Bombay High Court
The Bank Of India, Bombay And Another vs T.S. Kelawala, Bombay And Others on 15 October, 1985
Equivalent citations: (1988)IILLJ264BOM
Author: S.P. Kurdukar
Bench: S.P. Kurdukar
JUDGMENT Lentin, J.
1. the appellant is a nationalised Bank. Two of the respondents are its employees. The other two are the trade unions representing the Bank's employees.
2. In furtherance of certain demands for wages revision made by the employees, in June, 1977 the All the India Bank Employees' association gave a call for an all-India strike on certain days. The Bank issued a circular dated 23rd September 1977 to its managers and agents directing them to deduct the wages of such of the employees who participated in the strike. The principle was 'no work no pay'. We are only concerned with the 4 - hour strike on 25th December, 1977. The Bank issued an administrative circular dated 27th December, 1977 to its managers and agents that such of the employees who participated in the 4 - hour strike would be committing a breach of their contract of service and would not draw salary for the entire day.
3. The employees struck work for 4 hours on 29th December, 1977. On 16th January, 1978 the Bank issued a circular to its managers and agents directing them to deduct the full day's wages of such of the employees who participated in the 4-hour strike. The respondents filed a writ petition for rescinding that circular. The petition was allowed. Hence the present appeal by the Bank.
4. Was it permissible for the Bank, by means of the impugned administrative circular, to deduct the full day's salary (or for that matter even a part of the day's salary) of the employees who participated in the 4 - hour strike on 29th December, 1977. Such is the controversy before us.
5. The Bank's learned Counsel Mr. Kaka invokes the doctrine 'no work no pay' and invites us to answer the question in the affirmative. Mr. Kaka says there is an implied contract to receive salary provided the employee does work. Promise to work and promise to pay are mutual. By resorting to the 4-hour strike that day, the employees absented themselves from work resulting in failure of consideration 'on work on pay'.. Mr. Kaka justifies the deduction of the entire day's salary on the ground that unless the employees work for the first 4 hours when the Bank is open to the public, there is precious little or nothing for them to do the rest of the day. No work no pay, says Mr. Kaka.
6. Mr. Kaka supported his battle-cry by assiduously taking us through a number of decisions. The tentative view taken by the Calcutta High Court in Algemene Bank v. Central Govt. Labour Court (1978-II-LLJ-117) was no work no pay. On the same doctrine, the employees' writ petition was not countenanced and the employees' submission that a contract to pay wages is indivisible in character was rejected by the Madras High Court in v. Ramchandran v. Indian Bank (1979-I-LLJ-122), and R. Rajamanickam v. Indian Bank (1981-II-LLJ-367).
7. In Dharam Singh v. Bank of India 1979 (2) Lab. I.C. 1979, the Punjab and Haryana High Court held that absence from duty for a part of the day is absence for the whole day entitling the Bank to deduct wages for the whole day under Section 16 of the Punjab Shops and Commercial Establishments Act read with Sections 7(2) and 9 of the payment of wages Act.
8. In V. Ganesan v. State Bank of India (1981-ILLJ-64) the Madras High Court held that the contract of employment being on a monthly basis was one whole and indivisible, incapable of being divided into the number of days, hours and minutes. There was no provision in the bi-partite settlement or in the award which entitled the Bank to deduct salary for the day if the employee absented himself only for a part of the day. However instead of treating the contract as discharged by reason of the breach committed by the employees, the Bank had acquiesced in the breach by allowing the employees to work for the rest of the day. It is on this latter finding that Mr. Kaka justifies the deduction of the entire day's salary, lest the Bank be faced with the difficulty of acquiescence.
9. In R. N. Shenoy v. Central Bank of India 1984 (2) Lab. I.C. 1493, the Kerala High Court agreed with the doctrine, "no work no pay.' It held that the Bank was justified by an administrative circular in deducting a day's wages of the officers for absence for a part of the day on the ground that monthly wages cannot be earned in terms of hours or minutes. The deduction effected was not by way of penalty but only endorsements of the contract which governed their service condition. Mr. Kaka relied on the following observations in para 23 of the report ".... the petitioners ... are officers not governed by the payment of Wages Act. Their service conditions are governed by contract. An institution like a Bank has to discharge onerous duties to the public. Paralysing the activities of the Bank for a portion of the day by a token strike would seriously affect the working of the Bank for the rest of the day also. An officer cannot be said to earn his salary by hours or minutes. The minimum unit for purpose of remuneration of an officer should be taken as a day. They absented from duty though for portion of the day .... despite being warned about the consequences. Officers like the petitioners in this writ petition, should have a sense of responsibility and should, therefore, suffer the consequences for their conduct in holding at ransom the Bank and the general public by activities like the one in question. On our finding that in case of officers the day should be deemed to be the unit of contract of employment, the order deducting a day's salary for what they did, cannot be invalidated in proceeding under Article 226 ......"
10. Mr. Kaka takes refuge under these authorities in seeking to justify the Bank's impugned circular on the doctrine 'no work no pay.'
11. The attempt must fail. It is one thing to apply the general law of master and servant as between individuals and to do the same in the case of the Bank, which is "State". The service conditions of the Bank's employees were prior to 19th October, 1966 governed by the Sastry and K. T. Desai Awards. On 19th October, 1966 and 12th October, 1970 the service conditions were modified in terms of the bi-partite agreements entered into between All India Bank Employees' Association and the Indian Banks' Association. They were further modified by a supplementary agreement of 23rd July, 1971. It is by the regulations, awards and settlements having statutory force and effect that the parties are governed. It is not in dispute that neither by the regulation, nor awards nor settlements is the Bank empowered to make the deduction as done by the impugned circular.
12. Section 19(1) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 enables the Board of Directors of the corresponding new Bank, after consultation with the Reserve Bank and with the previous sanction of the Central Government, to make regulations to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of the Act. Sub-Section (2) empowers the Board to make regulations to provide inter alia for xxx xxx xxx
(d) the conditions or limitations subject to which the corresponding new bank may appoint advisers, officers or other employees and fix their remuneration and other terms and conditions of service;
(e) the duties and conduct of advisers, officers or other employees of the corresponding new bank;
xxx xxx xxx
(m) generally for the efficient conduct of the affairs of the corresponding new bank.
Sub-section (3) reads as under :-
"Until any regulation is made under sub-section (1), the articles of association of the existing bank and every regulation, rule, bye-law or order made by the existing bank shall, if in force at the commencement of this Act, be deemed to be the regulations made under sub-section (1) and shall have effect accordingly and any reference therein to any authority of the existing bank shall be deemed to be a reference to the corresponding authority of the corresponding new bank and until any such corresponding authority is constituted under this Act shall be deemed to refer to the Custodian."
13. In V. T. Khanzode v. Reserve Bank of India (1982-I-LLJ-465) the Reserve Bank issued an administrative circular whereby the group-wise system of seniority which was in existence for over 27 years stood substituted by combined seniority for officers in Group I (Grade A) and in Group II and III with retrospective effect. It was contended that it was not competent for the Reserve Bank to provide by means of administrative circulars, for conditions of service of its staff and that the regulations framed under Section 58 of the Reserve Bank of India Act, 1934 could not be altered by administrative circulars and must be framed by regulations made under Section 58 of that Act. Section 58(1) confers powers on the Central Board of Directors of the Bank to make regulations in order to provide for all matters for which provision is necessary or convenient for the purpose of giving effect to the provisions of the Act. It was observed at P. 473 :
"... It seems to us clear that it is not only convenient but manifestly necessary to provide for the service conditions of the Bank's staff in order to give effect to the provisions of the Act .... It is, in our view, not open to any question either on the basis of reason or authority, that the power to provide for service conditions of the staff is atleast incidental to the obligation to carry out the purposes for which the Bank was constituted ........."
Negativing the contention that regulations governing terms and conditions of the service of the bank's staff could not be made by administrative circulars but could only be framed under Section 58(1), it was observed at page 474 of the Report "...... it is material to note that Section 58(1) is in the nature of an enabling provision under which the Central Board "may" make regulations in order to provide for all matters for which it is necessary or convenient to make provision for the purposes of giving effect to the provisions of the Act. This provision does not justify the argument that staff regulation must be framed under it or not at all. The substance of the matter is that the Central Board has the power to frame regulations relating to the conditions of service of the Bank's staff. If it has that power, it may exercise it either in accordance with Section 58(1) or by acting appropriately in the exercise of its general power of administration and superintendence."
At page 475 of the report it was observed "So long as staff regulations are not framed under Section 58(1), it is open to the Central Board to issue administrative circulars regulating the service conditions of the staff in the exercise of power conferred by Section 7(2) of the Act ......... the power to frame rules or regulations does not necessarily imply that no action can be taken administratively in regard to a subject-matter on which a rule or regulation can be framed ....."
14. It is on these observations that reliance was placed by the Bank's learned Counsel in urging that it was open to the Bank to change the service conditions by issuing the impugned circular. The submission does not cater to an important distinguishing feature which was not before the Supreme Court in Khanzode's case (supra). And that important distinguishing feature is that in justice, equity and good conscience the Bank could not, by the dictate of the impugned circular, attempt to stifle a legitimate weapon given by the law to workers to ventilate their grievances by drawing public attention to them. Strikes and demonstrations are not banned in this country. Despite the inconvenience they may cause, they are recognised as a legitimate form of protest for workers to ventilate their grievances. Here the Bank virtually tells the workers : if you resort to the (be it legitimate) weapon of a 4-hour strike in order to ventilate your grievance for a wage revision, you will be faced with the loss of a day's wage. This was a deterrent to the employees from resorting to a legally recognised mode of protest. By the expedient of an administrative circular, you cannot stifle a legitimate mode of protest allowed and recognised by the law. Doing away by an administrative circular with the system of groupwise seniority and replacing it with combined seniority (as in Khanzode's case) is altogether different from coercing the employees into not resorting to a legitimate form of protest to ventilate and draw public attention to their grievances. There is nothing in Section 19 of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and there is nothing (as indeed there cannot be) in the observations of the Supreme Court, that in the guise of an administrative circular, workers' rights, given to them by the law established, can unilaterally be taken away or impinged by an administrative circular. Making provision for service conditions of the Bank's staff by an administrative circular, as done in khanzode's case (supra), cannot be equated with unilaterally making a deduction from the monthly wages of the workers as done in the present case. Neither Section 19 nor the Supreme Court gives a carte-blanche to Banks to unilaterally change by administrative circulars, service conditions depriving the workers of their fixed monthly wages under their contract of service by attempting to stifle a mode of protest recognised by the law. To do so does not, as observed in Khanzode's case (supra), "provide for the service conditions of the Bank's staff in order to give affect to the provisions of the Act", not is it "incident to the obligation to carry out the purposes for which the Bank was constituted."
15. We express no opinion as to the legality or otherwise of the strike resorted to by the Bank's employees that day. Nor are we called upon to do so. All we seek to emphasise is that the power exercised by the Bank in issuing the impugned circular does not flow from the Act, intended as it was to frighten the employees into submission from embarking on legitimate form of protest, by holding out the threat of a day's deduction of salary and putting the threat into effect.
16. In the facts and circumstances of the present case, the ratio laid down and observations made by the Supreme Court in the facts and circumstances of Khanzode's case (supra), are not attracted. The reliance placed on behalf of the Bank on that case is misplaced.
17. Also looked at another way, it is important that under the conditions of service, wages are paid not from day to day or hour to hour, but by a fixed sum on a monthly basis. The contract between the Bank and the workers is not a divisible one. It is a monthly contract. It is not the day or the hour but the month which is the unit of the contract of employment. All months do not have the same number of days. Some months may have no holidays but Sundays. Other months may have holidays with varying number of holidays in different months. The employees are also entitled to leave with pay, casual leave and earned leave. The number of days and hours of work put in would therefore vary from month to month. Yet (permissible deductions apart), the monthly wage does not vary from month to month. Being a monthly contract, the consideration is one and indivisible and on the basis thereof a monthly salary is payable. Of course they are required to work during fixed hours. Yet that does not change the unit of the contract of employment from monthly to daily or hourly. Non-observance may give the employer a cause of action for breach of the contract and right to take appropriate remedy for such breach. But if the monthly contract is kept alive and subsisting, deduction by the Bank of a day's wage or even a 4-hour deduction would be arbitrary and impermissible. Failure or refusal on the part of the employee to work during the fixed hours on any particular day, may result in a partial failure of consideration. In consequence thereof an employer may claim compensation against the employee, but not the right to deduct any part of the salary on any pro rata basis or otherwise V. Ganesan v. State Bank of India (supra) and M. K. Bose v. Bank of India (1977-II-LLJ-285). In the absence of a specific term in the regulations, awards and settlements, the Bank could not, in guise of an administrative circular, unilaterally reduce the monthly wage and give the employee a lesser monthly salary than the one contracted. Giving the employee a lesser pay packet at the end of the month cannot (in the words of the Supreme Court in Khanzode's case (supra) be "incidental to the obligation to carry out the purposes for which the Bank was constituted" or "giving effect to the provisions of the Act."
18. Looked at it either way the impugned circular must be struck down.
19. Does this mean that the Bank is helpless ? That the Bank has no remedy ? That the employees can hold the Bank to ransom ? No. Far from it. Get the 4-hour strike declared illegal by recourse to the machinery provided by law. That the Bank does not want to do. So do it. Or, in the state of the service conditions, regulations, awards and settlements as they stand, put the erring workers under suspension for minor misconduct under regulation 19.7, hold an enquiry and if found guilty, impose the punishment of warning, censure, adverse remark or stoppage of increment for not more than 6 months as prescribed by regulation 19.8. That also the Bank does not want to do. So do it.
2. Instead, Mr. Kaka takes shelter under regulation 13.27. It reads thus "Any absence from duty without satisfying the requisite conditions under which leave may be taken or obtaining such leave on false grounds would justify any bank, after giving the employee an opportunity to explain, in not treating the employee as on casual leave but as being absent without leave on loss of pay and allowances."
Mr. Kaka says that because the employees struck work 4 hours on 29th December, 1977 they were absent from duty, entitling the Bank to take recourse under regulation 13.27.
21. This is not correct. To start with, it is to the impugned circular that the Bank resorted to and wrongly so. The Bank did not resort to regulation 13.2, and rightly so. The reason is obvious. Chapter XI of the regulations pertains to leave Rules. Regulations 13.2 to 13.16 contain general provisions pertaining to leave; Regulations 13.17 to 13.21 pertain to privilege leave; Regulations 13.22 to 13.28 are under the heading "Casual Leave" and the subsequent regulations in that Chapter pertain to other kinds of leave, to wit, sick leave, extraordinary leave, maternity leave, etc. It is difficult to see how the striking employees could conceivably fall within regulation 13.27 relied on by Mr. Kaka. It is nobody's case that for 4 hours that day they went on causal leave or that even the Bank treated their absence as such.
22. None of this appears to have been brought to the notice of the various High Courts on whose decisions Mr. Kaka relies. It is, therefore, with deep respect that we find ourselves unable to agree with them.
23. Mr. Kaka seeks refuge under the Payment of Wages Act, 1936. It is not even the Bank's case that the day's deductions were made under that Act but only under the impugned circular. Since, however, this contention is raised by Mr. Kaka, it is but right we deal with it.
24. According to Mr. Kaka once deductions are permitted under that Act, it is immaterial whether the contract itself permits them or not. They can be made regardless of the contract, for the Act is paramount, says Mr. Kaka who relies on Section 7 which provides for deductions which can be made from wages, and on sub-section (2) which reads thus :
"2. Deductions from the wages of an employed person shall be made only in accordance with the provisions of this Act and may be of the following kinds only, namely xxx xxx xxx
(b) deductions for absence from-duty :
xxx xxx xxx Mr. Kaka says that the words "only in accordance with the provisions of this Act" mean that deductions can only be made under this Act, hence even if the day's deduction could not have been made under the impugned circular, it could be made under Section 7(2) of the Payment of Wages Act.
25. We do not agree with Mr. Kaka's interpretation of Section 7(2). The Act is regulatory, as is manifest from the opening words, namely, "an Act to regulate the payment of wages to certain classes of employed persons". Section 7(2)(b) read with Section 9 tells the employer in what circumstances and to what extent deduction can be made. It is when the employer has the power to make deductions, can he do so. Even so, the invocation of such power must be read with Section 9, regulated as it is by Section 7(2). It is only when the employer is entitled to make a deduction, them resort must be had to the Act to ascertain to what extent the deduction can be made. No deduction exceeding the limits provided by the Act is permissible even if the contract so provides. The Act does not cast on the worker a greater obligation or confer on the employer a higher right than what they have under the terms of the contract. To illustrate, if a contract of employment provides that for a day's or an hour's absence the employer shall deduct the entire month's wages, the Act steps in and tells the employer that while under Section 7(2)(b) deduction may be permissible, it shall not be of an amount exceeding what is provided by Section 9(2). Sections 7 and 9 are not the fountain-head but the creatures that regulate the power to make deductions, if the employer has under the contract of employment power to do so. The Act is intended for the protection of the workmen. Parties cannot contract contrary to or in terms wider than the import of Sections 7 and 9. If they do, the regulatory Act steps in for the protection of the workmen. Thus, Mr. Kaka's reliance on Section 7(2) of the Payment of Wages Act must fail.
26. Mr. Kaka's reliance on Chandramalai Estate v. Its Workmen (1960-II-LLJ-243) is strained. It was held that a claim for wages for the period of an illegal strike was not permissible. From this Mr. Kaka invites us to hold that deduction of a day's wages could have been made by the Bank. Such according to Mr. Kaka is the ratio of that judgment. It is not. The inference which Mr. Kaka foists on us is so unnatural, that nothing more need be said. Mr. Kaka's reliance on India Marine Service v. Their Workmen (1963-I-LLJ-122) and Ganeshi Ram v. District Magistrate is also misplaced. In the former, an unjustified strike was followed by an unjustified lock-out. It was held that wages to be awarded would be on the basis of apportionment of blame. In the latter, it was held that it is only in respect of unauthorised or illegal deduction could claims be made before the authorities by an aggrieved workman. We have referred to those three decisions not for their relevance but as a concession to the seriousness with which they were cited.
27. The appeal is dismissed with costs.
28. Mr. Kapadia makes an oral application for leave to appeal to the Supreme Court. This is a fit case where under Article 134A of the Constitution the certificate for appeal to the Supreme Court should be granted. We do so accordingly.