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Two days ago, on this blog, we discussed the pending challenge before the Supreme Court to the government’s directions requiring employers to pay wages to their workers during the nationwide lockdown imposed under the Disaster Management Act. At the time, the matter had been reserved for orders; today, the Supreme Court passed an order that can only be described as bizarre: it refused to rule on the legal issues before it, postponed arguments to the end of July (seven weeks from now), directed employers and employees to “negotiate” between themselves, but in the meantime extended its interim orders preventing any coercive action against employers for not complying with the direction to pay wages. In effect, therefore, the Court made the wages direction unenforceable without holding it to be illegal or unconstitutional, at least for the foreseeable future.

What reasons did the Court provide for this failure to decide? It said that the issues raised had to be decided “together”, and could not be given “piecemeal consideration.” (paragraph 29) With respect, this is bogus. A perusal of the orders in the case reveals that the lead petition – Ficus Pax Private Lts. v Union of India was taken up for hearing on 27th April 2020, which – at the time of writing – was forty-seven days ago. On that day, the Court granted the Solicitor-General two weeks time to reply. The matter was then taken up on 15th May 2020, when notice was issued, made returnable in a week. It was taken up for a third time on 26th May 2020, where the Court noted that the Union’s counter had not been filed, and granted it another week, specifically in order for the Union to clarify its stand. A fourth hearing took place on 4th June 2020, where the Court observed that the counter affidavit had been filed, and that the hearing was complete.

How then can the Court turn around on the 12th of June 2020, and say that because the issues cannot be considered “piecemeal”, the Union would be given time to file a more detailed counter-affidavit, with the hearing set for the end of July? Were four hearings not enough for the Court to achieve clarity on the exact scope of the case, for parties to file written submissions, and for arguments to take place – especially given how time-sensitive this litigation is (involving payment of wages to people living – literally – from paycheck to paycheck)? This becomes all the more inexcusable when we remember that if you pare it down to the essentials, all this case involves is a pure question of law: was the direction for the payment of wages, passed under the DMA, legal? This is a legal question that has one of two possible legal answers: “yes” or “no”.

The Court’s order, however – as I noted in the first paragraph – did not merely delay the hearing. It delayed the hearing in a way that effectively skewed the case in favour of the employer. This is because, from April itself, the Court had passed orders directing that no coercive action be taken against employers who were violating the wages direction. In the 12th June order, the Court directed that this interim order remain in place; thus, it immunised the employers for (at least) a further seven weeks from requiring to comply with a direction that still remains presumptively legal and valid. Consider, also, what the direction was: the payment of wages for a total of fifty-four days (until the government withdrew it); the class of people most affected by it are precisely those for whom non-payment of wages is – quite literally – an existential issue; we have already seen, in this context, the large-scale migration (and the suffering that that has unleashed), predominantly caused by the closure of industry and the absence of livelihood options for workers who already exist in an extremely precarious economic situation. So it is unclear what purpose is served by the Court deciding at the end of July the issue of wages that were payable in the month of April, to those particularly dependent upon monthly payment.

This, therefore, is a classic case of judicial evasion: the Court refrained from answering the legal question before it, but its refusal to answer created a status quo where one party benefited at the expense of the other (a decision by refusing to decide). Up until now, this technique was clearly seen in civil rights cases involving individuals against the State; unfortunately, it now seems to have bled into labour law cases pitting employers against employees.

In order to justify its refusal to decide, the Court framed its task as one of balancing the claims of the employers and employees, in a context in which each needed the other. With respect, this is – again – bogus; because that balance was already struck by the government in the wages direction, where it ordered the payment of wages for a temporary and time-bound period (which was not even the full length of the lockdown). Now, in litigation, the limited remit of the Court was to find that the balance had been correctly struck – and uphold it – or to find that it was irrational or arbitrary, and strike it down.* But it was most emphatically not the Court’s task to suspend the operation of the direction – and then compound this by directing the employers and employees to negotiate with each other for the next seven weeks, until the matter could be heard again.

This last part of the order – i.e., requiring employer-employee negotiation – is perhaps the most astounding part of the entire story, because here the Court entirely reversed the balance that the government had chosen to strike in the wages direction. The very fact that the government issued the wages direction in the first place was because, in its view, an open negotiation between employers and employees – “collective laissez faire“, in the words of Kahn-Freund – would not have protected the interests of the latter; the reasons are obvious, and they rest in the vast differences in power between the two parties. When, therefore, the Court stayed coercive action and directed negotiation, it was not achieving any kind of “balance”: rather, it was overturning the government and holding in favour of the employers, without even the courtesy of a reasoned judgment or a finding of illegality.

What explains this? It is my submission that – as pointed out in the previous post – the wages direction was so inextricably bound up with the rest of the lockdown regulations, that it would have been very difficult for the Court to strike it down without the lockdown itself (legally) unraveling; furthermore, the inequity of a situation in which numerous rights violations by the government over the last two months had been nodded and winked at, while the only effective legal measure in support of vulnerable sections had been struck down, would have been too stark to stomach. Thus, we have a via media where, in the finest traditions of judicial evasion, the stronger party wins, but it wins through an indirect maintenance of the status quo rather than a direct judgment that would require the Court to actively hold in favour of the stronger party.

This is, for obvious reasons, unfortunate.


* On this point, it is important to note that even in contexts not involving big industries, the law often imposed a basic notice-and-one-month-wages obligation on employers; for example, Section 39 of the Karnataka Shops and Establishments Act requires that prohibits dismissal of any employee without one month’s notice or payment in lieu of wages; so it is difficult to see how the wages direction went particularly beyond even the existing legal framework in requiring payment of wages for fifty-four days, far from radically altering the balance of power between employer and employee.