NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

SUBJECT: LABOUR LAW-I

TRIMESTER: XII

TOPIC: SUPREME COURT’S DIRECTIONS IN FICUS PAX PRIVATE

LIMITED & ORS. VS. UNION OF INDIA & ORS.: ANALYSING THE
WAY FORWARD

SUBMITTED BY: SUBMITTED TO:

SAUMYA AGARWAL PROF. MAHENDRA SONI

2016BALLB73 ASSISTANT PROFESSOR

1
 ACKNOWLEDGEMENT

This project work is the combined effort of several people, for which the researcher would
most humbly, express her gratitude. First and foremost, the faculty in-charge of Labour Law-I
Prof. Mahendra Soni, who stood by me like a pillar, right from the beginning. He gave us so
much of confidence and he always had a solution to every problem that arose, at the time of
making of this project. He made himself available to us like a friend and the aura that he
carries around himself never made us feel any kind of tension even though there were many
instances where we could have lost hopes. It has been my pleasure to include his inputs in
whatever way I could and the researcher considers herself privileged and blessed to have
gotten the opportunity to have made this work under his aegis. Along with him, the entire
university administration, our Vice Chancellor, Prof. (Dr.) V. Vijayakumar and Faculty In-
charge of Examination Department Prof. (Dr.) Raka Arya, who provide us with opportunities
like remote access to online databases even in these extraordinary times thus helping us in
achieving the greatest heights in life.

I would be doing a great injustice to myself, if I end without mentioning the support given to
me by my parents and my elder sister, who, although could not help me out with the content
of this work, but have always given me immense moral support and have trusted me with
their unconditional love, faith and blessings which fills me with so much of power and
strength to do whatever I do in life.

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 TABLE OF CONTENTS
ACKNOWLEDGEMENT.......................................................................................................2

TABLE OF CONTENTS.........................................................................................................3

LITERATURE REVIEW........................................................................................................5

A. ARTICLES.................................................................................................................5

i. Manishii Pathak , Poonam Das and Shweta Velayudhan (IndusLaw), India: Supreme
Court Order On Payment Of Wages During The Lockdown Period.................................5

ii. Tushar K. Shah (Vaish Associates Advocates), India: Apex Court's Order -
Blessing In Disguise...........................................................................................................5

iii. Vikas Goel, Shambhu Sharan (Singhania & Partners LLP, Solicitors and
Advocates), India: Can Prıvate Employers Pay Reduced Salary Durıng Lockdown........5

iv. Milanka Chaudhury, Ashly Cherian (Link Legal India Law Services), India:
Payment Of Wages During Period Of Lockdown Implemented To Contain COVID-19. 6

B. CASES........................................................................................................................6

i. Ficus Pax Private Limited and Ors. vs. Union of India and Ors.................................6

ii. State of Punjab v. Jagjit Singh.................................................................................6

iii. Rashtriya Shramik Aghadi vs Maharashtra.............................................................6

C. STATUTE..................................................................................................................6

i. Disaster Management Act, 2005.................................................................................7

ii. Epidemic Diseases Act, 1897..................................................................................7

iii. Industrial Disputes Act, 1947..................................................................................7

STATEMENT OF PROBLEM...............................................................................................7

OBJECTIVE OF STUDY........................................................................................................7

HYPOTHESIS..........................................................................................................................7

RESEARCH QUESTION.......................................................................................................7

SCOPE OF STUDY.................................................................................................................8

RESEARCH METHODOLOGY...........................................................................................8

INTRODUCTION....................................................................................................................9

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 CHALLENGING THE ORDER..........................................................................................10

I. LOOKING INTO THE CURRENT STATUS OF FICUS PAX PRIVATE LTD &
ORS. VS. UNION OF INDIA & ORS..................................................................................11

A. PETITIONERS........................................................................................................12

 Petitioners' Arguments...............................................................................................12

 Petitioners' Suggestions.............................................................................................12

 Petitioners' Prayers....................................................................................................13

B. PUBLIC INTEREST LITIGANT..........................................................................13

C. GOVERNMENT'S DEFENSE...............................................................................14

D. INTERVENORS' SUPPORT TO GOVERNMENT............................................14

E. IMPORTANT NOTING OF APEX COURT IN JUNE 12 ORDER..................14

F. INTERIM MEASURES..........................................................................................15

II. ANALYSING THE LEGALITY OF THE MHA ORDER........................................15

III. LOOKING INTO THE VIABILITY OF SUPREME COURT’S INTERIM

ORDER...................................................................................................................................21

IV. CONCLUSION & SUGGESTIONS.............................................................................24

BIBLIOGRAPHY..................................................................................................................27

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 LITERATURE REVIEW
A. ARTICLES

i. Manishii Pathak , Poonam Das and Shweta Velayudhan (IndusLaw), India:

Supreme Court Order On Payment Of Wages During The Lockdown Period
The authors in this article have opined that the Supreme Court has followed a
balanced approach which is very practical and viable. Though the employers have
been given discretion and option to opt for negotiations and settlements with their
employees, however, it would be expected by the government and Apex Court,that
the employers adhere to the direction of the Apex Court and take proactive steps to
resolve the issues amicably. They also expect that this interim order may pave the
way for a harmonious approach, strengthening the bond between the employer and
employees and/or workers.

ii. Tushar K. Shah (Vaish Associates Advocates), India: Apex Court's Order -
Blessing In Disguise.
The author through this article has delved into various arguments put forth via
different parties in Ficus Pax Private Limited & Ors. vs. Union of India & Ors. and on
analyzing has observed that the Supreme Court has taken note of the challenges faced
by employers owing to government's Order under DMA. However, given the fact that
Covid-19 pandemic is continuing, one cannot rule out the fact the Court may be
constrained to sacrifice private interest to safeguard public interest. Thus the interim
measure of Court is a blessing in disguise for employers- both who have complied
with Order as well as those who failed to comply with it

iii. Vikas Goel, Shambhu Sharan (Singhania & Partners LLP, Solicitors and
Advocates), India: Can Prıvate Employers Pay Reduced Salary Durıng
Lockdown.
The authors in this article have looked into various provisions of the Industrial
Dispute Act and the Disaster Management Act. They are of the opinion that the MHA
Order will hold good in law as it made under Section 10 of DMA, which is a statutory
provision and once an order is passed in compliance of any statutory provision, such
order takes the statutory color. The authors have also looked into why the order is not
against the golden triangle.

5
iv. Milanka Chaudhury, Ashly Cherian (Link Legal India Law Services), India:
Payment Of Wages During Period Of Lockdown Implemented To Contain
COVID-19.
The authors in this article have argued that the government has acted ultra vires of
Disaster Management Act, 2005 by issuing Order dated 29.03.2020 and shifted its
economic responsibility onto the private players who are technically not even covered
under the Act.

B. CASES

i. Ficus Pax Private Limited and Ors. vs. Union of India and Ors.
The Supreme Court collated under this lead petition collated all the other applications
which were filed challenging the MHA order dated 29.03.2020, directing the
employers to pay wages to all the employees. Through the last order dated
12.06.2020, the Supreme Court has granted certain interim measures. The case is sub-
judice and is listed for last week of July.

ii. State of Punjab v. Jagjit Singh

The Supreme Court held that principle of “equal pay for equal work” expounded
through its various decisions constitutes to be law, which is binding on all courts in
India and is applicable to all temporarily engaged employees (daily-wage employees,
ad-hoc appointees, employees appointed on casual basis, contractual employees and
the like) who are entitled to minimum of the regular pay-scale, on account of their
performing the same duties, which are discharged by those engaged on regular basis
against sanctioned posts.

iii. Rashtriya Shramik Aghadi vs Maharashtra

Through this case, the Aurangabad Bench of Bombay High Court observed that
during this present time of the COVID-19 pandemic, the principle of "no work- no
wages" cannot be made applicable by the employers. It however should be noted that
the ruling came before the SC asked the government to not take any coercive action
on non-compliance.

C. STATUTE

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 i. Disaster Management Act, 2005
The Act calls for effective management of disaster or for matters connected or
incidental thereto, through the establishment of National Disaster Management
Authority (NDMA), with the Prime Minister of India as chairperson. The NDMA is
responsible for "laying down the policies, plans and guidelines for disaster
management" and to ensure "timely and effective response to disaster".

ii. Epidemic Diseases Act, 1897

The Epidemic Diseases Act, 1897 is a law which was first enacted to tackle bubonic
plague in Mumbai in former British India. The law is meant for containment of
epidemics by providing special powers that are required for the implementation of
containment measures to control the spread of the disease.

iii. Industrial Disputes Act, 1947

This Act is aimed to make provision for the investigation and settlement of industrial
disputes, and for certain other purposes.

STATEMENT OF PROBLEM
The MHA order dated 29.03.2020, being pro-employees - without state support has the
capability of affecting employers and their businesses negatively.

OBJECTIVE OF STUDY
The researcher by doing this project titled “Supreme Court’s Directions In Ficus Pax Private
Limited & Ors. vs. Union of India & Ors.: Analysing The Way Forward” aims at following
things:

1. To understand the concerns from different sides, in relation to the MHA order;
2. To analyse and evaluate the legality of the MHA order;
3. To evaluate the viability of Supreme Court’s interim order dated 12.06.2020; and
4. To suggest ways by which the employers can be benefitted as well.

HYPOTHESIS
A complete balance between employer-employee rights in time of this crisis cannot be
maintained.

RESEARCH QUESTION

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What steps can be taken by the Government of India and the Supreme Court to help in
balancing out as much as possible, the rights between these two sides?

SCOPE OF STUDY
The scope of the project is limited to the objectives of study and research questions stated
above. The author has limited herself to the resources useful in answering the same.

RESEARCH METHODOLOGY
Doctrinal method of research has been followed in this project. The study is descriptive in
nature and is based on secondary sources of data that have been obtained from various
published sources, websites, and books, articles, journals and decided case laws.

8
 INTRODUCTION
Corona Virus has created an unprecedented situation having devastating impact on the
finance of our country. Absence of any economic activity during lockdown rendered migrant
workers redundant. Consequently, a large exodus of migrant workers took place from various
work places to reach their hometowns. Social distancing norms were ignored thereby upping
risk of spread of virus. All industries/businesses across the country have got adversely
affected and one question which is pestering all is, "Whether the various orders and
directions issued by the Government calling upon the private employers not to deduct the
salaries of its employees and further advising them not to terminate their employment during
this lockdown period, are mandatory in nature?"

Central Government as well as several State Governments issued advisories/orders advising

the employer to treat the workers "on duty" and not to take any coercive steps against them.
However, these advisories were not binding and were merely directory in nature.

However, on 29.03.2020, the Ministry of Home Affairs, Government of India, in exercise of

powers contained in Section 10(2)(l) of the Disaster Management Act, 2005 (DMA), passed
an order (No. 40—3/2020-DM-1(A))1 directing for mandatory payment of wages without
deduction by employers of private/government establishments to their workers and making
any violation of the order punishable under the DMA. The said order reads as under:

"Whereas, to deal with the situation and for the effective implementation
of the lockdown measures, and to mitigate the economic hardship of the
migrant workers, in exercise of the powers, conferred under Section 10(2)
(l) of the DMA, the undersigned, in the capacity as Chairperson, National
Executive Committee here directs the State/Union Territory

Government and State/Union Territory Authorities ... to take following

additional measures:

(i) ...

(ii) ...

(iii) All the employers, be it in the industry or in the shops and

commercial establishments, shall make payment of wages of their

1
Order No. 40—3/2020-DM-1(A), Government of India, Ministry of Home Affairs, 29 March 2020
http://csharyana.gov.in/WriteReadData/Notifications%20&%20Orders/COVID-19/10920.pdf.

9
 workers, at their work places, on the due date, without any deduction, for
the period their establishments are under closure during the
lockdown; ..."

In the recital part of the Order, MHA mentioned 'migrant workers' whereas in
operative/direction part MHA simply used word 'worker'. This forced employers to extend
benefit to all non-managerial employees in addition to migrant workers.

Additionally, prior to issuance of Order, on March 20, 2020, the Ministry of Labour and
Employment too, had issued an advisory to the industry. It advised employers to abstain from
terminating services of workers or reducing their wages during the lockdown.

CHALLENGING THE ORDER

In response to the advisory dated 20.03.2020, 2020 (Advisory) issued by the Secretary,
Government of India, Ministry of Labour and Employment and order dated 23.03.2020
(MHA Order), issued by Government of India, Ministry of Home affairs, in exercise of
powers under Section 10(2)(l) of DMA and other consequential orders notified by other state
governments, a batch of petitions were filed before the Apex Court challenging the
constitutional validity of the MHA Order.

Among the petitioners, the Karnataka-based Ficus Pax Private Limited filed a writ petition
challenging the constitutional validity of the MHA Order as well as the advisory on the
grounds that they violated Articles 14 and 19(1)(g) of the Constitution of India and, were in
contravention of the principles of 'equal work, equal pay'2 and 'no work, no pay'3 by not
differentiating between the workers so covered and those who had been working during the
lockdown. The petitioners submitted that in light of the pandemic and the subsequent
lockdown, many industries were unsustainable and already at the brink of insolvency,
wherein payment of full wages to its workers would drive them out of business.
On May 15, 2020, the Apex Court had asked the Central Government not to take any
coercive action for a week against companies and employers who were unable to pay full

2
In State of Punjab v. Jagjit Singh, (2017) 1 SCC 148, the Supreme Court held that principle of “equal pay for
equal work” expounded through various decisions of Supreme Court constitutes law declared by Supreme
Court, which is binding on all courts in India and is applicable to all temporarily engaged employees (daily-
wage employees, ad-hoc appointees, employees appointed on casual basis, contractual employees and the like)
who are entitled to minimum of the regular pay-scale, on account of their performing the same duties, which are
discharged by those engaged on regular basis against sanctioned posts.
3
The Aurangabad Bench of the Bombay High Court in Rashtriya Shramik Aghadi vs Maharashtra, recently
observed that during this present time of the COVID-19 pandemic, the principle of "no work- no wages" cannot
be made applicable by the employers. It however should be noted that the ruling came before the SC asked the
government to not take any coercive action on non-compliance.

10
wages to their workers or employees during the nationwide lockdown 4, in two cases while
hearing multiple petitions on the said issue through video conferencing. Later, the petitions
were all brought together (Eighteen Civil Writ Petitions filed by different employers and
employers’ organization and One Public Interest Litigation) under the lead petition Ficus Pax
Private Limited & Others vs. Union of India & Others. 5 and the Apex Court made a reference
to the aforesaid order in its order dated May 26, 2020. The Apex Court observed that the
MHA Order directing companies to make payment of full wages to workers or employees,
was an omnibus order and there was a larger question involved which needs to be answered.
The Apex Court also issued a notice to the Central Government. A counter-affidavit was filed
by the Central Government with its submissions, which was to be considered for all the
petitions pending before the Apex Court. Thereafter, the Apex Court vide its order dated June
4, 2020 extended the bar on coercive action against all employers.
The Attorney General of India, arguing on behalf of the Central Government, submitted that
the MHA Order was passed with an intention to prevent human suffering amid the national
lockdown and the directions contained therein, were a temporary measure to mitigate the
financial hardship of the employees and workers, specially contractual and casual, during the
lockdown period. By way of its counter-affidavit filed, the MHA submitted that financial
incapacity (as claimed by the companies) is a legally untenable ground to challenge the MHA
Order.
Though the case is still sub-judice, an interim order was passed on 12.06.2020 (Order).
Through this project, the researcher aims to discuss it in detail and analyse the validity of
MHA order and the possible decision Supreme Court might take.

I. LOOKING INTO THE CURRENT STATUS OF FICUS PAX

PRIVATE LTD & ORS. VS. UNION OF INDIA & ORS.
Before we start with the discussion on the legality of the order and its current position in the
instant case, that is, Supreme Court’s order dated 12.06.2020 or Order6; it is important to look
into the arguments put forth from all sides in detail:7

A. PETITIONERS

4
Prashant K Nanda, Payment of wages during lockdown no more mandatory, govt withdraws order, LIVE
MINT, 18 May 2020, https://www.livemint.com/news/india/payment-of-wages-during-lockdown-no-more-
mandatory-govt-withdraws-order-11589823719789.html
5
Ficus Pax Private Ltd & Ors. Vs. Union Of India & Ors., 2020 SCC OnLine SC 503.
6
Id, order dated 12.06.2020.
7
Tushar K. Shah (Vaish Associates Advocates ), India: Apex Court's Order - Blessing In Disguise.

11
 • Petitioners' Arguments
1. The Order compels employers to retain migrant and regular workers. It requires them
to pay full wages especially when there was no business during lockdown. Thus the
Order can force an otherwise stable and solvent industrial establishment into
insolvency and lose control of business;
2. MHA cannot invoke Section 10(2)(l) of DMA to impose financial obligations such as
payment of wages on employers. The ultimate onus to compensate workers is that of
government and it cannot shift the burden on employers;
3. The Order was issued to safeguard interest of migrant workers. However, the scope of
Order should not be extended to cover entire workforce of an establishment;
4. The Order fails to differentiate between workers who worked during lockdown and
those who didn't. Hence the Order conflicts with principles of 'Equal Work Equal
Pay'8 and 'No Work No Pay'9;
5. The Order groups them all industries and private establishments in one category
thereby ignoring the fact that such industries and private establishments have different
financial capacity;
6. Failure to comply with Order for genuine reasons like complete absence of funds
would still render the employer liable to prosecution. Thus the Order is ex-facie
arbitrary and unreasonable; and
7. Last but not the least, the Order is contrary to provisions of Article 14 , Article 19(1)
(g) and Article 300A of the Constitution of India;

• Petitioners' Suggestions
1. To make periodical payments to the workers, government must utilize funds lying
with Employees' State Insurance Corporation (ESIC) or constitute funds under DMA
namely- 'National Disaster Response Funds' and 'State Disaster Response Funds'; and
2. Some petitioners expressed their willingness to pay 50% wages for lockdown period.
Few petitioners submitted that they are negotiating payment of wages for the
lockdown period with their workers.

8
Id at 2.
9
Id at 3.

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 • Petitioners' Prayers
1. Order and the advisories of Central/State Governments to the extent they compel
employers to pay full salaries should be declared ultra vires Articles 14 and 19(1)(g)
of the Constitution of India and quashed;
2. If court concludes the government has powers under DMA to direct private
establishment to pay wages to their workers during the lockdown period, it should
order that Section 10(2)(l) of DMA be declared ultra vires to Articles 14 and 19(1)(g)
of the Constitution of India;
3. Pending final disposal of the matter, permit petitioners to make payment of 50% of
Basic Pay + Dearness Allowance to its workers without payment of contribution
towards provident fund and ESIC;
4. Direct authorities to waive provident fund and ESIC contribution as there was no
work during lockdown. Consequently even direct authorities to refund of March and
April 2020 aforesaid social security contributions;
5. Direct government to subsidize wages of workers to the tune of 70% to 80% during
lockdown period. For this purpose, funds from ESIC or PM CARES funds should be
utilized; and
6. Pass appropriate direction to the government to strike a balance between the
conflicting interest of MSMEs and workers/employees such that neither is unduly
prejudiced.

D. PUBLIC INTEREST LITIGANT

Mr. Aditya Giri, through a PIL sought to mitigate problems of both financially weaker
employers as well as employees. Accordingly, following directions were sought:

1. Formulate policy measures to mitigate problems of sudden laying-off of employees of

private sector during lockdown; and
2. Where employer is financially weak and unable to maintain the employees, direct the
government to support such employees who in turn cannot maintain their families and
fulfill basic needs.

E. GOVERNMENT'S DEFENSE
1. Government's power to issue Order can be traced under Section 10(1) of DMA.
Section 10(2) of DMA does not restrict the scope and ambit of Section 10(1) of DMA.
Thus the Order was in full conformity with provisions of DMA;

13
 2. The Order was issued to prevent perpetration of financial crisis within lower strata of
society represented by such labourers and employees;
3. The Order was issued as a temporary measure aimed to mitigate financial hardship of
employees and workers especially contractual workers and casual workers during
lockdown period;
4. The Order was in force for 54 (fifty four) days only as it ceased to be in operation
w.e.f May 18, 2020;
5. The Order was an economic and welfare measure; and
6. The ground of financial hardship raised by employers is legally untenable ground to
challenge the Order.

F. INTERVENORS' SUPPORT TO GOVERNMENT

Intervenors supported government by submitting as under:

1. The government has offered economic stimulus package to all small and medium
enterprises to remain viable as well as cope with both financial situation and the
burden of payment of wages;
2. The Order and advisory were issued in larger public interest to prevent possible
spread of disease;
3. Closure of the workplace due to nationwide lockdown directly affected the sustenance
and livelihood of members of union whereas the Order seeks to reinforce pre-existing
right of workers to receive wages without reduction. Thus if the Order is struck down
then even nationwide lockdown is liable to be struck down for arbitrariness;
4. DMA is a self-contained code. Reliance cannot be placed on other laws as Section 72
of DMA overrides provisions of all other enactments;
5. Central Government has full authority under DMA to issue such an Order and
measures undertaken by government were under its legislative competence; and
6. The prayer of petitioners to utilize ESIC funds was refuted.

G. IMPORTANT NOTING OF APEX COURT IN JUNE 12 ORDER

1. The Apex Court took note of the fact that the MHA Order is no longer in operation.
However, the issue, whether the MHA Order (when in was in force i.e. from March
29, 2020 to May 17, 2020) was ultra vires the Articles 14, 19 and 21 of the
Constitution of India needs to be answered;
2. The Court took note of the fact that:

14
 (i) all industries/establishments are of different nature and of different
capacity including financial capacity;
(ii) not all employers would be able to bear the burden of payment of wages or
substantial wages to their workers during lockdown; and
(iii) no industry/establishment can survive without employers/labourers and
vice-versa; (emphasis supplied)
3. Hon'ble Apex Court therefore felt a need to strike balance between competitive claims
of employers and employees through negotiations.

H. INTERIM MEASURES
1. On June 4, 2020 Apex Court had directed that no coercive action be taken against
employers not complying with the Order. The Court has continued with this direction
for all matters;
2. All private employers (including employers whose establishments/industries were
functional during lockdown as well as petitioners) and employees, negotiate and
arrive at a settlement with regards to payment of wages for the applicable period
during which establishment was closed due to lockdown.
3. Where negotiations fail, conciliation assistance may be requested from the concerned
labour authorities under different statutes to arrive at a settlement. Where settlement is
arrived, employers and employees shall act upon it dehors the directions of
government set out in the Order. In this context, court directed petitioners to file an
affidavit on the next date of hearing if a settlement is reached.

II. ANALYSING THE LEGALITY OF THE MHA ORDER

In order to begin with the examination of the issue at hand, i.e., legality of the MHA Order,
provisions of the Industrial Disputes Act 1947 (ID Act) and DMA are to be considered.

Under the ID Act following points are to be noted:

 Lay off10 has been defined to mean failure, refusal or inability of the employer to give
employment to the workmen whose name is borne on the muster rolls of his industrial
establishment. Natural Calamity is one such reason provided in the said definition
because of which employer can deny employment or lay off the workman.
 Compensation for lay off is not payable if-

10
Section 25C, The Industrial Disputes Act, 1947.

15
 (i) the industrial establishment employed less than 50 workmen (average per working
day) in the preceding year and
(ii) seasonal character industrial establishments11.
(iii) to casual workman
(iv) to workman, who had his name in the muster-rolls but has not completed one year
of continuous services.
 Workmen laid off, subject to their being eligible, shall be entitled to 50% wages for
the laid off day.
 If the period of lay off is more than 45 days in preceding 12 months, employer and
employee can enter into agreement for payment of compensation for beyond 45 days
lay off.

The MHA order directing full payment of wages/ salaries during lockdown to all the workers
has been passed under section 10(2)(l) of the DM Act.

Following provisions of the DM Act may be noted:

 10. Powers and functions of National Executive Committee.-

(1) The National Executive Committee shall assist for the purpose of disaster
management in the count.
(2) Without prejudice to the generality of the provisions contained in sub-section (1),
the National Executive Committee may-
lay down guidelines for, or give directions to, the concerned Ministries or
Departments of the Government of India, the State Governments and the State
Authorities regarding measures to be taken by them in response to any threatening
disaster situation or disaster:
 51. Punishment for obstructions, etc. – provides that whosoever obstructs or refuses to
comply with any direction given by any authority under the Act would be punished
with imprisonments or with fine or both.
 72. Act to have overriding effect.- The provisions of this Act, shall gave effect,
notwithstanding anything inconsistent therewith contained in any other law for the
time being in force or in any instrument having effect by virtue of any law other than
this Act.

11
Section 2(gg), The Industrial Disputes Act, 1947.

16
Above points show that provisions relating to layoff under the ID Act are industry specific
and would not govern the employees which are employed in places other than an industrial
establishment as defined under the ID Act. The ID Act provides that in case of layoff,
workman concerned would be entitled to 50% of the wages. However, the MHA order passed
under DM Act is much wider and covers workers, primarily of the category of workmen
(though not specifically stated so) working in all types of organization irrespective of its
size.12 Additionally, given that labour law statutes govern payment of wages to
workers/employees and particularly the provisions of the ID Act, 1947 which explicitly
recognizes certain rights of an employer like lay off as discussed above, it appears that the
Ministry of Labour and Employment has consciously chosen to issue an advisory instead of
resorting to a formal order/direction mandating payment of wages during lockdown. 13 The
aim is to prevent violation of lock down and social distancing norms by the labourers, who
had started or could have started, migrating to their native places in the absence of livelihood
and to ensure that they are not deprived of food and other basic amenities.14

The primary argument of the employers turns upon the contention that the DMA15 does not
grant the central government the power to compel the payment of wages to the workers. The
order itself invoked section 10(2)(l) of the DMA, and the employers argue that this provision
only enables guidelines to government authorities, not private entities. Petitioners also
contend that Section 65 of the DMA, which allows the National Executive Committee to
"requisition resources" in order to ensure a prompt response, and is followed by Section 66,
which compels the payment of compensation in case of requisition, is the only provision
under the DMA which authorises the government to impose obligations on private parties is
Section 65. This (or so the argument goes), on its terms, does not allow a direction for the
mandatory payment of wages; and that in any event, even if it does, the terms of Section 66
have not been complied with.16

Now, as a legal argument, this contention is very clearly flawed. There are two reasons for
this. The first is that the series of guidelines and orders17 issued on and after the 24th of
12
Vikas Goel, Shambhu Sharan (Singhania & Partners LLP, Solicitors and Advocates), India: Can Prıvate
Employers Pay Reduced Salary Durıng Lockdown.
13
Milanka Chaudhury, Ashly Cherian (Link Legal India Law Services), India: Payment Of Wages During
Period Of Lockdown Implemented To Contain COVID-19.
14
Id at 7.
15
https://www.ifrc.org/Docs/idrl/512EN.pdf.
16
Gautam Bhatia, The Payment of Wages Order: An Analysis, LIVELAW.IN,
https://www.livelaw.in/columns/the-payment-of-wages-order-158142.
17
https://www.mha.gov.in/sites/default/files/Guidelines_0.pdf.

17
March 2020 have not been issued under Section 65 of the DMA, but under Sections 10 – in
particular, 10(1) and 35 of that Act. Previously on this blog, we have critiqued these sections
for being over-broad and enabling executive carte blanche; however, as long as these
sections remain on the statute books, the power of the government to act remains within the
framework of the DMA (Section 35, in particular, authorises the government to take
measures that are "expedient" for the purposes of the Act).

More importantly, however, the point is this: the impugned direction in the order of 29th
March cannot be severed from all the other directions that have been passed by the NEC
under the framework of the DMA. These directions – that constitute the warp and the weft of
the lockdown itself – impose obligations upon private parties. These include, for example:

1. The order of closure of shops and establishments, which gave rise to this controversy
in the first place.
2. Orders restricting the movement of individuals between state borders.
3. Orders imposing "night curfews."
4. Orders banning public gatherings.
5. Orders mandating social distancing.

Examples can be multiplied, but the basic point is that if the Court was to hold that the
payment of wages direction is unconstitutional because the DMA denies to the government
the power to impose obligations upon private, then it would necessarily follow that the
lockdown itself – which is nothing more than a web of interlocking obligations imposed upon
private parties – is itself unconstitutional, as a whole.

Or, to put it another way: in order to enforce the lockdown, the government imposed a series
of obligations and restrictions upon a whole host of private parties and individuals, that have
put them to a significant amount of hardship. It would be oddly asymmetrical if
those restrictions  were upheld, but directions to mitigate their impact upon some of the most
vulnerable and marginalised segments of society, were struck down for want of power.

Now it may be argued that the distinction between the orders set out above, and the direction
for the payment of wages, is that in the latter case, there is an already existing regime of
labour law (set out in the ID Act and other laws) that governs this question. This argument,
however, is flawed as well: the DMA has a general non-obstante clause (Section 72) that
makes it prevail over inconsistent statutory provisions in other laws; however, the ID Act has
a specific exception to its non-obstante clause for provisions that are more beneficial  to

18
workmen than what they may get under the ID Act; the impugned direction, it should be
clear, falls squarely within the scope of the objection, thus obviating any need for
adjudicating between seemingly conflicting laws.

Consequently, the challenge to the competence of the NEC in issuing the directions for the
payment of wages cannot succeed. What of the substance of the direction itself? It may be
argued that it violates Article 19(1)(g) (freedom of trade and commerce) by compelling
employers to pay wages even when their shops themselves have been closed down. In this
context, it is important to note the following: the source of the dispute is State action; in
particular, the Order of 24th March 2020, mandating the closure of all shops and
establishments for the duration of the lockdown. Now, imagine a situation in which the
impugned Direction had not been passed. The result of this would be that workers would –
effectively – be deprived of their right to livelihood (under Article 21), as a direct
consequence of State action.

Moreover, amidst this unprecedented calamity, the payment of wages cannot be viewed from
the narrow compass of employment law. Payment of wages during the lockdown is nothing
but a translation of the constitutional mandate into action. Payment of wages is nothing but
protecting life. It is also a disaster management measure primarily aimed at containing
migration and resultant aggravation of pandemic.18

So, all arguments or actions aimed against payment of wages tantamount to questioning or
rather defying the decision of lockdown. Moreover, Section 2 of Epidemic Diseases Act,
1897 (EDA) empowers the authorities to determine in what manner and by whom expenses
incurred necessary to prevent the outbreak of such disease or the spread thereof shall be
defrayed.19

Now, in its recent judgment on the Right to Information Act, the Supreme Court noted that in
case there was a clash of two fundamental rights, the doctrine of proportionality would apply.
Proportionality – in such cases – requires a balancing exercise that ensures that neither of the
two rights is effaced. It is clear that no Direction at all would deprive the workers entirely of
their right to livelihood during the period of the lockdown, and thus effectively effaces
Article 21 during that time. On the other hand, it is not evident that a temporary order for the

18
Shridhar Prabhu, Payment of wages during COVID-19 Lockdown: To pay, or not to pay?. Bar&Bench, 24
April 2020, https://www.barandbench.com/columns/payment-of-wages-during-covid-19-lockdown-to-pay-or-
notto-pay
19
Id.

19
payment of wages would efface the right under Article 19(1)(g) (i.e., force permanent closure
of business). To the extent that it does impose a burden upon employers – that also flows
from State action – there is no doubt that the State ought to pay compensation. For that,
however, there should lie a direct claim against the State for its failure to protect rights under
Article 19(1)(g) after its own action has led to their deprivation. However, the remedy for
that cannot be to throw the other party to the equation – the more vulnerable and marginalised
party – to the wolves, by striking down the payment of wages order itself.

Special vs. General:20

Labour legislation is devised for the business as usual scenarios, whereas NDMA and EDA
are special laws which override all generic legislation including the labour laws. The
principle expressed in the maxims Generalia specialibus non derogant and Generalibus
specialia - meaning special law overrides general law - is a well-settled legal principle across
all jurisdictions including India. Moreover, the DMA per Section 72, has an overriding effect
over all other laws.

It is therefore clear that Article 19(1)(g) is not the only right at issue in the present case, but
that Article 21 is involved as well. It is further crucial to note that Article 14 is also
implicated: the ability and means to work from home is directly related to socio-economic
class, and therefore the Guidelines of closure of 24th March disproportionately
impacted  workers who are already the most vulnerable and marginalised in society.

It is also contended that the MHA order is in violation of Article 14 which accords equal
protection of law. It is true that the epidemic has affected both the employer and the
employee equally i.e. both of them are not free to move out of their houses. However, in
terms of financial impact, the employees are worst affected as their survival is totally
dependent on their wages. Here the doctrine of reasonable classification would come into
play. Employee, more so of the workmen category, as a class has been treated separately for a
definite object sought to be achieved namely to ensure that they strictly follow the lockdown
and social distancing norms in the present situation. It is well known fact that in the absence
of employment, many labourers had come out on road and had started walking towards their
native places. Such widespread movement of large number of human beings is definitely
dangerous and contrary to the efforts of containment of the disaster. Accordingly, it can be
said that MHA order is based on a reasonable classification.

20
Id.

20
It is therefore submitted that under the existing legal framework, the Direction for payment of
wages is legal; at the same time, however, there should be an enforceable fundamental rights
claim made against the State for its failure to adequately compensate employers as a result of
the lockdown that it imposed following the Order and Guidelines of 24th March 2020.

As from a humanitarian perspective and as legally shown above, directing employers to

ensure payment of wages to migrant labour shall appear logical as in the event these workers
are left without any source of income, they would be constrained to travel home which would
defeat the very purposes of the containment measures. But to cast the financial obligation on
private employers to ensure timely payment of wages without any monetary aid from the
government at a time when operations are down and no revenue is generated, cannot be said
to be an objective under the DM Act and appears to ring hollow in light of the fact that many
state governments have itself taken a decision to cut or defer salaries of government
employees in light of the Covid-19 pandemic.

III. LOOKING INTO THE VIABILITY OF SUPREME COURT’S

INTERIM ORDER

The interim directions issued by the Apex Court have given an option to employers, whose
businesses may have taken a commercial hit due to the lockdown. Undoubtedly, an employer,
under the law, is obligated to pay wages or salary to its workers and/or employees. While
there is a social obligation on the employers to mitigate financial hardships and ensure
continued sustenance of its workers and/or employees during the pandemic, the government
also has a corresponding responsibility towards the society. Having treated all employers, at
par, irrespective of their nature of business, impact of pandemic on it and consistency of
financial returns from operations, the government seem to have imposed an unreasonable
expectation on the employers.21

The approach taken by the Apex Court is very practical and viable. Though the employers
have been given discretion and option to opt for negotiations and settlements with their
employees, however, it would be expected by the government and Apex Court, that the
employers adhere to the direction of the Apex Court and take proactive steps to resolve the
issues amicably. During the course of the settlement (as directed by the Apex Court), the

21
Manishii Pathak , Poonam Das and Shweta Velayudhan (IndusLaw), India: Supreme Court Order On
Payment Of Wages During The Lockdown Period,

21
parties would now be in a better position to come to an agreement giving due consideration to
the industry or establishment-specific practical issues involved. This may also pave the way
for a harmonious approach, strengthening the bond between the employer and employees
and/or workers, thus giving rise to a congenial environment wherein the employees and/or
workers would be more open to sharing the responsibility to contribute towards the
sustenance of the company or industry, in times of turmoil. Any understanding reached
mutually will be legal and held to be fair.22

Moreover, the direction to permit the willing employees and/or workers to work in the
establishments, without prejudice to their rights regarding the payment of wages for the 50
Days Period, would allow the possibility of employers continuing to offer employment, rather
than downsizing the operations leading to termination of workers and/or employees and,
would hence prove helpful in the gradual revival of the industry and economy now that the
lockdown restrictions have been eased.23 It is evident that the Supreme Court is trying the
balance between the conflicting interest of the industry and establishments who have been hit
hard during the lockdown with no operations and lack of revenue and the devasting financial
conditions of poor workers and employees due to lack of work and wages. It is expected that
the labour authorities would in the near future be flooded with petitions for negotiation,
conciliation, and settlement in tandem with the Apex Court's order.24
The order does not get in into the aspect if any non-compliance by the employers for not
having paid wages, for the period in question, in the petitions. However, given that the
matters are still sub judice, the result achieved before the next date of hearing may determine
what the Apex Court finally decides. Also, it is to be seen whether the Apex Court will
address the issue of non-payment of wages being a non-compliance or not.25

22
Id .
23
Id.
24
Seema Jhingan, Tanmay Mohanty (LexCounsel Law Offices), India: Negotiation/Settlement of Lockdown
Wages Is A Way Forward Holds Supreme Court.
25
Id

22
 IV. CONCLUSION & SUGGESTIONS
While the intentions of the government appear to be noble, the measures adopted to ensure
payment of wages are not adequate to tackle the problem. The need of the hour is a dedicated
framework in the form of monetary subsidies similar to the ones declared by governments
across the globe.
The obligation to mitigate disaster under the DM Act is cast upon the central and state
government and passing this burden, financial or otherwise onto any Industries or shops and
commercial establishments or private employers/individuals without any express provisions
under the DMA would be ultra vires. As such even section 72 of the DM Act, which states
that the provisions of the DM Act shall have an overriding effect, notwithstanding anything
inconsistent therewith contained in any other law, would not be attracted in such a case.
It would also be relevant to note the clarifications issued by the Ministry of Corporate Affairs
on 10th April 2020 where it said: "Payment of salary/ wages in normal circumstances is a
contractual and statutory obligation of the company. Similarly, payment of salaries/wages to

23
employees and workers even during the lockdown period is a moral obligation of the
employers, as they have no alternative source of employment or livelihood during this
period." While these clarifications were issued in relation to questions raised whether
payment of salaries/wages during lockdown period would qualify as Corporate Social
Responsibility, it appears that there is no unison amongst the various ministries on the issue
of whether payment of wages without any deductions during lockdown is a moral or a
statutory obligation under the provisions of the DM Act.
Though the nationwide lockdown has been lifted with only certain states imposing it on their
discretion, all businesses across all industries have been severely impacted. In such a
situation it would neither be prudent nor fair to further direct an employer to continue
payment of wages to its workers without any corresponding state responsibility towards the
employers. The only way to tackle this problem and prevent a complete deterioration of all
industries would be by subsidizing employers for the payments made by them to their
workers and employees during the period the lockdown is in force. In the absence of such
measures, Industries or shops and commercial establishments will be put through hardships
that would most likely push them to bankruptcy, the impact of which on the workers /
employees would outlast the pandemic itself.
It is the government’s responsibility to ensure worker’s wages are paid by providing grants,
financial packages or subsidies (in wages) to the private establishments as contended by the
petitioner. The burden of ensuring wage safety of the workers and employees cannot be
transferred to the private establishments who are themselves struggling to survive in this
lockdown. The people of this country have a firm belief that even during these tough times of
the pandemic of COVID-19, the courts will keep a balance, and principles of equity will
prevail. 26

The Hon’ble Supreme Court, on the contrary could have very actively performed its role
to ensure reliefs to the private establishments who do not carry the responsibility to pay off
full wages of the workers, despite suffering losses in their respective
businesses. Directions could have been issued to the government to announce some subsidies
or schemes or loans for the wages of the workers and employees.

26
Advait Mishra, Assessing the Efficacy of the Supreme Court in view of the recent interim directions passed in
the Ficus Pax Private Ltd. & ors. v. Union of India case, LEGALLY LAYMAN,
https://legallylayman.wordpress.com/2020/06/21/assessing-the-efficacy-of-the-supreme-court-in-view-of-the-
recent-interim-directions-passed-in-the-ficus-pax-private-ltd-ors-v-union-of-india-case/ .

24
In this regard, the researcher would like to suggest some ways which the government of India
can take or through which employers can reduce the burden:

 Certain countries have taken notice of the situation and have tried to financially help
employers:
i. Australia has initiated a "Jobkeeper" wage subsidy plan, under which an employer
can claim a payment of $1,500 every fortnight per eligible employee from March
30, 2020. The Australian government has provided payments of up to $25,000 to
businesses to cover wages of employees;
ii. The government of Canada has announced a fiscal stimulus package amounting to
C$202 billion which also includes wage subsidies and tax deferrals to inject cash
into the country's small and medium-sized businesses providing 75% subsidy on
wages.
iii. Similarly, Ireland has also announced a Wage Subsidy scheme, under which
employers are refunded up to 70 per cent of an employee's wages, up to a specific
amount to reduce the adverse financial effects of COVID-19 on employers.
iv. The United States of America has announced a $2.2 trillion stimulus package
which includes distribution of$1,200 stimulus checks, enhanced unemployment
benefits and forgivable loans for small businesses to pay workers and other
expenses even while they're shuttered. Individuals with an adjusted gross income
below $99,000 as a single filer, $136,500 as head of household, or $198,000 as a
joint filer will be getting stimulus checks.27
 In so far as employees other than workmen are concerned, employer will be at liberty
to exercise it's right under the respective employment contracts including a mutual
settlement between the two parties for lesser payment or no payment of salaries
during the lockdown, as the case may be. In respect of the employees who have not
reported for work despite direction, the employer shall always be at liberty not to pay
for the period of unauthorized absenteeism. Given the economic downturn, employees
are more concerned about job-security rather than reduced pay. Employers must
proactively discuss cost-containment measures such as 'lay-off', 'reduced pay',
'working from home', 'exhausting paid leaves', reducing 6 working day week to 3/4
working day week owing to social distancing norms, 'insurance', etc.
27
Id at 12.

25
 Discussions/negotiations would culminate into settlement with unions/employees
which would insulate businesses from onerous, unreasonable and arbitrary executive
diktats issued under DMA or similar statutes.

Thus, to conclude, the MHA order in most probability will be upheld as legal by the Supreme
Court of India; however, the Government should through a subsidy or stimulus package,
work towards helping the employers in this tough time.

BIBLIOGRAPHY
 WEBSITES:
i. https://www.scconline.com/blog/post/2020/06/12/covid-19-sc-asks-employers-and-
workers-to-reach-settlement-in-dispute-regarding-payment-of-wages-for-lockdown-
period/
ii. https://www.scconline.com/blog/post/2020/05/16/fact-check-did-the-supreme-court-
pass-any-order-staying-mha-order-dated-29-03-2020-directing-private-companies-to-
make-full-payments-to-their-employees/#_ftn1
iii. https://taxguru.in/corporate-law/covid-lockdown-period-wages-employers-
employees-should-negotiate-settle-between-themselves-sc.html
iv. https://legallylayman.wordpress.com/2020/06/21/assessing-the-efficacy-of-the-
supreme-court-in-view-of-the-recent-interim-directions-passed-in-the-ficus-pax-
private-ltd-ors-v-union-of-india-case/
v. https://www.livemint.com/news/india/payment-of-wages-during-lockdown-no-more-
mandatory-govt-withdraws-order-11589823719789.html

26
 vi. https://www.barandbench.com/columns/payment-of-wages-during-covid-19-
lockdown-to-pay-or-notto-pay
vii. https://www.barandbench.com/news/litigation/covid-19-principle-of-no-work-no-
wages-cannot-be-applied-in-these-extraordinary-circumstances-bombay-high-court
viii. https://www.scconline.com/blog/post/2020/05/15/covid-19-no-coercive-action-to-be-
taken-for-one-week-in-representative-petition-challenging-mha-order-on-payment-
of-full-wages-during-lockdown/
ix. https://www.livelaw.in/columns/the-payment-of-wages-order-158142
x. https://legallylayman.wordpress.com/2020/06/21/assessing-the-efficacy-of-the-
supreme-court-in-view-of-the-recent-interim-directions-passed-in-the-ficus-pax-
private-ltd-ors-v-union-of-india-case/.

 ARTICLES:
i. Seema Jhingan, Tanmay Mohanty (LexCounsel Law Offices), India:
Negotiation/Settlement of Lockdown Wages Is A Way Forward Holds Supreme
Court
ii. Manishii Pathak , Poonam Das and Shweta Velayudhan (IndusLaw), India: Supreme
Court Order On Payment Of Wages During The Lockdown Period
iii. Tushar K. Shah (Vaish Associates Advocates ), India: Apex Court's Order - Blessing
In Disguise.
iv. Vikas Goel, Shambhu Sharan (Singhania & Partners LLP, Solicitors and
Advocates), India: Can Prıvate Employers Pay Reduced Salary Durıng Lockdown.
v. Milanka Chaudhury, Ashly Cherian (Link Legal India Law Services), India:
Payment Of Wages During Period Of Lockdown Implemented To Contain COVID-
19.
 STATUTES:
i. Epidemic Diseases Act, 1897
ii. The Industrial Disputes Act, 1947
iii. Disaster Management Act, 2005
 CASES:
i. Ficus Pax Private Limited and Ors. vs. Union of India and Ors.
ii. State of Punjab v. Jagjit Singh
iii. Rashtriya Shramik Aghadi vs Maharashtra

27