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Financial losses cannot be offset on the weary shoulders of the laboring worker- Factories Act: SC

Gujarat Mazdoor Sabha and Anr. v. St ate of Gujarat, Writ Petition (Civil) No. 708 of 2020, October 1, 2020.

Counsel for the Petitioners: Senior Counsel, Mr Sanjay Singhvi and Ms. Aparna Bhat

Counsel for the State: Solicitor General, Mr. Tushar Mehta and Ms Deepanwita Priyanka.

The Hon’ble Supreme Court Comprising of Justice D.Y.Chandrachud, Justice Indu Malhotra and Justice K.M.Joseph held in this case that 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.


Invoking its powers under Section 5 of the Factories Act, 19481, the State of Gujarat has exempted factories from observing some of the obligations which employers have to fulfill towards the workmen employed by them. The government justifies the action on the ground that industrial employers are faced with financial stringency in the economic downturn resulting from the outbreak of COVID -19. A trade union with a state-wide presence and another with a national presence are before the Supreme Court in a petition under Article 32 of the Constitution to challenge the validity of the state’s notifications dated 17 April 2020 and 20 July 2020.


Learned counsel for the petitioners contended that (i) Applying the interpretative principle of noscitur a sociis, the expression ‘internal disturbance’ will have a meaning which derives content from ‘war’ and ‘external aggression’ which endangers the security of India and would not include a pandemic or a lockdown; (ii) The power under Section 5 can be exercised only upon the objective existence of the conditions prescribed (iii) Section 5 contemplates an exemption only to an individual factory or to a class of factories, and not a blanket exemption that extends to all factories; (iv) Section 65(2), and not Section 5, of the Factories Act enables suspension of Sections 51, 52, 54 and 56 to a class of factories owing to ‘exceptional pressure of work’; (v) The notifications do not specifically exempt the application of Section 59 of the Factories Act which mandates payment of double the wages for overtime. Yet they make overtime wages proportionate to the existing wages, which also violates the spirit of the Minimum Wages Act, 1948 and amounts to forced labour violating the workers’ fundamental rights under Article 23, 21 and 14;

Learned counsel for the state contended that (i) Section 5 of the Factories Act confers the power of exemption to the State Government to exempt any factory or class of factories from its provisions. The State Government has the prerogative to determine whether all or only a class or description of factories were to be exempted. Listing of all classes of factories would have been an unnecessary exercise; (ii) The notifications have not been issued under Section 65(2) of the Factories Act, which can only be invoked to deal with an exceptional pressure of work; No targets for production have been fixed. Hence, there is no exceptional pressure of work within the meaning of Section 65(2). (iii) The notifications do not violate Section 59 of the Factories Act as they impose the condition of payment of wages for overtime work in proportion to the existing wages; (iv) Under the notifications, workers are only allowed to work for three additional hours than the normal work day. Factories have also been directed to compensate the workers proportionately for the extra working hours. There is no exploitation of labour and factories are also able to sustain themselves; and the notifications are not in violation of Articles 14, 21 and 23 of the Constitution.

Question of law:

The question of law framed and answered in the case was whether the notifications fall within the ambit of the power conferred by Section 5 of the Factories Act.


The Court while answering what constitutes public emergency under section 5 of the factories act, referred to its judgment in K.S.Puttaswamy v. Union of India, brought out the significance of the principle of proportionality and observed the following:

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.(Para 8)

The court while referring to its judgment in S.R.Bommai v. Union of India, Extra-Judicial Execution Victim Families Association vs. Union of India, Anuradha Basin v. Union of India Ram Manohar Lohia vs. State of Bihar and Romesh Thappar v. State of Madras explained that “Grave emergency” exists only when “Internal disturbances” threaten the “Security of the State” and observed the following:

The expression ‘internal disturbance’ cannot be divorced from its context, or be read in a manner divorced from the other two expressions which precede it. They are indicative of the gravity of the cause which threatens the security of India or a part of its territory. An internal disturbance must be of a similar gravity. Further, it is necessary to evaluate whether a situation of internal disturbance threatens the security of India, or a part of its territory to qualify as a ‘public emergency’. In the absence of any one or more of the constituent elements, the conditions requisite for the exercise of statutory power will not exist. (Para 19)

While explaining how the present covid-19 situation does not come within the purview of “Public emergency” under section 5 of the Factories Act, the court noted the following:

Even if we were to accept the Respondent’s argument at its highest, that the pandemic has resulted in an internal disturbance, we find that the economic slowdown created by the COVID-19 pandemic does not qualify as an internal disturbance threatening the security of the state. The pandemic has put a severe burden on existing, particularly public health, infrastructure and has led to a sharp decline in economic activities. The Union Government has taken recourse to the provisions of the Disaster Management Act, 2005.12 However, it has not affected the security of India, or of a part of its territory in a manner that disturbs the peace and integrity of the country. 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.(Para 28)

While answering the respondents contention, that “extreme financial exigencies arise due to the spread of COVID-19 pandemic and the present notification is a holistic approach to maintain the production, adequately compensate workers and take sufficient measures to safeguard the said factories and establishments in carrying out essential activities”, the Court observed the following;

We are unable to find force in the arguments of the learned counsel for the Respondent. 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 (Para 36)

The court further held:

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. In Y A Mamarde vs. Authority under the Minimum Wages Act (“Mamarde”) this court in the context of a contemporary legislation, the Minimum Wages Act, 1948, interpreted the concept of overtime pay at double the rate of the ordinary wage, as a minimum endeavour of just compensation for the significant additional labour that is utilized by a worker, after having toiled in the ordinary course of the day. (Para 39)

Further, the court explained the Constitutional mandate to protect the welfare of the workers, the importance of the directive principles of state policy, and observed the following:

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. Justice Patanjali Sastry immortalized that phrase of this court as the sentinel on the qui vive in our jurisprudence by recognizing it in State of Madras vs. V G Row. The phrase may have become weather-beaten in articles, seminars and now, in the profusion of webinars, amidst the changing times. Familiar as the phrase sounds, judges must constantly remind themselves of its value through their tenures, if the call of the constitutional conscience is to retain meaning. 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.

To conclude, the Court held:

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

To provide justice to those workers working overtime since the issuance of the notification, the court held:

As a consequence of this judgment, and in the interest of doing complete justice under Article 142 of the Constitution, we direct that overtime wages shall be paid, in accordance with the provisions of Section 59 of the Factories Act to all eligible workers who have been working since the issuance of the notifications

Kalidharun K M



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