KANAK INDUSTRIES Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) This petition under Article 226 of the Constitution takes exception to Notification bearing No. MWA 3277/1742/Lab-7 of the Industries, Energy and Labour Department, Government of Maharashtra, dated 12th November, 1982 (Notification) fixing the minimum wages payable unto employees in establishments engaged in manufacture of readymade garments or its accessories (excluding hosiery articles) and tailoring establishments in the State of Maharashtra.

(2.) The Minimum Wages Act, 1948 (Act) is designed to fix minimum rates of wages in certain employments. These employments are referred to as a "scheduled employment" because they are listed as such in the schedule appended to the Act. On 11.1.1977, the following was added to the schedule being item No. 46 therein:-

(3.) Petitioners contend that they represent a distinct and different segment by themselves. They could not be mixed up with garment manufacturers catering to the national market or tailoring establishments. Their problems were kept unto themselves. The Committee constituted by the State Government had no representative of theirs after the acceptance or the resignation of K.V. Doshi. No action had been taken by Government upon the recommendation to fill up Mr. Doshi's vacancy by appointing Mr. Harikrishnan. Petitioners and their companions in the garment export industry had to compete with manufacturers in the State of Karnataka and the Union Territory of Delhi. These competitors enjoy a distinct cost advantage over garment exporters located in Manarashtra. A major advantage which the competitors derived there, was the low minimum wages prevalent in their regions as was clear from Exs. D and E (accompaniments to W.P. No. 265 of 1983). Garment exporters like the petitioners operated in a wholly buyers market. They had to compete with manufacturers from countries like Hong Kong, Korea, Taiwan, Singapore, Sri Lanka and China. The manufacturers from these countries offered a stiff competition to the Indian exporters. The latter operated in a market which was seasonal in character, inasmuch as Indian made garments were found suitable only as summer wear. The Indian exporters could not effectively work for more than seven months in a year. For a variety of reasons, the Indian exporters were finding it more and more unprofitable to work. The Notification impugned rested upon the recommendations made by the Committee which had failed to take into consideration a number of relevant factors. The Committee had not borne in mind the distinction between manufacturers of readymade garments and tailoring establishments. The exporters operated in a highly competitive and unremunerative environment. The production pattern in their establishments followed the assembly line system. That was not the case with the pattern followed in tailoring establishments and the manufacturers of ready-made garments catering to the national market. The non-representation of the exporters after the resignation of K.V. Doshi made the Committee wholly unrepresentative which was a violation of Section 9 of the Act. The minimum wage recommended by the Committee and accepted by the Government approximated to a fair or living wage. This was ultra vires the powers vested in the Government under the Act. In the Notification, tailors had been divided into three grades and there were no guidelines to indicate what the grades meant. In the same fashion, ironers had been divided into different grades. The gradation was irrational and arbitrary showing non-application of mind. In the export segment of the employment employees were paid on a piece rate basis. This was because the nature of work was such as to exclude payment by time rating. Despite this, the Committee had recommended and Government accepted the time rating basis for computing wages payable to the employees. The State had been divided into three zones and various areas placed in these zones without any reasons to explain the demarcation and classification. Also arbitrary was the categorisation of employees into five categories. The five categories did not prevail in the establishments of those manufacturing readymade garments. Before accepting the report of the Committee, the Government should have objectively considered the situation. This was not done, with the result that a number of infirmities in the Committee's report were overlooked. The Notification be quashed.