Exporter moves Supreme Court against payment of full wages to workforce

A Mumbai-based textile exporter has moved the Supreme Court seeking quashing of the government orders that mandated employers to pay full salary to their employees, workers, contract workers and casual workers without any deduction, during the lock down.

Nagreeka Exports has challenged the constitutional validity of the orders issued by the ministry of home affairs and the Maharashtra government on March 29 and March 31, respectively, on the grounds that neither the Central government nor the Maharashtra government is empowered to issue such directions to private establishments under the Disaster Management Act, 2005.

Ajay Bhargava of Khaitan and Co, said the matter needs to be heard urgently by the SC as the issue will impact all the industries across all sectors. Seeking setting aside of the orders, the exporter said that directing private establishments to compulsorily pay 100% wages during lockdown is “illegal, unconstitutional” and violative of Articles 14 and 19 of the Constitution of India.

The company also submitted that the Disaster Management Act, under which these notifications were issued, does not provide for continued payment of wages by employers during any disaster. “National Disaster Management Authority and National Executive Committee constituted under the Act have no power under Section 7 and 10, respectively, to direct the employers to make payment to their workers, without any deduction, during the period of lockdown. These government orders are passed beyond the legislative competence of the Respondents (government) and, therefore, ultra vires the 2005 Act,” the petition stated.

Besides, the orders will have “more far reaching consequences, affecting the livelihood of more people,” the petition said. Instead of burdening the industries with the payment of wages during lockdown, the exporter said that “… GoI ought to have considered that Provident Fund Department has bounteous accumulation of over Rs 351 crore as unclaimed PF Deposits’ and this amount can be utilized” to financially support the workers in these unprecedented crisis, especially when this amount has “accumulated from the contribution of the industry and its workforce.”

The company further contended that it has already paid Rs 1.75 crore towards salaries of its 1,500 workforce in March despite there being a shutdown in economic activity. Now it will be difficult to pay salaries in April due to the extension of the lockdown till May 3, Nagreeka Exports said, while requesting the SC to allow it to pay only 50% of the salaries to its workers till the disposal of its petition.

Stating that its losses will multiply further since operations have stopped, Nagreeka Exports said that if it has to follow the government orders in entirety, its business will become unsustainable.

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