T.S Kelwala And Others v. Bank Of India And Others

M.L Pendse, J.:— Two questions fall for consideration in this petition filed by the employees of the nationalised bank and those questions are (i) whether it is open for the Bank authorities to deduct any part of the salary for absence from work of an employee, and (ii) if so, whether pro-rata deduction of salary is permissible for absence of employee for the part of the day.

2. The petitioners No. 1 and 2 are employees working with Respondent No. 1 Bank while petitioners 3 and 4 are the Trade Union representing the employees of the Bank. Petitioner Nos. 1 and 2 are employees on a monthly salary. The service conditions of the Bank employees were governed by the Award of Shri P. Shastry and Mr. Justice K.T Desai prior to October 19, 1966. On October 19, 1966 and October 12, 1970, the service conditions were modified as per the by-partiate agreements entered into between the All India Bank Employees Association and the Indian Bank Association. The by partiate agreement was further modified by supplementary agreement dated July 23, 1971. The employees were demanding wages revision in the Banking industry since the year 1975. After the advent of the internal emergency declared by the Government of India the Bank authorities were directed not to hold any discussion with the unions representing the employees. In June 1977, the employees union decided to take action in furtherance of their demands and in response to the call of All India Bank Employees Association, the employees resorted to the strike for a duration of two hours each on August 18, August 29 and September 13, 1977. Respondent No. 1 by a circular dated September 23, 1977, addressed to the Managers of various branches directed that the wages of the staff participating in the strike should be deducted on the principle of “No work no pay”. The Union gave call for strike on December 29, 1977 for four hours and in view of impending strike the Bank authorities issued a circular dated December 27, 1977. By this circular instructions were issued by the Head Office to all the Managers and Agents of various branches in Bombay Metropolitan Region and in Goa to put up a notice warning the employees that in case they resort to the strike for a period of four hours, then they would be committing breach of contract of service and would not draw salary for the entire day. In pursuance of this circular, each of the Branch Managers displayed the notice on December 27, 1977. The Bank employees inspite of this notice struck work for a duration of four hours on December 29, 1977 in support of their demands. The Badk authorities thereupon advised the Managers and the Agents to deduct full day's wages and allowances for absence from duty for four hours on December 29, 1977. The employees had also struck work for entire day on December 30, 1977 and the authorities deducted the salary of the employees for that day also. The petitioners have thereafter approached this Court seeking a writ of mandamus for directing the Bank authorities to rescind the decision providing for deduction of salary and restraining the Bank authorities from deducting any amount of wages for striking of the work on December 29.1977

3. In answer to the petition, on behalf of the respondents, return has been filed by Shri V.M Nadkarni, Executive Regional Manager, Bombay Metropolitan Region, Bank of India. After setting out the inconvenience which will be caused to the Bank and to ???ts customers by the practice adopted by the employees, the return further mentions that the action of the employees had resulted into a total disruption of the work. The return further mentions that it was open for the Bank to terminate the services of the employees, but instead of doing that action of far less stringent character was resorted to. It is further claimed that Rule 13-27 enables the authorities to deduct wages for absence from duty for part of the day, without holding any inquiry.

4. Shri Sanghavi, the learned counsel appearing in support of the petition, submitted that the action of the Bank is entirely unsupportable. The learned counsel submitted that the relationship between the employees and the Bank is not of a master and servant, but the employees have a statutory status and their conditions of service are statutory in nature. The learned counsel submitted that even assuming that the relationship is of a master and servant, still it is not permissible for the Bank authorities to deduct the wages for the full day for striking work for part of a day. It was argued that to strike work for a part of the day in exercise of the right to collectively bargain for better conditions of service is not a breach of a contract of service. The learned counsel submitted that the contract of service and the conditions of service enable the authorities to impose any punishment including dismissal from the service, but that can be resorted to only after following the requisite procedure provided by the Act. Shri Singhavi submits that deductions from salary for the period during which the employees had struck the work is nothing less than the punishment of fine and that cannot be sustained without the Bank authorities following the proper procedure. Shri Vahasvaty, the learned counsel appearing on behalf of the Bank, on the other hand submits that there is no implicit contract between the employees and the employer to deduct the wages for the work not done. The learned counsel submitted that apart from the contract of service, the provisions of Payment of Wages Act enables the authorities to deduct the wages for the period for which the work was not done by the employees. It was also urged that though the salary was fixed for the entire month it is permissible to deduct the wages pro-rata for the work not done on a particular day.

5. In view of these rival submissions, the first question which falls for determination is whether the contract of conditions of service enables the Bank authorities to deduct any part of the salary for failure or refusal on the part of the employees to carry on their work during any part of the working hours. It is now well settled that the right to receive salary is a right to property. Respondent No. 1 is a nationalised bank and unless empowered or authorised by any Act or under the terms and conditions of employment it is not permissible to deduct any part of the salary payable to the employees. The contract between the employees and the Bank is indivisible and the consideration for payment of salary to the employees is service to be rendered by the employees. The consideration is not related to any fixed period of work for any month. The refusal of an employee to do work on a particular day results in partial failure of the consideration and in consequence whereof the employer may be able to claim compensation against the employee, but the employer cannot claim the right to deduct any part of the salary. Shri Vahasvaty did not dispute that the contract of conditions of service did not expressly authorise the Bank to deduct salary for a particular day or a part of the day for the work not done by the employees. The submission of the learned counsel is that though the contract does not specifically provide such right in the employer an implicit right should be read in the terms of contract. In my judgment, it is difficult to accept this line of reasoning. It is not open for the employer to assume that the consideration for the contract can be split up and though the salary was fixed for the entire period of one month it is open to deduct the salary of a particular day or a part of the day. In absence of specific term in the conditions of service, it is not open for the employer to reduce the wages on the ground that the workers had not performed their part of the obligation under the service conditions. Even though the employees had struck work for a part of a day on December 29, 1977 and have remained absent for the entire day on December 30, 1977, the Bank had not chosen to terminate the contract but the contract of employment subsist inspite of absence from duty by the employees. In my judgment, it is not permissible for the Bank authorities, in absence of contract, to deduct the wages of the employees for the work not done in a particular month.

6. The view which I am taking is shared by certain decisions not only of this Court but the Calcutta and Madras High Courts also. I will first refer to the decision of a Division Bench of this Court reported in Apar (Pvt.) Limited v. S.R Samant (1). In that case, a settlement was entered into between the employer and the employees whereby the employees agreed to make all efforts to eliminate the factors of low production and to bring up the same to the productivity level. Inspite of the settlement, differences arose and the employees launched go-slow tactics resulting into low production. The employer thereupon put up a notice stating that because of the attitude of indiscipline on the part of the employees the employer was relieved of its commitments and obligations imposed upon it by the agreement. In pursuance of the notice, the employer declined to pay the wages and other emoluments as per the terms of settlement. The question raised before this Court was (1) whether the employer could unilaterally reduce the wages on the ground that the employees have adopted go slow tactics in violation of the terms of the settlement and (2) whether the employer could invoke the principle of “no work, no wages”. The Division Bench observed as follows;

“In the absence of a specific term in the settlement or statutory provision an employer has no right to reduce the wages or emoluments on the allegation that the workers had resorted to go-slow tactics or had not performed their part of the obligation in the settlement. In the instant case the management had proceeded on the assumption that the workers had indulged in serious types of misconduct. Reduction of wages in such circumstances is clearly a punishment. Such penal action is not permissible without holding an enquiry as it is violative of principles of natural justice”.

7. This decision undoubtedly supports the submission of Shri Singhavi that in the absence of specific provision under the contract of service the Bank authorities had no right to reduce the wages. Shri Vahasvaty tried to distinguish this judgment by submitting that the Division Bench was not called upon to consider the principle of “no work, no pay”. The submission is without any merit. The plain reading of the judgment clearly indicates that one of the questions formulated by the Division Bench was whether the employer could invoke the principle of “no work, no pay”. Shri Vahasvaty then submitted that in the case before the Division Bench the employees had not remained away from the job but attended the work and adopted go-slow tactics. The submission is that as in the present case the employees had remained away from the work, the principle laid down by the Division Bench has no application. In my judgment, the submission is totally falacious. The question is not whether the employees physically attended the work but whether they really discharged the duties required of them. The employees in the given case may attend the work and adopt go-slow tactics, while in the other case the employees may attend the place of work but refuse to perform any work assigned to them, while in another case the employees may remain away from the work. In all these cases the employees have failed to discharge their duties and have committed breach of contract. It is open in all these cases for the employer to terminate the employment according to the provisions of law, but in none of these cases it is open for the employer to unilaterally deduct or reduce the wages which were to be paid on monthly basis. In my judgment in view of the decision of the Division Bench it must be held that the action of the Bank authorities in deducting wages for December 29, 1977 and December 30, 1977 was illegal.

8. Shri Singhavi also invited my attention to the decision of Mr. Justice A.N Sen, as he then was, in the matter No. 252 of 1975 decided on January 22, 1976. An identical question arose before the learned Judge when the employees of Bank of India absented themselves from work and participated in demonstrations for certain period for four days and the Bank issued orders deducting their wages on pro-rata basis. The learned Judge held that the contract of employment is not a divisible one, and the consideration for payment of salary is not related to any fix period of work for any month. The consideration being one and indivisible, the learned Judge observed that the Bank was not entitled to deduct the salary on a pro-rata basis even for the period for which the employees were actually absent. The decision of the learned Judge was approved by the Division Bench of this Court. An identical question arose for consideration before the Madras High Court in a group of writ petitions filed on behalf of the employees of the State Bank of India. In a judgment reported in V. Ganesan v. State Bank of India(2), the learned Judge took the view that the contention of the Bank that the service condition was a matter of pure contract and as the employees have committed breach thereof Bank is entitled to deduct the wages for the period for which the employees had not worked, was not correct. The learned Judge held that the employment in the Bank involves an element of public employment and the employees having statutory status, though not the status of civil servant, in the absence of any statutory provision the Bank would not be entitled to deduct the salary for the period for which the employees had worked. The question before the Madras High Court was only in respect of deduction of the salary for the part of the day for which the employees had struck work. The learned Judge approved the view of the Calcutta High Court and the Division Bench of the Bombay High Court and disagreed with the Judgment of Punjab and Haryana High Courts which held that the contract of employment is divisible into days.

9. Shri Vahanvaty submitted that even assuming that the contract of conditions of service does not enable the Bank authorities to deduct wages for work not done, it is open for the authorities to rely upon the statutory provision in exercise of that power. In support of his submission reliance is placed on the provisions of Sections 7 and 9 of the Payment of Wages Act. Section 7 provides for deductions which may be made from wages paid to the employees. Section 7 inter alia lays down that the wages of the employed person shall be paid without deductions…except those authorised by the Act. Section 7(2) reads as under:

“Deduction 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:

(b) Deductions for absence from duty;”

10. Section 9(1) and (2) reads as under:

(1) Deductions may be made under clause (b) of sub-section (2) of Section 7 only on account of the absence of an employed person from the place or places where by the term of his employment, he is required to work, such absence being for the whole or any part of the period during which he is so required to work.

(2) The amount of such deduction shall in no case bear to the wages payable so the employed person in respect of the wage period for which the deduction is made, a large proportion than the period for which he was absent bears to the total period, within such wage-period, during which by the terms of his employment, he was required to work:

Provided that, subject to any rules made in this behalf by the State Government if ten or more employed persons acting in concert absent themselves without due notice (that is to say without giving the notice which is required under the terms of their contracts of employment) and without reasonable cause, such deduction from any such person may include such amount not exceeding his wages for eight days as may be any such terms due to the employer in lieu of due notice.”

11. Relying upon these provisions, Shri Vahanvaty urges that even though the contract does not enable the employer to deduct wages for absency from duty, the Bank can exercise that right. In my judgment, the submission is fallacious and cannot be accepted. The learned counsel assumed that Section 7(2) and Section 9 gives power to the employer to deduct wages for absence from duty. In other words, what is claimed is that the provisions of Payment of Wages Act are superimposed on the contract between the employer and the employees. Neither Section 7 nor Section 9 are the source of power for the purpose of deduction, but what these provisions does is only to fetter the right of the parties to the contract to the contrary Section 9(2) inter alia provides that the amount of deduction shall in no case bear to the wages payable in respect of the wages period for which the deduction is made, a larger proportion than the period for which be is absent. What this provision does is to impose restriction on the right of the parties to contract to the contrary. It is not correct to suggest that independent of the contract an employer can fall back upon the statutory right given under the Payment of Wages Act to deduct the wages. Shri Vahanvaty relied in support of his submission on the decision of the Punjab and Haryana High Court reported in Dharam Singh Rajput v. Bank of India, Bombay(3). The question which came up for consideration before the Punjab and Haryana High Court was in respect of deduction of wages of the Bank employees for having struck work for the part of the day. The Bank authorities deducted the salary for the entire day and the argument advanced was that in view of provisions of Section 9(2) of the Payment of Wages Act it is not permissible for the Bank to deduct the salary for the entire day. The reading of the judgment indicates that it was argued on behalf of employees that the source of power to deduct wages flows from the provisions of Sections 7 and 9 of the Payment of Wages Act. In my judgment that assumption was totally unfounded. The Punjab and Haryana High Court held that where the wage period is monthly, a pare of the period can be reasonably split up into a number of days during the month, but it would be unreasonable to further split up each day into hours, minutes and seconds. On these conclusions, the Punjab and Haryana High Court held that though tne employees had worked on a part of the day the deduction of the salary for the entire day was justified. It is not possible to accept the view taken by the Punjab and Haryana High Court for more than one reason. In the first instance, the submission proceeded before the Punjab and Haryana High Court on an erroneous assumption that source of power to deduct flows from Section 7 and Section 9 of the Payment of Wages Act. Secondly, the conclusion recorded by the Punjab and Haryana High Court that where the wage period is monthly a part of the period can be reasonably split up into number of days is contrary to the Division Bench decision of this Court. The reading of Section 7 of the Payment of Wages Act indicates that the employer can deduct the wages of an employee provided it is so permitted under the contract or settlement or award. The provisions of the Payment of Wages Act merely provide a mode of such deductions and do not confer a right on the employer to deduct. The right to deduct must be found out from the contract or any other statutory provision and reliance on provisions of Payment of Wages Act is ill-founded. With respect, I am unable to accept the decision of the Punjab and Haryana High Court. It is required to be stated that the Madras High Court also did not accept the ratio laid down by the Punjab and Haryana High Court. Before the Division Bench of this Court the submission was advanced on the basis of provisions of the Payment of Wages Act, but it was conceded that the deduction did not fall in the permissible statutory deductions. In my judgment, the deduction of wages resorted to by the Bank authorities was totally without any authority of law and the petitioners are entitled to the relief sought in the petition.

12. Accordingly, the petition succeeds and the rule is made absolute in terms of prayer (a) of the petition. The Bank authorities shall pay the amount deducted within a period of one month from today. The respondents shall pay the costs to the petitioners.