Managing Director Deemed “Employer” For Proceedings Under Section 20(2) Of The Minimum Wages Act, 1948; Kerala High Court Dismisses Challenge To Liability For Deficit Wages
Safiya Malik
The High Court of Kerala, Single Bench of Justice K. Babu held that a Managing Director of a company can be treated as an “employer” within the meaning of Section 2(e) of the Minimum Wages Act, 1948, for proceedings initiated under Section 20(2) of the Act. Dismissing a writ petition filed by a former Managing Director challenging an order of the Deputy Labour Commissioner, the Court upheld the authority’s decision directing payment of deficit wages to 19 employees who had received less than the statutory minimum. The Court found that the Managing Director, being responsible for supervision and control of the employees during the relevant period, bore liability for the unpaid wages despite a subsequent transfer of the company’s ownership.
The petitioner, former Managing Director of a private company engaged in automobile operations, challenged an order issued by the Deputy Labour Commissioner, Kannur, under Section 20(3) of the Minimum Wages Act, 1948. The proceedings arose from an inspection conducted by the Assistant Labour Officer, Hosdurg, in 2018, which revealed that 19 employees had been paid less than the prescribed minimum wages. Based on this inspection, a claim petition was filed before the Deputy Labour Commissioner under Section 20(2) of the Act, seeking direction to recover the deficit wages from the petitioner.
The petitioner contended that the proceedings were invalid due to non-joinder of the company, which continued to exist as a separate legal entity, and asserted that only the company, not its Managing Director, was liable for payment. It was further argued that the petitioner had resigned from the position pursuant to a share purchase agreement executed in January 2022, by which the entire ownership of the company was transferred. The petitioner also alleged denial of adequate opportunity to contest the proceedings and relied on the Supreme Court’s ruling in Dayle De’souza v. Government of India to assert that individual directors cannot be held personally liable without the company being made a party.
The respondents, represented by the Government Pleader, maintained that the Managing Director, being responsible for supervision and control of employees during the relevant period, fell within the statutory definition of “employer” under Section 2(e) of the Minimum Wages Act.
The Court observed that “the petitioner, in the capacity of Managing Director of the company, was responsible for the supervision and control of the employees for the relevant period.” It referred to the statutory definition of “employer” under Section 2(e) of the Minimum Wages Act and recorded that “the Managing Director of the company under consideration is a statutorily recognized person to be treated as the ‘employer’ as defined under Section 2(e) of the Minimum Wages Act, in a proceedings initiated under Section 20(2) of the said Act by the competent authority.”
The Court noted that the period during which minimum wages were unpaid was from November 2017 to April 2018 and that the petitioner held managerial responsibility during that period. It relied on the principle recognized in Thankamma v. Regional Joint Labour Commissioner, Kollam (2025 KHC 846), where a manager in a factory was treated as an employer under a similar statutory framework, and stated that “importing the principle declared in Thankamma, this Court is of the view that the Managing Director is a proper party and the order passed by the statutory authority under Section 20(3) is binding on the petitioner.”
Regarding the share transfer agreement, the Court recorded that “the agreement was executed and came into effect in 2022. Minimum wages were due to the employees for the period from 2017 to 2018. Therefore, the transfer stated to have been effected by Ext.P1 has no impact on the liability of the petitioner to pay minimum wages.”
On the issue of opportunity to contest, the Court stated that “the petitioner admitted that he was aware of the proceedings in MCP.No.77/2018 before respondent No.2, but stated that he could not follow up the proceedings after his resignation. Therefore, the contention that the petitioner was not given sufficient opportunity to contest the proceedings has no force.”
Finally, the Court observed that “the reliance placed by the learned counsel for the petitioner on Dayle De’souza (supra) is of no relevance to the instant case.”
The Court directed: “The petitioner, being the employer at the relevant time, is bound by the impugned order. Therefore, the impugned order is not liable to be interfered with. The writ petition stands dismissed.”
Advocates Representing the Parties
For the Petitioner: Smt. Kala G. Nambiar, Advocate
For the Respondents: Adv. V. K. Sunil, Senior Government Pleader
Case Title: Bhavesh Anil Kumar v. Assistant Labour Officer & Anr.
Neutral Citation: 2025:KER:81754
Case Number: W.P.(C) No. 26208 of 2025
Bench: Justice K. Babu
