Gujarat Mazdoor Sabha v. The State of Gujarat
Writ Petition (Civil) No. 708 of 2020 decided on October 1, 2020
Bench: Dr. Dhananjaya Y Chandrachud, Indu Malhotra, K M Joseph, JJ.
Invoking its powers under Section 5 of the Factories Act, 1948, the State of Gujarat has exempted factories from observing some of the obligations which employers have to fulfil towards the workmen employed by them. According to the notification, all factories registered under the Act were exempted “from various provisions relating to weekly hours, daily hours, intervals for rest etc. for adult workers”. The notification extended the exemption granted to factories till 19 October 2020.
[Ingredients of Notification:
The notifications make significant departures from the mandate of the Factories Act. They (i) increase the daily limit of working hours from 9 hours to 12 hours; (ii) increase the weekly work limit from 48 hours to 72 hours, which translates into 12 hour work-days on 6 days of the week; (iii) negate the spread over of time at work including rest hours, which is typically fixed at 10.5 hours; (iv) enable an interval of rest every 6 hours, as opposed to 5 hours; and (iv) mandate the payment of overtime wages at a rate proportionate to the ordinary rate of wages, instead of overtime wages at the rate of double the ordinary rate of wages as provided under Section 59.]
Whether the notifications fall within the ambit of the power conferred by Section 5 of the Factories Act and whether COVID-19 pandemic and the nationwide lockdown qualify as a ‘public emergency’ as defined in Section 5?
(i) Section 5 of the Factories Act enables government to exempt any factory, or a class of factories, from its provisions only when a ‘public emergency’ exists;
(ii) The explanation to Section 5 defines the expression ‘public emergency’ as a “grave emergency” which threatens the security of India or of any part of the territory by war, external aggression or internal disturbance. Applying the interpretative principle of noscitur a sociis, the expression ‘internal disturbance’ will have a meaning which derives content from ‘war’ and ‘external aggression’ which endangers the security of India and would not include a pandemic or a lockdown;
(iii) Though both Section 5 and the provisions of Article 352 of the Constitution (prior to its amendment in 1978) contain a reference to the expression ‘internal disturbance’, there is a crucial difference. Art 352 was premised on the satisfaction of the President while the power under Section 5 can be exercised only upon the objective existence of the conditions prescribed;
(iv) Even if a threat to the security of India were to exist as an objective fact, the notifications must, to be valid, ameliorate the threat;
(i) The State has issued the notifications by invoking its powers under Section 5 of the Factories Act, under which it may exempt any factory or class of factories from all or any provisions of the Act in a public emergency;
(ii) The COVID-19 pandemic is a ‘public emergency’ as defined in Section 5 of the Factories Act. It has disturbed the “social order of the country” and has threatened the even tempo of life in the State of Gujarat as well. As a result of the outbreak, emergency measures were required to be adopted to protect the existence and integrity of the State of Gujarat;
(iii) The COVID-19 pandemic has caused “extreme financial exigencies” in the State. The lockdown caused a slowdown in economic activities, leading to an ‘internal disturbance’ in the State within the meaning of Section 5. The State temporarily exempted factories and establishments from the operation of labour laws such as the Factories Act to overcome the financial crisis and to protect factories and establishments;
(iv) The notifications do not violate Section 59 of the Factories Act as they impose the condition of payment of wages for overtime work in proportion to the existing wages;
(v) Section 5 of the Factories Act confers the power of exemption to the State Government to exempt any factory or class of factories from its provisions. The State Government has the prerogative to determine whether all or only a class or description of factories were to be exempted. Listing of all classes of factories would have been an unnecessary exercise;
The Court quashing the impugned notification said that Section 5 of the Factories Act could not have been invoked to issue a blanket notification that exempted all factories from complying with humane working conditions and adequate compensation for overtime, as a response to a pandemic that did not result in an ‘internal disturbance’ of a nature that posed a ‘grave emergency’ whereby the security of India is threatened. In any event, no factory/ classes of factories could have been exempted from compliance with provisions of the Factories Act, unless an ‘internal disturbance’ causes a grave emergency that threatens the security of the state, so as to constitute a ‘public emergency’ within the meaning of Section 5 of the Factories Act. Furthermore, the Supreme court in the interest of doing complete justice under Article 142 of the Constitution, directed that overtime wages shall be paid, in accordance with the provisions of Section 59 of the Factories Act to all eligible workers who have been working since the issuance of the notifications.
View of Supreme Court on Notification
The Supreme Court said that the impugned notifications do not serve any purpose, apart from reducing the overhead costs of all factories in the State, without regard to the nature of their manufactured products. Furthermore, it would be fathomable, and within the realm of reasonable possibility during a pandemic, if the factories producing medical equipment such as life-saving drugs, personal protective equipment or sanitisers, would be exempted by way of Section 65(2), while justly compensating the workers for supplying their valuable labour in a time of urgent need. However, a blanket notification of exemption to all factories, irrespective of the manufactured product, while denying overtime to the workers, is indicative of the intention to capitalize on the pandemic to force an already worn-down class of society, into the chains of servitude
View on Section 5
Section 5 specifies (i) when an exemption can be granted; (ii) who can exercise the power to grant an exemption; (iii) who can be exempted; (iv) the conditions subject to which an exemption can be granted; (iv) the provisions from which an exemption can be allowed; (v) the period of time over which the exemption may operate; and (vi) the manner in which the exemption has to be notified. An exemption can be granted “in any case of public emergency”. The existence of a public emergency is a pre-requisite to the exercise of the power. Whether there exists a public emergency is not left to the subjective satisfaction of the state government. The absence of the expression “subjective satisfaction” in Section 5 is crucial. The existence of a public emergency must hence be demonstrated as an objective fact, when its existence is questioned in a challenge to the exercise of the power.
Meaning of Public Emergency
Under Section 5, a situation can qualify as a ‘public emergency’, only if the following elements are satisfied: (i) there must exist a “grave emergency”; (ii) the security of India or of any part of its territory must be “threatened” by such an emergency; and (iii) the cause of the threat must be war, external aggression or internal disturbance. The existence of the situation must be demonstrated as an objective fact. The co-relationship between the cause and effect must exist.
On principle of Proportionality
The principle of proportionality has been recognized in a slew of cases by this Court, most notably in the seven-judge bench decision in K S Puttaswamy vs. Union of India.
The principle of proportionality envisages an analysis of the following conditions in order to determine the validity of state action that could impinge on fundamental rights:
(i) A law interfering with fundamental rights must be in pursuance of a legitimate state aim;
(ii) The justification for rights-infringing measures that interfere with or limit the exercise of fundamental rights and liberties must be based on the existence of a rational connection between those measures, the situation in fact and the object sought to be achieved;
(iii) The measures must be necessary to achieve the object and must not infringe rights to an extent greater than is necessary to fulfil the aim;
(iv) Restrictions must not only serve legitimate purposes; they must also be necessary to protect them; and
(v) The State should provide sufficient safeguards against the abuse of such interference.
[Section 5 is extracted below:
5. Power to exempt during public emergency.—In any case of public emergency the State Government may, by notification in the Official Gazette, exempt any factory or class or description of factories from all or any of the provisions of this Act except section 67 for such period and subject to such conditions as it may think fit: Provided that no such notification shall be made for a period exceeding three months at a time.
Explanation.—For the purposes of this section “public emergency” means a grave emergency whereby the security of India or of any part of the territory thereof is threatened, whether by war or external aggression or internal disturbance.]