Payment of Wages 
during Covid Times -
Karnataka order Challenged
Payment of Wages during Covid Times - Karnataka order Challenged
Litigation News

MHA Order can turn a stable and solvent industrial establishment into insolvency and loss of control of biz: Karnataka Company moves SC

Karnataka-based company contends that these notifications can turn “an otherwise stable and solvent industrial establishment, especially an MSME establishment, into insolvency and loss of control of the business.”

Debayan Roy

A Karnataka-based medium scale packaging company has moved the Supreme Court seeking to quash two Government of India notifications directing payment of full wages to workers and employees during the lockdown announced to contain the COVID19 pandemic.

This is the third petition to be filed in the Supreme court challenging the the Union Ministry of Home Affairs (MHA) Order. Earlier Mumbai-based textile company Nagreeka Exports Limited and Punjab based-Ludhiana Hand Tools Association have filed petitions.

Karnataka-based company, ‘Ficus Pax Private Limited,’ is involved in the business of packaging with 11 factories spread across 7 States and is registered as Medium Industry (Manufacturing) under the Micro Small Micro Enterprises Development Act 2006 (MSMED Act 2006).

The company in the writ petition before the Supreme Court has challenged the constitutional validity of a March 20 notification by the Secretary (Labour & Employment) and clause III of the March 29 notification by the MHA, both of which compelled payment of full wages to workers and employees during the period of lockdown.

The petitioner company, through Advocate on Record, Jeetender Gupta, has submitted in his plea that these two notifications were “arbitrary, illegal, irrational, unreasonable and contrary to the provisions of law including Article 14 and Article 19(1)(g) of the Constitution of India.”

The company has stated that before the lockdown, the company had 176 permanent workers and 939 contract workers across all its factories/warehouses/officesd and that the petitioner had “paid the wages to all workers including contractual workers for the month of March 2020.”

It has been contended that these notifications can turn “an otherwise stable and solvent industrial establishment, especially an MSME establishment, into insolvency and loss of control of business.”

The Petitioner further urges the Court that these impugned notifications are in violation of Article 14 and Article 39 of the Constitution of India as they are contrary to principle of “Equal Work Equal Pay” and also “No Work No Pay” for it does not differentiate between the workers who are working during the lock down period in establishments such as the Petitioner who have been permitted to operate during the lockdown period.

The plea, substantiating on how it is the government's prerogative to look after the employers, states that Central Government in terms of Section 46 of Disaster Management Act 2005 has the power to constitute National Disaster Response Fund for meeting the expenses for emergency response, relief and rehabilitation.

Thus, it is the government that has the power to constitute National Disaster Mitigation Fund for the purpose of mitigation, under section 47 and thus the power to allocate fund for emergency response, relief, rehabilitation, mitigation of disasters.

Therefore, petitioner argues that the ultimate onus for any compensation towards workers shall “be of the Government and cannot be shifted upon the employers in private establishments.”

The petitioner company further states that while empathizing with the workmen and doing whatever is possible to support them, the “ultimate responsibility to provide a financial package or grant so as to subsidize the wages of workers lies with the Government”.

The government should subsidize the wages of the workers for the lockdown period, especially for the employers under the MSME Sector to the tune of 70-80 percent, taking example from other countries like Australia, Canada & UK etc

says the plea

[READ THE PETITION]

Karnataka Plea to Set Aside MHA Order.pdf
Preview
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