Orient Paper Mills S... v. Orient Paper Mills, ...

Patnaik, J.:— The petitioner is a recognised trade union and represents the workers and employees of the Orient Paper Mills. This year in October, “Gandhi Jayanti” and “Dussehra” fell on the same date, i.e, on 2 October, 1987. Since in accordance with an agreement between the management and the workers arrived at on 29 December 1985, the workers were entitled to nine national and festival holidays in a calendar year which include “Gandhi Jayanti” and “Dussehra” and both these holidays fell on 2 October, the petitioner-union requested that 3rd of October should also be declared as a holiday. The management, however, did not accede to this request of the petitioner. The management, thereupon issued a notice under the signature of the personnel officer of the company on 1 October, 1987 indicating therein that to maintain the flow of production in the factory which involves a continuous process of running essential and sensitive equipments, the workers should not participate in the proposed illegal strike on 2 October 1987, and if they do so, the company in accordance with the standing orders may take action for deducting wages for eight days including the wage for 2nd October under the provisions of the Payment of Wages Act. The petitioner has approached this Court by filing the writ petition on 3 November, 1987 after coming to know that the management was going to deduct the wages for a period of 8 days pursuant to the notice, dated 1 October, 1987 (annexure 3.a) by assailing the same, inter alia, on the grounds that in the absence of a determination by the management that the absence of the workers on 2 October, 1987 was a concerted action, the provisions of S. 9(2) of the Payment of Wages Act can have no application and that the deduction in question is being ordered to be made without following any procedure and in an arbitrary manner. In Para. 17 of the writ petition, it has been asserted that the petitioner has come to learn from official source that necessary instructions have been issued to the time-office which is responsible for disbursement of salary to the workmen to deduct 8 days wages from the wages of each workman pursuant to the notice under annexure 3.a. When this case was listed for admission on 4 November 1987, the opposite parties entered appearance through counsel and prayed that the matter may be called on 6 November 1987. At that stage, in view of the petitioner's assertions that deduction was going to be made immediately, this Court had directed that there may not be any deduction of the wages from the workers' salary until further orders in pursuance of notice under annexure 3.a. On 6 November 1987, the interim order restraining deduction was modified as it was represented by the management that the pay bill had already been prepared by making a deduction only of a day's salary in respect of those employees who were called to attend the factory on 2 October 1987, to maintain the continuity of manufacture and not in respect of others and since it was found that it would be difficult to recalculate and reprepare the pay bill in question.

2. The circular No. 53 of 1987 which has been annexed as annexure 3.b to the writ petition clearly reveals that 2 October 1987, will be a holiday for workers whose names are in the permanent muster-roll of the time-office in the mill (A, B, C and General Shift). However, in order to keep the flow of production which is technically a continuous process of production, the mill would be kept running and such of the permanent workers who are called for duty to maintain continuity of production are required to attend their duties. The workers coming on duty would be paid extra equivalent to their two days' wages. It was also stated that those workers whose rest day falls on the festival day and those working in the building and gardening department and office boys are not required to attend the duty.

3. A counter-affidavit has been filed on behalf of the management stating therein that the company is neither a “State” nor an instrumentality of the State, within the meaning of Art. 12 of the Constitution and, therefore, is not amenable to the writ jurisdiction. It has been further stated that there has already been a conciliation at the instance of the Assistant Labour Commissioner and consequently, the dispute in question can be appropriately adjudicated under the provisions of the Industrial Disputes Act. It has also been stated in the counter-affidavit that in accordance with the terms of the settlement, the workmen are under legal obligation to work in national and festival holidays if they are so required by the employer and for that they get enhanced wage and in that view of the matter, there is no illegality in issuing annexures 3 and 3.a.

4. A further affidavit on behalf of the opposite party was filed on 18 November, 1987 stating therein that 2,600 workers were required to work on 2 October, 1987 in all the four shifts to maintain continuity of production and out of these workers required to attend their duty, 172 workmen attended their duties and 216 were availing rest day and authorised leave and, therefore, there had been no wage-cut in respect of them. But in respect of others, their wages for one day had been deducted in accordance with S. 7(2)(b) of the Payment of Wages Act.

5. A further counter to the aforesaid affidavit was filed on behalf of the petitioner, but the averments made therein only relate to the interim order passed by this Court and have no bearing with the legality of the deduction that has been made.

6. In course of hearing of the writ petition, since there had already been a deduction of wage for one day, Sri Palit for the petitioner has filed an application for amendment to amend the prayer and we do not find any impediment in allowing the said amendment which was necessary because of the subsequent event. We would accordingly allow the application for amendment filed on 24 November 1987.

7. At the hearing of the writ petition, Sri Palit, the learned counsel for the petitioner, however, raises the only submission (which was not originally in the writ application namely, that the deduction made by the company of a day's salary is illegal and inoperative since the principles of natural justice have not been followed and the workers have not been required to show cause. Lengthy arguments were advanced by the petitioner as well as by the learned counsel appearing on behalf of the opposite parties. The short question which crops up for consideration is whether the principles of natural justice are required to be followed while effecting deduction in accordance with S. 9 of the Payment of Wages Act. According to Sri Palit, the learned counsel for the petitioner, an order directing deduction of wage of an employee affects his rights and works out to his prejudice and, therefore, unless principles of natural justice are followed giving the employee an opportunity of being heard, the order must be held to be bad in law. In support of the said submission, Sri Palit relies upon the observations of the Supreme Court in the case of Government of Mysore v. J.V Bhat [(1975) 1 SCC 110 : A.I.R 1975 S.C 596], the decision of the Calcutta High Court in the case of Manoj Kanti Bose v. Bank of India [1977-II L.L.N 284], and the decision of the Andhra Pradesh High Court in the case of Balaiah (D.) v. Indian Detonators, Ltd., Kukatpalli, Hyderabad [1976-II L.L.N 50].

8. Before examining the authorities cited by the learned counsel, it would be appropriate to note certain provisions of the Payment of Wages Act. Under S. 7(1) of the Act, the wages of an employed person is required to be paid to him without deductions of any kind except those authorised by or under the Act. Section 7(2) authorises deduction of the wages of an employed person but only in accordance with the provisions of the Act and in cases enumerated in Cls. (a) to (q). The present case falls under Cl. (b), i.e, “deduction for absence from duty.” Section 9(1) confers power of deduction. Section 9(2) stipulates that the deduction in question in no case can bear a large proportion than the period for which the employed person was absent bears to the total period. The proviso to Sub-sec. (2) of S. 9 authorises deduction for 8 days provided it is established that 10 or more employed persons acting in concert absented themselves without due notice and without reasonable cause. This deduction contemplated under the proviso to S. 9(2) stands on a different footing than the deductions made in accordance with the main part of S. 9(2). Section 26 is the rule-making power of the State Government and S. 26(3)(g) provides that State Government can prescribe condition subject to which deduction may be made under the proviso to S. 9(2). The aforesaid provisions indicate that the statute (namely S. 9 of the Payment of Wages Act) stipulates two types of deductions of wages,

(i) normal or ordinary deduction for the period of absence from duty, as contemplated under S. 9(2); and

(ii) the further or penal deduction of wages up to a period of 8 days, as provided under the proviso to S. 9(2).

So far as the question of deduction under S. 9(2) is concerned, in our opinion, the question of applying the principles of natural justice does not arise whereas in case of penal or further deduction under the proviso to S. 9(2), the said principles must be followed and the authorities must adjudicate upon the justification of the so-called strike and the alleged concerted action without which the proviso will not operate.

9. Coming now to the authorities cited by Sri Palit, the learned counsel for the petitioner the first case is the case of the Government of Mysore v. J.V Bhai [(1975) 1 SCC 110 : A.I.R 1975 S.C 596] (vide supra), wherein the provisions of the Mysore Slum Areas (Improvement and Clearance) Act (8 of 1959), came up for consideration. Sri Palit, for the petitioner very much relies upon the observations of the Supreme Court to the effect:

“…It is only where there is nothing in the statute to actually prohibit the giving of an opportunity to be heard, but, on the other hand, the nature of the statutory duty imposed itself necessarily implied an obligation to hear before deciding that the audi alteram partem rule could be imported. The nature of the hearing would, of course, vary according to the nature of the function and what is just and fair exercise required in the context of rights affected.”

The Supreme Court having made the aforesaid observations construed the relevant statute and held that before deciding to demolish the particular buildings, it must be the bounden duty to bear those whose dwellings are to be condemned. The observations made by the Supreme Court in the aforesaid case must be held to have been made in relation to the provisions of the relevant statute which was being considered and the action that bad been taken in pursuance of the said provisions of the statute. Having examined the decision at length, we do not think that those observations will have any application to the present case in respect of the dispute between the parties.

10. Coming to the next decision in Manoj Kanti Bose v. Bank of India [1977-II L.L.N 284] (vide supra), the main question for consideration was whether, the order directing deduction of pay on a pro rata basis for failure or refusal on the part of the employees to carry on with their work during some period of the fixed hours is lawful or not and this was answered in the negative, i.e, the bank has no power either on the basis of the terms of employment or under any law to make the deduction on a pro rata basis for refusal on the part of the employees to carry on with their work during some period of the fixed hours. Bat so far as the direction to deduct a days' s pay from the salary of the employees who absented themselves and did not report for duty on 30 June was concerned, the same was upheld, as it was a case of absence for a whole day and question of any pro rata deduction did not arise. In Para. 32 of the judgment, the question regarding requirement of natural justice was considered and it was held that in the absence of any application from any employee for leave and any satisfactory explanation for the absence, the absence became unauthorised and the bank in consequence of such unauthorised absence became empowered to deduct the pay. In the facts of that case since the employees had not availed of the opportunity of applying for leave for their absence, the Court came to the conclusion that there had been no violation of the principles of natural justice in passing the order for deduction from the salary of the employees for their unauthorised absence on 30 June 1975. We are not in a position to appreciate how this decision helps the learned counsel for the petitioner in this case. On the other hand, it runs counter to the submissions made.

11. The next case is the case of Balaiah (D.) v. Indian Detonators, Ltd, Kukatpalli, Hyderabad [1976-II L.L.N 50] (vide supra). In that case action had been taken in accordance with the proviso to S. 9(2) of the Payment of Wages Act. Sri Palit for the petitioner relies upon the observations made in that case in Para 9, at page 54, to the effect;

“ . .While it is true that notice should be given, it is not necessary it should be given in any particular form, nor is it necessary that it should be sent individually. A general notice is sufficient so long as the workers concerned were made aware of the proposed deduction…”

According to Sri Palit this indicates that notice should be given. But in that particular case, the action was one under the proviso to S. 9(2), namely a case of further deduction and not the normal deduction under S. 9(2). Consequently, the said decision is of no application to the dispute between the parties in the present case.

12. In the case of R.S Dass v. Union of India [1986 Supp SCC 617 : A.I.R 1987 S.C 593], the Supreme Court considered the question of application of the principles of natural justice and observed:

“It is well established that rules of natural justice are not rigid rules, they are flexible and their application depends upon the setting and the background of statutory provision, nature of the right which may be affected and the consequences, which may entail, its application depends upon the facts and circumstances of each case…”

The exact question raised in the present case came up for consideration directly in the case of Mechanical Superintendent Visakhapatnam Port Trust v. Authority under Payment of Wages Act, Visakhapatnam, [A.I.R 1969 A.P 200]. After analysing the different provisions of the Payment of Wages Act, it was held:

“…The action was by the workers and however unreasonable the attitude of the management may have been the workers cannot contend that they did not absent themselves from duty. If they absented themselves from duty, the management was, in terms of S. 9(2), clearly entitled to make the normal or ordinary deduction from wages for the period of their absence from duty. Such deduction was not contrary to the provisions of the Act, even if such deduction was unjustified by reason of some other principle of industrial law…”

Having said so with regard to the legality of deduction made under S. 9(2), it was further observed:

“Of course, in cases where further deduction is made under the proviso to S. 9(2), the authority is bound to adjudicate upon the justification for the strike because it is only where the strike is without reasonable cause that the further deduction can be made. In the present case there is no further deduction under the proviso to S. 9(2) and, therefore, the question whether there was reasonable cause for the strike or not does not arise.”

The Act itself, more particularly S. 10 of the Act, provides for giving an opportunity to show cause against the deduction made under Cls. (c), (m), (n) and (o) of Sub-sec. (2) of S. 7, but not when a deduction is being made under S. 7(2)(b). Then again, the proviso to S. 9(2) indicates that the same can be exercised subject to any rules made in that behalf by the State Government. The Orissa Payment of Wages Rules, 1936, made by the State Government in exercise of power conferred under Sub-sec. (2) of S. 26 of the Payment of Wages Act clearly provides the procedure for deductions to be made for breach of contract. Section 26(3)(g) of the Act provides that rules may be made prescribing the conditions subject to which the deductions shall be made under the proviso to Sub-sec. (2) of S. 9. A combined reading of S. 26(3)(g) of the Act and rule 16 of the rules makes it clear that the procedure provided for in rule 16 has to be applied when deduction is made under the proviso to S. 9(2), and the procedure prescribed under the rules fully complies with the principles of natural justice. The fact that while prescribing the procedure for deduction to be made under the proviso to S. 9(2), the rules specifically provide for application of principles of natural justice and no procedure is provided for under the rules for making the normal deduction under S 9(2) is indicative of the position that for making a deduction under S. 9(2), principles of natural justice are not required to be followed. In the case of Union of India v. Tulsiram Patel [1985-II L.L.N 488], it was observed in Para. 101, at page 542:

“… So far as the audi alteram partem rule is concerned, both in England and in India, it is well established that where a right to a prior notice and an opportunity to be heard before an order is passed would obstruct the taking of prompt action, such a right can be excluded. This right can also-be excluded where the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provisions warrant its exclusion…”

In the present case, the statutory provisions do not expressly or by implication apply the rule of audi alteram partem while making the normal deduction under S. 9(2) of the Payment of Wages Act. Having examined the nature of functions imposed by the statute and the requirements, their design to meet in the context of Ss. 7(2)(b) and 9(2) of the Act, we are of the opinion that it is not the requirement of law that even for making a normal deduction under S. 9(2) for the absence from duty of an employee, the principles of natural justice are required to be followed. Consequently, there is no substance in the contention of Sri Palit, the learned counsel for the petitioner, that the impugned deduction of one day's salary made in case of employees who were required to attend duty on 2 October, to maintain the continuity of the running of the factory is vitiated on account of violation of principles of natural justice.

13. In the result, we do not find any merits in this application which is accordingly dismissed, but in the circumstances, without any order as to costs.

14. K.P Mohapatra, J.:— I agree.