A) ABSTRACT / HEADNOTE

The judgment in Gujarat Mazdoor Sabha & Anr. v. State of Gujarat examines the constitutional and statutory limits of emergency powers exercised by a State Government under Section 5 of the Factories Act, 1948. The Supreme Court was called upon to scrutinize the legality of two notifications issued by the State of Gujarat during the COVID-19 pandemic, which exempted all registered factories from compliance with statutory safeguards relating to working hours, rest intervals, and overtime wages. The core controversy revolved around whether the economic downturn caused by the pandemic constituted a “public emergency” within the meaning of Section 5, justifying a blanket suspension of labour welfare protections.

The Court undertook a detailed interpretative exercise of the expression “public emergency”, tracing its constitutional lineage to Articles 352, 355, and 356 of the Constitution and to prior jurisprudence distinguishing law and order, public order, and security of the State. It held that the statutory definition requires the existence of a grave emergency threatening the security of India or a part of its territory, caused by war, external aggression, or internal disturbance. Mere economic hardship, even if severe, was found insufficient to meet this threshold.

The judgment further reaffirmed the social-welfare character of the Factories Act, 1948, emphasizing that emergency powers cannot be used to dilute hard-won labour protections or legitimise exploitative conditions. The Court held that the impugned notifications were ultra vires the statute, violated constitutional guarantees under Articles 14, 21, and 23, and undermined the constitutional vision of social and economic democracy. Consequently, the notifications were quashed, and payment of statutory overtime wages was directed.

Keywords: Public Emergency; Factories Act; Labour Welfare; COVID-19; Overtime Wages; Constitutional Proportionality

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The judgment arose in the backdrop of an unprecedented nationwide lockdown imposed to contain the COVID-19 pandemic, which resulted in a near-complete halt of economic activity across India. Faced with industrial slowdown and alleged financial distress of employers, the State of Gujarat invoked Section 5 of the Factories Act, 1948 to issue notifications dated 17 April 2020 and 20 July 2020, exempting all registered factories from statutory limitations on working hours, rest intervals, and overtime compensation. The stated objective was to revive industrial productivity during the economic downturn.

The petitioners, representing a substantial body of industrial workers, challenged these notifications under Article 32 of the Constitution, asserting that the State had exceeded its statutory authority and diluted non-derogable labour welfare standards under the guise of emergency powers. The challenge was premised on the argument that the pandemic, though grave, did not threaten the security of India as required by the statutory definition of public emergency under Section 5.

The case assumed constitutional significance because it tested the limits of delegated emergency powers, the doctrine of proportionality, and the enforceability of socio-economic rights during crises. The Court was required to balance competing interests of economic revival and labour protection while remaining faithful to the constitutional ethos of a welfare State. In doing so, it revisited foundational doctrines relating to emergency jurisprudence, labour welfare legislation, and the constitutional vision of dignity in employment.

D) FACTS OF THE CASE

Following the imposition of a nationwide lockdown on 24 March 2020, industrial operations in Gujarat were suspended, leading to financial stress for factory owners and large-scale displacement of migrant labour. On 17 April 2020, the Labour and Employment Department of Gujarat issued a notification under Section 5 of the Factories Act, 1948, exempting all factories from compliance with Sections 51, 54, 55, and 56. The exemption permitted adult workers to work up to 12 hours per day and 72 hours per week, altered rest interval norms, and mandated payment of wages for extended hours only at a proportionate rate rather than double overtime wages under Section 59.

The exemption was initially valid till 19 July 2020 and was subsequently extended by another notification dated 20 July 2020 till 19 October 2020. These notifications applied uniformly to all factories, irrespective of the nature of production or necessity.

The petitioners contended that factories had resumed operations almost immediately after the first notification, undermining the claim of emergency necessity. They further highlighted reported industrial accidents occurring post-lockdown, attributing them to overworked and fatigued labour. The State defended its action by characterising COVID-19 as a public emergency causing internal disturbance through economic chaos and argued that the proportional wage payment safeguarded worker interests.

The factual matrix thus presented a direct conflict between economic exigency and statutory labour safeguards.

E) LEGAL ISSUES RAISED

i. Whether the COVID-19 pandemic and the resulting economic slowdown constitute a “public emergency” under Section 5 of the Factories Act, 1948?
ii. Whether the State Government can issue a blanket exemption to all factories under Section 5?
iii. Whether the impugned notifications violate Sections 51, 54, 55, 56, and 59 of the Factories Act?
iv. Whether the notifications infringe Articles 14, 21, and 23 of the Constitution of India?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the Petitioners submitted that Section 5 permits exemption only upon the objective existence of a grave emergency threatening the security of India. They invoked the doctrine of noscitur a sociis to argue that internal disturbance must be of comparable gravity to war or external aggression. Reliance was placed on Romesh Thapar v. State of Madras and Ram Manohar Lohia v. State of Bihar to distinguish economic hardship from security threats.

It was contended that the notifications effectively nullified Section 59 by substituting double overtime wages with proportionate wages, amounting to forced labour under Article 23. The petitioners further argued that Section 65(2), not Section 5, governed exceptional workload situations and imposed safeguards absent in the impugned notifications. The blanket nature of the exemption was asserted to be ultra vires and arbitrary.

G) RESPONDENT’S ARGUMENTS

The counsels for the Respondent submitted that COVID-19 disrupted social order and economic stability, constituting an internal disturbance. The State argued that Section 5 vested discretionary power to exempt any factory or class of factories and that enumerating classes was unnecessary. It was contended that the notifications merely allowed three additional working hours with proportionate compensation and did not violate Article 23.

The Respondent relied on Pfizer Private Limited v. Workmen to justify enhanced production during national crises and asserted that the measures were temporary, proportionate, and necessary to sustain industrial operations.

H) JUDGEMENT

The Supreme Court held that the existence of a public emergency under Section 5 is an objective jurisdictional fact subject to judicial review. It undertook an exhaustive interpretation of the statutory explanation, holding that all constituent elements—grave emergency, threat to security, and causation by war, external aggression, or internal disturbance—must co-exist.

The Court rejected the State’s attempt to equate economic hardship with internal disturbance, relying on constitutional jurisprudence under Articles 352, 355, and 356, including S.R. Bommai v. Union of India and Extra-Judicial Execution Victim Families Association v. Union of India. It held that economic slowdown, though severe, did not disrupt public order or threaten territorial integrity.

The Court further held that the notifications made impermissible departures from the statutory scheme by extending working hours and diluting overtime wages, thereby undermining the welfare objective of the Factories Act. It emphasised that emergency powers cannot be used to convert labour protections into “paper tigers”.

Accordingly, both notifications were quashed, and the State was directed to ensure payment of overtime wages strictly in accordance with Section 59.

a) RATIO DECIDENDI

The ratio decidendi of the judgment is that economic hardship, even when caused by a pandemic, does not constitute a “public emergency” under Section 5 of the Factories Act unless it threatens the security of India or a part of its territory. The Court held that emergency powers must be narrowly construed and proportionately exercised. Blanket exemptions undermining labour welfare are ultra vires and unconstitutional.

b) OBITER DICTA

The Court observed that selective exemptions under Section 65(2) for factories producing essential medical equipment during a pandemic could be justified if accompanied by statutory safeguards and fair compensation. It also remarked on the constitutional obligation of the State to protect vulnerable workers during crises rather than exacerbate inequality.

c) GUIDELINES

i. Emergency powers under Section 5 must be exercised only upon strict satisfaction of statutory conditions.
ii. Economic exigency alone cannot justify suspension of labour welfare legislation.
iii. Blanket exemptions applicable to all factories are impermissible.
iv. Overtime wages under Section 59 are mandatory and non-derogable.

I) CONCLUSION & COMMENTS

The judgment reaffirms the constitutional primacy of labour welfare and the limited nature of statutory emergency powers. It restores doctrinal clarity by aligning Section 5 with constitutional emergency jurisprudence and reinforces the principle that crises cannot be used to legitimise exploitation. The decision strengthens the enforceability of socio-economic rights and preserves the dignity of labour as an essential component of India’s constitutional democracy.

J) REFERENCES

a) Important Cases Referred

• Romesh Thapar v. State of Madras, [1950] 1 SCR 594

• Ram Manohar Lohia v. State of Bihar, [1966] SCR 709

• S.R. Bommai v. Union of India, [1994] 2 SCR 644

• Extra-Judicial Execution Victim Families Association v. Union of India, [2016] 4 SCR 909

• K.S. Puttaswamy v. Union of India, [2017] 10 SCR 569

b) Important Statutes Referred

• Factories Act, 1948

• Constitution of India

• Disaster Management Act, 2005