Case analysis

Bijoy cotton mills ltd vs state of ajmer

October 14,1954

Introduction

The State of Ajmer v. Bijoy Cotton Mills Abstract The case generally relates to a minimum wage
dispute between an industry and its employees in which the constitutionality of the Minimum
Wages Act was challenged on the ground that it violated the fundamental rights of employees.

In newly independent India, the Minimum Wages Act of 1948 came into effect. The British created
labour rules based on exploitation. Wages were low and inconsistent in every region of the nation.
There was no such thing as a "minimum wage" and conditions for labours were very difficult.

Minimum Wages Act 1948

It came into existence to bring equality and justice to the working class. The Fair Wages Committee's
policies have served as a reference for wage-setting practitioners in resolving disputes involving
wage issues in organized industries

The Fair Pay Commission provided an overview of minimum wages, but did not provide guidance on
how to assess minimum wages. The 15th Session of the Indian Labour Conference gave an
explanation of the necessary physical standards and health care for workers.

Definition and Purpose of the Minimum Wage Act

to ensure that the employee has access to the basic necessities of life, good health and comfort.

Ensure workers are fairly compensated.to guarantee that the worker has a good reputation in
society and leads a decent life.

Standards for determining the minimum wage

The minimum wage is set by the "appropriate government" in accordance with section 3 of the
Minimum Wages Act 1948. Local, state and federal governments are examples of appropriate
government. This section sets the rate in accordance with hours, days, months or any other
permitted wage period.

It is not required that the rates set be uniform. Different tariffs can be set for different zones or
areas. If the salary is determined in accordance with Salary.
Objectives of the Industrial Disputes Act, 1947

By providing a system and procedure for the investigation and settlement of industrial disputes by
conciliation, arbitration and judicial proceedings as provided by law, a law has been made to
regulate them and ensure industrial peace and harmony.

The statement of aims and reasons for the legislation states that "The preservation of a culture of
peaceful labor in industry in India" was the main driving force behind the passage of this Act.

The law further provides:

a clause that stipulates that the worker is to be compensated in the event of termination, dismissal
or restriction.

Process of obtaining prior approval of concerned government before discharge, restrictions on

discharge, deteriorating industrial facilities

Steps that must be taken to stop unfair labor practices by an employer, union, or employee

Here in this case

Bijoy cottons mills was the petitioner

Vs

Their workmen and others were the respondents

Date of judgment – 12/2 /1960

Bench-GAJENDRAGADKAR, P.B.
GUPTA, K.C. DAS
Act – industrial disputes act 1947
Minimum wage act 1948

FACTS OF THE CASE

 The relevant government of Ajmer referred
the industrial dispute that had arisen in
1950 between the company and its
 workers over an increase in wages to an
industrial tribunal.
 The Chief Commissioner of Ajmer
established a committee to fix the
minimum salaries of workers in the state's
textile sector in accordance with the
Minimum Wages Act while the appeal was
still pending.
 The Industrial Tribunal made its final
decision, rejecting the grounds on which
the Chief Commissioner's minimum wage
of Rs. 56 was set, while the minimum wage
including the dearness allowance was fixed
at Rs. 35.
 In the interim, the Appellate Tribunal had
sent the case back to it for further
investigation.
 In their appeal, the company claimed that
the government-set minimum wage makes
it impossible for it to operate. Due to their
conflict with the fundamental rights of
employers and employees guaranteed
under article 19(1)(g) of the Constitution
and the fact that they are not protected by
clause (6) of that article, the company
claimed that the material provisions of the
Minimum Wages Act are illegal and ultra
vires.

The dispute was referred to the Industrial Tribunal for resolution after the appellant-employer
refused to fix minimum wages and contract labor rates for the respondent-workers who claimed to
be paid less than the bare minimum wage. The First Tribunal was unable to fix the minimum basic
pay and the decision of the Second Tribunal which fixed the scale was set aside on the ground that
the appointment of the Tribunal was not published in accordance with law. After taking into account
the rates typical in different regions of the country and the location closest to the appealable
enterprise, the third tribunal finally established a basic minimum wage based on industry and region.
The Ministry of Labor marginally increased the minimum amount awarded by the Tribunal.

When estimating the minimum basic wage, it should not be neglected if employees in other
comparable occupations in the same region received large amounts of survivor's allowance.

That the Central Government may become the competent Government under S. 2(a)(i) of the
Industries (Development and Regulation) Act, 1951 (65 of I 951)

. GAJENDRAGADKAR, J., delivered the judgment of the Court. The industrial dispute giving rise to this
special leave appeal was between Bijay Cotton Mills Ltd. (hereinafter referred to as the petitioner)
and its employees (hereinafter referred to as the respondents). As it was alleged that the payments
made by the appellant were below the bare subsistence level, the respondents argued that a range
of minimum wages and rates for contract work should be fixed for them. The demand raised by the
respondents was rejected by the petitioner and on 1st December, 1950 this dispute was referred to
the Industrial Tribunal composed of Mr. D.N. Roy for decision in accordance with Section 10(1).

It appears that Mr. Roy has not been able to fix any basic minimum wage. In support of his
contention that it would be unnecessary to fix any minimum basic wage in the proceedings before
him, he pointed out how difficult it was to fix a basic wage in view of the state of industrial
development in Ajmer State and the unpredictable and frequent fluctuations in prices. On October
5, 1951, he still received credit for a number of contentious matters and announced his decision.

ISSUES
 The question at hand in this case was
whether constraints placed on the right
to contract, even while they infringe to
some extent on the freedom of
commerce or business protected by
Article 19(1)(g) of the Constitution,
were reasonable or not.
 The provisions of Sections 3, 4 and 5 of
the Minimum Wages Act (XI of 1948)
give the appropriate Government the
authority to determine the minimum
rate of wages in an employment dispute
between the employer and the
employees, and it is a crime to fail to
pay the wages so determined in
 accordance with the Act. (1948's The
Minimum Wages Act, n.d.)
 The firm claimed that the Minimum
Wages Act's provisions are
unconstitutional and place undue
limitations on the rights of the employer
by preventing him from restarting his
trade or business until he is prepared to
pay the workers the minimum wage.
 The rights of the employees are also
limited in that they are unable to work
in any trade or industry under the
conditions set forth in the contracts
they have with their employers. It is
emphasized that the rules governing the
setting of minimum wages are arbitrary
and illogical.
 The clause is in opposition to the
fundamental rights of employers and
employees that are guaranteed by
Article 19(1)(g) of the Constitution and
are not covered by clause (6) of that
article.

Arguments

The objectors appealed this decision to the Labor Appellate Tribunal. Thereafter, the Appellate
Tribunal remanded the case to Mr. Roy with directions that the issues of basic pay and cash
assistance should be decided accurately and proper directions issued in these two matters. On
October 20, 1952, this detention order was apprroved.
Mr. Roy was not accessible when the proceedings were resumed before the remand tribunal as he
was no longer the District Magistrate for Ajmer. Mr.roy in his place.

Sharma got the job. On September 8, 1953, Mr. Sharma then presented his award. He fixed the
minimum wage at Rs. 10 and basic pay at Rs. 25. It looks like a prize.

The Industrial Tribunal was then appointed by Mr. C. Jacob. He presented the award on January 25,
1956. By making this award, Mr. Jacob essentially agreed with Mr. Sharma's view and fixed a
minimum rarity allowance of Rs. 10 per mensem and basic pay at Rs. 25 per month. This award was
to come into effect on 1st December, 1950. This award was again challenged before the Labor
Appellate Tribunal, which partially allowed the appeal of the respondents and increased the basic
pay from Rs. 25 per month up to Rs. 30 per month. It has been confirmed that the minimum poverty
allowance is worth Rs. 10 per month. The Appeals Tribunal announced its verdict on 12 December
1956.

It appears that Mr. Jacob, who fixed the basic minimum pay at Rs. 25 per month, he based his
decision on the fact that the above amount represents the basic minimum wage based on the sector
and region. He noted that unlike other localities, the basic minimum wage for an unskilled worker
ranges from Rs. 22 to Rs. 30 per month in Bombay textiles. He then referred to two charts, Exhibits
4-A and 4-B, produced by the respondents which showed that the minimum basic wages in
Rajasthan ranged from Rs. 21 to Rs. 30. He stated that the nearest town, Beawar, has a minimum
basic income of Rs. 26 per month in Rajasthan. The minimum wage for an unskilled textile worker in
Bijaynagar in 1950 was Rs. 25 per month. That is one of the facts that the tribunal stated. Another
fact which was cited was the agreement between the parties dated December, 1949, under which
the respondents agreed to work for a minimum wage of Rs. 27. In fact, it appears that the petitioner
and the respondents have jointly prayed this Court to set aside the notification of the Ajmer
Government fixing the minimum pay at Rs. 30 with effect from January 8, 1953. In Bijay Cotton Mills
Ltd. v. State of Ajmer it was jointly argued on their behalf that the relevant provisions were argued
that certain provisions of the Minimum Wages Act were unconstitutional and that the impugned
notification should be quashed in favor of both the employer and the employees. The Act and the
notification were upheld as legitimate by this Court, which rejected the said argument. But that's
another matter. The appellant took advantage of the agreement which the respondents were willing
to sign to work for him before the tribunal. (1) [1955] served as a tribunal.

The appellant started textile business in 940 but in 1943 it was forced to deal with a catastrophic
disaster which resulted in heavy losses and liabilities amounting to nearly Rs.30 lakhs. In addition,
the tribunal heard arguments that a substantial number of respondents belonged to the agricultural
class and could increase their income through agricultural means. Mr. Jacob apparently fixed the
minimum wage at Rs. 25 per month based on these considerations. They were of the view that the
pay scales mentioned in the notification should not be changed, even for the period,
notwithstanding that the notification cannot be used before January 8. , 1953. This was further
confirmed as there was not much information on record which could be used to adjust the said
salary. The Appellate Court raised the minimum wage from Rs. 25 to Rs. 30 as required by the
notification, on this basis. On behalf of the petitioner before us, Mr. A. V. Viswanatha Sastri
challenges this amendment.

The Labor Appellate Tribunal, on the other hand, held that a statutory notice issued under the
Minimum Wage Act provides "the best and safest direction in fixing minimum wages in the absence
Further, if the Appellate Division was of the view that legislative fixation of the minimum wage in
Ajmer by the Minimum Wages Act would provide more beneficial relief, we do not see how that
conclusion can be called into question in the present appeal. As the Board of Appeal did, it would
not be wrong to conclude that the Statutory Committee, in determining the minimum wage in the
area, considered all the relevant circumstances and determined that this would be a reasonable
minimum for prescribing. However, the Appeals Chamber cannot be said to have erred in law in
relying on the limited amount of relevant or valuable evidence presented to it, rather than the other
insufficient evidence presented in the case, mandatory notification. Since the minimum basic wage
was fixed by law on January 8, 1953, it cannot be said that the Court of Appeal committed an error
of law which we should correct in accordance with Article 136 of the Constitution, even if it awarded
the same basic wage for several years before this date. We are therefore not convinced that the
applicant has established a cause of action on this issue equate evidence on record".

The second argument advanced by Mr. Sastri is that the appointment of Mr. Jacob which resulted in
his being granted on 25th January, 1956 was invalid. Mr. Sastri proposes that the impugned finding,
as well as the judgment of the Appellate Tribunal, be set aside and the case returned to Mr. Sharma
for legal resolution. It is argued that the appointment of Mr. Sharma by the Industrial Tribunal, made
on December 31, 1954, was still valid when Mr. Jacob was appointed on June 17, 1955, and that it
was not proper for the competent authority to refer the same industrial dispute. to Mr. Jacob when
it had already been referred to Mr. Sharma. On the decision of this Court in The 988 State of Bihar v.
D.N. Ganguly & Ors. is relied upon to support this opinion (1). In our opinion, this argument is
unfounded. The notification which serves as the basis of the entire argument was published on
December 31, 1954 with the express intention of correcting the error which crept into Mr. Sharma's
appointment in consequence of the fact that the law did not require publication and notification. of
his previous appointment which was made on 4th May 1953. In fact it was because of this error that
Mr. Sharma's award dated 8th September 1953 was revoked on 25th May 1955. As I read the
subsequent notification This fact needs to be kept in mind while reading the following notification.
The notice appears to refer to Mr Sharma for his decision in a matter referred to him on remand by
the Labor Appellate Tribunal; however, as the appellate tribunal noted, Mr. Sharma's services were
not available when the post-custody proceedings began because he was not ostensibly employed by
the State, making it impossible to refer the matter to him for decision at that time. The Court of
Appeal came to this conclusion and is fully justified. Consequently, since the concerned Government
could not utilize the services of Mr. Sharma, it was perfectly acceptable for the said Government to
fill the void and appoint Mr. Jacob to exercise decision-making duties in his stead. Therefore, the
claim that Mr. Jacob's decision is legally invalid has some merit.

The final argument is that the reference is invalid because under Sections 10(1) and 12(5) of the Act,
the Chief Commissioner, Ajmer, had no power to refer the present matter for decision. It is
contended that the Chief Commissioner of Ajmer was not a proper Government under Section 2(a)(i)
of the Act because the textile industry is included under serial number 23 in the First Schedule of the
Industries (Development and Regulation) Act. , 1951 (Act 65 of 1951). It is encouraged that in
accordance with Article 989 of the Constitution, the Central Government is referred to as the
"competent Government" in relation to any industrial dispute involving a railway company, an
industry controlled by the Central Government or any other controlled industry which the Central
Government The Government may in this regard specify. The question arises: Has the Central
Government designated the textile industry as a controlled industry in this regard? It is true that the
provisions of Act No. 65 of 1951 govern the textile industry, making it a controlled industry in that
sense; however, this would not be sufficient to apply point i) of the Act. The Central Government is
required under the latter Article to specify “v This means that the specification must be made by the
Central Government with reference to the provisions of the Act and for the purposes of those wages
of labour .

JUDGEMENT

 After carefully examining the historical

context and the very nature of
jurisdiction, it is evident that the
restrictions placed on the freedom of
contract by the fixing of minimum wage
rates are not unreasonable and are
being implemented in the interest of
the general public and in order to carry
out one of the Directive Principles of
State, even though they do, to some
extent, interfere with the freedom of
trade or business guaranteed under
Article 19(1)(g) of the Constitution.

 Despite Section 3(1)(a), the

"appropriate government" is not
permitted to determine the basic
salaries for any planned job when less
than 1000 individuals are employed
across the State as a whole. However, it
must set the minimum wage rate if it
becomes known, after the fact, that this
number has climbed to 1000 or more in
such employment.

Sources
Ssc online and various other law portals

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