MD Of Company Can Be Treated As “Employer” For Proceedings U/S 20(2) Of Minimum Wages Act: Kerala High Court

Justice K. Babu, was delivering a judgment in a writ petition filed by the former Managing Director of Southwest Motorcorp India Pvt. Ltd., who challenged an order issued by the Deputy Labour Commissioner, Kannur under Section 20(3) of the Minimum wages Act.

The Labour Authority had directed the petitioner to pay deficit wages to 19 employees following an inspection conducted by the Assistant Labour Officer, Hosdurg, in 2018, which revealed that the workers were paid less than the minimum statutory rates.

The petitioner argued that the proceedings should have been initiated against the company rather than him personally, contending that he had resigned and transferred his shares to new owners through a share purchase agreement dated January 31, 2022. He further maintained that the principle of vicarious liability did not apply and that he was denied a fair opportunity to defend himself.

The Court held that under Section 2(e) of the Minimum Wages Act, a person responsible for the supervision and control of employees, such as a Managing Director, qualifies as an “employer.” Accordingly, he bears statutory responsibility for ensuring payment of minimum wages.

The court relied on Thankamma v. Regional Joint Labour Commissioner, Kollam [2025 LiveLaw (Ker) 479], which recognized a factory manager as an “employer” under the Section 2(f) of the Payment of Gratuity Act, 1972. The Court applied this reasoning in the present scenario and observed:

“Importing the principle declared in Thankamma, this Court is of the view 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. Therefore, the Managing Director is a proper party and the order passed by the statutory authority under Section 20(3) of the Minimum Wages Act is binding on the petitioner-Managing Director, in the capacity as 'employer'”

The Petitioners have also contended that the liability rests with the company since the company has been transferred by way of an agreement dated 20.01.2022.

The Court noted that the minimum wages were due to the employees for the period from 2017 to 2018, hence the transfer of the company did not have an impact on the liability of the petitioner to pay minimum wages.

Citing the Supreme Court's ruling in Dayle De'Souza v. Government of India [(2021) 20 SCC 135], the petitioner had contended that individual directors cannot be prosecuted without the company being arrayed as a party. However, the Court distinguished that precedent, clarifying that the Dayle De'Souza dealt with criminal prosecution under Section 22A of the Act, whereas the present matter concerned a wage recovery proceeding under Section 20.

The Court thus held that since the petitioner was the employer at the relevant time, he is bound by the order of the Deputy Labour Commissioner and dismissed the petition.

Case Title: Bhavesh Anil Kumar v The Assistant Labour Officer and Another

Case No: WP(C) 26208/ 2025

Citation: 2025 LiveLaw (Ker) 716

Counsel for Petitioner: Kala G Nambiar

Counsel for Respondent: V K Sunil (Sr. GP)