2020 (10) TMI 1293 - SC - Indian Laws

Exemption to factories from observing some of the obligations which employers have to fulfil towards the workmen employed by them - validity of the state's notifications dated 17 April 2020 and 20 July 2020 - whether the notifications fall within the ambit of the power conferred by Section 5 of the Factories Act? HELD THAT - The validity of the notifications depends on whether the COVID-19 pandemic and the nationwide lockdown qualify as a 'public emergency' as defined in Section 5. The statute provides both the language and the dictionary to interpret it - Section 5 of the Factories Act provides that in a public emergency, the State Government can exempt any factory or class or description of factories from all or any of the provisions of the Act, except Section 67. Principle of proportionality - HELD THAT - The explanation to Section 5 was introduced by the Factories (Amendment) Act of 1976 - Amending Act 94 of 1976 - with effect from 26 October 1976. Interestingly, it was an amendment which was brought in during the internal emergency declared in June 1975 purportedly on account of internal disturbances . The effect of the explanation is to circumscribe the ambit of what constitutes a public emergency. The explanation constricts the expression in two ways first, by confining it to specific causes; and second, by requiring that a consequence must have emanated from those causes before the power can be exercised. Under Section 5 a situation can qualify as a 'public emergency', only if the following elements are satisfied (i) there must exist a grave emergency ; (ii) the security of India or of any part of its territory must be threatened by such an emergency; and (iii) the cause of the threat must be war, external aggression or internal disturbance. The existence of the situation must be demonstrated as an objective fact. The co-relationship between the cause and effect must exist. Implicitly therefore, the statutory provision incorporates the principle of proportionality. Precedent on 'public emergency' and 'security of the state' - HELD THAT - The powers Under Article 352 have been invoked thrice by the President to declare an emergency. An emergency was declared for the first time in 1962 due to the Chinese aggression on Indian territory. The emergency was revoked in 1968. In 1971, when hostilities broke out with Pakistan, an emergency was proclaimed by the President on the ground that the security of India was threatened by external aggression. While this proclamation was in force, another proclamation was issued by the President on 25 June 1975 declaring that a grave emergency exists whereby the security of India is threatened by 'internal disturbance'. Both these proclamations were revoked in March 1977 - The Parliamentary amendments to Article 352 are the product of experience experiences gained from the excesses of the emergency, experiences about the violation of human rights and above all, experiential learning that the amalgam of uncontrolled power and unbridled discretion provide fertile conditions for the destruction of liberty. The sobering lessons learnt from our not-too-distant history should warn us against endowing a statute with similar terms of a content which is susceptible of grave misuse. Interpreting 'public emergency' in Section 5 of the Factories Act, 1962 - HELD THAT - The economic hardships caused by COVID-19 certainly pose unprecedented challenges to governance. However, such challenges are to be resolved by the State Governments within the domain of their functioning under the law, in coordination with the Central Government. Unless the threshold of an economic hardship is so extreme that it leads to disruption of public order and threatens the security of India or of a part of its territory, recourse cannot be taken to such emergency powers which are to be used sparingly under the law. Recourse can be taken to them only when the conditions requisite for a valid exercise of statutory power exist Under Section 5. That is absent in the present case. Scheme and Objects of the Factories Act, 1962 - HELD THAT - While enacting the Factories Act, Parliament was cognizant of the occasional surge of the demand for, or requirement of, the manufacture of certain goods which would demand accelerated production. The law - makers were aware of the exigencies of the war effort of the colonial regime in World War II, with its attendant shortages, bottlenecks and, in India, famine as well. Section 64(2) of the Factories Act envisages exemption from certain provisions relating to working hours in Chapter VI, for instances such as urgent repairs, supplying articles of prime necessity or technical work, which necessarily must be carried on continuously. Section 65(2) enables classes of factories to be exempt from similar provisions in order to enable them to cope with an exceptional pressure of work. However, these exemptions are circumscribed by Section 64(4) and 65(3) respectively, at limits that are significantly less onerous than those prescribed by the notifications in question. The impugned notifications do not serve any purpose, apart from reducing the overhead costs of all factories in the State, without regard to the nature of their manufactured products. It would be fathomable, and within the realm of reasonable possibility during a pandemic, if the factories producing medical equipment such as life-saving drugs, personal protective equipment or sanitisers, would be exempted by way of Section 65(2), while justly compensating the workers for supplying their valuable labour in a time of urgent need. However, a blanket notification of exemption to all factories, irrespective of the manufactured product, while denying overtime to the workers, is indicative of the intention to capitalize on the pandemic to force an already worn-down class of society, into the chains of servitude. Social and Economic Value of 'Overtime' - HELD THAT - The need for protecting labour welfare on one hand and combating a public health crisis occasioned by the pandemic on the other may require careful balances. But these balances must accord with the Rule of law. A statutory provision which conditions the grant of an exemption on stipulated conditions must be scrupulously observed. It cannot be interpreted to provide a free reign for the State to eliminate provisions promoting dignity and equity in the workplace in the face of novel challenges to the state administration, unless they bear an immediate nexus to ensuring the security of the State against the gravest of threats - The provisions embodied in Chapter VI of the Factories Act reflect hard-won victories of masses of workers to ensure working conditions that uphold their dignity. Constitutional vision of social and economic democracy - HELD THAT - The Constitution allows for economic experiments. Judicial review is justifiably held off in matters of policy, particularly economic policy. But the Directive Principles of State Policy cannot be reduced to oblivion by a sleight of interpretation. To a worker who has faced the brunt of the pandemic and is currently laboring in a workplace without the luxury of physical distancing, economic dignity based on the rights available under the statute is the least that this Court can ensure them - The 'right to life' guaranteed to every person Under Article 21, which includes a worker, would be devoid of an equal opportunity at social and economic freedom, in the absence of just and humane conditions of work. A workers' right to life cannot be deemed contingent on the mercy of their employer or the State. The notifications, in denying humane working conditions and overtime wages provided by law, are an affront to the workers' right to life and right against forced labour that are secured by Articles 21 and 23 of the Constitution. This Court is cognizant that the Respondent aimed to ameliorate the financial exigencies that were caused due to the pandemic and the subsequent lockdown. However, financial losses cannot be offset on the weary shoulders of the laboring worker, who provides the backbone of the economy. Section 5 of the Factories Act could not have been invoked to issue a blanket notification that exempted all factories from complying with humane working conditions and adequate compensation for overtime, as a response to a pandemic that did not result in an 'internal disturbance' of a nature that posed a 'grave emergency' whereby the security of India is threatened. In any event, no factory/classes of factories could have been exempted from compliance with provisions of the Factories Act, unless an 'internal disturbance' causes a grave emergency that threatens the security of the state, so as to constitute a 'public emergency' within the meaning of Section 5 of the Factories Act. Notification No. GHR/2020/56/FAC/142020/346/M3 dated 17 April 2020 and Notification No. GHR/2020/92/FAC/142020/346/M3 dated 20 July 2020 issued by the Labour and Employment Department of the Respondent State, are quashed - petition allowed.

Summary

Issues Involved:

1. The Notifications
2. Grounds of Challenge
3. The Power Under Section 5 of the Factories Act, 1962
4. Precedent on 'Public Emergency' and 'Security of the State'
5. Interpreting 'Public Emergency' in Section 5
6. Scheme and Objects of the Factories Act, 1962
7. Social and Economic Value of 'Overtime'
8. Constitutional Vision of Social and Economic Democracy
9. Summation

Issue-wise Detailed Analysis:

A. The Notifications:

The State of Gujarat issued notifications on 17 April 2020 and 20 July 2020 under Section 5 of the Factories Act, 1948, exempting all factories from various provisions relating to weekly hours, daily hours, intervals for rest, etc., due to the economic downturn caused by the COVID-19 pandemic. The notifications allowed adult workers to work up to twelve hours a day and seventy-two hours a week, among other relaxations.

B. Grounds of Challenge:

The petitioners, trade unions representing workers, challenged the notifications on multiple grounds, including:
- Section 5 can only be invoked in a 'public emergency' defined as a grave emergency threatening the security of India by war, external aggression, or internal disturbance.
- The economic downturn due to COVID-19 does not qualify as a 'public emergency.'
- The notifications violate Section 59 of the Factories Act, which mandates double wages for overtime.
- The notifications amount to forced labor, violating Articles 23, 21, and 14 of the Constitution.

C. The Power Under Section 5 of the Factories Act, 1962:

Section 5 allows the State Government to exempt factories from provisions of the Act during a 'public emergency,' defined as a grave emergency threatening the security of India or any part of its territory by war, external aggression, or internal disturbance. The existence of a public emergency must be demonstrated as an objective fact.

D. Precedent on 'Public Emergency' and 'Security of the State':

The Court referred to precedents, including the interpretation of 'internal disturbance' in Articles 352, 355, and 356 of the Constitution. It noted that 'internal disturbance' must be of a nature that disrupts the functioning of the constitutional order of the State or threatens the security of India.

E. Interpreting 'Public Emergency' in Section 5:

The Court held that the COVID-19 pandemic and the ensuing economic slowdown do not qualify as an 'internal disturbance' threatening the security of India. The pandemic has caused economic hardships but has not affected the security of India or any part of its territory in a manner that disturbs the peace and integrity of the country.

F. Scheme and Objects of the Factories Act, 1962:

The Factories Act aims to ensure the health, safety, and well-being of workers by regulating working hours, rest intervals, and overtime wages. The notifications in question significantly departed from these provisions, increasing daily and weekly working hours and altering rest intervals and overtime compensation.

G. Social and Economic Value of 'Overtime':

The Court emphasized the importance of overtime pay at double the ordinary rate as a protection against exploitation and a recognition of the additional labor provided by workers. The notifications undermined this protection by mandating proportionate wages for overtime.

H. Constitutional Vision of Social and Economic Democracy:

The Court highlighted that the Factories Act is aligned with the Directive Principles of State Policy, which aim to achieve social and economic democracy. The notifications, by denying humane working conditions and adequate compensation, violated the workers' right to life and right against forced labor under Articles 21 and 23 of the Constitution.

I. Summation:

The Court concluded that Section 5 of the Factories Act could not be invoked to issue a blanket notification exempting all factories from humane working conditions and adequate compensation for overtime. The notifications were quashed, and the Court directed that overtime wages be paid in accordance with Section 59 of the Factories Act to all eligible workers who have been working since the issuance of the notifications.