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Tag Archives | Rule 24-A

What’s in a name?

By Madhav Chandavarkar

It is perhaps not commonly known that the majority of the sign boards of shops and establishments in Bangalore and indeed, Karnataka were illegal under Rule 24-A of the Karnataka Shops and Establishments Rules, 1963 (“the Rules”). Rule 24-A required all establishments to display their name more prominently in Kannada than in English. The Rules were originally drafted by the State Government to enforce the provisions of the Karnataka Shops and Establishments Act, 1961 (“the Act”), a legislation enacted to create a unified law protecting the rights of workers in Karnataka.

If the existence of Rule 24-A was not common knowledge it is definitely less known that as of June 5, 2009, Rule 24-A and the corresponding penalty for any non-compliance with its provisions under Rule 26 (which also provides the penalties for all other rules) are no longer applicable. These two Rules were struck down as unconstitutional by the High Court of Karnataka in Vodafone Essar South Ltd. vs. State of Karnataka & Ors., on the grounds that they did nothing to protect workers, which was the original purpose of enforcing the Act.  

Rules 24-A and 26 in their current form were inserted into the Rules by the Karnataka Shops and Establishment (Amendment) Rules, 2008 with the aim of promoting the Kannada language. The amendment was suggested by the Kannada Development Authority  after agitations by pro-Kannada activist groups such as the Karnataka Rakshana Vedike. Rule 24-A required all name boards to be in Kannada and if a version in another language was to be used, that version would have had to have been “below the Kannada version” and it further stated that the “Kannada version shall be written more predominantly by providing more space than for other languages”.

Under Rule 26, there was a separate penalty for a contravention of Rule 24-A which was vastly higher than the penalty for a contravention of any of the other rules. A first offence would have attracted a fine not more than ten thousand rupees, while the penalty for a contravention of any of the other rules couldn’t (and still can’t) exceed one thousand rupees. Furthermore, the penalty for continued offences of Rule 24-A contained no such prescription on an upper limit; Rule 26 only stated that the fine could not be below ten thousand rupees . This is normally not the case in penal provisions as it empowers the State to levy whatever fine they wish to, which can lead to an arbitrary levy of unreasonable and crippling fines.

Within two days from the notification of the amendment in the Official Gazette, various departments in the Karnataka government were directed by the Labour Commissioner to ensure almost immediate compliance with the new provisions of the Rules. Notices were then served to Vodafone by the Senior Labour Inspector requesting them to show cause as to why the penalties under Rule 26 should not be levied against them.

Vodafone responded by challenging the Rules in a Writ Petition filed in the High Court of Karnataka, largely because the operation to change the sign boards in all their stores across the State would have cost a vast amount of money. The principle argument advanced in Court by Vodafone was that Rule 24-A and 26 were unconstitutional as they exceeded the mandate of the original Act to ensure the safety and conditions of employment for workers, and could thus be declared ultra vires (a legal doctrine that allows actions done outside the scope of the legal authority to be declared as void). Vodafone argued that these Rules interfered with their right to conduct business under Article 19 by denying them the use of their recognised Trademark.

The State government countered this argument by stating that the powers of delegated legislation conferred by the Act allowed the Government to draft Rules on anything that is ‘incidental’ to enforcing the Act and as such, Rule 24-A and 26 were  not ultra vires. The State Government also contended that similar provisions existed in corresponding legislations in Tamil Nadu and Maharashtra and they had not been challenged and given that Rule 24-A had already been challenged in the Karnataka High Court (in Laxman Omanna Bhamane vs. State of Karnataka & Ors. 2002 Vol. 2 KLJ 208) the writ petition was liable to be dismissed.

The Court rejected the contentions of the State Government, pointing out, amongst other things, that a previous version of Rule 24-A had been challenged in Laxman Omanna and that too under different grounds. The Court ultimately decided that the principal issue to be decided was whether Rule 24-A was “ultra vires as beyond the delegated legislative power”. To answer this the Court first determined the purpose of the Act by examining its pre-amble as well as going into a detailed reading of the provisions of the Act and the Rules, and the penalties for contraventions under both. It came to the conclusion that the sole purpose of the Act was to provide a uniform law to ensure the safety, work conditions and conditions of service for employees in the state.

The Court next went through all the Articles of the Constitution regarding languages and found that there are no provisions allowing for a restriction of language in trade and commerce, and that at best, the Constitution empowers States to only prescribe one or more official languages for use by government agencies. The Court finally cited Supreme Court cases on the scope of delegated legislation wherein the Supreme Court had held that rules can neither widen the purposes of the Acts from which they emerge nor add new or different provisions that were excluded by the original Act itself. Reading these three points together, the Court declared that even though provisions regulating the display of name boards in Kannada may be  “laudable”, the Government did not have the power to pass such rules, and declared Rule 24-A and Rule 26 (insofar as it punished a contravention of Rule 24-A) as ultra-vires.

However, this judgment seems to have fallen under the radar; both the government as well as pro-Kannada agitators seem to be under the assumption that Rule 24-A is still in force. The government appealed the 2009 decision in a Writ Appeal to a larger bench of the High Court, but the Court dismissed the appeal on March 17, 2014. However, ultimately the case is unlikely to have a major practical effect on the ground situation. The likelihood of an establishment displaying a Kannada name board was always determined more by the number of glass panes the manager wishes to keep intact from mob violence than by any zeal for regulatory compliance and this scenario is unlikely to change.

Madhav Chandavarkar is an intern at the Takshashila Institution. His Twitter handle is @MadChaP88

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