HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. & OTHERSversusTHE STATE OF HARYANA

1086                      [2019]REPORTS
                SUPREME COURT   6 S.C.R. 1086               [2019] 6 S.C.R.


 A           HINDUSTAN SANITARYWARE AND INDUSTRIES
                                LTD. & OTHERS
                                         v.
                           THE STATE OF HARYANA
 B                       (Civil Appeal No. 2539 OF 2010)
                                 APRIL 29, 2019
               [L. NAGESWARA RAO AND M.R. SHAH, JJ.]
              Minimum Wages Act, 1948: s. 5(2) – Fixing or revising the
 C     minimum rates of wages – Issuance of Notification dated 27.06.2007
       and 21.10.2015 by the State Government fixing/revising the minimum
       rates of wages in respect of different scheduled employments as
       mentioned in the schedule therein wef 01.07.2007 and 01.11.2015
       respectively – Writ Petition challenging the Notifications – Dismissed
       by the High Court – On appeal, held: Jurisdiction is conferred by
 D
       the Act on the Government to fix/revise the minimum rate of wages
       notwithstanding the contract – Categorization of unskilled employees
       as semi-skilled and semi-skilled as skilled on the basis of their
       experience is beyond the jurisdiction of the Government –
       Prohibition of segregation of wages into components in the form of
 E     allowances in the Notification is impermissible – Security inspector/
       security officer/ security supervisor cannot be included in the
       Notification – Trainees who are employed without payment of any
       reward would not be covered by the Notification – Fixing the training
       period for one year is beyond the jurisdiction of the Government –
       Conclusion in respect of some parts of the Notification would not
 F
       affect the Notification as such.
             Allowing the appeals, the Court
             HELD: 1.1 The appropriate government is empowered by
       Section 3 of the Minimum Wages Act, 1948 to fix the minimum
 G     rates of wages payable to the employees employed in an
       employment specified in Part I and Part I (b) of the Schedule.
       The procedure for fixing or revising the minimum rate of wages
       is dealt with in Section 5 of the Act. After following the procedure
       prescribed under Section 5, the appropriate government can fix/
       revise the minimum rates of wages and issue notification to that
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                                      1086
  HINDUSTAN SANITARYWARE AND INDUSTRIES LTD.v.                        1087
               STATE OF HARYANA

effect. An obligation is imposed on the employer by Section 12 of     A
the Act to pay to every employee engaged in a scheduled
employment wages at a rate not less than the minimum rates of
wages fixed by the notification issued under Section 5 of the Act.
[Paras 10, 11][1097-F; 1098-C-D]
       1.2 There is no power vested in the Government by the          B
Act to make alterations to the terms of a contract. Jurisdiction is
conferred by the Act on the Government to fix/revise the
minimum rate of wages notwithstanding the contract. The
Notification dated 21.10.2015 postulates that unskilled employees
having five years experience would be deemed categorized as
semi-skilled “A”; that after three years of experience in semi-       C
skilled “A”, the employees would be deemed categorized as
semi-skilled “B”; that after three years of experience in skilled
“A”, the employees would be deemed categorized as skilled “B”.
Such categorization or classification by deeming workmen in one
category to belong to another category is in direct contravention     D
of the contract between the employer and the employee and is
beyond the jurisdiction of the Government. Inclusion of Security
inspector/ Security officer/ Supervisor in the table “Minimum
rates of wages in respect of all scheduled employment” in the
Notification is ultra vires the provisions of the Act. They do not
fall within the definition of “employee’ in s. 2(i) as they do not    E
discharge any skilled or unskilled, manual or clerical work.
Similarly, not all trainees can be included in the Notification.
Trainees who receive wages during the period of training would
fall under the definition of “employee” as has been fairly admitted
by the appellants. Only a person who is employed for “hire or         F
reward” will fall under the definition of “employee”. The trainees
who are not paid wages cannot be included in the notification and
the fixation of minimum wages for such trainees at 75% is also
not valid. The minimum wages fixed for trainees who are appointed
for reward is not interfered with. The period of training to be
undergone by a trainee would depend upon the contract between         G
the employer and the employee. There is no power vested in the
Government under the Act to decide the period of training and
any stipulation with regard to the training period is ultra vires.
[Para 13][1101-B-H; 1102-A-B]
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1088            SUPREME COURT REPORTS                      [2019] 6 S.C.R.


 A           1.3 The word “employee” as defined in the Act means any
       person who is employed for hire or reward in a scheduled
       employment. There is no distinction made between a person
       employed by the principal employer and a person employed
       through a contractor. Any person who employs, whether directly
       or through any other person, one or more employees in a
 B
       scheduled employment falls within the definition of an “employer”.
       A close scrutiny of the definitions of the employer and the
       employee would bring the workmen employed through the
       contractors within the purview of the Act. It cannot be said that
       the contract workmen are not covered under the Act.
 C     [Para 14][1102-B-C]
              1.4 “Wages” is defined in s. 2(h) to mean all remuneration,
       capable of being expressed in terms of money, which would, if
       the terms of the contract of the employment, express or implied
       were fulfilled, be payable to a person in respect of his employment
 D     or of work done in such employment and includes house rent
       allowance. There are four exclusions in the definition relating to
       travelling allowance, value of housing accommodation, supply of
       light, water, medical attendance, etc. If certain components of
       the remuneration are taken care of by the employer, he cannot
       be asked to pay twice over such allowance/ payments which are
 E     part of the remuneration. Therefore, the prohibition on
       segregation of the wages into components under the notification
       is not a valid exercise of power. [Para 16][1102-F-G; 1103-A]
             1.5 The prohibition of segregation of wages into components
       in the form of allowances in the Notification is impermissible.
 F     The security inspector/ security officer/ security supervisor cannot
       be included in the Notification. Trainees who are employed without
       payment of any reward cannot be covered by the Notification.
       Categorization of unskilled employees as semi-skilled and semi-
       skilled as skilled on the basis of their experience is ultra vires.
 G     Fixing the training period for one year is beyond the jurisdiction
       of the Government.” [Para 18][1103-D-F]
             1.6 The conclusion in respect of some parts of the
       Notification would not affect the Notifications as such. The part

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  HINDUSTAN SANITARYWARE AND INDUSTRIES LTD.v.                        1089
               STATE OF HARYANA

of the Notifications other than that which are dealt with by this     A
judgment shall continue to be in force. The employers shall not
be entitled to recover any amounts paid under the Notifications
to the workmen on the ground that they have succeeded in this
case. The workmen are not precluded from seeking redressal of
their grievances by resorting to other remedies available to them
                                                                      B
under law. [Para 17][1103-B-C]
      Apparel Exporters & Manufacturers Association v. State
      of Haryana CWP No.9942 of 2007 dated 06.09.2007;
      Bidi, Bidi Leaves and Tobacco Merchants’ Association
      v. State of Bombay [1962] 1 Supp l. SCR 381 ; Haryana
      Unrecognised Schools’ Association v. State of Haryana           C
      (1996) 4 SCC 225 : [1996] 1 Suppl. SCR 253 ;
      Airfreight Ltd. v. State of Karnataka (1999) 6 SCC
      567 : [1999] 1 Suppl. SCR 22 – referred to.
                       Case Law Reference
                                                                      D
      [1962] 1 Suppl. SCR 381          referred to    Para 7
      [1996] 1 Suppl. SCR 253          referred to    Para 7
      [1999] 1 Suppl. SCR 22           referred to    Para 15
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2539
                                                                      E
of 2010
      From the Judgment and Order dated 06.09.2007 of the High
Court of Punjab and Haryana at Chandigarh in Civil Writ Petition
No. 11326 of 2007.
                               With                                   F
      Civil Appeal No. 4454 of 2019.
       Kailash Vasdev, Sr. Adv., Siddharth Dias, Umrao Singh Rawat,
Sumer Singh Sandhu, Ms. Limayinla Jamir, Ms. Nayantara, Ms. V. D.
Khanna, Harvinder Singh, Ms. Meera Mathur, Vishal Sharma, Advs.
for the Appellants.                                                   G

    Dr. Monika Gusain, Kamal Mohan Gupta, Raj Singh Rana, Pankaj
Kumar Singh, Vishwa Pal Singh, Advs. for the Respondent.


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1090            SUPREME COURT REPORTS                          [2019] 6 S.C.R.


 A           The Judgment of the Court was delivered by
             L. NAGESWARA RAO, J.
             CIVIL APPEAL No. 2539 of 2010
             1. The Appellant filed a Writ Petition challenging the Notification
 B     dated 27.06.2007 issued under Section 5 (2) of the Minimum Wages
       Act, 1948 (hereinafter, “the Act”). The said Writ Petition was dismissed
       by the High Court. Aggrieved by the judgment of the High Court, the
       Appellant has approached this Court.
              2. In exercise of the powers conferred by Section 5(2) of the
 C     Act, the Finance Commissioner and Principal Secretary to the Government
       of Haryana, Labour Department issued a Notification on 27.06.2007
       fixing/revising the minimum rates of wages in respect of different
       scheduled employments as mentioned in the schedule therein with effect
       from 01.07.2007. The relevant provisions of the Notification dated
       27.06.2007 are as under:
 D
             · Unskilled employees having 10 years’ experience would be
             deemed categorized as semi-skilled “A”.
             · After 3 years of experience in semi-skilled “A”, the
             employees would be deemed categorized as semi-skilled “B”.
 E           · After 3 years of experience in skilled “A”, the employees
             would be deemed categorized as skilled “B”.
             xxx
             Note:

 F           1. The minimum rates of wages being fixed/ revised are linked
             with Haryana State Working Consumer Price Index Number
             (base year 1972-73=100) with July 2007 as the base month.
             The rate of neutralization will be Rs.2.31 per point on the
             rise or fall of the Consumer Price Index Number, adjustment
             in wages shall be made six monthly i.e. 1st January and 1 st
 G           July, every year after taking into account the average rise or
             fall in the Haryana State Working Class Consumer Price Index
             Number half-yearly ending December and June respectively.


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  HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. v.                             1091
      STATE OF HARYANA [L. NAGESWARA RAO, J.]

      2. The minimum rates of wages being now fixed/ revised shall          A
      not be affected as a result of the linkage as much as the wages
      shall not fall below those being fixed/ revised now.
      3 The wages of apprentices appointed under the Apprentices
      Act, 1961 (52 of 1961), shall be regulated under the said Act.
      4. There shall be no difference between the wages for men             B
      and women workers.
      5. Where any of the above categories of workmen are
      engaged/ employed through a Contractor, the Occupier/ the
      Principal Employer shall be personally responsible for
      ensuring the payment of the minimum rates of wages by the             C
      Contractor.
      6. If any category of workers employed in the employment is
      not mentioned specifically by name, he/she shall not be paid
      less than the minimum wages fixed for similar category having
      same skill.                                                           D
      7. While calculating the per day wages, the monthly wages
      shall be divided by 26 days but for deduction, if any, shall be
      calculated monthly wages divided by 30 days.
      8. The categorization of employment in Brick Kiln is placed
                                                                            E
      at Annexure-A.
      9. Above rates are without food. Wherever food is given
      customarily, it shall be extra.
      10. Trainees will be paid 75% of the wages applicable to the
      category but it will not be less than the Minimum Wages for           F
      an unskilled category of worker. The period of training will
      not be more than one year.”
       3. The above Appeal was taken up along with the other Writ
Petitions which were filed for the same relief. Without a detailed
discussion on the issues which arose in the Writ Petition, the High Court   G
dismissed the Writ Petition by observing that the contention raised by
the Petitioners relating to classification was misconceived and that the
trainees would fall within the purview of the Act.


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1092             SUPREME COURT REPORTS                         [2019] 6 S.C.R.


 A             Civil Appeal No. 4454 of 2019
               (Arising out of Special Leave Petition (Civil) No. 5832 of
       2018)
               Leave granted.
 B           4. This Appeal by Special Leave is filed against the judgment of
       the High Court dated 18.08.2017 by which the Writ Petition filed by the
       Appellant questioning the Notification dated 21.10.2015 issued under
       Section 5(2) of the Act was dismissed.
               5. By a Notification dated 21.10.2015, the Labour Department of
 C     the Government of Haryana revised the minimum rates of wages in
       respect of different scheduled employments as mentioned in the
       schedules therein with effect from 01.11.2015. It is necessary to
       reproduce the relevant portion of the Notification dated 21.10.2015 which
       is as follows:

 D             “Unskilled employees having five years experience would be
               deemed categorized as semi skilled “A”.
               After 3 years of experience in semi skilled “A” the employees
               would be deemed categorized as skilled “B”
               xxx
 E             xxx
               Notes:
               1. The minimum rates of wages notified herein above are basic
               rates of minimum wages which are not permitted to be
 F             segregated into components in the form of allowances by the
               employer. The minimum rates of wages being fixed/ revised
               are linked with Haryana State Working Class Consumer Price
               Index number (base year 1972-73=100) with July 2015, as
               the base month. There shall be 100% neutralization of the
               rise or fall of the consumer price index number on pro rata
 G             basis; the adjustment in wages shall be made six monthly i.e.
               on 1 st January and 1 st July every year, after taking into
               account the average rise or fall in the Haryana State Working
               Class Consumer Price Index half yearly ending December
               and June respectively.
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  HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. v.                             1093
      STATE OF HARYANA [L. NAGESWARA RAO, J.]

      2. The minimum rates of wages now being fixed/ revised shall          A
      not be affected as a result of the linkage as much as the wages
      shall not fall below those being fixed/ revised now.
      3. The wages of apprentices appointed under the Apprentices
      Act, 1961 (52 of 1961), shall be regulated under the said Act.
      4. There shall be no difference between the wages for men             B
      and women.
      5. Where any of the above categories of workmen are
      engaged/ employed through a contractor, the occupier/ the
      principal employer shall be personally responsible for
      ensuring the payment of the minimum rates of wages by the             C
      contractor.
      6. If any category of workers employed in the employment is
      not mentioned specifically by name, he/she shall not be paid
      less than the minimum wages fixed for similar category having
      same skills.                                                          D
      7. While calculating the per day wages, the monthly wages
      shall be divided by 26 days but for deduction, if any, shall be
      calculated as monthly wages divided by 30 days.
      8. The categorization of employment in Brik Kiln is placed
                                                                            E
      above at Annexure-A.
      9. Above rates do not include food charges. Wherever food
      is given customarily, it shall be extra.
      10. Trainees shall be paid 75% of the wages applicable to
      the category, but it shall not be less than the Minimum Wages         F
      for an unskilled category of worker because an unskilled
      worker does not require any training. The period of training
      shall not be more than one year.
       6. It was submitted on behalf of the Appellant before the High
Court that segregation of wages into components in the form of              G
allowances was permissible. The further contention of the Appellant
before the High Court was that Note 10 of the Notification which fixed
the minimum wages for trainees at 75% of the wages applicable to that
category and also limited period of such training to one year was ultra
vires the Act. The provision for categorization of unskilled employees as
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1094             SUPREME COURT REPORTS                              [2019] 6 S.C.R.


 A     semi-skilled and of semi-skilled employees as skilled on their acquiring
       experience of a certain number of years was stated to be beyond the
       jurisdiction of the Government. Inclusion of Domestic Workers and
       Safai Karamcharis in the list of scheduled employment at Serial Numbers
       49 and 50 was also in challenge in the Writ Petition. The High Court
       rejected the submission of the Appellants that there is prohibition of
 B
       segregation of wages into components in the form of allowances. The
       challenge to 100% neutralization was also not accepted by the High
       Court. The Act was held to be applicable to the trainees by the impugned
       judgment. Insofar as the categorization of workers was concerned, the
       High Court was of the opinion that the categorization was justified and
 C     indeed necessary as the workmen were continued with their grades for
       a long number of years which resulted in stagnation. The contention of
       the Appellants that Domestic Workers and Safai Karamcharis could not
       have been included in the list of scheduled employment at Serial Numbers
       49 and 50 was accepted by the High Court. In view of the aforesaid
       findings, the High Court concluded that Notes 1, 9 and 10 of the
 D
       Notification dated 21.10.2015 were legal and valid. It is relevant to
       mention that the High Court relied upon the judgment of a Division Bench
       in Writ Petition (Civil) No.11326 of 20071 in support of its findings.
              7. Mr. Kailash Vasdev, learned Senior Counsel appearing for the
       Appellants in Civil Appeal No. 2539 of 2010 submitted that the
 E     classification of workmen by the Notification dated 27.06.2007 amounts
       to an interference with the promotion policy of the Appellant which is
       beyond the jurisdiction of the Government under the Act. He stated that
       the Government does not have the power to alter the conditions of service,
       contract or settlement between the employer and the employee. He
 F     referred to a settlement between employees and the employer which
       specifies the regulation of wages. Mr. Vasdev argued that the High
       Court erred in not realizing the difference between a fair wage, a living
       wage, and a minimum wage. He relied upon a judgment of this Court in
       Bidi, Bidi Leaves and Tobacco Merchants’ Association v. State of
       Bombay2 in support of his submission that the power that is conferred
 G     on the Government was only to deal with fixation and revision of wages
       and not to interfere with the contractual rights and obligations. Mr.
       Harvinder Singh, learned counsel appearing for the Petitioner in Civil
       1
         Apparel Exporters & Manufacturers Association vs. State of Haryana - CWP
         No.9942 of 2007 dated 06.09.2007
 H     2
         1962 Supp (1) SCR 381
     HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. v.                            1095
         STATE OF HARYANA [L. NAGESWARA RAO, J.]

Appeal @ SLP (Civil) No.5832 of 2018 submitted that the Petitioner has        A
a grievance only regarding some portions of the Notification dated
21.10.2015. His first objection to the Notification was relating to the
revision of minimum rates of wages for Security inspector/ Security
officer/ Supervisor by relying upon the definition of “employee” in Section
2(i) of the Act. He submitted that Security inspector/ Security officer/
                                                                              B
Supervisors will not fall within the purview of the definition and hence,
the State Government did not have the power to fix/ revise the minimum
wages for the said categories. Similarly, the learned counsel submitted
that trainees cannot be brought within the purview of the Act as they
also do not fall within the definition of “employee” under Section 2(i) of
the Act as all the trainees are not employed for hire or reward. The          C
learned counsel relied upon a judgment of this Court in Haryana
Unrecognised Schools’ Association v. State of Haryana3 in which it
was held that teachers working in an educational institution cannot be
held to be discharging either skilled or unskilled or manual or clerical
work and as such they did not fall within the scope of “employee” under
                                                                              D
Section 2(i) of the Act. Mr. Singh submitted that the Government did
not have the power to place a restriction on the period of training which
according to the Notification cannot be more than one year. He further
argued that the classification of employees was totally impermissible.
He also submitted that different minimum rates of wages cannot be
fixed for the same class of work in the same scheduled employment.            E
By the deemed categorization of an unskilled employee as a semi-skilled
employee after five years experience, the Government fixed higher
minimum rate of wages for worker who has completed five years though
he continued to work as an unskilled employee. This would amount to
higher minimum wages being paid for a worker in the lower category on
                                                                              F
the basis of deemed classification. He further submitted that the
prohibition of segregation into components in the form of allowances
was beyond the competence of the Government. By referring to Section
2(h) of the Act which defines wages, the learned counsel for the Appellant
submitted that the very definition of wages means all other remuneration
in accordance with the terms of contract or employment. According to          G
Mr. Singh, there is no concept of basic rate of minimum wages. He
further argued that the concept of principal employer and contractor is
foreign to the Act and the occupier/the principal employer cannot be

3
    (1996) 4 SCC 225                                                          H
1096             SUPREME COURT REPORTS                           [2019] 6 S.C.R.


 A     made responsible for the payment of minimum rate of wages to a contract
       labour. Allegations of exploitation of workmen by the employers cannot
       be a ground for issuance of a notification under Section 5 of the Act if
       the Government lacks the jurisdiction.
               8. Dr. Monika Gusain, learned counsel appearing for the State of
 B     Haryana referred to Article 43 of the Constitution of India to submit that
       it is the duty of the State to secure a living wage to all workers. She
       submitted that the Notifications were issued on the basis of
       recommendations made by an Advisory Committee after consultations
       with the employers and the workmen. Splitting of the minimum wages
       into components is permissible as there is no prohibition in the Act. She
 C     contended that the deemed promotion of an unskilled worker to a semi-
       skilled worker and a semi-skilled worker to a skilled worker, based on
       experience, is only for the purpose of entitling them with the next grade
       of minimum wages which cannot be construed as a deemed promotion
       or classification. Dr. Gusain stated that it has come to the notice of the
 D     Government that trainees were not being paid even the minimum wages
       applicable to an unskilled workmen for which reason it was decided that
       trainees should be protected. The learned counsel for the State of
       Haryana defended the Notifications dated 27.06.2007 and 21.10.2015
       on the ground that they were issued to protect the fundamental rights of
       the workers. She also argued that the Appellants have not produced
 E     any material to show the loss caused to them by the Notification, and
       hence, the judgment of the High Court does not warrant interference.
              9. At this stage, it is necessary to refer to the relevant provisions
       of the Act. “Wages” and “Employee” have been defined in Section 2(h)
       and 2(i) of the Act which reads as under:
 F
              “2(h) “wages” means all remuneration, capable of being
             expressed in terms of money, which would, if the terms of the
             contract of employment, express or implied, were fulfilled, be
             payable to a person employed in respect of his employment
             or of work done in such employment, [and includes house
 G           rent allowance], but does not include—
             (i) the value of—
             (a) any house-accommodation, supply of light, water, medical
             attendance, or
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  HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. v.                          1097
      STATE OF HARYANA [L. NAGESWARA RAO, J.]

      (b) any other amenity or any service excluded by general or        A
      special order of the appropriate Government;
      (ii) any contribution paid by the employer to any Pension
      Fund or Provident Fund or under any scheme of social
      insurance;
      (iii) any travelling allowance or the value of any travelling      B
      concession;
      (iv) any sum paid to the person employed to defray special
      expenses entailed on him by the nature of his employment; or
      (v) any gratuity payable on discharge;                             C
      2(i) “employee” means any person who is employed for hire
      or reward to do any work, skilled or unskilled, manual or
      clerical, in a scheduled employment in respect of which
      minimum rates of wages have been fixed; and includes an
      out-worker to whom any articles or materials are given out         D
      by another person to be made up, cleaned, washed, altered,
      ornamented, finished, repaired, adapted or otherwise
      processed for sale for the purposes of the trade or business
      of that other person where the process is to be carried out
      either in the home of the out-worker or in some other premises
      not being premises under the control and management of that        E
      other person; and also includes an employee declared to be
      an employee by the appropriate Government; but does not
      include any member of the Armed Forces of the [Union].”
       10. The appropriate government is empowered by Section 3 of
the Act to fix the minimum rates of wages payable to the employees       F
employed in an employment specified in Part I and Part I (b) of the
Schedule. Section 4 of the Act provides that the minimum rate of wages
fixed or revised under Section 3 may contain:
       “(i) a basic rate of wages and a special allowance at a rate
      to be adjusted, at such intervals and in such manner as the        G
      appropriate Government may direct, to accord as nearly as
      practicable with the variation in the cost of living index
      number applicable to such workers (hereinafter referred to
      as the “cost of living allowance”); or
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1098            SUPREME COURT REPORTS                          [2019] 6 S.C.R.


 A           (ii) a basic rate of wages with or without the cost of living
             allowance, and the cash value of the concessions in respect
             of supplies of essential commodities at concession rates, where
             so authorised; or
             (iii) an all-inclusive rate allowing for the basic rate, the cost
 B           of living allowance and the cash value of the concessions, if
             any.”
              11. The procedure for fixing or revising the minimum rate of wages
       is dealt with in Section 5 of the Act. After following the procedure
       prescribed under Section 5, the appropriate government can fix/revise
 C     the minimum rates of wages and issue notification to that effect. An
       obligation is imposed on the employer by Section 12 of the Act to pay to
       every employee engaged in a scheduled employment wages at a rate
       not less than the minimum rates of wages fixed by the notification issued
       under Section 5 of the Act. The authority conferred on the Government
       in fixing or revising the minimum rate of wages under the relevant
 D     provisions of the Act was dealt with by this Court in Bidi, Bidi Leaves
       and Tobacco Merchants’ Association (supra). This Court held:
                     “What is the extent of the authority conferred on the
             respondent in fixing or revising minimum rates of wages under
             the relevant provisions of the Act? In dealing with this question
 E           we must necessarily bear in mind the definition of the term
             “wages” prescribed by Section 2(h). As we have already seen
             the term “wages” includes remuneration which would, if the
             terms of the contract of employment, express or implied, were
             fulfilled, be payable to a person employed in respect of his
 F           employment. In other words, the term “wages” refers to
             remuneration payable to the employee as a result of the terms
             of employment. What would be the amount to which the
             employee is entitled if the other terms of the contract are
             performed? That is the question which has to be asked in
             determining what the term “wages” means under Section 2(h).
 G           No doubt Sections 3, 4 and 5 authorise the appropriate
             Government to fix the minimum rates of wages. In other words,
             if the wages fixed by a contract which is either express or
             implied are found to be low, authority is conferred on the
             appropriate Government to increase them so as to bring them
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HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. v.                          1099
    STATE OF HARYANA [L. NAGESWARA RAO, J.]

  to the level of what the said Government regards as the              A
  minimum wages in the particular scheduled employment in
  the particular area concerned. This means that power is
  conferred on the appropriate Government to modify one term
  of the contract express or implied between the employer and
  the employee and that is a term which has reference to the
                                                                       B
  payment of wages. If for a certain piece of work done by the
  employee the employer has agreed to pay him either expressly
  or by implication a certain amount of wages the appropriate
  Government can issue a notification and prescribe that for
  the said work done under the contract the employer must pay
  his employee a much higher rate of wages and the higher              C
  rate of wages thus prescribed would be deemed to be the
  minimum rate of wages between the parties.
          It would, however, be noticed that in defining “wages”
  clause 2(h) postulates that they would be payable if the other
  terms of the contract of employment are fulfilled. That is to        D
  say, in authorising the fixation of minimum rates of wages the
  other terms of the contract of employment have always to be
  fulfilled. The fulfilment of the others terms of the contract is a
  condition precedent for the payment of wages as defined
  under Section 2(h) and it continues to be such a condition
  precedent even for the payment of the minimum rates of wages         E
  fixed and prescribed by the appropriate Government. The
  significance of the definition contained in Section 2(h) lies in
  the fact that the rate of wages may be increased but no change
  can be made in the other terms of the contract. In other words,
  the Act operated on the wages and does not operate on the            F
  other terms of the contract between the employer and the
  employee. That is the basic approach which must be adopted
  in determining the scope and effect of the powers conferred
  on the appropriate Government by the relevant provisions of
  the statute authorising it to prescribe minimum rates of wages
  or to revise them. What the appropriate Government is                G
  authorised to do is to prescribe, fix or revise wages and wages
  are defined to be remuneration payable to the employees if
  the terms of the contract of employment, express or implied,
  were fulfilled. This definition runs, as it inevitably must,
                                                                       H
1100             SUPREME COURT REPORTS                           [2019] 6 S.C.R.


 A           through the material provisions of the Act and its importance
             cannot therefore be ignored.”
              12. The learned counsel for the Government of Haryana argued
       that the workmen are exploited by the employers and the notification
       was issued after taking into account the recommendations of the expert
 B     body to protect the interests of the workmen. The point raised by the
       Appellants pertains to the jurisdiction of the Government in the issuance
       of the notification. The grievances of the workmen can be redressed by
       fora constituted under the Industrial Disputes Act, 1948 if the Government
       does not have the competence to deal with certain issues in the notification
       under the Act. In Bidi, Bidi Leaves and Tobacco Merchants’
 C     Association (supra), Justice Gajendragadkar, observed :-
              “It is well settled that industrial adjudication under the
             provisions of the Industrial Disputes Act 14 of 1947 is given
             wide powers and jurisdiction to make appropriate awards in
             determining industrial disputes brought before it. An award
 D           made in an industrial adjudication may impose new
             obligations on the employer in the interest of social justice
             and with a view to secure peace and harmony between the
             employer and his workmen and full co-operation between
             them. Such an award may even alter the terms of employment
 E           if it is thought fit and necessary to do so. In deciding industrial
             disputes the jurisdiction of the tribunal is not confined to the
             administration of justice in accordance with the law of
             contract. As Mukherjea, J., as he then was, has observed in
             Bharat Bank Ltd., Delhi v. Employees of the Bharat Bank
             Ltd., Delhi the tribunal “can confer rights and privileges on
 F           either party which it considers reasonable and proper, though
             they may not be within the terms of any existing agreement. It
             has not merely to interpret or give effect to the contractual
             rights and obligations between them which it considers
             essential for keeping industrial peace”. Since the decision of
 G           the Federal Court in Western India Automobile Association v.
             Industrial Tribunal, Bombay , it has been repeatedly held that
             the jurisdiction of Industrial Tribunals is much wider and can
             be reasonably exercised in deciding industrial disputes with
             the object of keeping industrial peace and progress (Vide:
             Rohtas Industries, Ltd. v. Brijnandan Pandey, Patna Electric
 H
     HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. v.                            1101
         STATE OF HARYANA [L. NAGESWARA RAO, J.]

         Supply Co. Ltd., Patna v. Patna Electric Supply Workers’             A
         Union). Indeed, during the last ten years and more industrial
         adjudication in this country has made so much progress in
         determining industrial disputes arising between industries of
         different kinds and their employees that the jurisdiction and
         authority of Industrial Tribunals to deal with such disputes
                                                                              B
         with the object of ensuring social justice is no longer seriously
         disputed.”
       13. There is no power vested in the Government by the Act to
make alterations to the terms of a contract. The Act only confers
jurisdiction in Government to fix/revise the minimum rate of wages
notwithstanding the contract. The Notification dated 21.10.2015               C
postulates that unskilled employees having five years experience would
be deemed categorized as semi-skilled “A”; that after three years of
experience in semi-skilled “A”, the employees would be deemed
categorized as semi-skilled “B”; that after three years of experience in
skilled “A”, the employees would be deemed categorized as skilled “B”.        D
Such categorization or classification by deeming workmen in one category
to belong to another category is in direct contravention of the contract
between the employer and the employee and is beyond the jurisdiction
of the Government. Inclusion of Security inspector/ Security officer/
Supervisor at Serial No.9 in the table “Minimum rates of wages in respect
of all scheduled employment” in the Notification is ultra vires the           E
provisions of the Act. They do not fall within the definition of “employee’
in Section 2(i) as they do not discharge any skilled or unskilled, manual
or clerical work.4 Similarly, not all trainees can be included in the
Notification. Trainees who receive wages during the period of training
would fall under the definition of “employee” as has been fairly admitted     F
by the learned counsel for the Appellants. It is the Appellant’s case that
such of those trainees who are not paid any wages cannot be included in
the notification. We are in agreement with the said submission as only a
person who is employed for “hire or reward” will fall under the definition
of “employee”. Consequent upon the above finding, the trainees who
are not paid wages cannot be included in the notification and the fixation    G
of minimum wages for such trainees at 75% is also not valid. To make
it clear, the minimum wages fixed for trainees who are appointed for
reward is not interfered with. The period of training to be undergone by

4
    See: Haryana Unrecognized Schools Association (supra)                     H
1102                SUPREME COURT REPORTS                          [2019] 6 S.C.R.


 A     a trainee would depend upon the contract between the employer and the
       employee. There is no power vested in the Government under the Act
       to decide the period of training and any stipulation with regard to the
       training period is ultra vires.
              14. The word “employee” as defined in the Act means any person
 B     who is employed for hire or reward in a scheduled employment. There
       is no distinction made between a person employed by the principal
       employer and a person employed through a contractor. Any person who
       employs, whether directly or through any other person, one or more
       employees in a scheduled employment falls within the definition of an
       “employer”.5 A close scrutiny of the definitions of the employer and the
 C     employee would bring the workmen employed through the contractors
       within the purview of the Act. We reject the submission made on behalf
       of the Appellants that the contract workmen are not covered under the
       Act.
              15. The only point that remains to be considered is regarding the
 D     segregation of wages into components in the form of allowances. It is
       useful to refer to the judgment of this Court in Airfreight Ltd. v. State of
       Karnataka6 in which this Court observed:
                 “20. … … … Once rates of minimum wages are prescribed
                under the Act, whether as all-inclusive under Section 4(1)(iii)
 E              or by combining basic plus dearness allowance under Section
                4(1)(i), are not amenable to split up. It is one pay package.
                Neither the scheme nor any provision of the Act provides that
                the rates of minimum wages are to be split up on the basis of
                the cost of each of the necessities taken into consideration
 F              for fixing the same.”
              16. “Wages” is defined in Section 2(h) to mean all remuneration,
       capable of being expressed in terms of money, which would, if the terms
       of the contract of the employment, express or implied were fulfilled, be
       payable to a person in respect of his employment or of work done in
 G     such employment and includes house rent allowance. There are four
       exclusions in the definition relating to travelling allowance, value of housing
       accommodation, supply of light, water, medical attendance, etc. If certain
       components of the remuneration are taken care of by the employer, he

       5
           Section 2(e), Minimum Wages Act, 1948
 H     6
           (1999) 6 SCC 567
   HINDUSTAN SANITARYWARE AND INDUSTRIES LTD. v.                                  1103
       STATE OF HARYANA [L. NAGESWARA RAO, J.]

cannot be asked to pay twice over such allowance/ payments which are              A
part of the remuneration. Therefore, we are of the opinion that the
prohibition on segregation of the wages into components under the
notification is not a valid exercise of power.
        17. Our conclusion in respect of some parts of the Notification
will not affect the Notifications as such. The part of the Notifications          B
other than that which are dealt with by this judgment shall continue to be
in force. We make it clear that the employers shall not be entitled to
recover any amounts paid under the Notifications to the workmen on
the ground that they have succeeded in this case. As the findings recorded
in this judgment pertain to the jurisdiction of the Government under the
Act, the workmen are not precluded from resorting to redressal of other           C
remedies regarding their grievances.
        18. The upshot of the above discussion is :
        “(a) The prohibition of segregation of wages into components in
        the form of allowances in the Notification is impermissible;              D
        (b) The security inspector/ security officer/ security supervisor
        cannot be included in the Notification;
        (c) Trainees who are employed without payment of any reward
        cannot be covered by the Notification;
                                                                                  E
        (d) Categorization of unskilled employees as semi-skilled and semi-
        skilled as skilled on the basis of their experience is ultra vires.
        (e) Fixing the training period for one year is beyond the jurisdiction
        of the Government.”
        19. For the aforementioned reasons, the appeals are allowed.              F

Nidhi Jain                                                     Appeals allowed.




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