MSMEs Move SC Seeking Centre Subsidise 70% Wages From PM-CARES Fund

New Delhi:  A plea has been moved a group of Micro, Small and Medium Enterprises (MSMEs) in the Supreme Court seeking direction to Centre to subsidise the wages of workers to the tune of 70 per cent for the lockdown period by utilising the funds collected by the Employees’ State Insurance Corporation (ESIC) or the PM-CARES Fund or through any other government fund.

The plea has challenged the Centre’s advisories and orders asking private employers to not sack their employees and pay them full wages during the nationwide lockdown.

The petitioners, having at least one of their factories in Haryana, urged the top court to term the advisory notices issued, by the Secretary (Labour & Employment) on March 20 and by the Ministry of Home Affairs (MHA) on March 29, as ultra vires of Articles 14 and 19(1)(g) of the Constitution.

The petitioners contended that they have already paid the wages to all workers including for the month of March. “On one hand, the business of the petitioners has come to a standstill due to lockdown and on the other hand the petitioners are being compelled under the impugned notifications to pay for the wages to workers for the entire lockdown period. The petitioners are being further restrained from reducing their workforce especially the casual or contract or migrant workers. The petitioners are under extreme financial & mental stress because of the Impugned Notifications”, said the plea.

The petition argued that private employers be relieved of paying 70 per cent of each employee’s wages, and the Centre be directed to subsidize this amount and pay workers 70 per cent of their wages by using funds collected through government schemes such as the Employees’ State Insurance Corporation (ESIC) or the PM-CARES Fund.

The plea contended that the government does not have the power to impose any financial obligations on the private establishments by invoking the Disaster Management Act, 2005 (DMA), and rather it is Centre’s obligation to ensure the same under Article 43 of the Constitution.

“That in terms of Section 65 of DMA 2005 the National Executive Committee is empowered to requisition resources, provisions, vehicles, etc, for rescue operations and that too by Payment of Compensation in terms of Section 66 of DMA 2005. However, the ultimate onus for any compensation towards workers shall ultimately be of the government and the said liability cannot be shifted upon the employers in private establishments”, said the plea.

The petition, due to these notifications, said “an otherwise stable and solvent industrial establishment, especially an MSME establishment, can be forced into insolvency”

Earlier, companies from Punjab and Karnataka had moved the top court asking the government to place on record its policy regarding the application of the said notification in two weeks.


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