Petition Filed In SC By Exporter Stating That Payment Of 100% Wages To Workforce During Lockdown Is ‘Illegal, Unconstitutional And Violative Of Articles 14 And 19’

A Mumbai-based textile exporter 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, 2020 respectively, because neither the Central government nor the Maharashtra government is empowered to issue directions to private establishments under the Disaster Management Act, 2005. 

The petition seeks 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 lockdown.

The exporter seeking setting aside of the orders 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 Disaster Management Act, 2005 has been enacted as the central Act to deal with the management of disasters. This act envisaged a three-tier Disaster Management structure in India at National, States and District levels. Under the act, the NDMA, SDMA, NEC, NDRF, NIDM, and disaster-related funds were established.

Various government authorities have invoked their respective powers under the Disaster Management (DM) Act, 2005 to deal with the novel coronavirus (COVID-19) outbreak in the country. 

The powers exercised by the home secretary for being the Chairman of the National Executive Committee (NEC) under section 10 of the DM Act (2005) have been delegated to the Ministry of Health and Family welfare. Section 10 evaluates the preparedness at all governmental levels to respond to any threatening disaster situation or disaster and give directions, where necessary, for enhancing such preparedness. It also lays down guidelines for, or give directions to, the concerned Ministries or Departments of the Government of India, the State Governments and the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster. The delegation would help to enhance preparedness and containment of novel coronavirus (COVID-19) in the country. 

The Act gives power to the district administration under Sections 33 and 34 to deal with any disaster-related situation. Under Section 33 and 34, the district authorities may opt for requisition powers for any officer or any department at the district level or any local authority to take measures for prevention or mitigation of disaster or to effectively respond to it and such officer or department is bound to carry out such order. This step will help to create awareness among the public regarding COVID-19 and will also help to regulate the medical supply of masks, injections, and medicines, etc.

Advocate 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 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.

The petition stated that “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 said that besides, the orders will have “more far-reaching consequences, affecting the livelihood of more people,” Instead of burdening the industries with the payment of wages during the lockdown, the exporter said that "… GoI ought to have considered that Provident Fund Department has a bounteous accumulation of over Rs 351 crore as unclaimed PF Deposits” and this amount can be utilized to financially support the workers in this 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. Nagreeka Exports while requesting the SC said that, “Now it will be difficult to pay salaries in April due to the extension of the lockdown till May 3, to allow it to pay only 50% of the salaries to its workers till the disposal of its petition”.

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