Videsha Madhya Vyavasaya Thozhilali Federation (INTUC) v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL THURSDAY, THE 2[ND] DAY OF JUNE 2022 / 12TH JYAISHTA, 1944 WP(C) NO. 7240 OF 2019** ## **PETITIONERS:** 1 VIDESHA MADHYA VYAVASAYA THOZHILALI FEDERATION (INTUC) SANTHI NAGAR JUNCTION,PRESS ROAD, THIRUVANANTHAPURAM,REPRESENTED BY ITS GENERAL SECRETARY,SRI.BABU GEORGE. 2 R.SISUKUMAR, ABKARI WORKER,FL-1-NO.7036, KERALA STATE BEVERAGES(M AND M)CORPORATION LTD, PERUMBAVUR. 3 SURYAPRAKASAN.S, ABKARI WORKER,FL-1 9025,ALATHUR KALLAMKODE, PALAKKAD DISTRICT. 4 P.P.PRIYA KUMAR, ABKARI WORKER,CONSUMERFED, FL1-4006,ALAPPUZHA. BY ADVS. DEEPU THANKAN SMT.UMMUL FIDA SRI.A.ABDUL NABEEL ## **RESPONDENTS:** 1 STATE OF KERALA REPRESENTED BY THE SECRETARY, TAXES DEPARTMENT,GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695001. 2 LABOUR COMMISSIONER, THOZHIL BHAVAN,VIKAS BHAVAN,PMG, THIRUVANANTHAPURAM-695033. 3 KERALA STATE BEVERAGES(M AND M) CORPORATION LTD, BEVCO TOWER,VIKASBHAVAN,PALAYAM, THIRUVANANTHAPURAM-695033,REP.BY ITS MANAGING DIRECTOR. WP(C) No.7240/2019 2 4 THE KERALA STATE CO-OPERATIVE CONSUMERS FEDERATION LTD, (CONSUMER FED),GANDHI NAGAR,ERNAKULAM, KOCHI-682020,REP.BY ITS MANAGING DIRECTOR. 5 THE SECRETARY, LABOUR AND RAHABILITATION DEPARTMENT, GOVERNMENT OF KERALA,GOVERNMENT SECRETARIAT,THIRUVANANTHAPURAM-695001. BY ADVS. SRI.K.V.SOHAN, STATE ATTORNEY SRI.NAVEEN.T., SC, KERALA STATE BEV.CO. M. AND M. SRI.M.SASINDRAN, SC, CONSUMERFED SRI.V.K. SUNIL, SR.GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.06.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) No.7240/2019 3 ## **JUDGMENT** Petitioners Nos.2 to 4 along with petitioner No.1 Union have approached this Court with the following prayers: _“(i) issue a writ of certiorari or order or direction calling for the records leading to Ext.P6 and quash the same ;_ _(ii) issue a writ of mandamus or any other appropriate writ or direction directing the second respondent to implement the provisions of the Kerala Shops & Commercial Establishments Act that are applicable to the retail outlets of the third and fourth respondents ;_ _(iii)issue a writ of memorandum or any other appropriate writ or direction directing the respondents to pay overtime wages and Holiday wages to the abkari workers working in third and fourth respondents establishments in accordance with the provisions of the Kerala Shops and Commercial Establishments Act ;_ _and_ _(iv)pass such other orders as this Hon'ble Court deems fit, proper and necessary in the circumstances of the case.”_ 2. Petitioners 2 to 4 are abkari workers working with respondent Nos.3 and 4 Kerala State Beverages (M&M) Corporation Ltd. and Kerala State Co-operative Consumers Federation Ltd. WP(C) No.7240/2019 4 from the year 2001. On the basis of the request made by the union, the Government decided to categorise the abkari workers working in 3[rd] and 4[th] respondents on daily wages such as those who have registered with Abkari Workers Welfare Fund Board prior to 31.3.1991, prior to 31.3.1996 and after 1.4.1996. The scale of pay according to the seniority was fixed. It was also decided that 3[rd] and 4[th] respondents shall pay Dearness Allowance (DA) and other benefits similar to the employees of the Corporation working in similar categories. Vide Ext.P1 Government Order dated 18.2.2002, abkari workers were allowed to continue in the Welfare Fund Board. Three categories of abkari workers (1) working in the retail shops at the time of taking over of the sale of foreign liquor by the 3[rd] respondent (2) Dependent sons recruited on the basis of the Government Order and (3) Daily wages employees recruited by the 3[rd] respondent before 2001. Employees falling under the first category were getting all the benefits as that of the employees of the 3[rd] respondent whereas the second and third categories of employees were getting those benefits in terms of first category of employees. Government vide order dated 24.2.2011 sanctioned the pay scale and service benefits of categories two and three as in the case of first category employees. The retail outlets of the WP(C) No.7240/2019 5 third and fourth respondents are “shops” within the meaning of Section 2(15) of the Kerala Shops and Commercial Establishments Act, 1960 (Hereinafter called “the Act of 1960”). The grievance expressed is that the respondents have not made applicable the provisions of the aforementioned Act and Rules framed thereunder in as much as that as per Section 6 of the Act, any employee in the establishment is not allowed to work more than eight hours in any day and 48 hours in any week. However, as and when they work overtime shall be, as per the provisions of Section 7 of the Act, entitled to extra wages at the rate of twice of the ordinary rate of wages. For example, if the workers are permitted to do extra work for a period of half day, they would be entitled to wages of full day. 3. Mr.Deepu Thankan, learned counsel appearing on behalf of the petitioners, submitted that petitioners 2 to 4 are working in the retail outset for more than eight hours which is extended to 11 hours per day. Though Section 8 provides for a rest, that has also not been adhered to and whenever the question of earning the extra wages arises, are paid less than what is prescribed under Section 7. Though the overtime allowances were announced from time to time, for the time being it is Rs.420/- per day which is less than what is prescribed under Section 7. When the question arose WP(C) No.7240/2019 6 for strict compliance of Section 7, the respondents had taken the aid of the letter issued by Additional Chief Secretary addressed to the Labour Commissioner, Thiruvananthapuram that establishments under the Central and State Governments, as per the provisions of Section 3 of sub-section (1) of paragraph (c) would not come under the purview of the Act, 1960. It is contended that the said procedure being followed is totally alien to the provisions of Section 4 of the Act where the Government is empowered to grant exemption to the person or the establishment vide notification in the official gazette. There has not been any notification to this effect disentitling the petitioners for the extra wages. Even after Ext.P6, are being given wages, but less than the one prescribed under Section 7. 4. In support of the aforementioned contention, the judgment of the Supreme Court titled as _**Heavy Engineering Mazdoor Union v. State of Bihar and others** [1969 KHC 460]_ has been relied upon to the extent that the contention of the respondents in treating the corporation of the Government to be an appropriate Government, would have a deeming fiction of exemption under Section 3(1), has been negated by holding that any incorporated Company under the Companies Act has a WP(C) No.7240/2019 7 separate existence being a juristic person and distinct from its members. It runs through the powers derived from the memorandum of association and articles of association of the company and thus, even if the Government is holding 80% share in the Company, that could not be construed to be an appropriate Government in the State and mutatis mutandis apply the implication provided under Section 3(1) paragraph (c) of the Act. 5. Learned counsel appearing on behalf of the third respondent and the State Government refuted the aforementioned argument on the ground that the workers have been duly paid their extra wages on the basis of the basic pay by demonstrating through a chart produced in paragraph 13 of the counter. The same reads thus : _“13. Regarding the averments contained in paragraphs 12 and 13 of the Writ Petition, it is submitted that as per Ext.P3 order all the abkari workers were also granted additional allowance of Rs.50/- per day. Based on the 10[th] pay revision orders, the additional allowance paid to various category of employees for extra 3 hours of work per day is as follows :_ |_Sl._<br>_No._|_Basic Pay_|_Daily Allowance_| |---|---|---| |_1_|_Up to Rs.26,500/-_|_Rs.320+100=420_| |_2_|_Above Rs.26,500/- but below_<br>_Rs.49,200/-_|_Rs.375+100=475_| |_3_|_Above Rs.49,200/-_|_Rs.455+100=555_| 6. It is also argued that by taking the strict provisions of WP(C) No.7240/2019 8 the definition of 'establishment' provided under Section 2(8), establishment would mean a shop or commercial establishment which can be a small, medium or a big one and by reading such definition in conjunction with Section 3(1)(c) the establishment under the Central or the State Government, Local Authorities, Reserve Bank of India and cantonment authorities would not be covered by the Act of 1960. Rightly so, the Government issued the communication Ext.P6 and urged this Court for dismissal of the Writ Petition. 7. I have heard the counsel for the parties and appraised the paper book. 8. For understanding the submissions made on behalf of the rival parties, it would be expedient to extract the definition of 'establishment' prescribed under Section 2(8), Section 3 dealing with exemptions as well as sections 4, 6, 7 and 8: _“_ _**2(8)“establishment”** means a shop or a commercial establishment;_ _**3.Exemptions.** -(1) Nothing contained in this Act shall apply to(a)persons employed in any establishment in a position of management; (b)persons whose work mainly involves traveling, and persons employed as canvassers and caretakers and whose names do not appear in the muster rolls; (c)establishments under the Central or any State Government, local authorities, the Reserve Bank of India and cantonment authorities; (d)establishment in mines and oil fields; (e)establishments in bazaars in places where fairs or festivals are held temporarily for a period not exceeding fifteen days at a time; (f)establishments which, not being factories within the meaning of the Factories Act, 1948 (Central Act 63 of 1948) are in respect of matters dealt with in this Act, governed by a separate_ WP(C) No.7240/2019 9 _law for the time being in force in the State of Kerala. 2.Nothing contained in section 10 shall apply to— (a)hospitals and other institutions for the treatment or care of the sick, the infirm, the destitute or the mentally unfit; (b)such chemists’ or druggists’ shops, as the Government may, by general or special order, specify; (c)clubs and residential hotels, hostels attached to schools or colleges, and establishments maintained in boarding schools, in connection with the boarding and loading of pupils and resident masters; (d)stalls and refreshment rooms at railway stations docks, wharves or ports._ _**4.Power of Government to apply Act to exempted persons or establishments.** — Notwithstanding anything contained in section 3, the Government may, by notification in the Gazette, apply all or any of the provisions of this Act to any class of persons or establishments mentioned in that section, other than those mentioned in clauses ( ) and (f) of sub-section (1) and modify or cancel any such notification. 5.…......_ _**6.Daily and Weekly Hours** .-No employee in any establishment shall be required or allowed to work for more than eight hours in any day and forty-eight hours in any week: Provided that the total number of hours of work including overtime, shall not exceed ten hours in any day except on days of stock taking and preparation of accounts and the total number of hours of overtime shall not exceed fifty for any quarter._ _**7.Extra wages for overtime work** .-Where an employee, works in any establishment for more than eight hours in any day or for more than forty-eight hours in any week he shall in respect of such overtime work be entitled to wages at the rate of twice the ordinary rate of wages. Explanation.-For the purpose of this section “ordinary rate of wages” means the basic wages plus such allowances, including the cash equivalent of the advantage accruing through the supply of meals and the concessional sale to employees of foodgrains and other articles, as the employee is for the time being entitled to, but does not include bonus._ _**8.Intervals for rest.** - The period of work of an employee in an establishment each day shall be so fixed that no period shall exceed four hours and that no such person shall work for more than four hours before he has had an interval for rest of at least one hour.”_ 9. No doubt establishment under sub-section (8) of Section 2 has been defined to be a shop either a smaller, bigger or a medium and if read in conjunction with the clause (c) of subsection (1) of Section 3, in the first blush, the arguments of the WP(C) No.7240/2019 10 respondents look not only attractive but impressive to mean that the workers working in the shops of the 3[rd] and 4[th] respondents would not be governed by the provisions of the Act of 1960. But, the said argument would not have a foundation to stand convincing this Court to form a different opinion than the one arrived at in the judgment cited above. Paragraph 4 of the judgment in _**Heavy**_ ## _**Engineering Mazdoor Union**_ (supra) reads thus : _“4. Before considering the authorities cited by counsel before us, we proceed first to examine the meaning of the words used by Parliament in the definition clause of 'appropriate Government'. It is an undisputed fact that the company was incorporated under the Companies Act and it is the company so incorporated which carried on the undertaking. The undertaking, therefore, is not one carried on directly by the Central Government or by any one of its departments as in the case of posts and telegraphs or the railways. It was, therefore, rightly conceded both in the High Court as also before us that it is not an industry carried on by the Central Government. That being the position, the question then is, is the undertaking carried on under the authority of the Central Government? There being nothing in S.2(a) to the contrary, the word 'authority' must be construed according to its ordinary meaning and therefore must mean a legal power given by one person to another to do an act. A person is said to be authorised or to have an authority when he is in such a position that he can act in a certain manner without incurring liability, to which he would be exposed but for the authority, or, so as to produce the same effect as if the person granting the authority had for himself done the act. For instance, if A authoritises B to sell certain goods for and on his behalf and B does so, B incurs no liability for so doing in respect of such goods and confers a good title on the purchaser. There clearly arises in such a case the relationship of a principle and an agent. The words "under the authority of" mean pursuant to the authority, such as where an agent or a servant acts under or pursuant to the authority of his principal or master. Can the respondent company, therefore, be said to be carrying on its business pursuant to the authority of the Central Government? That obviously cannot be said of a company incorporated under the Companies Act whose constitution, powers and functions are provided for and regulated by its memorandum of association and the articles of association. An incorporated company, as is well known, has a_ WP(C) No.7240/2019 11 _separate existence and the law recognises it as a juristic person separate and distinct from its members. This new personality emerges from the moment of its incorporation and from that date the persons subscribing to its memorandum of association and others joining it as members are regarded as a body incorporate or a corporation aggregate and the new person beings to function as an entity. (cf. Saloman v. Saloman and Co., 1897 AC 22). Its rights and obligations are different from those of its shareholders. Action taken against it does not directly affect its shareholders. The company in holding its property and carrying on its business is not the agent of its shareholders. An infringement of its rights does not give a cause of action to its shareholders. Consequently, it has been said that if a man trusts a corporation he trusts that legal persona and must look to its assets for payment; he can call upon the individual shareholders to contribute only if the Act or charter creating the corporation so provides. The liability of an individual member is not increased by the fact that he is the sole person beneficially interested in the property of the corporation and that the other members have become members merely for the purpose of enabling the corporation to become incorporated and possess only a nominal interest in its property or hold it in trust for him. (cf. Halsbury's Laws of England, 3rd Ed. Vol. 9, p. 9). Such a company even possesses the nationality of the country under the laws of which it is incorporated, irrespective of the nationality of its members and does not cease to have that nationality even if in times of war it falls under enemy control. (cf. Janson v. Driefontain Consolidated Mines, 1902 AC 484 and Kuenigl v. Donnersmarck, 1966 (1) QB 515.) The company so incorporated derives its powers and functions from and by virtue of its memorandum of association and its articles of association. Therefore, the mere fact that the entire share capital of the respondent company was contributed by the Central Government and the fact that all its shares are held by the President and certain officers of the Central Government does not make any difference. The Company and the share holders being, as aforesaid distinct entities the fact that the President of India and certain officers hold all its shares does not make the company an agent either of the President or the Central Government. A notice to the President of India and the said officers of the Central Government, who hold between them all the shares of the company would not be a notice to the company; nor can a suit maintainable by and in the name of the company be sustained by or in the name of the President and the said officers.”_ 10. In Companies established under Section 245 of Companies Act 2016, 13 and 617 of the erstwhile Act, 1956, there WP(C) No.7240/2019 12 is no confusion and doubt that the Government can also have shares, in the instant case the share holding is 80%, that would not construe to mean that it would be an appropriate Government and would be excluded from the ambit/ embrace of the 1960 Act where the workers are discharging the duties by rendering more than eight hours of service, but denying the workers getting extra wages prescribed under Section 6. The aforementioned argument cannot be accepted simply on the ground that despite having been confronted with the communication dated 21.10.2016 Ext.P6 regarding non applicability of the Act of 1960, workers are being given extra wages but not in tandem with the provisions of Section 7 of the Act. There would have been a force in the argument had Government came out with a notification as prescribed under Section 4 ibid exempting the establishment from the purview of 1960 Act. The letter dated 21.10.2016 Ext.P6 cannot be construed and equated with the compliance of the provisions of Section 4 to be a notification published in the gazette taking out the establishment of the 3[rd] and 4[th] respondents out of the ambit and applicability of 1960 Act. The Writ Petition is allowed. Ext.P6 is quashed. Directions are issued to the District Labour Commissioner second respondent WP(C) No.7240/2019 13 to call the parties or their representative to the lis for determination of extra wages strictly as per the provisions of Section 7 of 1960 Act and other benefits like a rest of one hour provided under Section 8 of the Act, arrive at a figure by deducting the amount already paid and received by the workers and ensure that the balance amount is paid. Let this exercise be undertaken within a period of two months from the date of receipt of a certified copy of the judgment. Sd/- **AMIT RAWAL JUDGE** csl WP(C) No.7240/2019 14 ## **APPENDIX OF WP(C) 7240/2019** |**APPENDIX OF WP(C) 7240/2019**|**APPENDIX OF WP(C) 7240/2019**| |---|---| |PETITIONERS' EXHIBITS|| |EXHIBIT P1|TRUE COPY OF THE GOVT.ORDER DATED 18/2/2002| |EXHIBIT P2|TRUE COPY OF THE GOVT.ORDER DATED 24/2/2011| |EXHIBIT P3|TRUE COPY OF THE ORDER OF THE FIRST| ||RESPONDENT DATED 11/7/2008| |EXHIBIT P4|TRUE COPY OF THE ORDER PASSED BY THE FIRST| ||RESPONDENT DATED 15/5/2013| |EXHIBIT P5|TRUE COPY OF THE ORDER PASSED BY THE SECOND| ||RESPONDENT DATED 12/11/2018.| |EXHIBIT P6|TRUE COPY OF THE LETTER ISSUED BY THE LABOUR| ||AND REHABILITATION DEPARTMENT TO THE SECOND| ||RESPONDENT DATED 21.10.2016 WITH ENGLISH| ||TRANSLATION.| |RESPONDENTS' EXHIBITS|| |EXHIBIT R5(a)|TRUE COPY OF THE GO(MS) NO 17/84/TD DATED| ||1.2.1984| |EXHIBIT R5(b)|TRUE COPY OF THE REPRESENTATION DATED| ||2.9.2015|