Coronavirus lockdown | Don’t take coercive action against firms on full wages, SC tells govt

Separate petitions have also been filed by entities from the micro, small and medium sector against the government’s order to pay full wages to their workers.

Updated - May 15, 2020 06:37 pm IST

Published - May 15, 2020 06:36 pm IST - NEW DELHI

A view of the Supreme Court of India.

A view of the Supreme Court of India.

The Supreme Court on Friday asked the government not to resort to any coercive action against private companies who have not paid their workers full wages during the lockdown in accordance with a government order in March.

Also read: Coronavirus lockdown | Industries cannot be forced to pay wages during lockdown: panel

A three-judge Bench led by Justice L. Nageswara Rao indicated that payment of full wages, as directed by the Ministry of Home Affairs (MHA) in an order on March 29, may not be viable for small and private enterprises, which themselves are tottering on the brink of insolvency due to the lockdown. Some small units may not have been able to survive a fortnight into the lockdown. The court remarked that the March 29 order was an omnibus one and there were several issues involved that required careful reconsideration from the government side.

Solicitor General Tushar Mehta sought time to file a detailed response. The court scheduled a hearing for next week.

The court hearing was based on a batch of petitions filed by several companies challenging the constitutional validity of the March 29 order, which mandates that industry, shops and commercial establishments, without exception, should pay their workers without any deductions in the name of COVID-19 pandemic.

Also read: Coronavirus lockdown | Explain Home Ministry order on full wages, Supreme Court tells government

The petitions said a blanket direction from the government to private establishments to pay full salaries against no work was arbitrary and violative of Article 14 (right to equality) of the Constitution.

“It is implicit in the fundamental right of an employer to trade or business that there is an obligation to pay when work is actually done and there is no obligation if no work is done. An employer and employee have reciprocal promises whereby the right of an employee to demand salary is reciprocal to performance of work by such employee. The employer has a right to not pay if no work is done,” petitions filed by private firms like Nagreeka Exports Limited and Ficus Pax Private Ltd said.

Nagreeka said it was engaged in manufacture and export of cotton yarns, fabric and textiles. It said stoppage of operations since the lockdown had led to losses to the tune of ₹1.50 crore.

Also read: Coronavirus | Companies cannot force leave without pay, say experts

Separate petitions have also been filed by entities from the micro, small and medium sector against the government’s order to pay full wages to their workers.

MSME industries have said that they are compelled to slide into insolvency by the government, which has ordered them to continue to 100% pay to their workers.

These petitions have even asked the court to order the government to support them by taking responsibility for 70% of their staffers’ pay by drawing funds from PM CARES Fund or the Employees State Insurance Corporation.

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