MHA Order directing Employers to Pay Salaries in Lockdown Not Applicable To those Unemployed Before Lockdown: Bombay HC [READ ORDER]

The Bombay High Court held that an order passed by the Union Ministry of Home Affairs under the Disaster Management Act compelling all states and union territories to ensure that all employers pay their employees’ salaries without any deduction during the lockdown does not apply to employees who have remained unpaid and unemployed for a long time.

Division Bench of Justices Ujjal Bhuyan and Riyaz Chagla jointly heard a written petition lodged by a Pune-based heavy machinery manufacturer called M / s Premier Limited against an order of the Industrial Court to pay back wages to employees who have not been paying since May 2019, along with a written petition lodged by Premier Employees Union seeking compliance with MHA's order dated 29th March 2020 and subsequent state GR dated 31st March 2020.

Nonetheless, the Court amended the Industrial Court's order dated 20th March 2020, to the degree that workers are now being paid half their wages (instead of full wages as ordered by the Industrial Court) on or before the tenth day of each month effective from 1st March 2020, until the complaint is disposed of.

The union filed a claim of unfair labor practice against the company's management and thereupon a petition was lodged before the Industrial Court, Maharashtra at Pune. The company received NOC from the Labor Commissioner's office, Maharashtra, to shift its plant from its original location.

NOC was conditional on the company making full payment of salaries and duties to the workforce and ensuring the continuity of their jobs.

In this regard, the company released a notice dated 3rd March 2020, addressed to all the employees and staff stating that the management had decided to suspend operations with immediate effect until further notice/order as provided for in clause 18 of the Model Standing Orders with regard to the workforce and clause 19A with regard to the staff.

Rising the claim that the aforementioned notice of suspension related to unfair labor practice, the union lodged a lawsuit against the company before the Industrial Court. The Industrial Court found that when delivering the notice dated 3rd March 2020, the company did not follow the correct procedure and concluded that the company had committed unfair labor practice.

Accordingly, the Industrial Court ordered the firm to pay full back wages on or before the tenth day of each month to the workmen w.e.f. 1st March 2020.

Despite the company 's undertaking, the employees did not resist moving the factory, but after May 2019, the company refused to pay salaries and dues to the employees. Also after the industrial court order, salaries were not paid, said Senior Advocate Gayatri Singh appearing on the petitioner union's behalf.

Adv. Singh maintained that management had made no payment in respect of legitimate responsibilities, such as the provident fund contribution from employers, the gratuity of retired workers, and the extension of medical insurance premium. While the staff expressed willingness to work at the relocated plant but the management did not provide them with any such jobs, Singh said.

The petitioner's advocate relied on the order of MHA dated 29th March 2020, and the consequent GR issued by the State of Maharashtra on 31st March 2020, requiring employers to make full payment of salaries to employees, laborers, daily wagers, etc.

On the other side, Advocate Kiran Bapat and Advocate Manish Leklar appeared for the Company and claimed that due to the union's non-cooperation and "obstructionist approach" some customers withheld their orders, causing the Company to lose heavy business earnings.

Hence the company took loans from many banks over a period of time amounting to Rs.330 crores to ensure that manufacturing operations are carried out smoothly. The business had unpaid Rs.417 crores dues as of March 2020. This apart, the business also owed Rs.95 crores to other creditors, and furthermore, Adv Bapat submitted for payment of employee-related dues.

The company has been engaged by Edelweiss Asset Reconstruction Company to restore the business. After the selling of the factory property, the employees were paid wages until May 2019.

After hearing submissions of both the parties, the Court observed-

"A conjoint reading of the central government order and the Maharashtra government resolution would go to show that those have been issued to meet the situation arising out of the lockdown.

But the moot question is could the central government order and the Maharashtra government resolution be invoked in a situation where the management and workmen are engaged in an industrial adjudication relating to non-payment of salary/wages and suspension of work much prior to closure of the establishments due to the lockdown? Or where the related cause of action arose prior to the lockdown?

Let us take a hypothetical case. Say an employee/worker is not in employment, for whatever reason, and has not been paid wages for one year prior to the declaration of the lockdown. Can he still avail of the benefit of the above central government order and the Maharashtra government resolution? In our view, the answer to this question would have to be in the negative."

The bench explained –

"To be deemed to be on duty one should be on duty on the date when the lockdown was declared. To be entitled to or for continuity of salary/wages during the lockdown, an employee/worker should receive the same till the month which is previous to closure on account of the lockdown. That apart, when there is an ongoing industrial adjudication pertaining to the claim of the workmen to wages, the claim to wages would be subject to such adjudication. The central government order and the Maharashtra government resolution cannot be invoked to short circumvent an industrial dispute which is being adjudicated upon before the competent forum."

Thereafter, the Bench examined the order passed by the Industrial Court and noted that the Company committed unfair labor practice but said-

"We find the above view of the Industrial Court to be contradictory. It is a settled proposition of law that ordinarily the final relief may not be granted by way of an interim order. Power to grant interim relief is discretionary. Such discretion has to be exercised on well-established principles. Since a prima facie view has been taken that the management has committed unfair labor practice, certainly an interim order is called for.

But what should be the nature of the interim order? It is an admitted position that the workmen have not been paid wages post-May, 2019. Since their employment has not been disturbed because even as per the management the notice dated 03.03.2020 has only declared suspension of operations, the workmen cannot be left in the lurch."

The Court then amended the order of the Industrial Court and ordered 50 percent of salaries to be paid to the workers. Besides, the Industrial Court was ordered to settle the case within six months.

[READ ORDER]