TMI Blog1999 (8) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and also for setting aside the order dated 31s' July, 1997 passed by the Labour Officer (the Competent Authority) under the Minimum Wages Act. Respondent-employees contended that appellant was required to pay variable dearness allowance on the basis of the Notification issued under Section 3 read with Section 5 of the Act. Applications under Section 20(2) of the Act were filed as the employer failed to pay the said amount. The Labour Officer directed that each employee was entitled to the difference of minimum wages to the extent of ₹ 8.740 by way of variable dearness allowance in terms of the Notification. The competent authority also directed the employer to pay compensation under Section 20(3) of the Act. However, that part of the order directing employer to pay compensation is set aside by the High Court. At the time of hearing of this appeal, Mr. Cama, learned counsel for the appellant, submitted that:- (a) the appellant company does not come under the categories of shops and commercial establishments as defined under the provisions of the Karnataka Shops and Commercial Establishment Act, 1961, and, therefore, the Notification under the Minimum Wages Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be covered by the expression shops and/or commercial establishment as understood in the ordinary common parlance. What the appellant-establishment is doing is purely a commercial activity with profit motive, hence, commercial establishment. It can also be termed as a shop where services are sold on retail basis. For this purpose, it is not -necessary to refer to various decisions of this Court in detail which deal with the meaning of the expression shops and/or commercial establishment . In Hindu Jea Band v. Regional Director, ESIC [1987] 2 SCC 101 a shop was held to be a place where services are sold on retail basis and, therefore, making available on payment of a stipulated price the services of musicians employed by the petitioner on wages made the petitioner's establishment a `shop'. In International Ore and Fertilizers (India) Pvt.. Ltd. v. Employees State Insurance Corporation, [1987] 3 SCC 203 the petitioner carried on activities facilitating the sale of goods by its foreign principals to the State Trading Corporation or the Minerals and Metals Corporation; it arranged for the unloading of such goods and, their survey; upon delivery it collected the price p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same premises or otherwise, used in connection with such trade or business, but does not include a commercial establishment or a shop attached to a factory where the persons employed in the shop fall within the scope of the Factories Act, 1948 . The activities stated above carried on by the appellant-company would be covered by the definition of the word shop which inter alia means any premises where trade or business is carried on or where the services are rendered to customers. It would also be commercial establishment and/or trading establishment. Hence, the contention of the appellant that it would not be covered by the said definition has no substance. Learned counsel for the appellant submitted that appellant-company is paying more than minimum wages and, therefore, the Notification issued by the State Government would not be applicable to the appellant. He submitted that in any case before issuing the said Notification, the State Government was required to verify and ascertain whether the appellant-company was paying more or less than minimum wages to its employees and if so, to exclude or include it from the operation of the Notification. He relied upon followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether they were paying minimum wages or not. The Notification is made applicable to all shops and commercial establishments in the State of Karnataka where the State has found that the labour was unorganised or that wages paid to the workers were below minimum wages. At this stage we would refer to the decision in Kamani Metals Alloys Ltd. v. Their Workmen, [1967] 2 SCR463 wherein the Court observed as under:- Broadly speaking the first principle is that there is a minimum wage which, in any event, must be paid, irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen on lower wages. This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity . Hence, the submission of the learned counsel that as the appellant company is paying more than minimum wages (as alleged), the Notification under the Act would not be applicable to it, has no substance. Mr. Cama, learned counsel for the appellant relied upon the decision in the case of Municipal Council, Hatta v. Bhagat Singh and Ors., [1998] 2 SCC 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act that the appellant must pay wages separately under both these different categories. Therefore, the appellant should pay contractual wages as paid by them and in addition to that V.D.A. is required to be paid separately as per the Notification. For considering this contention, we would first refer to the Notifications issued by the State Government. By Notification dated 27-28 January, 1971, the Karnataka State Government in exercise of powers conferred by Section 27 of the Minimum Wages Act directed that in Part I of the Schedule to the said Act, after item No. 27, following item shall be added, namely:- 28. Employment in shops and commercial establishments . Thereafter, in exercise of the powers conferred by sub-section (1) of Section 3 and sub-section (I) of Section 5 of the Act, the State Government has fixed the rates of minimum wages payable to the categories of employees who are employed in any kind of work throughout the State of Karnataka in any of the shops and commercial establishments as specified in the Schedule. The Notification also provides for payment of V.D.A. at the rate specified therein. The Schedule is divided as under:- SCHEDULE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention of the learned counsel for the respondent employees is without any substance because the Notification fixes minimum wages which includes dearness allowance. Thereafter for taking care of future increase in cost of living, dearness allowance is to be paid as prescribed in the said Notification. However, if there is no increase in cost of living, then there is no question of paying dearness allowance and minimum wages would be paid as stated therein. For the purpose of illustration, we have mentioned group no. 3 skilled worker where prescribed minimum wage is ₹ 495.45 for zone no. 3. The said rate of minimum wage includes dearness allowance till the date of the Notification and is not bifurcated. To contend that by the said Notification, minimum wage is fixed into two parts, namely, basic wages and other dearness allowance, is without any basis as the total of both items constitutes the minimum wage which is required to be paid under the Notification. Further, as quoted above, the Notification specifically saves the rights of the employees who are getting more than minimum wages from their employer by providing a clause that `wherever the prevailing rates of wages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hysical needs and keep himself just above starvation. That clearly is not intended by the concept of minimum wage. On the other hand since the capacity of the employer to pay is treated as irrelevant it is but right that no addition should be made to the components of the minimum wage which would take the minimum wage near the lower level of the fair wage, but the contents of this concept must ensure for the employee not only his sustenance and that of his family but must also preserve his efficiency as a worker The Act contemplates that minimum wage rates should be fixed in the scheduled industries with the dual object of providing sustenance and maintenance of the worker and his family and preserving his efficiency as a worker . Further the definition of word `wages' and the manner prescribed under Sections 3 and 4 of the Act fixing the wages would make it clear that `minimum wage' is one unit of fixed amount and for fixing the same, the authority is required to take into consideration various components of costs so that the worker gets minimum remuneration which can provide for sustenance and maintenance of the worker and his family and preserve his efficiency. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash value of the concessions, if any. (2) The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rate shall be computed by the competent authority at such intervals and in accordance with such directions as may be specified or given by the appropriate government. As stated above minimum wage must provide not merely for the bare subsistence of life but for the preservation of the efficiency of the worker and so it must also provide for some measure of education, medical requirements and amenities of himself and his family. While fixing the minimum wages, the capacity of the employer to pay is treated as irrelevant and the Act contemplates that rates of minimum wage should be fixed in schedule industries with a dual object of providing sustenance and maintenance of the worker and his family and preserving his efficiency as a worker. So it is required to take into consideration cost of bare subsistence of life and preservation of efficiency of the workers and for some measure of education, medical requirements and amenities. This cost is likely to vary depending upon the cost prevailing in the market o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration for fixing the same. Hence, in cases where employer is paying total sum which is higher than minimum rates of wages fixed under the Act including the cost of living index (VDA), he is not required to pay VDA separately. However, that higher wages should be calculated as defined in Section 2(h) of the Act. Section 2(h) specifically provides that value of the following items are not required to be computed for finding out whether employer pays minimum wages as prescribed under the Act:- (i) the value of any house, accommodation, supply of light, water, medical care, or any other amenity or any service excluded by general or special order of the appropriate Government. (ii) any pension fund or provident fund or under any scheme of social insurance (iii) any travelling allowance or the value of any travelling concession (iv) any sum paid to any person employed to defray special expenses curtailed on him by the nature of his employment or (v) any gratuities payable on discharge. But while deciding the question of payment of minimum wages, the competent authority is not required to bifurcate each component of the costs of each item taken into consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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