (supra).   This  Court

held:

“What is the extent of the authority conferred on  the  respondent  in  fixing  or  revising  minimum rates of wages under the relevant provisions of the Act?  In  dealing  with  this  question  we  must necessarily bear in mind the definition of the term “wages”  prescribed  by  Section  2(h).  As  we  have

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already  seen  the  term  “wages”  includes remuneration  which  would,  if  the  terms  of  the contract  of  employment,  express  or  implied,  were fulfilled, be payable to a person employed in respect of his employment. In other words, the term “wages” refers to remuneration payable to the employee as a result of the terms of employment. What would be the amount to which the employee is entitled if the other terms of the contract are performed? That is the question which has to be asked in determining what the term “wages” means under Section 2(h). No  doubt  Sections  3,  4  and  5  authorise  the appropriate Government to fix the minimum rates of wages.  In  other  words,  if  the  wages  fixed  by  a contract which is either express or implied are found to be low, authority is conferred on the appropriate Government to increase them so as to bring them to the level  of  what the said Government  regards as the  minimum  wages  in  the  particular  scheduled employment in the particular  area concerned.  This means that  power is  conferred on the appropriate Government  to  modify  one  term  of  the  contract express  or  implied between the employer  and the employee and that is a term which has reference to the payment of wages. If for a certain piece of work done by the employee the employer has agreed to pay him either expressly or by implication a certain amount of wages the appropriate Government can

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issue a notification and prescribe that for  the said work  done  under  the  contract  the  employer  must pay his employee a much higher rate of wages and the higher rate of wages thus prescribed would be deemed to be the minimum rate of wages between the parties.

It would, however, be noticed that in defining “wages” clause 2(h) postulates that they would be payable  if  the  other  terms  of  the  contract  of employment  are  fulfilled.  That  is  to  say,  in authorising the fixation of minimum rates of wages the other terms of the contract of employment have always  to  be fulfilled.  The fulfilment  of  the  others terms of the contract is a condition precedent for the payment of wages as defined under Section 2(h) and it continues to be such a condition precedent even for  the  payment  of  the  minimum  rates  of  wages fixed and prescribed by the appropriate Government. The  significance  of  the  definition  contained  in Section 2(h) lies in the fact that the rate of wages may be increased but no change can be made in the other terms of the contract. In other words, the Act operated on the wages and does not operate on the other terms of the contract between the employer and the employee. That is the basic approach which must be adopted in determining the scope and effect of  the  powers  conferred  on  the  appropriate Government by the relevant provisions of the statute

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authorising it to prescribe minimum rates of wages or to revise them. What the appropriate Government is authorised to do is to prescribe, fix or revise wages and wages are defined to be remuneration payable to  the  employees  if  the  terms  of  the  contract  of employment, express or implied, were fulfilled. This definition  runs,  as  it  inevitably  must,  through  the material  provisions  of  the  Act  and  its  importance cannot therefore be ignored.”

12. The  learned  counsel  for  the  Government  of  Haryana

argued that  the workmen are exploited by the employers

and the notification was issued after taking into account the

recommendations of the expert body to protect the interests

of the workmen.  The point raised by the Appellants pertains

to the jurisdiction of the Government in the issuance of the

notification.   The  grievances  of  the  workmen  can  be

redressed by fora constituted under the Industrial Disputes

Act, 1948 if the Government does not have the competence

to deal with certain issues in the notification under the Act.

In  Bidi,  Bidi  Leaves  and  Tobacco  Merchants’

Association (supra), Justice Gajendragadkar, observed :-

“It is well settled that industrial adjudication under the provisions  of  the Industrial  Disputes Act  14 of 1947 is given wide powers and jurisdiction to make

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appropriate  awards  in  determining  industrial disputes  brought  before  it.  An  award  made  in  an industrial adjudication may impose new obligations on the employer in the interest of social justice and with a view to secure peace and harmony between the employer and his workmen and full co-operation between them. Such an award may even alter the terms  of  employment  if  it  is  thought  fit  and necessary to do so.  In  deciding industrial  disputes the jurisdiction of the tribunal is not confined to the administration of justice in accordance with the law of contract.  As Mukherjea,  J.,  as he then was,  has observed in Bharat Bank Ltd., Delhi v. Employees of the Bharat Bank Ltd., Delhi the tribunal “can confer rights  and  privileges  on  either  party  which  it considers reasonable and proper, though they may not be within the terms of any existing agreement. It has  not  merely  to  interpret  or  give  effect  to  the contractual  rights  and  obligations  between  them which  it  considers  essential  for  keeping  industrial peace”.  Since  the  decision  of  the  Federal  Court in Western India Automobile Association v. Industrial Tribunal, Bombay , it has been repeatedly held that the jurisdiction of Industrial Tribunals is much wider and  can  be  reasonably  exercised  in  deciding industrial  disputes  with  the  object  of  keeping industrial  peace  and  progress  (Vide: Rohtas Industries,  Ltd. v. Brijnandan  Pandey, Patna  Electric

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Supply  Co.  Ltd.,  Patna v. Patna  Electric  Supply Workers'  Union).  Indeed,  during  the  last  ten  years and more industrial adjudication in this country has made  so  much  progress  in  determining  industrial disputes arising between industries of different kinds and  their  employees  that  the  jurisdiction  and authority  of  Industrial  Tribunals  to  deal  with  such disputes with the object of ensuring social justice is no longer seriously disputed.”

13. There is no power vested in the Government by the Act

to make alterations to the terms of a contract.  The Act only

confers jurisdiction in Government to fix/revise the minimum

rate of wages notwithstanding the contract.  The Notification

dated  21.10.2015  postulates  that  unskilled  employees

having five years experience would be deemed categorized

as semi-skilled “A”; that after three years of experience in

semi-skilled  “A”,   the  employees  would  be  deemed

categorized  as  semi-skilled  “B”;  that  after  three  years  of

experience in skilled “A”, the employees would be deemed

categorized  as  skilled  “B”.   Such  categorization  or

classification  by  deeming  workmen  in  one  category  to

belong to another category is in direct contravention of the

contract  between the  employer  and the  employee and is

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beyond  the  jurisdiction  of  the  Government.   Inclusion  of

Security inspector/ Security officer/ Supervisor at Serial No.9

in  the  table  “Minimum  rates  of  wages  in  respect  of  all

scheduled employment” in the Notification is ultra vires the

provisions of the Act.  They do not fall within the definition of

“employee’  in  Section  2(i)  as  they  do  not  discharge  any

skilled or unskilled, manual or clerical work.4  Similarly, not

all trainees can be included in the Notification.  Trainees who

receive wages during the period of training would fall under

the definition of “employee” as has been fairly admitted by

the learned counsel for the Appellants.  It is the Appellant’s

case that such of those trainees who are not paid any wages

cannot be included in the notification.  We are in agreement

with the said submission as only a person who is employed

for   “hire  or  reward”  will  fall  under  the  definition  of

“employee”.   Consequent  upon  the  above  finding,  the

trainees who are not paid wages cannot be included in the

notification  and  the  fixation  of  minimum  wages  for  such

trainees  at  75% is  also  not  valid.   To  make  it  clear,  the

minimum wages  fixed  for  trainees  who are  appointed  for

reward is not interfered with.  The period of training to be

4 See: Haryana Unrecognized Schools’ Association (supra)   23

undergone  by  a  trainee  would  depend  upon  the  contract

between the employer and the employee.  There is no power

vested in the Government under the Act to decide the period

of training and any stipulation with regard to the training

period is ultra vires.   

14. The word “employee” as defined in the Act means any

person who is employed for hire or reward in a scheduled

employment.   There  is  no  distinction  made  between  a

person employed by the principal  employer  and a person

employed through a contractor.  Any person who employs,

whether directly or through any other person,  one or more

employees  in  a  scheduled  employment  falls  within  the

definition  of  an  “employer”.5  A  close  scrutiny  of  the

definitions of the employer and the employee would bring

the workmen employed through the contractors within the

purview  of  the  Act.   We  reject  the  submission  made  on

behalf of the Appellants that the contract workmen are not

covered under the Act.   

15. The  only  point  that  remains  to  be  considered  is

regarding the segregation of wages into components in the

5 Section 2(e), Minimum Wages Act, 1948  

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form of allowances. It is useful to refer to the judgment of

this  Court  in  Airfreight  Ltd. v.  State of  Karnataka6 in

which this Court observed:  

“20.  … … … Once  rates  of  minimum wages  are prescribed  under  the  Act,  whether  as  all-inclusive under  Section  4(1)(iii)  or  by  combining  basic  plus dearness  allowance  under  Section  4(1)(i),  are  not amenable to split up. It is one pay package. Neither the  scheme nor  any  provision  of  the  Act  provides that the rates of minimum wages are to be split up on the basis of the cost of each of the necessities taken into consideration for fixing the same.”

16. “Wages”  is  defined  in  Section  2(h)  to  mean  all

remuneration,  capable  of  being  expressed  in  terms  of

money,  which  would,  if  the  terms  of  the  contract  of  the

employment, express or implied were fulfilled, be payable to

a person in respect of his employment or of work done in

such employment and includes house rent allowance.  There

are  four  exclusions  in  the  definition  relating  to  travelling

allowance, value of housing accommodation, supply of light,

water,  medical  attendance,  etc.   If  certain components of

the  remuneration  are  taken  care  of  by  the  employer,  he

cannot  be  asked  to  pay  twice  over  such  allowance/ 6 (1999) 6 SCC 567

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payments which are part of the remuneration.  Therefore, we

are of the opinion that the prohibition on segregation of the

wages into components under the notification is not a valid

exercise of power.   

17. Our  conclusion  in  respect  of  some  parts  of  the

Notification will not affect the Notifications as such.  The part

of the Notifications other than that which are dealt with by

this judgment shall continue to be in force. We make it clear

that  the  employers  shall  not  be  entitled  to  recover  any

amounts paid under the Notifications to the workmen on the

ground  that  they  have  succeeded  in  this  case.   As  the

findings recorded in this judgment pertain to the jurisdiction

of  the  Government  under  the  Act,  the  workmen  are  not

precluded  from  resorting  to  redressal  of  other  remedies

regarding their grievances.         

18. The upshot of the above discussion is :

“(a) The  prohibition  of  segregation  of  wages  into

components in the form of allowances in the Notification

is impermissible; (b) The  security  inspector/  security  officer/  security

supervisor cannot be included in the Notification;

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(c) Trainees who are employed without payment

of any reward cannot be covered by the Notification; (d) Categorization  of  unskilled  employees  as  semi-

skilled  and  semi-skilled  as  skilled  on  the  basis  of  their

experience is ultra vires. (e) Fixing the training period for one year is beyond

the jurisdiction of the Government.”    

19. For  the  aforementioned  reasons,  the  appeals  are

allowed.    

               .................................J.               [L. NAGESWARA RAO]

 ..................................J.               [M.R.SHAH]

New Delhi, April 29th, 2019.   

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