V.A. Mohta, J.
1. By this batch of 7 Writ Petitions filed by various employees' Unions is challenged the validity of the following Notification dated 9th October 1992 issued by the Industries, Energy and Labour Department of the State Government, in exercise of the powers conferred by section 13 of the Maharashtra Workmens' Minimum House Rent Act, 1983 (`the Act'):
'No. HRA. 3191/992/LAB-3A.---In exercise of the powers conferred by sub-section (1) of section 13 of the Maharashtra Workmens' Minimum House Rent Allowance Act, 1983 (Mah. XXIII of 1988), the Government of Maharashtra, being satisfied that it is just and proper to do so in the public interest, hereby directs that, with effect from 1st January 1991, the provisions of the said Act, shall not apply to the factories and establishments in relation to their workmen drawing wages as on 1st January 1991 or thereafter at the rates exceeding the limits mentioned in Column (4) with reference to the Zones and Areas mentioned in Column (2) and (3), respectively, of the Schedule below, subject to the condition that where the wages of the workmen exceed the limits of wages in the respective Zones, the House Rent Allowance payable to such workmen shall be calculated as if their wages were as per the limits in Column (4) of the Schedule below : Serial Zone Areas Limits of wagesNo. (1) (2) (3) (4)1 I Comprised within the limits Rs.3,500/-per month.of Greater Bombay, Thane and Kalyan Municipal Corporations; Ulhasnagar and AmbernathMunicipal Councils; NewBombay Thane-Belapur, Taloja-PanvelIndustrial Areas.2 II Comprised within the limits of Pune, Rs.3,000/-per month.Pimpri-Chinchwad and Nashik MunicipalCorporations (including Ambad-SatpurMIDC of Nashik).3. III All areas within the jurisdiction of Rs.2,500/-per month.the State of Maharashtra excludingthe area covered under Zones I andII above.
2. Section 13 reads thus :
'13. Power to exempt in special cases.---(1) Notwithstanding anything contained in this Act, the State Government may, by order published in the Official Gazette, and subject to such conditions and restrictions, if any, and for such period or periods, as may be specified in the order, direct that the provisions of this Act shall not apply to any specified factory or establishment or to any specified class of factories or establishments in any industry, if it is satisfied that it is just and proper so to do in the public interest or for any special reasons having regard to the more favourable conditions of employment in such factory or factories or establishment or establishments or to the financial position and other relevant circumstances of such factory or factories or establishments, as the case may be.(2) Any order made under this section may be made so as to be retrospective to any date not earlier than the date on which the Act became applicable to that factory or factories or - establishment or establishments, as the case may be.'
3. The challenges are that the notification is (i) in excess of power conferred under section 13, (ii) against the basic provisions of the Act, (iii) arbitrary, and (iv) vitiated by non-application of mind. Additional challenge is to the retrospectivity from 1-1-1991 on the ground of unreasonableness.
4. In order to appreciate the various contentions raised, it would be necessary to examine the back-ground, the object and so also the basic feature of the Act. The Act has received the assent of the President of 5th October 1988 and has come into force on 1-1-1991. Its preamble indicates that it aims at providing for payment of minimum house-rent allowance (H.R.A.) to workmen employed in industries in the State. By virtue of notification issued under section 1(3), it applies to the factories and establishments employing 50 or more workmen. Section 1(4) empowers the State Government to apply the Act by a notification to factories or establishments employing such higher number of workmen as may be specified and section 1(5) to factories or establishments employing less than 50 workmen. Section 2(i) defines the term 'workman' as meaning a workman as defined in the Industrial Disputes Act or an employee as defined in the Bombay Industrial Relations Act.
5. Section 4, which is soul of the Act, provides for payment of H.R.A. to workman at five per cent of the basic wages and dearness allowance payable to him during a month or Rs. 20, whichever is higher. However, the entitlement to higher H.R.A. under the service conditions, agreement, settlement, award is not affected. Where residential accommodation is provided by the employer and no deduction is made therefor from the wages, there is no entitlement to this H.R.A. Deductions of rates higher or lower than the minimum prescribed are brought to the level of minimum. The H.R.A. is payable in cash with monthly wages and unpaid amount can be recovered as fine imposed by a Judicial Magistrate. Right of the workman to get or fight for higher H.R.A. or better service conditions relating to housing accommodation is in no way affected (section 15).
6. Notification dated 26th December 1990 under section 1(3) was issued bringing the Act into force from 1st January 1991. No notification either under section 1(4) or 1(5) have been issued. Net result is that the Act applied to factories of establishments employing fifty or more workmen. By two separate notifications dated 26th December 1990, issued under section 13 of the Act - (a) factories or establishments in the industries carried by or under the authority of any Department of the Government, and (b) new factories or establishments in certain areas, are exempted from the operation of the Act. Third exemption notification is the one impugned in these petitions and - reproduced above.
7. One of the side issues - which is raised by the respondent-employers - is, whether the Act has at all been brought into force to factories or establishments employing fifty or more workmen in the absence of notification under section 1(4). The submission cannot be accepted. Act applies to those establishments as soon as it is brought into force by a notification under section 1(3). Notification under section 1(4) is contemplated only when the Act is to be applied to factories or establishments in which 'such higher number of workmen as may be specified by the State Government by notification in the Official Gazette' are employed. The use of the disjunctive word 'or' between the word 'fifty' and the words 'such higher number of workmen' is siginificant. It indicates that the expression 'as may be specified by the State Government by notification in the Official Gazette' is relatable only to the words 'such higher number' and not the word 'fifty'.
8. The validity of the notifications issued under the statutory exemption provision can be questioned-in addition to the grounds on which the - statute can be questioned - on the grounds that - (i) it is ultra-vires the Act; (ii) is contrary to any statute; (iii) is manifestly arbitrary and unreasonable; (iv) is vitiated due to non-application of mind. In this connection, following observations of the Supreme Court in the case of Indian Express Newspapers (Bombay) Pvt. Ltd. & others v. Union of India and others, , may be usefully noticed - (paragraphs 75 and 79) :---
'The present position of law bearing on the above point is stated by Diplock, L.J., in Maxman's Properties Ltd. v. Chertery Urban District Council thus---
The various special grounds on which subordinate legislation has sometimes been said to be void ... can, I think, today be properly regarded as being particular applications of the general rule that subordinate legislation, to be valid, must be shown to be within the powers conferred by the statute. Thus, the kind of unreasonableness which invalidates a bye-law is not the antonym of 'reasonableness' in the sense in which that expression is used in the common law, but such manifest arbitrariness, injustice or partiality that a Court would say : 'Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires' ... If the courts can declare subordinate legislation to be invalid for 'uncertainty' as distinct from unenforceable ... this must be because Parliament is to be presumed not to have intended to authorise the subordinate legislative authority to make changes in the existing law which are uncertain.
We do not, therefore, find much substance in the contention that the courts cannot at all exercise judicial control over the impugned notifications. In cases where the power vested in the Government is a power which has got to be exercised in the public interest, as it happens to be here the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution.'
Our attention was also invited to the following observations of the Supreme Court in the case of State of West Bengal and another v. Rash Behari Sarkar and another, 1993(1) S.C. `Judgment Today' page 1 (Paragraph 21) :
'Power of exemption has been described as `conditional legislation' by a Constitution Bench of this Court in Jalan Trading Co. v. Mill Mazdoor Sabha, : (1966)IILLJ546SC and not in the nature of delegated legislation. Whether this power is treated as conditional legislation or as a species of delegated legislation, the test is whether the power is exercised for the purpose(s) indicated.'
9. On applying these tests to the impugned notification, it seems to us that it is void for several reasons. Now, the power of exemption is contained in several social legislations. Take for example, the Security Guards Act, the Payment of Bonus Act, the Provident Fund Act, the Payment of the Gratuity Act, the Employees' State Insurance Act, the Employees' Provident Fund Act, the Minimum Wages Act. Invariably we find two basic features in the power. One is the measure of the liability and the other is the unit or units upon which the measure operates. The measure in the instant case is to be found in section 4 and the units in section 13. Measure is the minimum rate of H.R.A. and unit is the factory or establishment and/or their class, which essentially means all workmen in that or those units. There is no scope to reduce the minimum rate of any class of workmen or to differentiate between different classes or categories of workmen of a unit. In the instant notification, rates of H.R.A. have been reduced even below statutory minimum by putting a ceiling in case of workmen drawing salary more than Rs. 3,500, Rs. 3,000/- or Rs. 2,500/- depending upon the geographical area in which the factories or establishments are situated. The notification can claim originality in scaling down even the statutory minimum rate of liability by a delegated legislation. It is pertinent to notice that such power is not expressly contained in section 13. In industrial jurisprudence such scaling down is unheard of. Respondents submit that higher power to exempt totally would include lower power to reduce the rate. The submission cannot be accepted for the width and nature of the two powers are entirely different. Equally unfounded is the submission that right to get minimum H.R.A. is a right given by the statute and hence it can also be taken away by the statute, reason being that section 13 does not refer to any such power or to its delegation. The existence of non-obstante clause also does not salvage the position. The presence of the words 'subject to such conditions and restrictions' also in no way improves the question. The context and purpose of that expression is entirely different.
10. Section 13 does not speak of class of workers in a factory or establishment. The reference is to the factory or establishment which means all workmen in that unit. Hence, as indicated earlier, there is no scope to classify the workers specially in the manner done in the notification. It is pertinent to notice that even section 1 of the Act speaks of factories or establishments and not to classes of workmen employed therein. In this context, rightly, has our attention been drawn on behalf of the petitioners to the decision of the Supreme Court in the case of The Security Guards Board for Greater Bombay & Thana Distt. etc. v. Security and Personnel Service Pvt. Ltd. and others etc., : (1988)ILLJ146SC , wherein, the principle is laid down that the basis of the exemption cannot travel beyond the enabling provision and will have to be located therein only.
11. The conclusion is thus inevitable that the notification is not only ultra vires the Act but is also against the basic provisions of the Act.
12. Section 13 does not empower the State to grant exemption only because it pleases to do so. Power is conditional upon satisfaction that it is just and proper to do so ---
a) in the public interest or
b) for any special reason having regard
i) to the more favourable conditions of employment in the establishment or
ii) to the financial position and other relevant circumstances of the establishment:
The notification is founded on and justified before us only on the ground of 'public interest'. Shri B.G. Pol, Under-Secretary to the Government, has filed two affidavits, the gist of which can be stated thus :---
(1) About 80 to 90 industrial establishments had made representations for granting exemptions.
(2) In several industrial establishments the workers were getting monthly wages in the range of Rs. 3,000/- to Rs. 4,000/-, and there were more favourable conditions of service.
(3) In some establishments there have been agreements with the workers providing for the rise in wages based on the consumer price index.
(4) Consumer Price index takes into consideration the house rent.
(5) Need was felt to balance the interest of the low paid workers and the economic viability of establishments and hence ceiling was put on the upper limit of minimum H.R.A.
(6) Several legislations like the Employees' State Insurance Act, the Payment of Bonus Act, the Payment of Gratuity Act, the Employees' Provident Fund Act have put ceiling on the entitlements and hence phenomenon is not new.
(7) Zone-wise classification of industries is permissible.
(8) Right to get minimum H.R.A. is not a fundamental right.
13. It seems to us that the notification is clearly vitiated on account of non-application of mind to the basic objective and scheme of the Act, and its background. The concepts of minimum wage, dearness allowance are all based on the fluctuations in the consumer price index which, of necessity, takes into account the cost of housing accommodation. The legislature must be deemed to be fully aware of this basic facet. In this context, the following observations of the Supreme Court in the case of Patna Electric Supply Co. Ltd. v. Patna Electric Supply Workers' Union : (1959)IILLJ366SC , may be noticed :
'Besides, a scheme of wages properly fixed necessarily takes into account house-rent amongst other relevant facts, and under a proper scheme of dearness allowance adjustments can be made when necessary from time to time so as to take into account an appreciable rise in the rents which industrial labour may have to pay. That is why usually tribunals do not entertain employees' claim for housing and do not even allow a separate demand for house allowance as such'.
Much water has flown below the bridge after 1959 when the above judgment was delivered. With passage of time necessity was felt to confer additional statutory benefits to a class of employees - the workers - in the form of minimum H.R.A. Residential accommodation is the basic human need to maintain the health and efficiency in the work and hence in order to give some relief to this class of employees the State of West Bengal had made a law and since the State of Maharashtra is industrially advanced State, it also thought of following the good example. The Act has made no distinction between a worker and worker in the matter of entitlement to this statutory benefit. Nor has it prescribed graded rates depending upon level of wages. Section 13 also does not either empower making of distinction between a worker and worker or different classes of workers or putting ceiling on the statutory minimum H.R.A. Law does not permit giving by one hand and almost simultaneously taking by the other. Power to exempt establishment cannot be equated with power to lower down the statutory minimum where there is no exemption. Since we have not so far come across any exemption notification by which statutory minimum benefit is scaled down, we repeatedly requested the learned Counsel for the parties to do some research and point out any such notification. None is pointed to us. The notification is thus unprecedented and novel.
14. Representations made by various industrial undertakings have by and large put up their cases for total exemption on the ground of existence of more favourable conditions of employment and/or financial difficulties. It is common ground that cases have not been examined establishment-wise or case of establishment-wise. The factor that the wage level in some of the factories is quite high cannot be a ground to grant exemption exclusively on zone basis. Indeed, even the respondent-employers who are also parties to the representations have complained to us that their cases have not been considered legally and properly. In principle zone or geography can also be a valid basis for classification depending upon the purpose of the statute. For section 13 of the Act also perhaps that can form one - of the basis. Justified grievance of the petitioners is about that having been formed the sole basis. Classification of establishments on purely zone basis has resulted into invidious discrimination for it fails to make distinction between establishments having more favourable service conditions and the establishments not having such conditions and so also between establishments having better economy and profits and establishments having financial problems. It is pertinent to notice that at earlier stage even the Hon'ble in-charge Minister had promised the Union of employees to look into individual cases in the matter of exemption.
15. Mere use of the expression 'public interest' in the notification is not conclusive of the matter, though certain presumptions get attached to its use by the State. Ex-facie, the notification appears to be against the letter and spirit of the Act and hence we had called upon the State Government to produce material in justification, since it was within the special knowledge of the State and yet no such material was produced. Silence is not golden when there is a duty to speak. For all these reasons the notification appears to be manifestly arbitrary and unreasonable and also vitiated by non-application of mind to basic features of the Act as well as the purpose of section 13.
16. This takes us to the second part of the challenge, viz., unreasonableness of the retrospectivity. It is true that retrospectively is permitted under sub-section (2) of section 13. But permissible does not mean necessarily legal. Retrospectively can be tested on the touch-stone of arbitrariness. Upon operation of the Act certain statutory benefits accrued to the workmen. The H.R.A. became payable every month. Contravention of the provisions is made penal under section 10. Such are the serious consequences for failure to discharge the statutory liability. Some of the employees have even paid the amount. It is unknown to industrial jurisprudence that the rights accrued and benefits received by workmen as per the law then prevailing can subsequently be withdrawn with retrospective effect. The notification has been issued after a period of nearly twenty-two months and no material justifying the unusual course has been put-forth before us. The notification under section 1(3) was not issued in a hurried fashion. The Act is of 1983. It received the President's assent on 5th October 1988 and it has been made applicable more than two years thereafter on 1st January 1991. Full knowledge of the existing positions must be presumed in favour of the State. Exemption is not based on unexpected subsequent developments. Hence, in our view, even the - retrospectively part of the notification is arbitrary and unjust and therefore violative of Article 14 of the Constitution.
17. To conclude, the impugned notification is declared void, unenforceable and inoperative in law and is hereby quashed. We direct the respondent-employers to refund within four weeks from today the amount recovered from the workmen on the basis of the said notification.
18. In the result, all the above 7 writ petitions are allowed, and the rule in each of these petitions is made absolute in the above terms. However, there will be no order as to costs.
19. All other individual questions including the effect of the Supreme Court decision in Civil Appeal No. 5139 of 1992, Arising out of S.L.P. (c) No. 14636 of 1992, Batliboi Employees' Union v. Batliboi and Co. Ltd. and another, are kept open.
20. Needless to clarify that the State Government is free to consider afresh the representations made so far or that may be made in future, and to issue appropriate notification in accordance with law in future.
21. At this stage, learned Counsel for the respondents orally apply under Article 134A of the Constitution for certificate of the nature referred to in Article 133(1). Prayer rejected.
22. Second prayer for maintaining the status quo as on today for a period of two months, is also rejected.