1

TITLE OF PROJECT

Bijay cotton mills vs state of ajmer

labour law project

Submitted to Submitted by
Dr. Shiva Satish Sharda Jobanpreet Singh
Assistant prof. of law Roll No. – 17183
Group no:-28 4th Semester
2

Contents
1. Law Involved: ........................................................................................................................................... 3
2. Judges/Quoram: ........................................................................................................................................ 3
3. Facts of the case: ....................................................................................................................................... 3
4. Applicability of law: ................................................................................................................................. 6
5. Decision of Supreme Court:.................................................................................................................... 10
6. Ratio:- ..................................................................................................................................................... 11
7. Off shots:- ............................................................................................................................................... 11
8. Validity:- ................................................................................................................................................. 12
3

Bijay cotton mills limited v. State of Ajmer

(1955) 1 SCR 752: AIR 1955 SC 33: (1955) 1 LLJ 129

1. Law Involved:
Section 3, 4 and 5 of minimum wages act and Article 19(1)(g) of the constitution of India.

2. Judges/Quoram:
5 Judge Bench

Mehr Chand Mahajan CJ, Bijan Kumar Mukherjea, Vivian Bose, B Jagannadhadas and T.L
Venkatarama Ayyar JJ.

3. Facts of the case:

In Bijay Cotton Mills Ltd. V State of Ajmer, wherein Sections 3,4 and 5 of the Act were
challenged on the ground that the restrictions imposed by these Sections upon the freedom of
contract and thus violated the fundamental right guaranteed under Article 19 (1) (g) of the
Constitution. There was an industrial dispute between the appellants company and its workmen
regarding enhancement of wages and the dispute was referred to an Industrial Tribunal. The
tribunal held that The capacity of the mill precludes the award of higher rates of wages and
higher dearness allowance.” The employees appealed to Appellate Tribunal when this appeal
was pending, the Government fixed the minimum wages at Rs. 56 in the textile industry under
the Act. In the meantime the Appellate Tribunal sent back the case to the industrial tribunal for
further investigation and the latter rejected the basis upon which the minimum rates of wages of
Rs. 56 were fixed by the State, and fixed the minimum rates of wages including the dearness
allowance at Rs. 35 only. The Company in its petition stated that, the minimum wages fixed by
the State is prohibitory and it is not at all possible for the company to carry on its business on
payment of such wages and accordingly closed its mills. An interesting feature in this case was
that, all the workers working in the mills approached the Company and expressed their
willingness to work at lower rate of wages than the rates prescribed under the Act. Despite the
willingness of the workers the Company is unable to open the mills by reason of the fact that the
Act makes it a criminal offence for not paying the wages fixed under the Act. The workers also
filed the other petition supporting the contentions of the Company. Mr. Seervai, appearing for
both the petitioners invited the Court to hold that the material provisions of the Act are illegal
4

and ultra vires by reason of their conflict with the fundamental rights of the employer. The Act
puts unreasonable restrictions upon the rights of the employer, and the rights of the employees
are also restricted, in as much as they are disabled, from working in any trade or industry on the
terms agreed to between them and their employers. Further it was contended that the provisions
relating to the fixation of minimum wages are unreasonable and arbitrary or fine which may
extend to five buncked rupees, or with both has been left to the unfettered discretion of the
'appropriate Government’ and even when a Committee is appointed, the report or advice of such
Committee is not binding on the Government. The restrictions put by the Act are altogether
unreasonable and even oppressive with regard to one class of employers, who for purely
economic reasons are unable to pay the minimum wages but who have no intention to exploit the
labour at all. In such cases the provisions of the Act have no reasonable relation to the object,
which it has in view. The Court held that ‘it can scarcely be disputed that securing of living
wages to labourers which ensure not only bare physical subsistence but also the maintenance of
health and decency is conducive to the general interest of the public. This is one of the directive
principles of State policy embodied in Article 43 of our Constitution. The employers cannot be
heard to complain if they are compelled to pay the minimum wages to their labourers even
though the labourers, on account of their poverty and helplessness are willing to work on lesser
wages. Further it was held that If it is in the interest of the general public that the labourers
should be secured adequate living wages, the intentions of the employers whether good or bad
are really irrelevant. Individual employers might find it difficult to carry on the business on the
basis of the minimum wages fixed under the Act but this must be entirely due to the economic
conditions of the particular employers. That cannot be a reason for striking down the law itself as
unreasonable. As regards the procedure for fixing of minimum wages, the ‘appropriate
Government’ has undoubtedly been given very large powers. But it has to take into
consideration, before fixing wages, the advice of the committee if the one is appointed or the
representations on its proposals made by persons who are likely to be affected thereby.
Consultation with advisory bodies has been made obligatory on all occasions of revision of
minimum wages and Sec. 8 of the Act provides for the appointment of the Central Advisory
Board for the purposes of advising the Central as well as the States both in the matter of fixing
and revising the minimum wages. In the committees of advisory bodies, the employers and
employees have an equal number of representation and there are certain independent members
5

besides who are expected to take a fair and important view of the matter. These provisions the
“living wages" implies which meets the level and defined by Committee on Fair Wages. Court
held, in its opinion, constitute an adequate safeguard against any hasty or capricious decision by
the ‘appropriate Government’. In suitable cases the ‘appropriate Government’ has also been
given the power of granting exemptions from the operation of the provisions of this Act. The
Court held that the restrictions, though they interfere to some extent with the freedom of trade or
business guaranteed under Article 19 (1) (g) of the Constitution, are reasonable and being
proposed in the interests of the general public, are protected by the terms of Cl. (6) of Article 19.
These cases firmly establish that in fixing the minimum wages under the Act, the hardship
caused to individual employers or their inability to meet the burden has no relevance. The Court
had specifically laid down that the workmen should at least be given adequate living wages,
which in reality mean minimum wages. Secondly the Court analyzed the scope of the term
‘minimum rates of wages’ fixed under the Act, that it should ensure not only bare physical
subsistence but also the maintenance of health and decency and thus concurred with the
definition of ‘minimum wage’ as defined by the Committee on Fair wages. The Court here
liberally interpreted the progressive spirit of the Constitution. Again the employers in different
cases raised the similar contentions without much new impact on the Supreme Court. It is
proposed to examine them at the appropriate stage. In the above case the Supreme Court was
called upon to decide the validity of the Minimum Wages Law itself as well as on the question of
power vested with the appropriate Government to interfere with matters of wage fixation which
under common law was considered to be in the realm of contract between parties based upon
notions of freedom of contract. Very rightly the Court had no difficulty to reject the older
jurisprudence as pleaded even by Mr. Seervai and opt for the new jurisprudence of Industrial
Law. The outcome of these two decisions clearly establish that in fixing the statutory minimum
wage the capacity of the employer to pay is not a relevant factor. Apart from the above, there are
series of judgments through which it can be traced the evolution of judicial pronouncements on
the question of wages specially pertaining to the principles that ought to be followed under
different circumstances and in respect of fixation of different levels of wages. In the present state
of society the primary requirement is that all workmen must get at least a minimum wage, which
should not only be a bare minimum but it should also provide them some measure of education,
medical requirements and other amenities. In determining the minimum wage the financial
6

capacity of the employer or industry is irrelevant, the case of fair wage stands on a different
footing. In assessing the capacity, the main consideration to be borne in mind is that “the
industry should be able to maintain production with efficiency and the fixation of the rates of
wages should be such that there are no movements from one industry to another owing to wide
disparities.” In a case where the employer is already paying minimum wage and the claim is for
fair wage, the question of the financial capacity of the employer is not only relevant but is
pertinent, because fixing the limit of fair wage would depend upon the capacity of the employer
to pay.1

4. Applicability of law:
FIXING OF MINIMUM RATES OF WAGES (Section 3):-Under Section 3(1) of the Act, the
appropriate Government has been empowered to:

(a) Fix the minimum rates of wages payable to employees employed in an employment specified
in Part I or Part II of the schedule.

(b) Review and revise at such intervals not exceeding 5 years. Provided that the appropriate
government may, in respect of employees employed in an employment specified in Part II,
instead of fixing minimum rates for the whole State, fix such rates for a part of the State or for
any specified class or classes.

Provided that where for any reason the appropriate government has not reviewed the minimum
rates of wages fixed by it, within any interval of 5 years, nothing contained in this clause shall
prevent it from reviewing and revising the minimum rates after the expiry of the said period of 5
year. Until they are so revised, the minimum rates in

It has been provided under Section 3(2) of the Act that the appropriate government may fix:

(a) Time Work Rate – A minimum rate of wages for time work.

(b) Piece Work Rate – A minimum rate of wages for piece work.

1
Bijay cotton mills limited v. State of Ajmer (1955) 1 SCR 752: AIR 1955 SC 33: (1955) 1 LLJ 129
7

(c) Guaranteed Time Rate – A minimum rate of remuneration for such employees who are
employed on piece work but for the purpose of securing to such employees a minimum rate of
wages on a time work basis.

(d) Overtime Rate – A minimum rate (whether a time rate or a piece rate) to apply in
substitution for the minimum rate which would otherwise be payable, in respect of overtime
work done by employees. Section 3(2A) of the Act puts a limitation on the powers of appropriate
government to fix or revise minimum rates of wages under certain circumstances which are as
follows: Section 3(2A) provides that during the pendency of any proceeding before the Industrial
Tribunal or National Tribunal or any other competent authority relating to rates of wages, no
order can be issued to fix or revise the minimum rates of wages. It also provides that if an award
is in operation no such order fixing the minimum rates or revising the minimum rates can be
issued.

Section 3(3) of the Act further provides that in fixing or revising the minimum rates of wages
under this section:

(a) Different minimum rates of wages may be fixed for:

(i) Different scheduled employments;

(ii) Different classes of work in the same scheduled employment;

(iii) Adults, adolescents, children and apprentices;

(iv) Different localities (b) Minimum rates of wages may be fixed by: (i) The hour (ii) The day
(iii) The month, or (iv) Such other longer wage period as may be prescribed. Where such rates
are fixed by the day or by the month, the manner of calculating wages for a month or for a day,
as the case may be, may be indicated. Provided that where any wage periods have been fixed
under section 4 of the Payment of Wagers Ac, 1936, minimum wages shall be fixed in
accordance therewith. M/s The Indure (P) Ltd. v. State of U.P. and others The Court held that
when wages of workers are more than the minimum rates of wages, as fixed and/or revised under
the Minimum Wages Act, no separate VDA (Variable Dearness Allowance) as declared by the
Authorities under Minimum Wages Act will be applicable since the total pay package is more
than the pay package under the said government order. Jaydip Industries v. Workmen The Court
8

held that the Tribunal is not bound by the fixation of minimum wage rates by the government
and can fix higher rates as minimum wages in its award. Tribunal can take into account rates of
minimum wages fixed in other awards. Chandra Bhawan Boarding and Lodging, Bangalore v.
State of Mysore The Supreme Court observed that fixing of different rates of minimum wages for
different industries or in different localities by dividing State into zones is not opposed to Section
3(3) of the Act but the government is not allowed to fix or revise minimum rates of wages in an
arbitrary manner.

(b) MINIMUM RATE OF WAGES (Section 4) :-Section 4(1) of the Minimum Wages Act
1948 provides that any minimum rates of wages fixed or revised by the appropriate Government
in respect of scheduled employments under Section 3 may consist of:

(a) A basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in
such a manner as the appropriate government may direct, or

(b) 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
authorized, or (c) An all-inclusive rate allowing for the basic rate, the cost of living allowance
and the cash value of the concessions, if any.

4(2) the cost of living allowance and the cash value of the concessions in respect of supplies of
essential commodities at concession rates shall be computed by the competent authority at
intervals and in accordance with the directions issued by the appropriate government. Karnataka
Film Chamber of Commerce v. State of Karnataka The Court observed that Section 4 of the Act
is a definite indication that basic wage is an integral part of the minimum wage. The Minimum
Wages Act 1948 is a beneficial piece of social legislation which protects the day to day living
condition of the workmen employed at the lowest level of wages in sweated labour. Though the
minimum wages are fixed statutorily, it does not measure up either to the fair wage or either to
the living wage. Therefore the Court cannot interfere with notifications issued under the Act
unless the grounds are substantial. Jaswant Rai Beri and others v. State of Punjab The Court held
that the Act makes no specific mention of the term dearness allowance (DA) but it is well known
that it refers to an allowance paid for rise of cost of living.
9

M. C. Mehta v. State of Tamil Nadu The Court expressed that the children doing the work of
“sorting out manufactured product and processing the same for packing” in a match factory,
should be given at least 60 percent of the prescribed minimum wages for an adult, for the same
job. But indicating the minimum wage does not stand in the way of prescription of a higher rate
if the State is satisfied that a higher rate is viable.

(c) PROCEDURE FOR FIXING AND REVISING MINIMUM WAGES (Section 5) :-

Section 5(1) of the Act lays down procedure for fixing and revising the minimum rates of wages.
It enunciates two methods for the purpose and the appropriate government can follow either of
the two methods namely:

(a) It shall either appoint as many committees and sub-committees as it considers it necessary to
hold inquiries and advise it in respect of such fixation or revision, as the case may be, or

(b) It shall by notification in Official Gazette, publish its proposals for the information of persons
likely to be affected thereby and specify a date, not less than two months from the date of
Notification, on which the proposals will be taken into consideration.

Section 5(2) – After considering the advice of the committee or committees so appointed or after
considering all representations received before the date specified in the Notification, the
appropriate Government shall, by notification in the Official Gazette, fix or revise the minimum
rates of wages in respect of each scheduled employment, and unless such Notification otherwise
provides, it shall come into force on the expiry of three months from the date of its issue.
However in case of revision of minimum rates of wages under clause 1(b) mentioned above the
appropriate government shall consult the Advisory Board also. Chandra Bhawan Boarding and
Lodging v. State of Mysore The Advisory Board is constituted to co-ordinate the work of the
committees and subcommittees and to advise the Government generally in the matter of fixing
and revising the minimum rates. However, in the initial fixation of minimum wages, consultation
with the Advisory Board is not compulsory. Jaswant Rai Beri v. State of Punjab The committee
appointed under section 5 is only an advisory body and the government is not bound to accept
any of its recommendations.2

2
S.N.Misra, “labour and industrial laws” 2016 central law publication. Allahabad
10

5. Decision of Supreme Court:

In this case Supreme court held that there can no longer be any doubt that in fixing the minimum
wage rates as contemplated by the Act, the hardship caused to individual employers or their
inability to meet the burden has no relevance. What the Act purports to achieve is to prevent
exploitation of labour and for that purpose it authorizes the appropriate Government to take steps
to prescribe the minimum rates of wages in the scheduled industries. In an underdeveloped
country, which faces the problem of unemployment on a very large scale it is not unlikely that
labour may offer to work even on starvation wage. The policy of the Act is to prevent the
employment of such sweated labour in the interest of general public and so in prescribing the
minimum wage rates, the capacity of employer need not be considered. What is being prescribed
are only the minimum wage rates, which a welfare State assumes every employer must pay
before he employs the labour. The Petitioners alleged that the minimum wage rates are very
much above the level of what may be properly regarded as minimum wages and it was essential
that before the impugned wage rates were prescribed the employer’s capacity to pay should have
been considered. According to them the burden imposed by the notification is beyond the
financial capacity of the industry. In Hindustan Times Ltd. V Their Workmen, the employer
challenged the wage structure and fixation of Dearness Allowance by the industrial tribunal on
the ground that the principles adopted were improper. In this regard, the Court made the
following observations: The fixation of wage structure is among the most difficult tasks that
industrial adjudication has to tackle. On the one hand, not only the demands of social justice but
also the claims of the national economy require that attempts should be made to secure to
workmen a fair share of the national income which they help to produce. On the other hand, care
has to be taken that the attempt at a fair distribution does not tend to dry up the source of the
national income itself. Better living conditions for workmen can only be possible by giving them
a living wage, which will tend to increase the nation’s wealth and income. On the other hand,
unreasonable inroads on the profits of the capitalists might have a tendency to drive capital away
from fruitful employment and even to affect prejudicially capital formation itself. The rise in
prices that often results from the rise in workmen’s wages may, in its turn, affect other members
of the community and may even affect prejudicially the living conditions of the workmen
11

themselves. At the bottom of the ladder, there is the minimum basic wage, which the employer
of any industrial labour must pay in order to be allowed to continue an industry. Above this is the
fair wage which may roughly be said to approximate to the need based minimum in the sense of
a wage which is adequate to cover the normal needs of the average employee regarded as a
human being in a civilized society Further the Court held that when the proper principles have
been applied by the tribunal in the matter of fixation of wage scale, it is not the practice of this
Court to interfere.3

6. Ratio:-
In this case laborers were agree to accept the les than minimum wages but court strictly opposed
on the logic that in any cases court doesn’t prevail injustice to humanity less than minimum
wages were accepted by laborers only because they have no other options because they are very
poor they were ready to do work on less than minimum wages only because of their poverty,
unemployment and hungriness. In this case court said that there is no exceptions relating to
accepting the minimum wages act every employer if they want to run an industry should give the
minimum wage which is decided by the officers. Whether the employees are agree to accept the
wages less than decided from minimum wages. Whether there is contract between the employer
and employee to work on less than minimum wages. But court doesn’t allow this and said that if
the employer are not in condition to run an industry than he or she has to shut the industry or if
he/she want to run the industry than he must give the minimum wages to the employees.

7. Off shots:-
In this case court said that in any case when the employer are not in condition to give or provide
minimum wages to the employees than he should be close his industry there is no exceptions in
such kind of cases.

3
Supra 1
12

8. Validity:-
This case is still relevant. There is minimum wages act. But there is no definition of minimum
wage. The minimum wage included the definition of wages and the minimum wages are decided
by the appropriate government with the consultation f central advisory body in case of central
industry and state advisory body in case of state industry. There is revision of minimum wages in
every five years it can be twice within the five year but must be happen in the five year.