JUDGEMENT SUMMARY: Ficus Pax Private Ltd & Ors Vs. Union of India
DATE OF JUDGEMENT: 12th June 2020
The following judgement deals with Disaster Management Act 2005 which compelled employers to make full payment to their employees even though the establishments were closed due to lockdown, and were sustainable under Articles 14, 19(1)(g) and 21 of the Constitution.
1. Several writ petitions were filed by different employers, employers association questioning the order issued under Disaster Management Act 2005 and other consequential orders issued by different states, where directions were issued that all the employees of industries, shops or commercial establishments shall make payment to their workers, at work place on due date without any deduction for the period their establishments were under closure due to lockdown.
2. To understand the nature of relief of in different writ petitions, referring a few is sufficient as the reliefs claimed are more or less similar. The Union of India has filed a counter affidavit against the W.P of FicusPax Limited and others versus the Union Of India praying that this W.P to be treated as the leading one.
• Article 14 of the Constitution provides for equality before the law or equal protection of the laws within territory of India.
• Article 19(1)(g) of the Constitution provides for practising any profession or to carry on any occupation, trade or business.
• Article 21 of the Constitution provides protection of life and personal liberty. No person shall be deprived of his life or personal liberty except according to the procedure established by law.
Under Section 10(2)(1) of the Disaster Management Act, without prejudice to the generality of the provisions, the National Executive Committee may act as the coordinating and monitoring body for disaster management.
• Is Section 10(2)(1) of Disaster Management Act violative of Article 14, 19(1)(g) of the Constitution of India?
• Do all the establishments irrespective of their size have to pay wages to their workers at the due time without deduction?
• Can the Government of India, Home Secretary and Ministry Of Home Affairs invoke Section 10(2)(1) of Disaster Management Act or any other provisions to impose financial obligation on the private sector?
In the period of global pandemic, where several employers and workers are suffering from financial crises due to closure of establishments due to lockdown, the Apex Court has come to a middle ground by directing interim measures which can be availed by all the private establishments, industries, factories and workers etc. which may be facilitated by the State Authorities.
1. The petitioner FicusPax Private Limited is a company incorporated under Companies Act and is engaged in packaging business with 11 factories spread across seven states. It is a registered Medium Industry under Micro, Small, Medium Enterprises Development Act 2006. The petitioner company before lockdown had employed several permanent and contract workers across its establishments. According to the petitioner the order dated 29.03.2020 is violative of Article 14, Article 19(1)(g) of the Constitution of India because after the lockdown period although petitioner is in a supply chain of several essential items like pharmaceuticals whose operations are permitted, its business has reduced by 5-6 percent.
2. According the petitioner the notifications were arbitrary, illegal, irrational and unreasonable and contrary to the provisions of law including Article 14, Article 19(1)(g).The notifications wereunreasonable and interfered with right of petitioner Employers under Article 19(1)(g). They were also contrary to the principles of Equal Pay Equal Work and No Work No Pay, as it did not differentiate between the workers who are working in the lockdown period in the establishments permitted to operate and who had not worked at all.
3. The Court stated that The Home Secretary, Ministry Of Home Affairs, Government of India, cannot invoke Section 10(2)(1) or any other provisions of the Disaster Management Act 2005, to impose financial obligations on the private sector such as payments of wages. The Central Government can allocate funds for emergency response, relief, rehabilitation, mitigation of disasters under Disaster Management Act. The onus for any compensation towards workers shall ultimately be of Government and the said liability cannot be shifted upon the employers in the Private establishment. The respondent should not compel the employers to pay the wages for lockdown period but instead should utilise the funds collected by Employees State Insurance Corporation (ESIC) to make periodical payment to workers.
4. Petitioner B4S Solution Private Ltd. is a company incorporated under the Companies Act, 1956. The company has a number of subsidiary/associate companies. In addition to challenging the Government Order dated 29.03.2020, the petitioners have also challenged the consequential orders issued by the Government of Maharashtra, Punjab, Haryana and Uttar Pradesh. In one of the prayers, petitionerprayed that petitioners be permitted to make payment of 50 percent of Basic Pay plus DA to its employees.
5. Similar W.P was filed by petitioner Aditya Girian individual to espouse the cause of employees and employers who have been laid off and who are on the verge of Bankruptcy due to lockdown. In the prayers made, directions have been sought to the respondent to frame policy to mitigate the problems of employees of the Private Sector as well as of the employers who are financially not in position to maintain the employees. Another petitioner Chamber of Small Industry Association issued a writ of Mandamus to pass appropriate direction to the respondent to strike a balance between the interest of MSME’s and the interest of workers and employees in a manner that neither is unduly prejudiced.
6. In a counter affidavit by the Union Of India it was stated that all orders passed under Section 10(2)(1) of Disaster Management Act 2005, were withdrawn with effect from 18.05.2020. Counter affidavit also stated that the notification issued by Secretary, Ministry of Labour and Employment, to the Chief Secretaries of all the States was an advisory and an order was issued by National Executive Committee in exercise of powers under Section 10(2)(1) of Disaster Management Act, 2005, directing all the employers to make payment of wages are under closure during the lockdown.
7. After hearing both the petitioners and the respondent the Court stated that the direction dated 29.03.2020 was issued in public interest by the Competent Authority. The directions were neither arbitrary nor capricious. The ground of financial hardship and incapacity pleaded by the petitioner were legally untenable grounds to challenge the directions issued. The Union of India issueddirections as a temporary measure to mitigate the financial hardship of the employees and workers especially contractual and casual workers during the lockdown period. The measure was proactively taken to prevent perpetration of financial crisis oflabourers and employees. The court also stated that if the authority declares a lockdown, it is also liable to provide for the consequences of the lockdown. The Court also mentioned that lockdown measures enforced by the Government of India had equally adverse effect on the employers as well as on employees. Various Industries, establishments were not allowed to function during the said period and those allowed to function also could not function to their capacity.
8. Lastly the court directed interim measures which can be availed by all the private establishment, industries and which facilitated by the State Authorities: - The private establishment, industries, employers who are willing to enter into negotiation and settlement with the workers/employees regarding payment of wages may initiate a process of negotiation with their employees organization and enter into a settlement with them and if they are unable to settle by themselves submit a request to concerned labour authorities. Those employer’s establishments, industries, factories which were working during the lockdown period although not to their capacity can also do the same. The private establishments, industries, factories shall permit the workers who are willing to work which may be without prejudice to rights of the workers regarding unpaid wages of above 50 days. The private establishments, factories who proceed to take such steps shall publicise and communicate about their steps to workers and employees for their response/participation.
9. The Central Government, all the States/UTs through their Ministry of Labour were ordered to circulate and publicise this order for the benefit of all private establishment, employers, factories and workers/employees.
The Supreme Court of India showed its concern about all the industries/establishments, employees and workers through its judgement. It duly noted that all industries/ establishments are of different nature and have different capacity, including financial capacity. Some of the establishments maybe be able to bear the financial burden of payment of wages or substantial wages of their workers/employees during the lockdown, some may not be able to bear the entire burden. Even the workers wanted and employers were ready to work, due to closure they could not and suffered. The Court thus came to a common ground and has asked the private establishments (if willing to) to negotiate and settle with the workers regarding payment of wages for 50 days or any other period applicable in the particular state during the lockdown.