Case Analysis on Gujarat Mazdoor Sabha v.

the State of Gujarat, 2020

SUBJECT CODE :- LLB 404 ( LABOUR LAW- II )

8th SEMESTER 2022-2023

SUBMITTED TO :- SUBMITTED BY:-

MS. SAMRITI AVISHI RAJ

22617703819

8-E

VIVEKANANDA INSTITUTE OF PROFESSIONAL STUDIES

VIPS

DELHI
Gujarat Mazdoor Sabha & Anr. ...Petitioners

Versus

The State of Gujarat ...Respondent

ISSUE :-

In order to contain the spread of Covid-19, the government had issued a nationwide
lockdown which was extended on several occasions. As a result of this lockdown, the
economy of the country detrimentally suffered and all sectors of the economy came to a
grinding halt. The department of Labour and Employment in Gujarat issued a notification
under Section 5 of the Factories Act, 1948 on 17th April 2020 to provide certain exemptions
to factories that were registered under the above-mentioned Act. The notification sought to
boost economic activities by relaxing certain compliance requirements and regulations but
along with that the notification also unwittingly gave factory owners a free pass to dock the
pay of workers for overtime. This exemption granted through the notification was to be
operational from April 20th to July 19th, 2020. The notification stated that the factories
registered under the Act were exempt from various provisions of the Act that regulate the
working hours, wages and intervals for rest, etc. A similar notification was issued by the
department again on 20th July when the previous one lapsed, this notification was to remain
operational from 20th July to 19th October 2020. A registered trade union, the Gujarat
Mazdoor Sabha along with the Trade Union Centre challenged the notification in the
Supreme Court.

Question of law involved

The notification that was issued under Section 5 of the Factories Act by the Department of
Labour and Employment should only provide an exemption to a certain class of factories only
when a ‘public emergency’ exists. The meaning of ‘public emergency’ with reference to this
decides the validity of the notification and the decision of the factories to dock the wages of
workers for overtime. Section 5 of the abovementioned Act is an enabling provision and
empowers the State Government to exempt certain classes of factories from the provisions of
the abovementioned Act, except Section 67 of the same Act. The explanation to Section 5
clearly states that a public emergency constitutes a grave emergency.

But then the question arises, whether a pandemic or lockdown shall constitute a grave
emergency within the meaning of public emergency as given in the abovementioned Act. The
reason for the emergency should be war, external aggression, or internal disturbance, and it is
a well-established point of law that the meaning of the term internal disturbance cannot be
interpreted separately from the context of the preceding terms. This basically indicates that
the definition of public emergency in the abovementioned Act includes any threat to the
security or territory of the country and an internal disturbance should be interpreted along
with similar parameters. And in the absence of any of the parameters constituting a public
emergency, the power granted under Section 5 shall not be operational.

REASONING :-

The Court observed that the pandemic has caused a huge loss of livelihood for the poor and
marginalised due to the lockdown. The loss of livelihood and the eventual lockdown of
factories and other institutions that left labourers without work. In order to remedy this
situation, the Department of Labour and Employment released the impugned notification to
incentivize the factories and boost economic activity. The Courts clearly stated that even if
the pandemic was to be accepted as a public emergency, which it is not, the economic
slowdown as a result of the pandemic could not be considered as a grave enough threat to the
security of India.

The Court stated further that the pandemic has significantly affected major mechanisms of
the country .This effect of the pandemic has forced the central government to use provisions
of the Disaster Management Act, 2005, but the effect cannot be constituted as a threat to the
security or a part of the territory as it does not disturb the peace and integrity of India.

The Court did agree to the fact that the effects of the Covid-19 pandemic on the economy
have been profound but it also stated that such issues need to be tackled by the state
governments in coordination with the central government. Emergency powers that are to be
used sparingly should not be invoked until and unless the condition of the economy becomes
so severe that it leads to public unrest and disruption of public order which threatens the
security or territory of the country. The Court also observed that the notification did not serve
any positive purpose, it only sought to reduce the overhead costs of the factories without any
regard or consideration to the kind of production activities or goods produced. Another
important observation made by the Court was that Section 5 of the abovementioned Act does
not enable the state governments to issue blanket notifications that would exempt all
factories, but rather the provision provides power to exempt only certain categories of
factories. The exemption of factories that produce essential commodities like sanitisers and
masks under Section 65(2) while compensating the workers for their work during this crisis
is understandable.
Analysis :-

Whether the economic crisis caused due to the Pandemic be considered as a ‘Public
Emergency’ as provided in Section 5 of the Factories Act?
According to Section 5 of the Factories Act, The State Government can exempt any factories
from the provisions of the statute, in case of a “public emergency”. The origin of “Public
Emergency” of Section 5 of the Factories Act must be interpreted in the context of emergency
under Article 352.

The 44th amendment sought to limit the powers under Article 352, and the expression
“internal disturbance” was replaced with “armed rebellion”. Therefore, the power under
Section 5 similarly must be used in a grave emergency.

The respondent State argued that the spread of COVID-19 pandemic is a ‘public emergency’,
as it has disturbed the “social order of the country” and has caused “extreme financial
exigencies” in the State. And as the result of the same, it can be categorised as an ‘internal
disturbance’ in the State within the meaning of Section 5.

The court upon consideration held that, even after considering the respondents argument at
the highest, that the pandemic has created internal disturbance, it cannot qualify as an internal
disturbance threatening the security of the State. And unless the economic hardship is so
extreme that it leads to disruption of public order and threatens the security of India or any
part thereof, such recourse cannot be taken.

Whether the impugned notification is ultra vires to the powers given under the
Factories act and in contravention to the constitutional vision behind it.

It is essential to examine the purpose of Factories Act in the backdrop of the constitutional
scheme of the Indian welfare State. The Factories Act is an integral element of the vision of
State policy which seeks to uphold Articles 38, 39, 42 and 43 of the Constitution by
ensuring decent working conditions and dignity of individual workers.

The “right to life” guaranteed to every person under Article 21, which includes a worker,
would be devoid of an equal opportunity at social and economic freedom, in the absence of
just and humane conditions of work, the Ideas of “freedom” and “liberty” in the fundamental
rights will remain hollow. A workers Right to life cannot be left at the mercy of the employer
and is in contravention of the workers’ right to life and right against forced labour that are
secured by 23 of the Constitution.
The blanket notifications exempt all factories from the applicability of Sections 51, 54, 55
and 56, effectively override Section 59 of the Factories Act. The Court held that the
impugned notification is in contrast to the objective of the Factories act and legitimise the
subjection of workers to onerous working conditions, when their feeble bargaining power is
also reduced due to the Pandemic.

The respondent Government contended that this was necessary in light of “extreme financial
exigencies arising due to the spread of COVID-19 Pandemic” and have been deployed as “a
holistic approach to maintain the production, adequately compensate workers and take
sufficient measures to safeguard the said factories and establishments in carrying out
essential activities”.

The Honourable Supreme Court rejected such submissions and held 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.” It emphasised that
it is not reasonable to exempt all factories from such cost without any specification. It is
indicative of the intention to capitalise on the pandemic to force an already worn-down class
of society into the chains of servitude.

Labour Welfare is an integral part of the vision behind the Indian constitution which aims to
achieve social and economic democracy. Therefore, the state does not have free reign to
eliminate provisions promoting dignity and equity in the workplace in the face of novel
challenges to the State administration, unless it causes a grave threat to the security of the
State.

Conclusion:-
The 3-judge bench quashed the notification under Section 5 and in the interest of doing
complete justice under Article 142 of the Constitution, directed the overtime workers are
justly remunerated in accordance with Section 59 of the Act, who have been working since
the notification was issued. The judgement was noteworthy for upholding the rights of the
labourers with feeble bargaining powers.

It recognised the right of the labourers as an essential constitutional vision and reiterated that
Factories Act being a socialist legislation cannot be misused by the whim of the government.
It also set a good precedent as to the limitation on the use of Public emergency so that the
Pandemic cannot be used as an excuse to shift the economic burden to the poorest and the
legislation is not misused by rich capitalists.