AIRFREIGHT LTD. versus STATE OF KARNATAKA AND ORS.

Citation: [1999] SUPP. 1 S.C.R. 22 · Decided: 04-08-1999 · Supreme Court of India · Bench: D.P. WADHWA · Disposal: Case Partly allowed
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Judgment (excerpt)

A 
AIRFREIGHT LTD. 
;; 
v. 
STATE OF KARNATAKA AND ORS. 
AUGUST 4, 1999 
B 
[D.P. WADHWA AND M.B. SHAH, JJ.] 
Labour Law: 
"'' 
Minimum Wages Act, 1948: 
·-
c 
Sections 3, 4 and 5-Commercial establishment and shops-Payment 
of basic wages and dearness allowance to employees-Appellant-company 
engaged in forwarding of cargo, travel, tourism, courier services etc.-Having 
offices in various places-Paying a total pay packet of more than the prescribed 
D 
minimum wages-Employees claiming variable dearness allowance as per 
Notification dated 28.8.1987 issued by the State of the Karnataka-The 
Competent Authority directed payment of VDA-High Court upheld the 
order-On appeal-Held, Appellant is covered by the expression 'shop and 
commercial establishment'-Notification is applicable to all shops and 
commercial establishments, whether they are paying more than prescribed 
E minimum wages or not, including the appellant-Where employer is paying 
a total sum which is higher than the minimum rates of wages prescribed, he 
is not required to pay VDA separately-Matter remanded to competent 
authority to decide afresh. 
Section 2(h): "Wages"-Minimum wages are to be calculated as per 
F Section 2(h)-Value of items specified therein is to be excluded. 
'-
Mysore Shops and Commercial Establishments Act, 1961 : 
Section 2(e) & 2(u)-"Commercial establishment" and "shop"-
G 
Company engaged in import and exports clearances, cargo forwarding, 
courier services, taurism and travel-Having offices in various places-Held, 
Company carries out various systematic commercial activities and sells services 
on retail basis-ls a 'commercial establishment' and 'shop' under the Act and 
as understood in common parlance. 
H 
The appellant-company was engaged in import and exports clearance, 
.... 
22 
' 
AIRFREIGHT LTD. v. STATE 
23 
;, 
forwarding of cargo, courier, travel, tourism and related services. It had A 
, several offices in various places. The respondent-employees sought variable 
dearness allowance (VDA) on the basis of Notification issued by the State 
Government on 19.8.87 under the Minimum Wages Act, 1948, fixing minimum 
rates of wages payable to employees of "shops and commercial 
establishments". The Competent Authority allowed the claim of the employees B 
and also directed the appellant-company to pay compensation under the Act. 
The company challenged the order in a Writ Petition before the High Court 
contending that the notification was not applicable to it since it was not a 
,,,. • 
"shop or commercial establishment". Single Judge of the High Court 
~ismissed the writ petition and a Division bench confirmed the order. However, 
that part of the order that directed payment of compensation was set aside. C 
-
In appeal before this Court it was contended by the appellant-company 
that it was not covered by the term "shops and commercial establishments" 
and hence, the notification fixing minimum wages was not applicable to it. 
It was also contended that since the appellant was paying a total pay packet 
that is more than the minimum wages, though the wages were not being 
bifurcated into basic wages and dearness allowance, the notification was not 
' applicable to it. The respondent, on the other hand, contended that the 
notification fixed minimum wages in two parts, separately, one basic wages 
and the other VDA and hence, the company was liable to pay VDA in addition 
D 
to the wages being paid. 
E 
Partly allowing the appeal and remanding the matter to the Competent 
Authority, this Court 
HELD: 1.1; The appellant-company is covered by the expression "shops 
and commercial establishments", as understood in the ordinary common 
parlance. It is carrying out various systematic commercial activities with 
profit motive and hence, is a commercial establishment. It can also be termed 
as a shop since services are sold on retail basis. It is a "commercial 
establishment" and also a "shop" under Section 2(e) and 2(u), respectively, 
F 
of the Mysore Shops and Commercial Establishments Act, 1961. 
G 
(26-F-G; 27-E-F) 
Hindu Jea Band v. Regional Director, ES!C, (1987) 2 SCC 101; 
International Ore and FeNilizers (India) Pvt. Ltd. v. ESIC, (1987) 3 SCC 
203; Cochin Shipping Co. v. ES/ Corporation, (1992), 4 SCC 245 and ESIC 
v. RK Swamy and Ors., (1994) 1 SCC 445, relied on. 
H 
24 
SUPREME COURT REPORTS [1999] SUPP. I S.C.R. 
A 
1.2. The notification dated 19.8.87 issued under the Act is applicable 
.._ 
to all kinds of 'shops and
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