Citation Codes

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Case Number

Original Petitions Nos. 8748 and 9075 of 1993

Advocates

Sri T.P Kelu Nambiar and Sri P.G Rajagopalan.
Sri P.C Sasidharan.

Judges

Sri M.R Hariharan Nair, J.

Acts

PAYMENT OF WAGES ACT

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Smart Summary

Summary of Opinion

Factual and Procedural Background

The common factual matrix involves partial strikes by employees of the Reserve Bank of India, Trivandrum, on two dates: 5 October 1990 (strike from 11:30 A.M. to 2:00 P.M.) and 7 March 1991 (strike from 1:00 P.M. to 2:00 P.M.). The Bank's working hours in the cash and customer-related sections ended by 2:00 P.M. on each day. The employer (Reserve Bank of India) cut a full day's wages for the employees for those days. The Industrial Tribunal, Kollam (referred to in the opinion as Exhibit P3) held that the management was not justified in regularising the absence as “extraordinary leave without pay and allowances not counting for increment” and declared that the workers were entitled to pro rata wages for those days.

The Bank relied on internal directives (Exhibit M1 circular of 6 July 1988 and Exhibit M2 office order of 23 July 1988) which informed employees that those working in public-facing departments who did not discharge duties during business hours, even for part of the hours, would not be paid pay and allowances for the whole day. The Bank challenged the Tribunal's award by filing original petitions. The court, after hearing and analysis, allowed the original petitions and set aside the impugned award.

Legal Issues Presented

Whether an employer (here, the Reserve Bank of India) is justified in cutting a full day's wages where employees undertake a partial strike (i.e., are absent for part of a working day) in departments dealing with the public.
Whether, on the facts of these cases and in light of the employer's circulars (Exhibits M1 and M2), the Industrial Tribunal was correct in directing pro rata wages for the days on which partial strikes occurred.
Whether doctrines such as acquiescence or acceptance of partial work by the employer can preclude deduction of full day's wages where employees worked for part of the day and then ceased work.

Arguments of the Parties

Management / Appellant (Reserve Bank of India)

Relied on Exhibit M1 (circular of 6 July 1988) and Exhibit M2 (office order of 23 July 1988), which specified that employees in public-facing departments who do not discharge duties during business hours, even for part of the hours, would not be paid for the whole day.
Contended that because the circulars expressly provided for full-day wage cuts for partial strikes, employees who worked in part on the relevant dates deprived themselves of any right to a portion of the day's wages.
Argued that the management lost work as a result of the partial strikes and therefore the consequences set out in the circulars had to be applied.

Respondents / Workmen (Reserve Bank Employees Association)

Contended that because work was turned out (i.e., performed) for part of the day, there was no justification for cutting the entire day's wages and that only a pro rata deduction would be appropriate.
Argued that by allowing employees to work in part the management had acquiesced in their action, which would preclude a full-day wage cut.
Relied on judicial authority, specifically Bank of India v. T.S Kelawala [1990 (2) L.L.N 251] and an unreported decision of the Madras High Court (Writ Petitions Nos. 10241/82, 994 and 1995/83 and 4707, 4710 and 4925/81), to support the proposition that if employees worked at least in part the management would be disentitled to cut the whole day's wages.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bank of India v. T.S Kelawala [1990 (2) L.L.N 251]	The court considered "whether notwithstanding the absence of a term in the contract of employment or of a provision in the service rules or regulations, whether an employer would be entitled to deduct wages for the period that the employee refused to work, although the work was offered to them." It also recognized that "it is not only permissible for the employer to deduct wages for the hours or the days for which the employees were absent from duty, but it is also permissible to deduct wages for the whole day even if the absence is only for a few hours." The extent of deduction depends on facts such as whether there was work to be done, whether the work was done, and whether it was accepted/acquiesced in. It further noted that where enactments such as the Payment of Wages Act are applicable, deductions can be made under such enactments.	The court held that where Exhibits M1 and M2 (the Bank's circulars) expressly specified full-day deductions for partial strikes, the Industrial Tribunal erred in applying Kelawala to order pro rata wages. The court applied Kelawala to conclude that the Bank was justified in deducting a full day's wages on the facts of these cases (no acquiescence; work ceased after partial performance; work remained to be done).
Shenoy v. Central Bank of India [1983 (2) L.L.N 213]	Considered whether management can cut the full day's wages where the strike was only partial; answered in favour of management. Emphasized that "the day is the unit of the contract of employment" and the question is whether duties were discharged for the full day.	The court relied on Shenoy to support the proposition that the relevant inquiry is whether employees discharged their duty for the full day and to reinforce the conclusion that full-day deduction can be justified on the facts here.
Unreported decision of the Madras High Court (Writ Petitions Nos. 10241/82, 994 and 1995/83 and 4707, 4710 and 4925/81)	Cited by respondents to contend that if employees have worked at least in part, the management would be disentitled to cut the whole day's wages (supporting pro rata payment).	The opinion records that respondents relied on this unreported decision, but the court found Kelawala authoritative and held that on the facts and in light of Exhibits M1 and M2, the Industrial Tribunal's contrary conclusion was incorrect.

Court's Reasoning and Analysis

The court's analysis proceeded from the established principle in Bank of India v. T.S Kelawala that an employer may deduct wages for the period an employee refused to work and, in certain circumstances, may deduct wages for the whole day even if absence was only for a few hours. The extent of deduction depends on factual considerations such as whether there was work to be done during the remaining hours, whether work was in fact done, and whether the employer accepted or acquiesced in the partial work.

The court noted that Exhibits M1 and M2 are definitive circulars issued by the Reserve Bank specifying that employees in public-facing departments who fail to discharge duties during business hours, even for part of those hours, would not be paid for the whole day. Because this policy was communicated in advance, the Tribunal's finding that cutting wages for the full day was irregular was, in the court's view, inconsistent with Kelawala and with the operation of those circulars.

The court distinguished the present facts from the Kelawala facts on the point of acquiescence: in Kelawala the management had admitted workers into the office after the forenoon strike and allowed them to remain, which implicated acquiescence and acceptance considerations. In the present cases the employees worked for part of the day and then ceased work, leaving work undone for the rest of the business hours. The court concluded that the question of acquiescence did not arise here and that the management had legitimately lost work as a consequence of the partial strikes, thereby triggering the consequences set out in Exhibits M1 and M2.

The court also relied on Shenoy v. Central Bank of India to reinforce that the day is the unit of the contract of employment and that the key inquiry is whether duties were discharged for the full day. On the combined reasoning of Kelawala, Shenoy, and the effect of the Bank's circulars, the court concluded that the Industrial Tribunal had misunderstood and misapplied the legal principles and the impact of Exhibits M1 and M2.

Holding and Implications

Holding: The original petitions are allowed and the impugned award of the Industrial Tribunal in these matters is set aside. The court declared that the employees who struck work on 5 October 1990 and 7 March 1991 are not entitled to any wages for those respective days and that the action of the Bank in effecting full day's wage cuts for those days is correct and legal.

Implications:

Direct effect: The Industrial Tribunal's award ordering pro rata wages for the days in question (referred to in the opinion) is set aside; the employees are deprived of any wage for those days.
The court applied existing precedents (notably Bank of India v. T.S Kelawala and Shenoy v. Central Bank of India) and existing circular instructions (Exhibits M1 and M2) to resolve the dispute; the decision applies those authorities to the facts rather than announcing a novel principle beyond them.

Order: Petition allowed.

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Manager, Reserve Bank Of India v. V. Raveendran, Secretary, Reserve Bank Employees' Association, And Others

1. The common question that arises in these original petitions is the validity of the order issued by the employer Reserve Bank of India cutting a full day's wage for partial strike held by its employees. In O.P No. 8748 the strike involved was from 11.30 A.M to 2 P.M on 5 October 1990 whereas in O.P No. 9075 of 1993 it was from 1 P.M to 2 P.M on 7 March 1991.

2. The working hours in the bank's cash and customer related sections, it is not disputed, would expire by 2 P.M everyday. The contention of the respondents, who are the workmen of the Reserve Bank of India, Trivandrum, and the members of the Reserve Bank Employees Association, is that since there was work turned out at least for part of the day, on the above dates, there is no justification for cutting the entire day's wage for a partial strike and that only a pro rata cut would have been justified.

3. What is under challenge in both these cases is the validity of Exhibit P3 award of the Industrial Tribunal, Kollam holding that the management (Reserve Bank of India) is not justified in regularising the absence of employees for a part of the particular day by treating it as “extraordinary leave without pay and allowances not counting for increment” and declaring that the workers would be entitled to get the pro rata wages on that day.

4. The management relied on Exhibit M1 circular issued by the Reserve Bank of India on 6 July 1988 informing the workmen that if employees working in the departments dealing with the public, do not discharge their duties as a part of concerted action or otherwise during the business hours, and thereby cause disruption in public service even for a part of the business hours, such employees will not be paid pay and allowances for the whole day, even if they have performed duties during the remaining part of the day. Reliance is also placed on Exhibit M2 office order issued by the Reserve Bank of India, Trivandrum office, on 23 July 1998 conveying the very same decision to the employees. The departments of the bank which are affected by the decision have also been specified in Exhibit M2. The contention is that though the employee worked in part on the relevant days, by virtue of the operation of the aforesaid circulars, they have deprived themselves of the right to get any portion of the days' wages.

5. The learned counsel appearing for the respondents in these two cases, during hearing, relied on the decision in Bank of India v. T.S Kelawala [1990 (2) L.L.N 251] as also on an unreported decision of the Madras High Court passed in Writ Petitions Nos. 10241/82, 994 and 1995/83 and 4707, 4710 and 4925/81 to contend that if the employees have worked at least in part, the Management would be disentitled to cut the whole day's wages. It was also argued that by allowing the employees to work in part the Management has acquiesced in the action of the employees and as such only pro rata cut can be implemented.

6. It is obvious from the decision in Kelawala case [1990 (2) L.L.N 251] (vide supra) that the strike that arose in that case though not governed by any service rules or regulations, was governed by warnings and circulars specifying that the management would be cutting the full day's wages in the case of strike. The circular had specified that even for partial strike the full day's wages would be cut and that workers need not report for duty for the rest of the working hours on the day of strike. The employees, however, struck work for the 4 hours (banking hours) as announced, but resumed attendance thereafter. The bank did not prevent them from doing so. It was found that the bank, in the circumstances, was not bound to pay either full day's salary or even pro rata salary for the period when remained in the office without doing any work. A perusal of Para. 4, at page 256, of the said judgment makes it clear that what was considered by the Supreme Court:

“was whether notwithstanding the absence of a term in the contract of employment or of a provision in the service rules or regulations, whether an employer would be entitled to deduct wages for the period that the employee refused to work, although the work was offered to them.”

7. In the instant case Exhibits M1 and M2 marked by the Industrial Tribunal show that definite directions governing the matter had been issued specifying that even for strike for a part of the day the management would be cutting the entire day's wages. I am of the view that the Industrial Tribunal was wrong in finding that cutting of wages for the full day, made in the instant case, was irregular on the principles laid down in Kelawala case [1990 (2) L.L.N 251] (vide supra).

8. In Para. 13, at page 260 of the judgment in Kelawala case [1990 (2) L.L.N 251], itself:

“the Supreme Court has referred to a catena of decisions which take the view that it is not only permissible for the employer to deduct wages for the hours or the days for which the employees were absent from duty, but it is also permissible to deduct wages for the whole day even if the absence is only for a few hours.”

In Paras. 22 and 24, at page 262 the Supreme Court summarised the legal position as follows:

“22. …Where the contract, Standing Orders or the service rules/regulations are silent on the subject, the management has the power to deduct wages for absence from duty when the absence is a concerted action on the part of the employees and the absence is not disputed. Whether the deduction from wages will be pro rata for the period of absence only or will be for a longer period will depend upon the facts of each case such as whether there was any work to be done in the said period, whether the work was in fact done and whether it was accepted and acquiesced in, etc.

23. xxx

24. When the contract, Standing Orders, or the service rules/regulations are silent, but enactment such as the Payment of Wages Act providing for wage cuts for the absence from duty is applicable to the establishment concerned, the wages can be deducted even under the provisions of such enactment.”

9. In Para 28, at page 263 of 1990 (2) L.L.N, the Supreme Court further made the position clear by holding that:

“…whether wages are deductible at all and to what extent will, however, depend on the facts of each case and that even if the employees may strike only for some hours; if there” is no work for the rest of the day as in the present case the employer would be justified in deducting salary for the whole day. On the other hand, the employees may put in work after the strike hours and the employer may accept it or acquiesce in it. In that case the employer may not be entitled to deduct wages in full or even the pro rata wages for the hours of strike.…”

10. In the instant case the question of acquiescence does not arise because here is a case where the employees worked for certain time and then struck work. The principle of acquiescence was considered in Kelawala case [1990 (2) L.L.N 251] (vide supra). because the strike that arose in that case was in the forenoon and the management admitted the workers and allowed them to be in the office in the afternoon. The question of granting such permission did not arise in the present case as the work had already been done in part in the forenoon (up to 11.30 A.M on 5 October 1990 and up to 1 P.M on 7 March 1991 and thereafter, they got themselves out of work. It may be mentioned here that in consequence of the respondent's partial work during the working hours there remained work to be done for the rest of the working hours albeit most of it was non-banking hours. Thus in the present case the management lost work in consequences mentioned in the circular have therefore to follow.

11. Shenoy v. Central Bank of India [1983 (2) L.L.N 213], also went into the question whether the Management can cut the full day's wages where the strike was only partial. The Bench, which considered the question, answered it in favour of the management. It was held that the question is whether they discharges their duty for the full day as the day is the unit of the contract of employment. According to me the principles laid down in Kelawala case [1990 (2) L.L.N 251] (vide supra), do not indicate to the contrary. The question is not whether they discharged their duty in part; but whether they failedto work for any part. Viewed from that perspective, the answer that can be given is that there was failure on the part of the employees to comply with the directions in Exhibits M1 and M2 circulars marked by the Industrial Tribunal and consequent exposure to the consequences enumerated therein. The action of the management in cutting the full day's wages is therefore justified and the impugned decision of the Industrial Tribunal, made without properly understanding the principles laid down in Kelawala case (vide supra), as also the impact of Exhibits M1 and M2 on the employees on the facts of this case is unjustified.

12. The original petitions are, hence, allowed and Exhibit P8 award passed in these two cases are set aside.

13. It is declared that the employees of the bank who struck work on 5 October 1990 and 7 March 1991 respectively as per details in O.P Nos. 8748/93 and 9075/93 are not entitled to any wages for the respective days and that the action of the bank in effecting full day's wage cut for the said days is correct and legal.

Petition allowed.

Manager, Reserve Ban... v. V. Raveendran, Secre...