1. Invoking its powers under Section 5 of the Factories Act, 1948, the State of Gujarat has exempted factories from observing some of the obligations which employers have to fulfil towards the workmen employed by them. The government justifies the action on the ground that industrial employers are faced with financial stringency in the economic downturn resulting from the outbreak of COVID -19. A trade union with a state-wide presence and another with a national presence are before this court in a petition under Article 32 of the Constitution to challenge the validity of the state’s notifications dated 17 April 2020 and 20 July 2020.

A. The Notifications

2. A nationwide lockdown was declared by the Central Government from 24 March 2020 to prevent the spread of the COVID-19 pandemic. Economic activity came to a grinding halt. The lockdown was extended on several occasions, among them for the second time on 14 April 2020. On 17 April 2020, the Labour and Employment Department of the State of Gujarat issued a notification under Section 5 of the Factories Act to exempt all factories registered under the Act “from various provisions relating to weekly hours, daily hours, intervals for rest etc. for adult workers” under Sections 51, 54, 55 and 56. The stated aim of the notification was to provide “certain relaxations for industrial and commercial activities” from 20 April 2020 till 19 July 2020. The notification in its relevant part is extracted below:
“…NOW, THEREFORE, in exercise of the powers conferred by Section 5 of the Factories Act, 1948 (LXIII of 1948), the 1 “Factories Act” PART B 3 Government of Gujarat hereby directs that all the factories registered under the Factories Act, 1948 shall be exempted from various provisions relating to weekly hours, daily hours, intervals for rest etc. of adult workers under section 51, section 54, section 55 and section 56 with the following conditions from 20th April till 19th July 2020,-
(1) No adult worker shall be allowed or required to work in a factory for more than twelve hours in any day and Seventy Two hours in any week.
(2) The Periods of work of adult workers in a factory each day shall be so fixed that no period shall exceed six hours and that no worker shall work for more than six hours before he has had an interval of rest of at least half an hour.
(3) No Female workers shall be allowed or required to work in a factory between 7:00 PM to 6:00 AM.
(4) Wages shall be in a proportion of the existing wages (e.g. If wages for eight hours are 80 Rupees, then proportionate wages for twelve hours will be 120 Rupees).”

On its lapse by the efflux of time, the State government issued another notification on 20 July 20202. Similar in content, the new notification extended the exemption granted to factories from 20 July 2020 till 19 October 2020.

C. The power under Section 5 of the Factories Act, 1962

6. The issue for analysis is whether the notifications fall within the ambit of the power conferred by Section 5 of the Factories Act. The validity of the notifications depends on whether the COVID-19 pandemic and the nationwide lockdown qualify as a ‘public emergency’ as defined in Section 5. The statute provides both the language and the dictionary to interpret it.

7. Section 5 of the Factories Act provides that in a public emergency, the State Government can exempt any factory or class or description of factories from all or any of the provisions of the Act, except Section 67. Section 5 is extracted below:

“5. Power to exempt during public emergency.—In any case of public emergency the State Government may, by notification in the Official Gazette, exempt any factory or class or description of factories from all or any of the provisions of this Act except section 67 for such period and subject to such conditions as it may think fit: Provided that no such notification shall be made for a period exceeding three months at a time. Explanation.—For the purposes of this section “public emergency” means a grave emergency whereby the security of India or of any part of the territory thereof is threatened, whether by war or external aggression or internal disturbance.” (emphasis supplied)

9. The principle of proportionality has been recognized in a slew of cases by this Court, most notably in the seven-judge bench decision in K S Puttaswamy vs. Union of India, 3 (2017) 10 SCC 1, para 325. The principle of proportionality envisages an analysis of the following conditions in order to determine the validity of state action that could impinge on fundamental rights:

(i) A law interfering with fundamental rights must be in pursuance of a legitimate state aim;

(ii) The justification for rights-infringing measures that interfere with or limit the exercise of fundamental rights and liberties must be based on the existence of a rational connection between those measures, the situation in fact and the object sought to be achieved;

(iii) The measures must be necessary to achieve the object and must not infringe rights to an extent greater than is necessary to fulfil the aim;

(iv) Restrictions must not only serve legitimate purposes; they must also be necessary to protect them; and

(v) The State should provide sufficient safeguards against the abuse of such interference. However before adverting to an analysis on the proportionality of the Respondent’s action in issuing the notifications, it would be important to determine, at the threshold, whether the notifications have been validly issued, in conformity with the scope of power envisaged under Section 5 of the Factories Act.

D Precedent on ‘public emergency’ and ‘security of the state’

10. The originating causes of a ‘public emergency’ in Section 5 of the Factories Act are similar to those which Article 352 of the Constitution embodied, prior to its amendment by the Constitution (Forty-fourth Amendment) Act, 1978. Articles 352 to 360 of the Constitution contain emergency provisions. Article 352 of the Constitution, prior to its amendment, read as follows:

“352. Proclamation of Emergency: (1) If the President is satisfied that a grave emergency exists whereby the security of India or of any part of the territory thereof is threatened, whether by war or external aggression or internal disturbance, he may, by Proclamation, make a declaration to that effect.” (emphasis supplied)

19. The power under Section 5 of the Factories Act can be exercised in a “public emergency”. The explanation states that to constitute a public emergency, there must be a grave emergency. The emergency must be of such a nature as to threaten the security of India or a part of its territory. The threat to the security of India or a part of the territory must be caused by war, external aggression or an internal disturbance. The expression ‘internal disturbance’ cannot be divorced from its context, or be read in a manner divorced from the other two expressions which precede it. They are indicative of the gravity of the cause which threatens the security of India or a part of its territory. An internal disturbance must be of a similar gravity. Further, it is necessary to evaluate whether a situation of internal disturbance threatens the security of India, or a part of its territory to qualify as a ‘public emergency’. In the absence of any one or more of the constituent elements, the conditions requisite for the exercise of statutory power will not exist.

20. What is meant by the phrase “security of India”? In Romesh Thapar vs. State of Madras, (1950) 1 SCR 594, a Bench, comprising six judges of this Court observed that the concept of ‘security of State’ is narrower than that of ‘public order’……

E. Interpreting ‘public emergency’ in Section 5 of the Factories Act, 1962

22. Section 5 of the Factories Act provides for the power of exemption from certain provisions of the Act due to the occurrence of a public emergency. The explanation speaks of a grave emergency where the security of India is threatened by war, external aggression or internal disturbance. The power conferred by the provision by its very nature, must be used only where there is a grave emergency implicating an actual threat to the security of the state. The purpose of exercising emergency powers is to avert the threat posed by war, external aggression or internal disturbance and such powers must not be used for any other purpose.

23. The question before the Court in this petition is whether the COVID-19 pandemic and the ensuing lockdown imposed by the Central Government to contain the spread of the pandemic, have created a public emergency as defined by the explanation to Section 5 of the Factories Act.

28. Even if we were to accept the Respondent’s argument at its highest, that the pandemic has resulted in an internal disturbance, we find that the economic slowdown created by the COVID-19 pandemic does not qualify as an internal disturbance threatening the security of the state. The pandemic has put a severe burden on existing, particularly public health, infrastructure and has led to a sharp decline in economic activities. The Union Government has taken recourse to the provisions of the Disaster Management Act, 2005. However, it has not affected the security of India, or of a part of its territory in a manner that disturbs the peace and integrity of the country. The economic hardships caused by COVID–19 certainly pose unprecedented challenges to governance. However, such challenges are to be resolved by the State Governments within the domain of their functioning under the law, in coordination with the Central Government. Unless the threshold of an economic hardship is so extreme that it leads to disruption of public order and threatens the security of India or of a part of its territory, recourse cannot be taken to such emergency powers which are to be used sparingly under the law. Recourse can be taken to them only when the conditions requisite for a valid exercise of statutory power exist under Section 5. That is absent in the present case.

33. The notifications make significant departures from the mandate of the Factories Act. They (i) increase the daily limit of working hours from 9 hours to 12 hours; (ii) increase the weekly work limit from 48 hours to 72 hours, which translates into 12 hour work-days on 6 days of the week; (iii) negate the spread over of time at work including rest hours, which is typically fixed at 10.5 hours; (iv) enable an interval of rest every 6 hours, as opposed to 5 hours; and (iv) mandate the payment of overtime wages at a rate proportionate to the ordinary rate of wages, instead of overtime wages at the rate of double the ordinary rate of wages as provided under Section 59.

34. While enacting the Factories Act, Parliament was cognizant of the occasional surge of the demand for, or requirement of, the manufacture of certain goods which would demand accelerated production. The law – makers were aware of the exigencies of the war effort of the colonial regime in World War II, with its attendant shortages, bottlenecks and, in India, famine as well. Section 64(2) of the Factories Act envisages exemption from certain provisions relating to working hours in Chapter VI, for instances such as urgent repairs, supplying articles of prime necessity or technical work, which necessarily must be carried on continuously. Section 65(2) enables classes of factories to be exempt from similar provisions in order to enable them to cope with an exceptional pressure of work. However, these exemptions are circumscribed by Section 64(4) and 65(3) respectively, at limits that are significantly less onerous than those prescribed by the notifications in question. Despite these concessions, these provisions do not enable an exemption of Section 59 which prescribes mandatory payment of overtime wages to the workers at double the ordinary rate of their wages.

35. During the course of the hearings, the Respondent has submitted that the exemption under the impugned notifications must be understood in the context of the “extreme financial exigencies arising due to the spread of COVID-19 pandemic” and have been deployed as “a holistic approach to maintain the production, adequately compensate workers and take sufficient measures to safeguard the said factories and establishments in carrying out essential activities”.

36. We are unable to find force in the arguments of the learned counsel for the Respondent. The impugned notifications do not serve any purpose, apart from reducing the overhead costs of all factories in the State, without regard to the nature of their manufactured products. It would be fathomable, and within the realm of reasonable possibility during a pandemic, if the factories producing medical equipment such as life-saving drugs, personal protective equipment or sanitisers, would be exempted by way of Section 65(2), while justly compensating the workers for supplying their valuable labour in a time of urgent need. However, a blanket notification of exemption to all factories, irrespective of the manufactured product, while denying overtime to the workers, is indicative of the intention to capitalize on the pandemic to force an already worn-down class of society, into the chains of servitude.

38. The need for protecting labour welfare on one hand and combating a public health crisis occasioned by the pandemic on the other may require careful balances. But these balances must accord with the rule of law. A statutory provision which conditions the grant of an exemption on stipulated conditions must be scrupulously observed. It cannot be interpreted to provide a free reign for the State to eliminate provisions promoting dignity and equity in the workplace in the face of novel challenges to the state administration, unless they bear an immediate nexus to ensuring the security of the State against the gravest of threats.

H. Constitutional vision of social and economic democracy

42. The Constitution is a charter which solemnized the transfer of power. But the constitutional vision of swarajya transcends the devolution of political power. The Fundamental Rights and Directive Principles of State Policy present a coherent vision of a welfare state that envisages justice- social, economic and political. Granville Austin, in his seminal work on the Indian Constitution, has collectively described them as “the conscience of the Constitution which connects India’s future, present, and past by giving strength to the pursuit of social revolution in India”. The colonial experience, and the poverty it sanctified as an incident of state policy, were the driving force in the Constituent Assembly’s goal to achieve economic equality and independence. Although the Directive Principles were not intended to be capable of being independently enforced before the courts to invalidate a legislation, they inform state policies; act as a guidepost for legislation and provide sign posts for travelers engaged on the path of understanding the complexities which the Constitution unravels. Eminent legal scholar Upendra Baxi, while reviewing Granville Austin’s work on the Indian Constitution had analysed the dichotomy of justiciability and non-justiciability of Fundamental Rights and Directive Principles. He had noted- “In no other area of constitutional scholarship, the need to ascend from the planet of platitudes to an analytic paradise is more compelling than in the study of directive principles20…The fact that this distinction [in justiciability] is now a constitutional reality should not be allowed to obscure the more important fact that the directive principles and fundamental rights are both originally rooted in a vision of a new India. And though many writers on constitutional law have been led to draw a radical and sharp distinction between rights and principles, it is heartening that judicial decision-making has not failed to maintain the awareness of their basic unity”. The Factories Act is an integral element of the vision of state policy which seeks to uphold Articles 38, 39, 42, and 43 of the Constitution. It does so by attempting to neutralize the excesses in the skewed power dynamics between the managements of factories and their workmen by ensuring decent working conditions, dignity at work and a living wage. Ideas of ‘freedom’ and ‘liberty’ in the Fundamental Rights recognized by the Constitution are but hollow aspirations if the aspiration for a dignified life can be thwarted by the immensity of economic coercion.

I. Summation

45. This Court is cognizant that the Respondent aimed to ameliorate the financial exigencies that were caused due to the pandemic and the subsequent lockdown. However, financial losses cannot be offset on the weary shoulders of the laboring worker, who provides the backbone of the economy. Section 5 of the Factories Act could not have been invoked to issue a blanket notification that exempted all factories from complying with humane working conditions and adequate compensation for overtime, as a response to a pandemic that did not result in an ‘internal disturbance’ of a nature that posed a ‘grave emergency’ whereby the security of India is threatened. In any event, no factory/ classes of factories could have been exempted from compliance with provisions of the Factories Act, unless an ‘internal disturbance’ causes a grave emergency that threatens the security of the state, so as to constitute a ‘public emergency’ within the meaning of Section 5 of the Factories Act. We accordingly allow the writ petition and quash Notification No. GHR/ 2020/56/FAC/142020/346/M3 dated 17 April 2020 and Notification No. GHR/2020/92/FAC/142020/346/M3 dated 20 July 2020 issued by the Labour and Employment Department of the Respondent State.

46. As a consequence of this judgment, and in the interest of doing complete justice under Article 142 of the Constitution, we direct that overtime wages shall be paid, in accordance with the provisions of Section 59 of the Factories Act to all eligible workers who have been working since the issuance of the notifications.

47. Pending application(s), if any, are disposed of.