Case Analysis of Chandra Bhawan Boarding and Lodging v/s State of Mysore

Facts

The case concerns the legitimacy of a notification issued by the State Government of Mysore pursuant to the Minimum Wages Act of 1948. The notification sought to implement minimum pay standards for workers in residential hotels and dining establishments inside the state.

• The state government possesses the jurisdiction to establish minimum salaries following the collection of pertinent data and consultation with advisory groups. The wage fixation process takes into account factors such as the cost of living, nature of labour, and prevailing economic conditions.
• The appellants and petitioners contested the notification on the basis of purported contravention of Article 14[1] of the Constitution and encroachment upon the commerce freedom granted by Article 19(1)(g)[2]. They contended that the government’s inability to establish a committee rendered the determination of minimum wages arbitrary and devoid of compliance with the principles of natural justice.
• The lawsuit also contained disputes concerning the valuation of food provided to employees and the government’s jurisdiction to establish varying minimum wages for different industries or regions.

‘The petitioner, Chandra Bhavan Boarding and Lodging, claimed that setting minimum wages imposed an unreasonable financial hardship on enterprises, violating their right under Article 19(1)(g). The State of Mysore (now Karnataka) defended the Act, claiming that minimum wage rules were necessary to protect workers from exploitation and ensure a reasonable quality of living. The Supreme Court assessed whether the Act’s provisions were fair and consistent with social justice objectives.’

Issues Involved And Rules Applicable

Issues

1. Whether Section 5(1) of the Minimum Wages Act, 1948[3], under the impugned Notification violates Article 14 of the Constitution by making way for unequal or arbitrary treatment.
2. Whether the Act trespasses Article 19(1)(g) by putting unjustified limitation upon the employer’s right to continue trade or business.
3. Whether the doctrine of natural justice can be applied to the process of wage fixation under the Act, and whether in its absence, the process becomes invalid.
4. Whether fixing minimum wages through a committee under Section 5(1)(a) is obligatory, or whether other means are permissible.
5. Whether the differentiation in the fixation of different minimum wages for different industries is constitutionally valid under the scheme of the Act.
6. Whether it is legally permissible and in line with the aims of the Act to divide a state into areas with different wage levels.
7. Whether the notification by the government to determine minimum wages for workers in residential hotels and eating houses is constitutionally valid and reasonable.

Rules

The right to conduct business is subject to reasonable limitations for the sake of social justice and worker welfare, and the Minimum Wages Act of 1948 constitutes a valid application of this principle. The applicability of a certain principle of natural justice in a situation is contingent upon the facts and circumstances of that case.

Analysis

Section 5(1) of the Minimum Wages Act, 1948 was challenged as unconstitutional under Article 14…

• They contended that the provision grants the relevant government absolute discretion …
• The petitioners assert that the two procedures differ significantly…
• They contended that the Minimum Wages Act contravened their right …
• The petitioners referred to Suraj Mall Mohta v. Visvanatha Sastri (1954)[5]…
• They added that Section 5(1)’s discretion … facilitated arbitrary rule.
• The other major contention was that the government had acted against natural justice…
• The petitioners also challenged the government’s industry- and occupation-specific minimum wages…
• They relied on Edward Mills Co. Ltd. v. State of Ajmer (1955)[6]…
• The petitioners further alleged that the government was attempting to establish “fair wages” instead of “minimum wages” …
• They had also objected to the government’s valuation of employees’ food…
• Finally, the petitioners warned that the government’s approach will ruin the hotel industry…

Yet, the respondents maintained that Section 5(1) does not bestow arbitrary power but allows procedural flexibility…

• They also asserted that the Minimum Wages Act was enacted to safeguard unorganised labour …
• The respondents asserted that the government had sufficient material to act under clause (b)…
• They asserted that all concerned parties were invited …
• They believed such discrimination was legal and reasonable…

Conclusion

The Supreme Court determined that the Minimum Wages Act, 1948, does not infringe upon the basic rights…

The Supreme Court confirmed the constitutional validity of the notification under the Minimum Wages Act …

The Court employed Bijay Cotton Mills and Edward Mills[11] …

‘The ruling emphasised that basic rights are susceptible to reasonable constraints for the public good … This decision remains a watershed moment in labour law, confirming government action to protect fair employment standards and workers’ rights.’

References

1. India Const. art. 14.
2. India Const. art. 19(1)(g).
3. Minimum Wages Act, 1948, § 5(1), No. 11, Acts of Parliament, 1949 (India).
4. Srivastava, Suresh C. … (1981)…
5. Suraj Mall Mohta v. Visvanatha Sastri, 1954 AIR 545
6. Edward Mills Co. Ltd. v. State of Ajmer, 1955 AIR 25
7. Minimum Wages (Central) Rules, 1950, § 21, 1950 (India).
8. Neha Tripathi, Soumya Rajsingh … 2020
9. India Const. art. 43.
10. Bhaikusa Yamasa v. Sangamner Bidi Kamgar Union, AIR 1960 BOMBAY 299
11. The Edward Mills Co. Ltd., Beawar vs The State of Ajmer and Another, 1955 AIR 25
12. U. Unichoyi and others vs The State of Kerala, 1962 AIR 12
13. A. K. Kraipak & Ors. Etc vs Union Of India & Ors, AIR 1970 SC 150