Hindustan Lever Vs. Hindustan Lever Mazdoor Sabha  INSC 393
(28 September 1993)
K. Jayachandra (J) Reddy, K. Jayachandra (J) Ray, G.N. (J)
1994 AIR 834 1994 SCC Supl. (1) 1 JT 1993 (5) 459 1993 SCALE (3)894
of the Court was delivered by K. JAYACHANDRA REDDY, J.- Some of the employees'
unions, who figure as respondents herein, filed a batch of writ petitions
challenging the validity of a notification dated October 9, 1992 issued by the
Industries, Energy and Labour Department of the State Government of Maharashtra
exercising the powers conferred by Section 13 of the Maharashtra Workmen's
Minimum House Rent Allowance Act, 1983 ('Act' for short). A Division Bench of
the High Court declared the impugned notification as invalid, unenforceable and
accordingly 3 quashed the same and also directed the employers, who figured as
respondents before the High Court, to refund the amount recovered from the
workmen on the basis of the impugned notification. M/s Hindustan Lever Ltd., Batliboi
& Co. and others ('Companies' for short) have filed these two SLPs
questioning the judgment of the High Court. These SLPs are being disposed of at
the admission stage itself. Some other Employees' Unions have filed I.A. Nos.
3, 4, 5 and 6 for being impleaded as interveners.
With a view to provide for payment of minimum house rent allowance to workmen
employed in industries in Maharashtra and
to provide for matters connected therewith, the Act was enacted in the year
1983 which received the assent of the President on October 5, 1988, and was published in the Official Gazette on October 17, 1988. The Act extends to the State of Maharashtra and as notified by the State
Government, it was brought into force with effect from January 1, 1991. This Act is made applicable under
Section 1 to every factory or establishment in an industry.
the purpose of the questions to be resolved, it may not be necessary to refer
to all the sections. Section 2(i) defines workmen as under:
In this Act, unless the context otherwise requires- (i) 'workman' means a
workman as defined in the Industrial Disputes Act, 1947 (XIV of 1947) or an
employee as defined in the Bombay Industrial Relations Act, 1946 (Bom. XI of
1947) as the case may require.
2(i) gives the same meaning to the expression workman as defined in the
Industrial Disputes Act or an employee as defined in the Bombay Industrial
4(1) reads thus:
Responsibility, for payment of house rent allowance.- (1) Every employer shall
pay to every workman employed by him a house rent allowance which shall not be
less than five per cent of the wages payable to the workman for his services
during a month, or twenty rupees, whichever is higher."
Section 13 empowers the State Government to grant exemption in certain special
cases from the application of the Act. Section 13 reads as follows:
Power to exempt in special cases.- (1) Notwithstanding anything contained in
this Act, the State Government may, by order published in the Official Gazette,
and subject to such conditions and restrictions, if any, and for such period or
periods, as may be specified in the order, direct that the provisions of this
Act shall not apply to any specified factory or establishment or to any
specified class of factories or establishments in any industry, if it is
satisfied that it is just and proper so to do in the public interest or for any
special reasons having regard to the more favorable conditions of employment in
such factory or factories or establishment or establishments or to the
financial position and other relevant circumstances of such factory or
factories or establishments, as the case may be.
Any order made under this section may be made so as to be retrospective to any
date not earlier than the date on which the Act became 4 applicable to that
factory or factories or establishment or establishments, as the case may
be." Purporting to exercise powers under this section, the impugned
notification was issued by the State Government which reads thus:
BRA 3191/992/LAB/%-A.- In exercise of the powers conferred by sub-section (1)
of Section 13 of the Maharashtra Workmen's Minimum House Rent Allowance Act,
of 1988), the Government of Maharashtra, being satisfied that it is just and
proper to do so in the public interest, hereby directs that, with effect from
January 1, 1991, the provisions of said Act, shall not apply to the factories
and establishments in relation to their workmen drawing wages as on January 1,
1991 or thereafter at the rates exceeding the limits mentioned in column (4)
with reference to the zones and areas mentioned in columns (2) and (3),
respectively, of the Schedule below, subject to the condition that where the
wages of the workmen exceed the limits of wages in the respective zones, the
house rent allowances payable to such workmen shall be calculated as if their
wages were as per the limits in column (4) of the Schedule below:
S. Zone Areas Limit of No. wages
------------------------------------------------------------ (1) (2) (3) (4)
------------------------------------------------------------ 1 . I Comprised
within the limits of Rs 3500 Greater Bombay, Thane and per month Kalyan
Municipal Corporation Ulhasnagar and Ambernath Municipal Councils; New Bombay
Thane- Belapur, Taloja-Banvel Industrial Areas.
Comprised within the limits of Rs 3000 Pune, Pimpri-Chinchwad and per month Nashik
Municipal Corporations (including Awbad-Satpur NIDC of Nashik).
All areas within the jurisdiction Rs 2500 of the State of Maharashtra excluding
per month" the areas covered under Zone per 1 and 11 above. month"
The employees unions challenged this notification on the ground that (i) it is
an excess of power under Section 13(2), (ii) it is against the basic provisions
of the Act, (iii) it is arbitrary and (iv) it is vitiated by non- application
of mind. An additional challenge is to the retrospectivity from January 1, 1991 on the ground of unreasonableness.
High Court held that the Act contemplates payment of house rent allowance to
all workmen and there is no scope to reduce the minimum rate of house rent in
respect of any class of workmen or to differentiate between classes or
categories of workmen of a unit and in the notification, rates of house rent
allowance have been reduced even below statutory minimum by putting a ceiling
depending upon the geographical areas in which the factories or establishments
are situated and it is beyond the power expressly contained in Section 13 and
that in other respects also, the impugned notification is not in accordance
with the conditions laid down in Section 13.
Shanti Bhushan, learned counsel appearing for the petitioners submitted that
Section 13(1) of the Act empowers the Government to exempt any specific factory
or establishment, subject to such conditions and restrictions, if any, and for
such period or periods, as may be specified, if the Government is 5 satisfied
that it is just and proper to do so in public interest or for any special
reasons mentioned therein and in deciding the question whether the notification
is in accordance with Section 13, the substance of the notification as a whole
should be considered.
counsel for the respondents, on the other hand, submitted that the notification
virtually amounts to amendment of the Act particularly Section 4 and is also in
total contravention of provisions of Section 13.
Section 4, which is the soul of the Act, makes every employer responsible to
pay monthly house rent allowance to every workman which shall not be less than
5% of the wages payable subject to a minimum of Rs 20, whichever is higher.
section does not lay down any upper limit regarding the entitlement of the
house rent allowance. However, higher the wages may be, an employer has to pay
it at 5%. A reading of the impugned notification shows that the rates of house
rent allowance have been reduced even below the statutory minimum by putting a
ceiling in the case of workmen drawing salary more than Rs 3500, Rs 3000 or Rs
2500 depending upon the geographical area in which the factories or
establishments are situated, Section 13 no doubt empowers the Government to
grant exemption in special cases in respect of applicability of the provisions
subject to certain conditions and restrictions and for some period.
section makes it clear that such an exemption can be granted to any specified
factory or establishment or to any specified class of factories or
establishments in any industry. Before granting such exemption, the Government
must be satisfied that it is just and proper to do so in public interest or for
any special reasons having regard to the favorable conditions of employment in
such factories or establishments or to the financial position and other
relevant circumstances of such factories or establishments.
be noticed that Section 13 does not speak of class of workers or employees. The
emphasis is on the factories or establishments in an industry and not on the
workmen or employees.
Learned counsel for the petitioners, however, submitted that in the
notification, a classification is made on the basis of ceiling fixed in respect
of salaries as shown in column (4) which is reasonable and the workmen who are
drawing the wages within the ceiling in column (4) are not affected and the
limit of payment of house rent allowance on this basis is uniformly applied to
all the factories in the entire State of Maharashtra without any discrimination
and that such exemption in such terms is permissible within the meaning of
Section 13. We see no force in this submission.
object of the Act is that every workman should get house rent allowance at 5%
of the wages paid. The exemption contemplated under Section 13 can be made
applicable to specified factories and establishments and not to one class of
employees thereby differently treating another class of employees in the same
factory. The intention of the legislature is clear that Section 13 applies to
factories or establishments or class of factories or establishments.
the exemption cannot be with reference to a class or classes of employees. The
expression "conditions and restrictions" cannot be interpreted to
mean differently and the same does not in any manner give scope to classify the
workers in the manner done in the notification and grant an exemption on that
Section 13 also contemplates that the exemption can be for such period or
periods as may be specified. In the impugned notification no such period is
fixed. Shri Shanti Bhushan, learned counsel, however, submitted that unlimited
period also comes within the meaning of such period. We do not agree. The
expression "such period or periods" should be read in the context of
the other expression namely that the Government should be satisfied that it is
just and proper to do so in the public interest or for any special reasons
having regard to the more favorable conditions of employment. If so read, it
becomes clear that the exemption cannot be for eternity.
are also unable to see as to how public interest is sub-served by depriving
some of the workmen in the same establishment, of the house rent allowance at
5% of the wages as provided under Section 4. Public interest will not be served
and cannot be served by applying the provisions of the Act to some workmen and
none to the other or with certain restrictions and conditions to yet another
class of workmen. There is yet another requirement namely that such exemption
can be given if it is just and proper for any special reasons having regard to
the more favorable conditions of employment and the same can be satisfied only
on the exemption of an individual factory or establishment or class of
factories or establishments and not on the basis of wages paid even in the case
of a flourishing industry.
notification also does not indicate any special reasons with reference to the
financial position and other relevant circumstances of any factory or
establishment or class of factories or establishments except mentioning that it
is just and proper to do so in the public interest. We are not able to cull out
any other valid reason which conforms with the requirement of Section 13.
Learned counsel for the petitioners vehemently submitted that the substance of
the notification has to be examined and not the mere form. We have noted above
that the Act is a welfare legislation in conformity with the directive
principles. The basic object underlying the Act is that the workers should be
paid house rent allowance at the rate mentioned in Section 4. The substance of
the notification is clear namely that some of the workers are deprived of house
rent allowance being paid at the rate laid down under Section 4. Assuming that
such modification as per the notification is justifiable on some other grounds
but that does not mean that the substance of the notification conforms to the
requirements of Section 13. The classification of the workers on the basis of
the income and the classification of the industries area wise are not
permissible under Section 13 as the exemption can be given to a factory or
establishment or a class of factories or establishments in an industry subject
to the conditions and restrictions enumerated in the section. The economic
viability of a particular factory or establishment may be a relevant
consideration but the wages and ceiling thereof cannot form the basis nor can
they be relevant for the purpose of Section 13. The public interest
contemplated under Section 13 is of different nature and the same cannot be
advanced by depriving a certain class of workmen of the benefits under the Act.
Section 4 lays down the fundamental structure namely that workers should be
paid house rent allowance and tile establishments, factories or the units which
under certain circumstances would be eligible for exemption under Section 13.
In other words, Section 4 is the measure of the liability which operates on the
factories or establishments which are units and the benefit should go to all
workmen in the unit. Likewise after 7 requirements of Section 13 being
satisfied, the individual unit or units, as a whole, can be exempted. But such
exemption cannot be on the basis of the workers and their wages differentiating
between different classes of workmen of the same unit. Learned counsel for the
petitioners relying on the judgment of this Court in Security Guards Board for
Greater Bombay and Thame Distt. v. Security and Personnel Service Pvt. Ltd.1
submitted that the exemption can be on the basis of class or classes of workmen
was a case arising under the Maharashtra Private Security Guards (Regulation of
Employment and Welfare) Act, 1981 and Section 23 empowers the Government to,
grant exemption from the operation of the provisions of the Act or any scheme thereunder
in regard to all or any class of security guards employed in any factory. It is
clear that the provision of exemption can be made applicable to class or
classes of security guards. But, in the instant case, the language of Section
13 is different.
For all the above reasons, we agree with the High Court that the notification
is ultra vires of the Act, void and unenforceable and therefore the same has
been rightly quashed.
Learned counsel for the respondents submitted that giving retrospective effect
to the notification is arbitrary and the workers cannot be made to refund the
house rent allowance which has already been paid to them. We need not go into
this question since we are holding that the notification itself has rightly
SLP (Civil) No. 6893 of 1993, learned counsel appearing for the petitioner
namely Batliboi & Co., submitted that by virtue of order passed by this
Court in Civil Appeal No. 5139 of 1992, the present SLP is not maintainable.
But that was at an interlocutory stage when the validity of the notification
was not in issue.
the said order does not come in the way of respondents challenging the
Accordingly, both the SLPs are dismissed. Since we are confirming the judgment
of the High Court, no further orders are necessary in I.A. Nos. 3, 4, 5 and 6.