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SC relief for firms unable to pay full wages during lockdown

Bid for survival:The petitions said the direction to pay full salaries against no work was violative of Article 14.AFPSAM PANTHAKY

Bid for survival:The petitions said the direction to pay full salaries against no work was violative of Article 14.AFPSAM PANTHAKY  

‘Small, private entities in danger’

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

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 are tottering on the brink of insolvency due to 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.

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

The 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, pay their workers without any deductions in the name of COVID-19.

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 Pvt. Ltd. said.

Nagreeka, engaged in manufacture and export of cotton yarns, fabric and textiles, said stoppage of operations had led to losses to the tune of Rs. 1.50 crore.

Separate petitions have also been filed by MSMEs, saying that they are forced into insolvency.

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