SC stays MHA circular directing private companies to make full payments to their employees

The Supreme Court on Friday stayed the MHA notification compelling full payment of wages to workers during lockdown and has ordered that no coercive action will be taken against private companies till next week while hearing a batch of petitions challenging the constitutional validity of such notification. The order was given by a three judges bench led by Justice L Nageshwara Rao. The Centre has sought time to respond. 

On March 29, the MHA had passed an order mandating payment of salaries to industry workers without deduction for the period of the lockdown. Similarly, on March 31, the Maharashtra government passed an order "compelling" industry owners to pay full salaries to staff, workers, contract workers and casual workers for the period of the lockdown. The apex court then granted two weeks time to the Centre to respond.

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What is the plea?

The pleas have challenged the constitutional validity of Government Order dated March 29, 2020 issued by MHA only to limited extent being that "All the employers, be it in the industry or in the shops and commercial establishments, shall make payment of wages of their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during lockdown period. "

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The petition has sought to adjudicate whether the Centre and Maharashtra government is empowered to issue a direction to the private establishment, like the petitioner, to pay 100 per cent wages under Disaster Management Act, 2005. The plea states that the orders passed by the MHA and the Maharashtra government are "illegal, unconstitutional" and violative of Articles 14 and 19 of the Constitution of India. The plea further prays that during the pendency of the plea, the petitioner be allowed to pay only 50 per cent of the salaries to its workers.

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Previous hearing

A bench of Justices N V Ramana, Sanjay Kishan Kaul and B R Gavai, in a hearing conducted through video conferencing, on Monday heard counsel for three private firms including Nagreeka Exports Limited and Ficus Pax Private Ltd against notifications of the Ministry of Home Affairs asking them to pay full wages to employees during lockdown. "Solicitor General (Tushar Mehta) submits that he wants to file a response to these writ petitions. List after two weeks," the bench said in its order.

The top court asked the private firms to supply copies of their applications to the Solicitor General through e-mail. Textile firm 'Nagreeka Exports Limited, one of the petitioners, has sought quashing of the government order. The textile company said that with the lockdown now being extended, its losses will be multiplied and if it has to follow the government orders in their entirety, its business will become unsustainable.

The firm engaged in manufacture and export of cotton yarns, fabric & textiles, stated in its plea that because of stoppage of operations since the lockdown, it has suffered losses to the tune of Rs.1.50 crore till the filing of the plea. "On top of that, as per the said orders dated March 29, 2020 and March 31, 2020, Petitioner had to disburse full salaries to all its employees on its payroll, which amounts to approximately Rs.1.75 crores," the petition said. The orders will have "more far-reaching consequences, affecting the livelihood of more people”, the plea said.

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