# MERCHANTS ASSOCIATION v. THE STATE OF BOMBAY

- **Citation:** [1962] Supp. 1 S.C.R. 381
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/merchants-association-v-the-state-of-bombay-2430
- **Pages:** 25

## Headnote

(1) S.C.R. SUPREME COURT REPORTS
381
department.
We are therefore of opinion that
the workmen are entitled to an additional bonus
for half a month for this year.
We therefore partly allow the appeal and
reduce the additional bonus from one month to
half a month. In the circumstances we order the
parties to bear their own cost~.
Appeal allowed.
BIDI, BIDI LEAVES' AND TOBACCO
MERCHANTS ASSOCIATION
v.
THE STATE OF BOMBAY
(P. B.
GAJENDRAGADKAR,
A. K.
SARKAR,
K. N. WANCHOO, K. C. DAs GUPTA and
N. RAJAGOPALA AYYANGAR, JJ.)
Minimum
Wages-Bidi
industry-Nolificatlon fixing
minimum wages, prescribi11g method for di.•carding of 'Chhat'
bidis and payment therefore-If ultra vii-es-Doctrine of
implied powers-Notification No. MIV A 1557 J dated June 11,
1948-Minimurn Wages Act, J.948(11 of 1948), ss.
2(k)
3, 5, 20 and 21.
By s. 3 of the Minimum W;iges Act, 1948, the appropriate Government is authorised to fix minimum rates of
wages for employees in the Scheduled employments and
•· 5 lays down the procedure for fixing and revising such
minimum wages. The State Government published a notification dated June 11, 1958, fixing minimum rates of wages
in respect of employments in bidi making in the Vidarhha
region. Clauses I and 2 of the notification prescribed the
minimum rates district wise and provided for higher rates
for making bidis known as •Hatl)akhun' in all the districts.
Clauses 3 to 7 dealt with disputes between the employers
and the employees as to how bad bidis were to be discarded
and in what proportion and as to the payment for such discarded bidis. The appellant contended that els. 3 to 7 of
the notification were 'ltltra virea:
llel.d, that els. 3 to 7 of the Notification were outside the
purview of the p~wers conferred upon the State Government
1961
illysort Kir/oakar
Ltd,
••
lt"orkers of lhe
1~1.Jsore
Kirloskar Ltd.
1961
382 SUPR,EME CO"(fflT RE.PORTS [1962lSUPP.
1961
Ridi Bidi Leaves and
Tob
0acco Merchants'
Association
by s. 5
of. the Act and were ultra vires.
TI.e pro-
~i~~ns of ~~C Act empo~ered the Gov:i-n~e?~ only to fi"
mm1mum Wages; they did not
authorise it to make rules
for resolving the disputes regarding the rejection of bad
bidis an,d regarding the payments to be made for the rejected
v.
Thi State of Bomhrry· bi dis.
'
·
The Act empowered the Government to fix the re.
muneration pavable to an employee if the other terms.of
the c;ontracl were.observed; it did not authorise the Government to vary the other terms. Under the contract the employer was entitled to decide which bidis to discard, and to
retain such
bidi~ and to pay onlv for such bidis as were
accepted by him.
Clauses 3 to 7 of the notification purported
to modifv these tert{ls in m~terial particμlars and this was
not within tJie po_wer conferred by 't]ie Act upon the 'GovrrnIl)ent. Nor could these'clauses• be justified. on the basis of
implied powers. The doctrine of implied powers could only
b~ invoked wh~n it was found that a duty was imposed or
a power conferred qq an authqritv by a statute and it was
furtl1cr found 'that the duty could not be discharged or the
p0wci:,s ,could n?t be, excrcisef\ ~t ,all unless some auxiliary
or inCjidrontal po\\•er was assumed· to exist.
~ven 'if cIS. J
and 2 would l'i'ecome 'ineffective without els. 3 fo 7 being
there that viould not be a proper basis for invoking the
doc.trJnc of implied power;c::.
The definition of !wages' in
•· 2(h) of the Act postulated, the binding character of the
othP.1" tenTJS of the contract and brought Within the-pur"iew
of the Act only th~ term.relating to wages. By impliqltio!l
the very ha~ic concept ot wae-es could not be ignored. By
ss: 20 and 21 the Act makes specific provision for the settlement of claims in re12;ard to payment of minimum wages
;:i.nd
a~ !llnch no :po,vers could be implied in the Governmf"nt
to set up a separa1c machinery to settle such cjisputr.s.
Fur.
ther, no power could be. implied to make els. I and ·7 of the
notification effective : such power could only be implied

## Text

_Characters 0–39,931 of 51,069. This is a partial read: ask again with offset=39931 for what follows._

(1) S.C.R. SUPREME COURT REPORTS
381
department.
We are therefore of opinion that
the workmen are entitled to an additional bonus
for half a month for this year.
We therefore partly allow the appeal and
reduce the additional bonus from one month to
half a month. In the circumstances we order the
parties to bear their own cost~.
Appeal allowed.
BIDI, BIDI LEAVES' AND TOBACCO
MERCHANTS ASSOCIATION
v.
THE STATE OF BOMBAY
(P. B.
GAJENDRAGADKAR,
A. K.
SARKAR,
K. N. WANCHOO, K. C. DAs GUPTA and
N. RAJAGOPALA AYYANGAR, JJ.)
Minimum
Wages-Bidi
industry-Nolificatlon fixing
minimum wages, prescribi11g method for di.•carding of 'Chhat'
bidis and payment therefore-If ultra vii-es-Doctrine of
implied powers-Notification No. MIV A 1557 J dated June 11,
1948-Minimurn Wages Act, J.948(11 of 1948), ss.
2(k)
3, 5, 20 and 21.
By s. 3 of the Minimum W;iges Act, 1948, the appropriate Government is authorised to fix minimum rates of
wages for employees in the Scheduled employments and
•· 5 lays down the procedure for fixing and revising such
minimum wages. The State Government published a notification dated June 11, 1958, fixing minimum rates of wages
in respect of employments in bidi making in the Vidarhha
region. Clauses I and 2 of the notification prescribed the
minimum rates district wise and provided for higher rates
for making bidis known as •Hatl)akhun' in all the districts.
Clauses 3 to 7 dealt with disputes between the employers
and the employees as to how bad bidis were to be discarded
and in what proportion and as to the payment for such discarded bidis. The appellant contended that els. 3 to 7 of
the notification were 'ltltra virea:
llel.d, that els. 3 to 7 of the Notification were outside the
purview of the p~wers conferred upon the State Government
1961
illysort Kir/oakar
Ltd,
••
lt"orkers of lhe
1~1.Jsore
Kirloskar Ltd.
1961
382 SUPR,EME CO"(fflT RE.PORTS [1962lSUPP.
1961
Ridi Bidi Leaves and
Tob
0acco Merchants'
Association
by s. 5
of. the Act and were ultra vires.
TI.e pro-
~i~~ns of ~~C Act empo~ered the Gov:i-n~e?~ only to fi"
mm1mum Wages; they did not
authorise it to make rules
for resolving the disputes regarding the rejection of bad
bidis an,d regarding the payments to be made for the rejected
v.
Thi State of Bomhrry· bi dis.
'
·
The Act empowered the Government to fix the re.
muneration pavable to an employee if the other terms.of
the c;ontracl were.observed; it did not authorise the Government to vary the other terms. Under the contract the employer was entitled to decide which bidis to discard, and to
retain such
bidi~ and to pay onlv for such bidis as were
accepted by him.
Clauses 3 to 7 of the notification purported
to modifv these tert{ls in m~terial particμlars and this was
not within tJie po_wer conferred by 't]ie Act upon the 'GovrrnIl)ent. Nor could these'clauses• be justified. on the basis of
implied powers. The doctrine of implied powers could only
b~ invoked wh~n it was found that a duty was imposed or
a power conferred qq an authqritv by a statute and it was
furtl1cr found 'that the duty could not be discharged or the
p0wci:,s ,could n?t be, excrcisef\ ~t ,all unless some auxiliary
or inCjidrontal po\\•er was assumed· to exist.
~ven 'if cIS. J
and 2 would l'i'ecome 'ineffective without els. 3 fo 7 being
there that viould not be a proper basis for invoking the
doc.trJnc of implied power;c::.
The definition of !wages' in
•· 2(h) of the Act postulated, the binding character of the
othP.1" tenTJS of the contract and brought Within the-pur"iew
of the Act only th~ term.relating to wages. By impliqltio!l
the very ha~ic concept ot wae-es could not be ignored. By
ss: 20 and 21 the Act makes specific provision for the settlement of claims in re12;ard to payment of minimum wages
;:i.nd
a~ !llnch no :po,vers could be implied in the Governmf"nt
to set up a separa1c machinery to settle such cjisputr.s.
Fur.
ther, no power could be. implied to make els. I and ·7 of the
notification effective : such power could only be implied if
it \vas neces5ary to make:is. 5 of the Act itself effective.
Michael Fent-On and JameA
Fraser v. Jhon Sleplien
Hom:eton, (1957-59) 117 R.. R. 21, referred to.
r
C:rvn. APPELLATE .'T 1j-RISDIOTION ': Civil Appeals
Nos. 415-Al8 of 1960.
Appeals from the judgments. and orders
da.te9- September 23, 1958,' of tlie Bombay High
Court in Specfal Civil Applications Nos. 205 and
214 of 1958.
•
,
~
I
(1) S.C.R. SUPREME OOURT REPORTS
383
A. V. Viswcinatha Sa8tri, S. P. Verma, S. N.
Andley, Rameshwar Nath and P. L. Vohra, for the
appellants (in C. A. No. 415 of 1960).
A. S. Bobde and Ganpat Rai, for the appellants (in C. A. No. 417of1960) and respondents
(in C. A. No. 418/60).
H. R. Khanna and R.H. Dhebar, for the appellants (in C.
A~. Nos. 416 and 418 of 1960)
and respondent No. l (in C. As. Nos. 415 and 417
of 1960).
A. G. R'1tnriparkhi, for respondent No. 3 (in
C. A. No. 415 of 1960).
1961November15. The Judgment of the Court
wa1 delivered by
GAJENDRAGADKAR, J.-These
four appeals
consist of two sets of cross appeals each and they
arise from two petitions filed in the High Court of
Bombay at Nagpur challenging the validity of the
notification dated June 11, 1958, issued by the
State of Bombay, now represented by the State of
Maharashtra, under s. 5 of the Minimum Wages
Act, 1948, ( 11 of 19_48) (hereafter called the Act.)
The petitioners in Special Civil Applicati.m No. 20,;
of 1958 are the Bidi, Bidi Leaves and Tobacco
Merchants' Association. Gondia and two others,
whereas the petitione~s in Special Ciyil Application
No. 214 of 1958 a.re Haji Latif Ghani Kachhi and
five others. The impugned notification consists of
seven clauaes.
Bv the majority decision of the
High Court els. 1 t~ 5 and th<i first p'lrt of cl. 6 are
held to be inti-a vire.'I, whereas the latter part of
cl. 6 a.nd cl. 7 as well as the explanation added to
it are held to be ultra vires. The first part of the
finding
is
challenged
by the petitioners in
the two writ petitions by their Civil Appeals Nos.
415 and 417 respectively, while the latter part of
the finding is challenged by the State of Maharashtra
in its Civil Appeals Nos. 416 and 418 respectively.
Thus, Civil Appeals Nos. 415 and 4lll are cross
1961
Bidi, Bidi LeaVlfS and
'l'obacco lU1rclionfs'
Association
I Y.
Th, Stole of Rombay
Gnjend1agadX:ar J.
\
38' SUPREME OOURT REPORTS [1962] SUPP.
11161
Billi, Bidi /.e41'1J arvl
T,,fuuuJ M trchonts'
AntKfation
appeals and Civil Appeals Nos. 417 and 418 are
cross appeals. 'l'hese appeals h:we been brought
to this Con rt with a certificate granted by the
High Court under Art. 132(1) of the Constitution .
As will presently appear tho only point which calls
for our decision in these appeals i;; one relating to
the validity of the impugned notification; and so
the certificate might well have been given under
Art. 133 ( l)(c) and not under Art. 132 (I) because
the c sc docs not involve a substantial question of
law as to the interpretation of the Constitution.
For convenience we will refor to the petitioners in
the writ petitions as petitioners and the State
of Maha1·ashtra as the respondent in these a.ppeals.
..
Tht S~ate of Bombtr1
Oq,11ndrnzadkar J.
The petitioners are bidi manufacturers in
different parts of the Vidarbha region and they
employ a large number of persons for the purpose
of making bidis for them. It appears that the
Government of the State of Madhya Pradesh within
whose jurisdiction Vidarbha was then situated had
fixed the minimum rates of wages in respect of
employment in tohacco (including bidi making)
manufactories by issuing a notification on January
11, 1951. This notification had purported to fix
tho minimum rates of wages per 1000 bidis by
reference to different localities in the State. The
rates thus fixed wore inclusive of dearness allowance
or compensatory cost of living allowance and they
varied from place to place as specified in columns
2 to 4 of the notification respectively. An Advisory
Board was thereafter constituted by the said Stat~
in exercise of the powera conferred on it by s. 7 of
the Aot. Subsequently, in Hl56 the said minimum
rates of wages were revisoo by a notification issued
on February 23, 1956.
As a result of th11 State
Reorganisation Act, 1956 (37of1956) the Vidarbha
region became part of the State of Bombay. After
Vida.rbha. thus became a part of the State of Bombay
the Government of Bombay notified that the
Advisory Board appointed by the said Government
(1) S.C.R. SUPREME COURT REPORTS
385
11nder s. 7 shall be the Advisory Board for Vidarbha.
This notification was issued on November 1, 1956.
The Government of Bombay then issued a notification publishing the draft of the notification whioh
was proposed to be issued under s. 5, sub-s. (2) read
with cl. (b) of sub-s. (1) of s. 5, and notice was thereby given to :i.11 the bidi manufacturers that the said
draft would be taken into consideration on or after
Ma~ch I, 1957. Thereafter the procedure prescribed
byis. 5 was followed, E>n enquiry wits held, a report
of the Advisory Board was received and finally the
impugned notification was issued on June 11, 1958.
It is the validity of the several clauses contained
in this notification that is challenged before us in
the present appcll.ls.
In their petitions the petitioners alleged that
els. 3 t,o 7 of the notification were invalid and '!dtm
vires the p•lwers of the respondent under ss. 3, 4
and 5 of the Act. According to them the respondent had no power to make provision for deciding
as to the extent to which "chhat" will be permittedor directing the action to be taken by the em{lloyer
and employee relating to bad bidis. Their contention
was that. the said clauses purported to make provisions for the settlement of disputes between the
employer and the employee concerning an Industrial matter and were outside the purview of the
respondent's power under the relevant sections.
They urged that the different provisions of the
notification were so interrelated that it was difficult
to dissociate one from the other and so it was
neceRsary that the notification as a whole should
be qua.shell.
The respondent disputed the correctness of
the contentions raised by the petitioners. It urged
that there were constant disputes among bidi
manufacturers and bidi workers regarding the
minimum wages fixed in the Vidarbha region and
so the respondent thought it neceRsary to institute
Bitli, Bidi Leaves and
Tobacc,7 .\Jerchanl ~,
Ass11riation
v.
The Staie 1,f BomblfY
Gajendi-1g•:dkar J.
J!Jf;J
Bid;, Bidi Lttn!ts t111tl
r obacco ,\fnchanls,
Associ4tion
...
7711 Stait of Bouabay
Oajcff<lragaJkar J.
386 SUPREME COURT REPORTS fl!l62) SUPP.
an cuquiry int-0 theBe complaints in order to decide
"'hether it WW! necessary to revise the minimum
wages prescribed by the earlier notification and the
mode of determining those 1vagee. It was only
aftt>r a comprehensi1·e enquiry was held at which
all parties were heard that the respondent issued
the notification in qucstiun. Its case wi>s that the
minimum rates of \\·ages had been fixed on industry
cum-regionwise hasiA and that els. 3 to 7 wcro intended to make t.he fixation of minimum rates of
wages effective. According to the respondent, the
absence of any ru lea regarding the t•xcrciee of the
right of "chhat" uy the employers tends to deprive
the bidi workers of their right of getting minimum
ra!.<lS of \\'ag.,~, and so !'.Is. 3 to 7 were deliberately
introduced to make the material provisions of th"
Act l'ffectivc in their implementation.
The&' pet it ions wt>re first heard hy llfoclholkar
and Kotval, JJ. ?lfudholkar, J. held that all the
'-'lauses in the impugned notification were valid for,
. accordin!! to him, though the Aot, had uot conferrc<l
t>Xpreas powers on the respondent to prt>scribe the
impugned clauses of the notification yet the respon-
<lent could prescribe the said rules undor the doctrine of implied powcrn. Kot val, J., agreed that els.I
and 2 were valid but he thought that llven under
the doctrine of implied powers the remaining els. 3
to 7 could not be sustained. According to him the
said clauses were, however, severable from els. I
and 2 and so they should be struck down leaving
els. I and 2 in tact. Sinco there was a difference
of opinion between the two learner! judges the
matter was referred to Tambe, ,T. He held that els.
I to 5 and the first part of cl. 6 wore intra vires
where as the latter part of cl. 6 and cl. 7 as w~,11 RS
the explanation added to it wero ultm vires. After
Mr. Justice Tambe pronounced his judgment the matter was again refrrred to a Division Bench, and the
Division Bench, in accordance with the majority
opinion, has upheld thP. validity of els. I to 5 and
•
.
..
I
1
(1) S.C.R.
SUPREME COURT REPORTS
387
the first part of cl. 6 and has struck down the latter
part of cl. 6 as well as cl. 7 and its explanation. It
is against this decision that the petitioners and the
respondent have come to this Court with a certificate
granted by the High Court in that behalf.
Before dealing with the merits of the controversy between the parties it wonld be relevant to
refer to the material provisions of the Act. The
Act was passed in 1948 in order to provide for fix.
ing minim nm rates of wages in certain employments.
Its provisions apply to the scheduled employment
which expression under s. 2 (g) means an employment specified in the schedule, or any process or
branch of work forming part of such employment.
It is common-ground that employment in any tobacco (including bidi making) manufactory is a
scheduled employment under the schedule of the
Act. Section 2(h) defines wages and it prescribes
inter alia, that wages means all, remuneration capable of being expressed in terms of money which
would, if the terms of the contract of employment,
express or implied, were fulfilled be payable to a
person employed in respect of his employment or
of work done in such employment, and includes
house-rent allowance, but does not include the items
specified by els. (i) to (v) of the said definition.
Section 3 authorises the appropriate Government to
prescribe different minimum rates of wage• for different scheduled employments, different classes of
work in the same scheduled employments, adults,
adolescents, children and apprentices and different
localities. Under s. 4 are prescribed the components
of the minimum rates of wages. Section 5 provides
for the procedure for fixing and revising minimum
wages. Section 7 provjdes, inter alia, that minimum wages payable under the Act shall be paid in
cash. Under s. 12 an obligation is imposed on the
employer to pay every one of his employees engaged in the scheduled employment wages at a ra.te
11161
Bidi1 Bitli Leav•.s at.'d
Tobaceo M1n·hant11'
Association
y,
TM Stat1 of Bombay
Gajendra1adkar J.
Hllll
Biii, Ridi Uaou tffltl
Tohar,co &1 nelumt•'
AJ.111riation
v.
Tht Stcltt of Bt1mhay
GaJtndragadkar J.
388 SUPREME COURT REPORTS [I 962] SUPP.
not less than the minimum rate or wages fixed by
the i1otification issued in that behalf.
Section 12
(2) saves the application of the provisions of the
payment of wages Act.
Section 20 authorises the
appropriate Government to appoint an authority to
hear 1nd decide for any specifir.d area all claims
arising out of the payment of less than the minimum rates of wages and other claims specified
therein. The remaining sub.sections of the said
section prescribe the procedure for determining such
rlaims. Under s. 21 a single application can be made
in respect of a number of employees who wish to prefer a claim for the decision of the authority under
R. 20. Section 22 prescribes penalties for the offences
therein specified. Section 22A provides that if any
employer contravenes any of the provisions of the
Act or any rule or order made thereunder he shall, if
no other penalty is provided for such contravention,
be punishable with fine which may extend to five
hundred rupees. Section 22B provides, inter alia
the manner in which Courts may take cognizance
of a complaint against any person for an offence
committed under the Act. That in brief is the
scheme of the material provisions of the Act.
At this stage it would be necessary to read
thi> Rrvernl cl a.uses of the impugned notification :
"No. MWA. 1557-J. In exercise of the
powers conferred by eub·section (2) of section
5 read with clause ( b) of suh·eection (I) of
that section of the Minimum Wages Act, 1948
(XI of 1948) and after consulting the Advisory
Board and in supereeesion of the former
Government of Madhya Pradesh
Labour
Department Notification No. 564-451 XXIII,
dated 23rd Febrwuy, 1956, thl' Government
of Bombay hereby revise the minimum rates
of wag~e in respect of the employment in any
tobacco (including bidi making) manufactory
in the Vidarbha region of the State of Bombay
I
I
..
t '
(1) S.C.R. SUPREME COURT REPORTS
389
as mentioned in the Schedule hereto annexed
and directs that this notification shall come
into force with effect from lst July, 1958.
SCHEDULE
Subject to the other provisions of this
Schedule, the revised minimum rates of wages
payable to employees per thousand bidis (when
leavas are supplied by the employer) shall be
as follows:
( i)
(ii)
(iii)
Area
Nagpur District
Bhandara District ...
Chanda, Akola,
Buldana, Yeotmal,
Amravati and Wardha
District
Re vised rates
in Rs.
1.69
1.62
1.56
2.
For all bidis in which 7 chhataks or
more of tobacco mixture is used and for those
bidis lthich are known as "Hatnakun" bidis,
there shall be an increase of 12 Naye Paise
per 1000 bi dis in the rates mentioned aboTe in
all the areas.
3. It shall be within the ,discretion of
the employer to decide which are "chhat"
hidis or bad bidis, up to 5 per cent of the
bidis prepared by the employee. If the employer decided that any bidis are "chhat" or
bed, the "ohhat'' or bad bidis up to 5 per cent
sha.U be destroyed forthwith by the employee
and whatever tobacco is recovered from them
shall be retained by the employer. If, h!)w·
ever the employer wants to retain these
"chhat" or bad hidis, he shall pay full wages
for the same to the employee.
4. ·If "chhat" or bad bidis are more than
5 per ClCJlt, but less than 10 per cant, and if
there is any dispute between the employer
BiJi, Bidi Leaves and
Tobacco Merchants~
A.!sociation
v.
Th• Stale of Bom•qy
Qaj1ndragadka.r J,
..
1~61
lfirli, Bidi ltMts and
1'cbarco Mnchr1n1J'
:l1Joci&1ion
v.
1 ht Stolt of Bum6ay
,,
390 SUPREME COURT REPORTS [1962] SUPP.
._
:mcl the employee as to whether the "chhat"
or bad bidis is <lone properly or not, equal
number of representatives of the omployer and
the employees shall inspect the "chhat" is
done properly or not. If there is any difference of opinion among the representatives of
the two sides, the majority opinion shall prevail. If tho opinion is equally divided and the
employer wants to retain the "chhat" bidis,
ho shall pay wagcs for "chhat" bidis between
ii per cent to JO per cent at half the
rates fixed abo\'e. If the employer does not
want to retaiu these bidis tho employee shall
destroy them forthwith.
5.
The employer shall nominate his
ropresentatives an<l the employees shall elect
their representativt-s.
ti.
In the case of "chhat" above 10 per
cent., tho employee shall be entitled to full
wages. It shall, however, be open to the
employer to take suitable action against the
employee if the "chhat" is more than l 0 per I
cent for 6 continuous working days in a calenda'r month.
7.
'.!.'he "chhat" shall be made once in a
<lay only, at any premiaes within a distance of
not more than 2 miles from the premilles
where bidis are manufactured.
Explanation :-For the purpose of this
Schedule the expression "employer" includes
his thekedar, centractor or agent as the case
may be.'
The validity of els. J and 2 ia not in dispute. The
petitioners, howevar, contend that els. 3 to 7 are
outside the powers conferred on the respondent by
the relevant provisions of
the Act and as such
are invalid. It i1 common ground that even if the
•
impugned claUBe8 arc held to be ultra vires they are
I
f
(I) S.C.R.
SUPREME COURT REPORTS
391
severable from els. I and 2 so that the invaliditv of
the impugned clauses will not affect the validity of
the said two clauses and they will stand even if the
other clauses are struck down.
In determining the question about t.he validity
of the impugned clauses it is necessary to refer to
two material facts. The nature and scope of the
terms of contract between the petitioners and
their employees are really not in dispute. It is
alleged by the petitioners that they employ a large
number of persons for the purpose of making
bidis for them, that these persons are supplied
with tendu leaves, tobacco and other necessary
. materials, they take the said articles to their
respective places where they work and bring
back the bidis prepared by them to the employer. The employer then
examines the bidis'
accepts such of them as are found to have been
prepared according to the terms of the contract
rejects such of them as a.re found to be of poor
quality and not preparad according to the terms of
the contract and pays for the bidis actually accepted.
The respondent has not traversed these allegations
made by the potitioners. It admitted that the
workers are
paid on piece-fate basis and the
payment is made "on the basis of bidis selected
and accepted by the employer after rejecting
certain portions of bidis prepared by the workers". In fa.ct the respondent has expressly stated
that "there is a recognised practice of making payment on the basis of bidis accepted by employers
as coming up to a certain standard of skill". It
is further admitted that the employers have insisted on their right in principle of rejecting
the sub-normal or sub-standard bidis prepared by
the employees. Thua, there is no doubt that
under the terms of the contract the workers
are · entitled to receive payment only for the
bidis accepted by the employers, and not for those
1961
Bidi, Bidi Leaves and
Tobaceo li1erch'ltJ.ts
Associatior.
v.
The State of Bo"•l>a;
Gajendra1adkar J,
392 SUPREME COURT REPORTl:i [19ti:l] SUPP.
-
1961
which are rejected. It is also not disputed that the
Bidi, Bidi L,..,, and bidis which are rejected by the employers otherwise
Toba= M,,dlants' kn
hh
"
· d b
h
J
Assoru.1;..
own as "c ata are retame
y t e emp oyer
T
S
•·
though he refuses to take them into account in the
ht ,.,, of Bomba,1
f
h
k
h
d
__
matter o payment to t e wor ers on t e groun
C..;.nJrqaikar J. that they do not come up to the stan'dard of
skill or quality prescribed by the contract.
It also appears t6 be true that the employees
in this region have been protesting against improper rejection of the bidis by the employers. They
have contended that the employers reject an un_reasonably high proportion of bidis falsely dubbing them as of sub-normal quality without
paying anything to the workers for their labour
spent in rolling such rejected bidis. In it.! affidavit the respondent has emphasised that as a result
of this method of discarding bidis on the ground
that they are of sub-standard quality bidis workers were deprived of the labour charges for bid.is
which are rejecttld by their employers; and so it
was urged that the question of · fixing minimum
rates of wages
for bidi workers
necessarily
involved
the question as to the quantum or
percentage
of such
rejection
which should
be
permissible
to the
employer.
According
to the respondent ~he impugned notification has
purported to fix the minimum rates of wages after
taking llito consideration the problem presented
by the praotioe of discarding bidis and paying
wages to the workers only for such bidis ae are accepted. In BUpport of the validity of the notification
the re~pondent aleo relied on the fact that 'the formula prescribed by the notification had been evolved
after taking into aooount the respresentstions made
both by the employers and the employees. In faot,
according to the respondent, the said formula
represented a substantial degree of agreement between the parties on this point.
It would thus be aeen that on ihe two material
faote there is really no serious dispute between the
,..
I
(I) S.C.R.
8U.PltEME COURT REPORTS
303
parties. The respondent agrees th~t under the practice
which mnst be taken to be consistent wi~h the implied
terms of contract between the bidi manufactufer and
his employee, after the bidis are prepared by the
employees and brought back to the employer the
employer has a right to examine the quality of the
bidis, a.ccept only such as have come up to the
standard prescribed by the contract and reject the
rest. The practice further justifies the payment
of wages to the employees only for the bidis actually accepted and not for those which are rejected
though the rejected bi'1is may be retained by the
employer. On the other hand, it is not, and cannot be, serioru;ly disputed by the petitioners that
in some cases this practice may work great hardship on the workers, and in every case the workers
do not get wages for the labour put by them in
rolling the rejected bidis. The main question which
arises for our decision in the present appeals is
whether the injru;tice resulting from the practice
of discarding bidis and not making any payment
for them to the workers can be checked, controlled
and regulated by the respondent by issuing a notification under the powers conferred on it by s.5 of
the Act. If the relevant provisions of the Act confer
upon the respondent the power to check the evil
against which the workers complain then of course
the validity of the impugned clauses would be
beyond challenge. If, on the other hand, the power
to prescribe or revise minimum rates of wages does
not either expressly or by neoellsary implication
include the power to provide for the machinery to
check the evil in question, then the impugned
clauses would be ultra vire8 however necessary it
may be to check and control the said evil in
question.
In 'this connection let us broadly examine
the scope and effect of the impugned clauses.
Clauses I and 2 prescribe the revised minimum rates
distriotwise and provide for the payment of higher
1961
Bidi, Bidi Lttw~s and
Tobacco Merchants'
Association
v.
The State of Bombay
Gqje.ndragadkar J.
Bidi. Didi l~at·tJ and
'/Qta<co .\ltrcliarits"
AsJCKi 1tton
v.
1 h~ S1a1e of Bomb•.]
:194 SUPREME Cl>lJHT RErOHTS [1962] SUP1'.
price for tho bidis known as Hatnakhun hidis in 1.111
the said districts.
These two dauses arc obviously
valid and the petitioners have not disputed the
conclusion of the High Court in that behalf. Clauses 3 to 6 deal with the problem of the Chhat hidis
or bidis which are rejected because they aro bad.
Clause 3 leaves it to the discretion of the employer
to decide which arc chhat bidis up to 5 percent of
the bidis prepared by the "mployees. This cluasc
provides that the bidis so rejected would be destroyed and tobacco recovered from them retained by
the employer ; and it adds that if the employer
wants to retain the rejected bidis he shall pay full
wages' for tho same to the employee. In other
words this, clause means that the employer may
discard bidis up to 5 per cent but if he doCI! not
want. to pay the workers for the said bidis he must
destroy them. That would show that the discretion
exerci.i!ed by him
i~ honest and fair.
If, on the
other hand, he wants to retain the said bidis that
would mean that ho thinks that the bidis would
find a market and in that case he must pay for
them on the basis that they are good bidis.
On
priciplc this provision may perhaps not be open
to any serious criticism and it is not unlikely that
if the notification had not made further det~iled
provisions by ols. 4 to 6 the present dieputo would
not have been brought before the High Court. The
employers probably do not have a serious grievance
against cl. 3 on the merits.
Clause 4 deals with cases where the rejection
may be more than 5 per cont but less than IO per
cent of total work produced by the worker. In
regard to this cl1.11111
o~ cases cl. 4 ~rovides for . a
machinery to deal with cases fallmg under it.
Representatives of the employers and employl.'68
have to be appointed and they havti to decide
whether the work has been properly done or not.
The decision would bo according t.o the opinion of
the majority. If the opinion is equally divided
..
(I) S.C.It.
8Ul'REME COURT REPO'ItTS
395
and tho employer wants to retain the chhat bidi8,
between 5 per cent to 10 per cent he shall pay at
half the rates fixed in cl. 1. If the employer does
not want to retain them the employees shall destroy
them, The clause does not seem to provide for a
case where the majority opinion may support the
rejection between 5 per cent and 10 percent ; that
is a lacuna in the clause. The only comment which
can be legitimately made against the clause on it.s
merits is th~t the setting up of the machinery for
a kind of adjudication of the dispute between the
employer and the employee may, instrncl of solving
the difficulties in actual working, add to them:
. That takes us to cl. 6. This clause has been
very severely criticised by the petitioners. It pro·
vides that in case of chhat above 10 per cent the
employees shall be entitled to full wages which
means that even if chhat above 10 per cent i1 made
reasonably and for a proper cause the employer
has to pay for the discarded work as therein prescribed ; the only right given to the employer in
such a case is to take suitable action against the
employee if the chhat is more than 10 per cent and
that too for six continuous working days in a
calendar month. Prima facie this clause appears
to be unreasonable and unjust.
The explanation to cl. 7 is also. criticised by
the petitioners because the thekedar, contractor or
agent, who is appointed by the employer would,
if the explanation is valid, be liable to perform all
the obligations imposed on the employer by the
relevant provisions of the Act such as ss.12 and 18.
We have examined the broad features of the notifi·
cation and indirated .the comment made on it by
the petitioners for the purpose of showing that on
the merits some of the clauses do not appear to be
fair and just, but that is not the ground on which
their validity can be or has been challenged before
us. The main argument in support of the challenge
1V61
Bidi, Bit!i Leaves anr:I
Tobacco M ercha11ts'
Association
v.
7 he S tote of Bomba;
Gajendragadkar J.
1961
1idi, Bidi l4tlr~s ontf
Tobac,o Altr,ltants•
A ss0<iation
..
rn, Stai, of BomHy
Gej,1,d1cg1u/A1.r J,
:~!lfi SUPHEME COURT REPORTS [1962] SUPP.
rests on the as~umption that els. 3 to 7 arc all be·
yond the powers conferred on the respondent by
the relevant provisions of the Act ; and it is this
argument which needs to be examined .
It is well settled that industrial adjudication
uder the provisions of the Industrial Disputes Act.,
1947(14 of 1947) is given wide powers and jurisdic.
tion to make appropriate awards in determining industrial disputes brought before it. An a'lfard made
in an industrial adjudication may impose new obligations on the employer in the interest of social
justico and with a view to secure peace and ha1mony
between the employer and his workmen and full
co-operation botween them. Such an award may
oven alter the terms of employment if it is thought
fit and nece888ry to do so. In deciding industrial
disputes tho jurisdiction of the tribunal is not con·
fiued to the administration of justice in accordance
with the Jaw of contract. Mukherjee, J ., as he
then was, has observed in The Bharat Bank Ltd.,
lJellii v. Employees of the Bharat Bank Ltd., Del/ti (1)
the tribunal "can confer rights and privileges on
either party which it considers reasonable and
proper, though they may not be within the terms of
any existing agreement. It has not merely to
interpret or give effect to the contractual rights and
obligations between them which it consid!'Ts essential
for keeping industrial peace." Since the decision of
the Federal Court in Western India Atltomobile
Association v. industrial Tribunal, Bombay('), it
h<U! been repeatedly held that the jurisdiction of
industrial tribune.ls is much wider and can be
reasonably exe1·cised in deciding industrial disputes
with the object of keeping industrial peace and
progress (Vide: Rohtas lndustriu, Ltd., v. Brijnandan
Pandey ('); The Patna Electr·ic Supply Co.
Ltd.,
Patna v. 'J'he
l'atna
Electric
Supply Workers'
Union('). Indeed, during the last ten years and more
(II [1950 S.C.R.4S~.Sl3, (21
A.l.R. [19•9]F.C. lli,[1949]F.C.32r.
(3) [l956J S.CR. 8\JU,
(fl [J9S9JSupp.2S.C.R. 761.
(1) S.C.R.
SUPREME COURT REPORTS
~7
industrial adjutlication in this conntrv has made
so much progress in determinin~ industrial d sputes
&rising between industries of different kinds and
their employees that the jurisliction ani auth >rity
of industrial tribunals to dna\ with .such disputes
with the object of ensuring social justice is no
longer seriously disputed.
But, it is necessary to remember that no
claim can be made for such broad jurisdictional
power by the respondent when it purports to issue
a notification under the provisions of the Act.
These powers and authority would necessarily be
conditioned by the relevant provisions under which
it purports to act, and the validity of the impugned
notification must therefore be judged not by general
considerations of social justice or even considerations for
introducing
industrial peace; they
must be
judged solely and exclusively by the
test prescribed by the provisions of the statute
itself. It appears that in 1956 before Vidarbha
became a part of the State or Bombay the State
Government of Madhya Pradesh had made a com·
prehensive reference· for the arbitration by the
State Industrial Court between the bidi manu·
facturers of Bhandara District and their employees.
In this dispute all the material issues arising from
the prevailing practice which authorised employers
to reject ohhat bidis had been expressly referred for
adjudication. Subsequently, when the impugned
notification wa~ issued the respondent apparently
took the view that wh11t could have been achieved
by reference to the arbitration of State Industrial
Co11rt may well be accomplished by issuing a notification under s. 5 of the Act. It may be that there
is substance
in the grievanco made by the
employees that ~he practice of rejecting chhat
bidis often leads to tho injuatice and deprives them
of the wages legitimately earned by them by rolling
the said bidis and there can be no doubt that if a
comprehensive reference is made for the decision of
1961
Bidi, Bidi L1twes altd
Tobacco Merchm11t
A.Sso~ialio.i
v-.--·
The State of Bomhrg
Gqjendrogadk•r J.
398 SUPREME OOURT REPORTS [1962] SUPP.
'
1901
this industrial dispute between the bidi ma.nufao.
Jidi, Bidi 1...,,,, .,,d turers and their employees an award ma.y well be
Tobauo Mrrch••t•'
passed which will resolve this dispute; hut the
AHociatUm
v.
question which falls for our decision is whether the
'r.. S1at<0f Bombay relevant proviaions of the Act authorised the Stnto
ojcndrag•dkar J.
Government io make rules for the decision of the
dispute in that behalf and for the p<~yment of mini·
mum rates of wagcR on the basis of such decision?
In our opinion, the answer to this question haR to
be in the negative.
Wba.t is the extent of the authority conferred
on the respondent in fixing or revising minimum
rates of the wages under the relevant provisions of
the Act? In dealing with this question we must
ncceSBarily bear in mind the definition of the term
"wages" proscribed by s. 2(h). As wo have already
Aeen the term "wages" includes remuneration which
would, if the terms of tho contract of employment,
express or implied, were fulfilled, be payable to a.
person employed in respect of his employment.. In
other words, the terms "wages'' r~fcrs to rcmunerat.ion payable to tho employee as a result of the
t-0rms of employment. What would be the amount
tu which tho employee is entitled if tho other
terms of the contra.ct
are
preferred ?
That
the question which has to be asked in detennin.
i11g
what
the
torm "wages"
means
under
H. 2(h). No doubt ~s. 3, 4 and 5 authorised the
appropriate Government to fix the minimum rates
of wages. In other words, if the wa.geR fixed by n.
contra.et which is either express or implied are found
to be low authority is conferred on the appropriate
Government to increase them so as to bring them
to the level of what the said Government ra.gards
as the minimum wages in the particular scheduled
employment in the particular area concerned. Thia
means that power is conferred on the appropriate
Government to modify one term of the contract
exprese or implied between the employer and the
(1) S.C.R.
SUPREME COURT REPORTS
399
employee and that is a term which has reference to
the payment of wages. If for a certain piece of
work done by the employee the employer has agreed
to pay him either expressly or by implicati 111 a
certain amount of wages the appropriate Government can issue a notification and prescribe that
for the said work done under the contract the
employer must pa,y his employee a much higher
rate of wages and the higher rate of wages thus
prescribed would be deemed to be the minimum
rate of wages between the parties.
It would, however, be noticed that in defining
"wages" cl. 2 {h) postulates that they would be
payable if the other terms of the contract of employment are fulfilled. That is to say, in authorising
the fixation of minimum rates of wages the other
terms of the contract of employment have always
to be fulfilled.
The fulfilment of the other terms
of the contract is a condition precedent for the
payment of wages as defined under s. 2 (h} and it
continues to be such a condition precedent even for
the payment of the minimum rates of wages fixed
and prescribed by the appropriate Government.
The significance of the definition contained in s. 2(h)
lies in the fact that the rate of wages may be
increased but no change can be made in the other
terms of the contract. In other words, the Act,
operated on the wages and docs not operntc on the
other terms of the contract between the employer
and the employee. That is the biisic approach which
must be adopted in determining the scope iind effect
of the powers conferred on the appropriate Government by the relevant provisions of the statute ii~tho
rising it to prescribe minimum rates of wages or to
revise them. What thA appropriiite Government is
authorised to do is to prescribe, fix or revise wages
and wages are defined to be remuneration piiyablc
to the employees if the terms of the contract of
employment, express or implied, wore fu !filled.
Bidi, Bidi Lta11er find,,.
Tobacco Merchant)'
Assar:iatiOn
v.
·rhe State of Bomhav
Gajendragadk111 J.
1961
Bidi, Bidi Ltaus onJ
Tobacco M,,tlumts'
AlJoeiation
v.
1 N S1at1 of Bo~v
najtnclro_fadktu J.
400 SUPREME OOURT REPORTS [1962) SUPP.
•
Thie definition nms, as it inevitably must, through
the material provisions of the Act a.n•l its import·
ance cannot ther<'fore be ignored.
Bf'aring this fa.ct in mind let us examine the
inpugned clauses of the notification. Clauses I and
2 dearly fall within the pun i<>w of the' power
conferred on the respondent because' they do no
more than prescribe the minimum rakR of wages
as therein specified; but. els. 3 to 7 clearly and
unambiguously purport to deal with tlie terms of
the contract between the partieR othrr than that
relating to I he remuneration. TheRe clausP.s are
obviously intended to deal with the dispute between
the employers and their employees as to how hidis
should be disr.ardcd and in what proportion and
what should lie the procecluro to be follow')cl in
regarrl to thP payment for such discarded bidis. In
appreciating the true effect of these clauses it is
nec<>ssary to recall that tbe parties a.re agrl'ed about
the practice a.t present prevailing which muat be
taken to represent the terms of the contract either
express or implied.