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Mandating private sector to pay wages: Legally justifiable?

It is not entirely clear as to whether the Central Government has the powers to direct or mandate private parties or employers to necessarily make payments to their workers, without considering their state of business affairs.

Ajay Bhargava Anshul Prakash and Abhinav Rastogi

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The outbreak of Covid-19 pandemic disrupted the business and economic activities across the globe, with India being no exception. The compulsions associated with “social distancing” coupled with lockdown directives in India led to a prolonged temporary shutdown of industries. The direct implication and consequence of this temporary cessation of business operations resulted in termination of service of workers specially the contract workers (including daily wage workers, casual workers) making them jobless.

Since, most of the contract workers are typically migrant workers with no means (job/income) to support their food and shelter expenses at their migratory residence, these workers were left with no choice but to return to their hometown, not caring much about risking contact with Covid-19 virus.

This mass exodus threatened to escalate into a national health and humanitarian crisis, with millions of workers started on foot to travel back to their hometowns in the absence of any available public transport. In this backdrop, the Home Secretary, Ministry of Home Affairs, Government of India, in his capacity as the Chairperson of the National Executive Committee (NEC) constituted under the Disaster Management Act 2005 (DM Act), issued directions on 29 March 2020, restricting movement of migrants across state borders and strict enforcement of the lockdown measures on maintaining social distance (MH Order).

Pursuant to the MH Order, a plethora of contentions were raised by various stakeholders across the industry as it caused them financial hardship. Without delving into finer tenets of the MH Order, the aspect which created anomaly in the minds of various stakeholders is set out below: “All the employers, be it in the industry or in the shops and commercial establishments, shall make payment of wages of their workers at their workplaces on the due date, without any deduction, for the period their establishments are under closure during the lockdown.”

In light of this background, it would be interesting to analyse and briefly touch upon the two moot questions, from an Indian employment law standpoint. Whether the Central Government has powers under the DM Act to mandate private employers to pay wages? and Whether the MH Order is applicable to certain category of workers or is applicable to all workers?

Whether the Central Government has powers under the DM Act to mandate private employers to pay wages At the outset, it is relevant to mention that the labour laws in India such as the Industrial Disputes Act, 1947 (ID Act) and Industrial Establishments (Standing Orders) Act 1946 have clear provisions and provide adequate guidance, in terms of payment of wages / layoff in the context of an epidemic.

Similarly, the powers conferred on the executive under the DM Act is for a specific purpose i.e. to curtail spread of the disaster and take remedial actions. Such powers are to be exercised for fulfilling the objective of the legislation, only if the ordinary provisions of the law for the time being in force are insufficient for the purpose. In the extant circumstances, the MH Order seeks to override the provision of law which may not be justifiable as the labour laws in India broadly cover relevant provisions in the context of “epidemic”.

In view of the same, any direction mandating employers should be effectuated by an amendment in the law, or by way of necessary notifications under the applicable laws or through an ordinance. Whether the MH Order is applicable to certain category of workers or is applicable to all workers? MH Order creates a clear and a fundamental dichotomy by using the terms “workers” in paragraph (iii). On perusal of the MH order, it makes abundantly clear that the same is for the protection of the interstate migrant workers.

The underlying intent is envisaged and manifested under the preamble of the MH Order which states that the “movement of large number of migrants have taken place in some parts of the country so as to reach their home towns”. The MH Order was to be enforced through the district administration and the police. These authorities were also required to screen and quarantine the migrant workers in their home towns for a minimum period of 14 days.

In view of the underlying intent, the MH Order should be read in its entirety and applying the harmonious rule of interpretation, it can be inferred that the same is issued from the perspective of migrant workers. The MH order is not clear and leave room for interpretational issues. In the absence of such clarity, and considering the penal provisions stipulated under the DM Act, several employers have chosen to err on the side of caution and have made some monetary payments to all its workers.

It is also not entirely clear as to whether the Central Government has powers to direct/mandate private parties / employers to necessarily make payments to their workers, without considering their state of business affairs. It is also relevant to mention that the validity of the MH Order has been challenged before the Supreme Court. The matter was last listed on 15 May 2020 and the court has issued orders that no coercive action should be taken against the employer until the matter is heard on the next date.

Since, the future course of action for employers’ is contingent on the decision of the Supreme Court, it needs to be seen if the court also takes into account the financial distress/ agony of employers’ too while passing any orders. In India, courts typically interpret labour laws in a pro-employee manner, however, given this unprecedented crisis and to ensure the businesses/ industry in general is not affected, a balanced approach may appear as more conducive for the industry and employees. Ajay Bhargava, Senior Partner, Litigation; Anshul Prakash, Partner, Employment Labour & Benefits; Abhinav Rastogi, Principal Associate, Employment Labour & Benefits, Khaitan & Co.

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AN ASSOCIATION OF CORPORATE BODIES CAN ESTABLISH A CAPTIVE POWER PLANT PRIMARILY FOR THEIR OWN USE UNDER THE ELECTRICITY ACT: SUPREME COURT

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The Supreme Court in the case Chhattisgarh State Power Distribution Company Ltd. vs Chhattisgarh State Electricity Regulatory Commission observed that a captive power plant primarily for their own use can be established by an association of corporate bodies.

The requirement would be that the consumption of SBIPL and SBMPL together should not be less than 51% of the power generated. Admittedly, the joint consumption by SBIPL and SBMPL is more than 51% and under the provisions of the said Act, the use of electricity by it would be for captive use only even an association of corporate bodies can establish a power plant. Since SBMPL holds 27.6% of the ownership, the requirement of not less than 26% of shares is fulfilled by SBMPL as SBMPL holds 27.6% equity shares in SBPIL.

The fourth proviso to sub­section (2) of Section 42 of the said Act would also reveal that surcharge would not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electricity to the destination of his own use and under Section 9 of the said Act, could be an individual or a body corporate or association or body of individuals, whether incorporated or not, it is clear that the person will get benefit even an association of corporate bodies can establish a captive power plant it has been seen. The definition of “person” is wide enough to include any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person it should be primarily for the use of the members of such co­operative society or association is the requirement, the Bench observed while referring to the provisions of the Electricity Act.

The BPIL, the respondent contended and supported the impugned judgment that no permission is required from the Commission for supply of electricity for its own use. Thereafter the appellant Company contended that unless SBPIL consumes 51% of the aggregate electricity generated by it, it will not be entitled to get the benefit under Section 9 of the said Act, in an appeal filled before the Apex Court.

An appeal was dismissed by the Appellate Tribunal for Electricity filed by the Company further The Commission held that SBPIL was entitled to supply electricity to its sister concern SBMPL and the same would qualify to be treating as own consumption and within the ambit of Section 9 read with Section 2(8) of the Electricity Act, 2003 and Rule 3 of the Electricity Rules, 2005 SBPIL submitted a petition for providing open access and wheeling of power through the transmission system of the Chhattisgarh State Power Distribution Company Ltd (Company) for captive use by SBMPL to the Chhattisgarh State Electricity Regulatory Commission, the commission. A Captive Generation Plant is established by SBPIL, and is a sister concern of SBPIL Shri Bajrang Power and I spat Ltd and Shri Bajrang Metallics and Power Ltd, SBMPL.

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Where the crime was committed the remission or premature release policy of the state has to be considered: Supreme Court

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The Supreme Court in the case Radheshyam Bhagwandas Shah, Lala Vakil vs State of Gujarat observed that where the crime was committed has to be considered in the remission or pre­mature release in terms of the policy which is applicable in the State.

While allowing the writ petition the court observed and contended that Once the crime was committed in the State of Gujarat, after the trial been concluded and judgment of conviction came to be passed, all further proceedings have to be 6 considered including remission or pre­mature release in terms of the policy which is applicable in the State of Gujarat where the crime was committed and not the State where the trial stands transferred and concluded for exceptional reasons under the orders of this Court, as the case may be. The court further stated that under Section 432(7) CrPC the appropriate Government can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments.

the appropriate Government in the ordinary course would be the State of Gujarat. But the case was transferred in exceptional circumstances by this Court for limited purpose for trial and disposal to the neighboring State i.e., the State of Maharashtra by an order dated 06.08.2004. ordinarily, the trial was to be concluded in the same State and in terms of Section 432(7) CrPC as the crime in the instant case was admittedly committed in the State of Gujarat, observed by the Apex Court.

he application for pre­mature release has to be filed in the State of Maharashtra and not in the State of Gujarat, as prayed by the petitioner by judgment impugned dated 17.07.2009 As His petition filed in the High Court of Gujarat was dismissed taking note of Section 432(7) CrPC on the premise that since the trial has been concluded in the State of Maharashtra. Thereafter He had filed his petition for pre­mature release under Sections 433 and 433A of the Code of Criminal Procedure, 1973 stating that he had undergone more than 15 years 4 months of custody.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed and noted that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of the appropriate Government.

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Adopt roster based reservation for preferential candidates as followed by JIPMER: Supreme Court directs all AIIMS institutes

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The Supreme Court in the case Students Association AIIMS Bhopal And Or’s. v. AllMS and Or’s observed and directed all AIIMS Institutes to adopt roster-based reservation followed by Jawaharlal Institute of Postgraduate Medical Education and Research, Pondicherry (JIPMER) as a plea was filled in the Court seeking direction to AIIMS to have a defined criteria for arriving at seat matrix for institutional preference candidates in INI-CET examination.

the order of the Apex Court in the case AIIMS Students’ Union v. AIIMS And Or’s, would not be applicable if It emphasized that if the roster-based system is implemented the actual roster points for AIIMS would be different from JIPMER as the same would depend on the percentage of seats decided to be allocated to the preferential candidates but It stated that the reservation would be similar to the one adopted by JIPMER AIIMS New Delhi was willing to provide a roster-point based reservation for its institutional preference candidates, by way of an affidavit 20th January 2022 the Bench was apprised that pursuant to a meeting held on 28th June 2020 as prescribed the relevancy:

It shall not be too wide with the one for the general category candidate, that the margin of difference between the qualifying marks for the Institute’s candidate.

The one who has secured marks at the common entrance PG test less than the one secured by any other candidate belonging to reserved category enjoying constitutional protection such as SC, ST etc. cannot be the AIMS graduate the last student to qualify for admission.

appearing on behalf of AIIMS, Advocate, Mr. Dushyant Parashar, New Delhi was asked to get instructions from AIIMS, Bhubaneswar and Jodhpur so that the Court can pass appropriate orders on the next date of hearing. As that apart from AIIMS, Bhubaneswar and AIIMS, Jodhpur, all other AIIMS before the Apex Court has agreed to implement the roster-based reservation system followed by JIPMER Puducherry for their institutional preference candidates, the Court was informed at the last date of hearing.

the petition had been filed seeking direction to AIIMS to disclose how the seats for institutional preference candidates are to be allotted in the view of the same the petitioners claim that in the INI-CET examination conducted in July, 2021, only 4 seats (1.87%) in AIIMS, New Delhi were allotted to institutional preference candidates. Rivetingly, the petitioners note that no seats were allocated to any other AIIMS for admission of institutional preference candidates.

the Bench comprising of Justice L. Nageswara Rao and the justice A.S. Bopanna observed and noted that to record in the order that the roaster system would be applicable from this year. Mr. Parashar informed it that since new software is to be put in place for counselling, it might cause some delay. The bench further stated that the court will order it to apply this year but in case of delay AIMS can come later.

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‘The crime committed has to be considered in the remission or premature policy of the state’

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The Supreme Court in the case Radheshyam Bhagwandas Shah, Lala Vakil vs State of Gujarat observed that where the crime was committed has to be considered in the remission which is applicable in the State and the pre­mature release in terms of the policy

The Court noted while hearing the writ petition that in terms of the policy which is applicable in the State of Gujarat where the crime was committed and not the State where the trial stands transferred and concluded for exceptional reasons under the orders of this Court once the crime was committed in the State of Gujarat, after the trial been concluded and judgment of conviction came to be passed, all further proceedings have to be 6 considered including remission or pre­mature release, as the case may be, in the instance case. under Section 432(7) CrPC, there cannot be a concurrent jurisdiction of two State Governments, can be either the Central or the State Government of the appropriate government.

in terms of Section 432(7) CrPC, the trial was to be concluded in the same State and ordinarily in the State of Gujrat the crime in the instant case was admittedly committed. by an order 06.08.2004., the case was transferred in exceptional circumstances by this Court for limited purpose for trial and disposal to the neighbouring State i.e., the State of Maharashtra, observed by the bench of Apex Court.

As mentioned by the petitioner in the plea that by judgment impugned dated 17.07.2019., the application for pre­mature release has to be filed in the State of Maharashtra and not in the State of Gujarat and His petition filed in the High Court of Gujarat was dismissed taking note of Section 432(7) CrPC on the premise that since the trial has been concluded in the State of Maharashtra. under Sections 433 and 433A of the Code of Criminal Procedure, 1973, the petition was filled by the petitioner for premature release further the petitioner stated that that he had undergone under the custody of more than 15 years 4 months.

Section 302, 376(2) (e) (g) and reading it with Section 149 IPC, Shah was found guilty for the offence, the offence committed by him in the State of Gujrat.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of that appropriate government.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of that appropriate government.

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Seeking reduction of qualifying the percentile for admission in ayurveda course: A plea in Supreme Court

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The Supreme Court in the Case Amit Kumar v UOI & Or’s observed in Ayurveda course in view of large number of vacancies and for seeking reduction of qualifying percentile for admission, an ayurveda aspirant who appeared in NEET 2021 has approached the Court.

the court had observed that lowering the minimum marks and reducing the percentile for admission to first year BDS Course would not amount to lowing the standards of Education and further the Court directed to lower the percentile mark by 10 percentiles for admission in first year of BDS Course for academic year 2020-2021, with regards to substantive the contentions made by the petitioner by referring the judgement passed in the case in Harshit Agarwal & Or’s v Union of India.

the percentile may also be reduced for Ayurveda programme enabling the Petitioner to take admissions then If percentile is being reduced/considered for reduction for BDS course was further stated by the petitioner in the plea, while referring to an order dated 04.29.2022. Thereafter the top Court had asked Centre to consider lowering the percentile for BDS Courses.

Seeking the Centre’s response in a plea by filing a counter affidavit, noted by the Top Court specifying the above-mentioned information:

after deducting the admission granted for MBBS Courses (BDS Courses), the total number of Candidates.

in All India Quota and State Quota, the totals number of vacant seats.

in government colleges on one hand & private/deemed colleges on the other hand, the number of seats which are remaining.

the petition was filed through AOR Neeraj Shekhar and for the petitioner Advocate Shivam Singh appeared.

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Bank case rejected by Supreme Court against farmer

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The Supreme Court in the case Bank of Maharashtra & Or’s v Mohanlal Patidar observed an order given by the High Courts of directing the bank the OTS proposal given by a farmer who had availed a loan from the bank, the court further pulled up the Bank of Maharashtra for challenging the order.

The Bank shall complete remaining formalities and provide all consequential benefits flowing therefrom to the petitioners, the court further stated that it is needless to emphasize The OTS proposal given by the petitioners in both the cases shall be accepted by the Bank and ‘sanction letters’ be issued forthwith, the court allowed the petitioner plea.

The petitioner not only promptly challenged the said order, it is noteworthy that petitioner never acceded to the unilateral decision dated 25th August 2021 and even otherwise the letter dated 25th August 2021 is held to be illegal by us, clause-7 of policy cannot take away the fruits of OTS benefits, within two months from the date of issuance of order dated 22th September 2021, the petitioner filled the instant petition and further the court directed we are unable to give stamp of approval to the impugned orders and action of the Bank, observed by the bench comprising of Justice Sujoy Paul and the justice Dwarka Dhish Bansal while setting aside the impugned orders of the bank.

In an order dated 03.09.2021 it was stated and it showed that the petitioner was required to pay minimum 10% of the OTS amount within stipulated time and that he had deposited Rs.35,00,000/- out of Rs.36,50,000/- within the stipulated time, it was argued before the court by the counsel.

As full and final settlement of the dues, he will be required to deposit Rs.50.50 lakhs as he was informed by the Asset Recovery Branch of the Bank.

Whole law comes into place when a matter of farmers come as the down payment were also accepted and it was further stated by the bench in an oral remark You don’t file cases against the ones who loot 1000s of crores.

The respondent had obtained a loan and intended to pay it in terms of a One Time Settlement which was quantified as Rs 3650000/-. in furtherance thereof the respondent had deposited Rs 35,00,000 with the bank, in the above-mentioned matter.

The bank had miserably failed to accept the same and on the contrary, decided to enhance the compromise amount to Rs.50.50 lakhs unilaterally which was contrary to the OTS scheme, contended by the counsel further the counsel stated that the bank had miserably failed to accept the same and on the contrary, decided to enhance the compromise amount to Rs.50.50 lakhs unilaterally which was contrary to the OTS scheme.

The bench comprising of Justice DY Chandrachud and the justice Surya Kant observed and remarked while dismissing the plea assailing Madhya Pradesh High Court’s order dated 02.21.2022 Such a litigation in Supreme Court will spoil the families of farmers financially, Go after bigger fish.

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