Papering Over the TS Kelawala Cracks

One question were really involved in the nineteen century in industrial premises that whether the workmen who proceed on an strike, whether legal or illegal are they entitle to get wages during the period of strike.

If we observed decision of the Supreme Court we found that an illusory conflict between the Bank of India v T.S Kelawala in one hand where court decided that the legality or illegality of the strike had nothing to do with liability for deduction of the wages even if the strike was legal, it did not save the workers from losing the salary for the period of strike and on the other hand where court given completely negative idea in the case Chaurakulam Tea Estate v Workmen and Cromptom Greaves Ltd v Workmen.

The negative views of these two cases are canvassed before a Constitutional Bench of the case of Syndicate Bank v K. Umesh Nayak [1] which involved with the main question whether the strike is legal or illegal and justified or unjustified. In the T.S Kelawala case did not considered that whether employee are entitle to wages if the strike is justified. In this case court given the justification in regarding whether the strike is legal or illegal and justified or unjustified which has to be decided on the evidence on records by a industrial adjudicator.

In this case certain settlements were entered into between the Union of the Workmen and the manager of the Bank under the Industrial Dispute Act which speaks about the employee of the Bank were entitled to certain advantages with retrospective effect the bank however did not forward the copies of memorandum of settlements to the authorities as required by rule 58(4) of the Industrial Dispute (central) Rules 1957. The settlements therefore were not implemented by the Bank, on the plea that the implementation of the settlement, giving the extra benefits to the workmen, required the government’s approval which was in process. The union on the other hand, contended that the settlements were signed without any pre-condition that they were to be cleared by the Government. Since the matter was becoming a stalemate, the union issued a strike notice to the Bank, demanding an immediate implementation of the settlements and the payment of the arrears of pay and allowances, pursuant to them. Though there was no formal strike notice in terms of section 22 of the said Act. On the basis of a copy of the notice given by the Union to the Bank, the Depety Chief Labour Commissioner and Conciliation Officer (Central) wrote to both the parties, informing them that he would be holding conciliation proceeding under section 12 of the Act and required them to attend conciliation proceeding along with a statement of the case, in terms of rule 41(a) of the Rules. After a few meetings the conciliation officer found that there was no meeting ground and no settlement could be arrived at. However, he kept the proceeding alive by stating in order to explore the possibility of bringing about an understanding in the matter, he would hole further discussions. As the employees felt that the possibility of the implementation of the settlements was not in sight their union gave a letter to the conciliation officer, requesting him to treat the conciliation proceedings as closed. But the conciliation officer still decided to keep the proceedings open, with a view to explore the possibility to resolving the matter amicably. Subsequently the bank issued a circular notice stating that it would be deduct salary for the days the employees go on strike, on the principle of “no work no pay”. In spite of the circular, the employees went on a strike and field a writ petition in the High Court on the issue of challenging the circular which threatening to deduct the salary for the days of strike. High Court relying on the holding in Chaurakulam Tea Estate v Workmen [2] case that held that the workmen were entitled to wages for the period of strike as the strike was legal and justified [3] .

The bank filed appeal through the Special Leave petition before the Supreme Court but the apex court set aside the decision of the High Court and court also directed high court as being beyond the write jurisdiction to decide the dispute and it should be vested in the industrial adjudicator. Therefore the court directed to the government to refer the dispute with regard to a deduction of wages for adjudication to the appropriate authority under this Act.

We can see judicial pronouncement of some earlier decision where apex court clearly said workmen are not entitle to get wages during the strike period. In 1953 in the case of Buckingham and Carnatic Co Ltd V Their Workers [4] , a appeal before the Supreme Court and the court set aside the finding of the Appellate Tribunal [5] by holding that it could not be disputed that there was a cessation of work by a body of persons employed in the Mills and that they were acting in combination and their refusal to go back to work was concerted and the necessary ingredients of the definition of strike in section 2(q) of the Industrial Disputes Act existed. Hence it was an illegal strike because no notice had been given to the management, the Mills being a public utility industry.

After few years in 1960 an another case of Chandramalai Estate, Erbakulam v Its Workmen and Another [6] , where three judge bench of the court had deprecated the conduct of workmen going on strike without waiting for a reasonable time to know the result of the report of the Conciliation Officer. Therefore they use the indiscriminate use of the weapon of strike. And court held that the strike was unjustified. It was, therefore held that the workmen were no entitled to even 50 per cent of the wages for the period of the strike.

Similarly in the Management of fertilizer Corpn of Indian v Workmen [7] , where again court upheld previous decision and held that the workmen were not entitle the wages during the strike period, because the strike though was not illegal but unjustified in that fact of the circumstances.

In the next case an another issue brought before the courtroom in regarding the nature of the strike. Court observed in the case of India General Navigation and Rly Co Ltd v Their Workmen [8] that an illegal strike can not be characterized as justified, because the law makes a distinction between an ‘illegal’ strike and ‘legal’ strike. But it does not make any distinction between an ‘illegal’ strike which may be said to be justifiable and one which is not justifiable. Such distinction is wholly misconceived and especially so in the case of employees in a ‘public-utility-service’. Therefore, in order to entitle the workmen for wages for the period of the strike, the strike must be both legal and justified. If the strike is legal as well as justified, it would be difficult for the employer to resist the claim of the workmen for wages for the period of the strike. on the other side, if the strike is unjustified, the workmen may not be entitle to wages for the period of strike [9] .

We can see the same principle in the case of Chaurakulam Tea Estate v Workmen [10] Court held that there was no conciliation proceeding pending when the factory works resorted. Court also observed that if the strike was hit by section 23(a) of Industrial Dispute Act, it would be illegal under the section 24(1)(i) of the said Act. Since, however the strike in this case could not be illegal. Therefore in this case neither strike was illegal not unjustified, the workmen were entitle to wages for the day on which they went on strike.

Similarly in the case of Cromptom Greaves Ltd v Workmen [11] , an appeal was filed before the Supreme Court by the management against the tribunal award. The court has also given same supportive view of tribunal. Court decided that in order to entitle the workmen to wages for the period of strike. But the strike should be legal and justified. Court farther observed that there was no cogent and disinterested evidence to substantiate the charge that the striking workmen had resorted to force or violence. Hence the court held that the wages for the strike –period could not be denied to the workmen on that ground as well.

Therefore it was obvious from the decision of Churakulam Tea Estate and Crompton Greaves that the workmen are entitle to wages for the period to strike, the strike has to be both legal and justified. The employee can not entitle to wages for such period merely because the strike was legal. In other words, if the strike was illegal but justified, or if the strike was legal but unjustified, the employees would not be entitled to the wages for the strike period. Now a question can come into in this context “whether the workmen who proceeded on the strike, whether legal or illegal, were at all entitled to wages for the period of the strike”.

For the first time the question was considered by the Court in the case of Bank of India v T. S Kelawala and Others [12] where the employee challenged the circular of the bank by writ petition to the High Court. The High Court observed supported reasons behalf of the employee that:-

The bank has no right to deduct the salary of the employee because neither the regulation nor the award to giving empower to do that even no settlement also given them to denied their wages.

Since the strike and demonstrations were not banned on the country and despite the inconvenience that they may cause they were recognised as a legitimate form of protest for the workers, the circular acted as a deterrent to the employees from resorting to a legally recognised mode of protest.

The deduction of the wages for the day according to the court amounted to unilaterally changing the service conditions depriving the workers of their fixed monthly wages under the contract of service.

The conditions of service, wage was paid not from to day or hour to hour but as a fixed sum on monthly basis.

The contract between the Bank and the employee being not a divisible one, in the absence of a specific term in the regulations, awards and selltements, the Bank could not unilaterally reduce the monthly wage and thus give the employees lesser monthly wages than the one contracted.

The terms of the contract also give the employer a cause of action and right to take appropriate remedy for the breach, but the employer was no entitled to deduct any part of the salary either on a pro-rate basis or otherwise.

On the other hand Bank argued that Bank could be declaring a illegal strike according to the law concern. And put the erring workers under the sustention for minor misconduct under the regulation. Law also provides that Bank could be hold an enquiry and after enquiry if any body found guilty, they can impose punishment and it includes stoppage if increment for not more than six months as prescribed by regulation [13] .

But the court rejected their contention that the Bank was entitled to make deduction under sec 7(2) of the Payment of Wages Act, 1926 which speaks about to enable the employer to deduct wages only if the Bank had power under the contract of employment.

In appeal by a special leave, a two-fold question was raised before the Supreme Court was, as to whether the bank was entitled to deduct the wages of the workmen of the workmen for the period of strike and further whether the bank was entitle to deduct the wages for the whole day or pro-rate only for the hours for which the employees had struck work. However the question as whether the strike was legal or illegal and whether it was justified or unjustified was not raised in this case. The only question debated before the Supreme Court was whether even assuming that the strike was legal, the bank was entitle to deduct the wages, as it purported to do under the circular in question. [14]

Here Court found that it was necessary to explain in regarding that there was no doubt that whenever a worker indulges in misconduct such as a deliberate refusal to work, the employer can take a disciplinary action against him and impose on him penalty prescribed for it which was include some deduction from his wages. However, when misconduct is no disputed but is on the other hand admitted and is resorted to on a mass scale such as when the employees go on strike, legal or illegal. In a mass action such as a strike it is not possible to hold an inquiry against every employee nor is it necessary to do so unless, of course, an employee contends that although he did not want to go on strike and wanted to resume his duty, he was prevented from doing so by the other employees or that the employer did not give him proper assistance to resume his duty though he had asked for it. Hence as the present context one question that had to be considered was whether when admittedly the employees refuse to work by going on strike, the employer was entitled to deduct wages for the relevant period or not. It was contended that although the employee went on strike only for four hours and thereafter resumed their duties, the bank has deducted wages for the whole day. And also contended by the workers that it was impermissible and the bank could at most deduct only pro-rate wages.

On the other hand bank contended that when the employees came back to work after their four hours strike, they were not prevented from the entering the bank premises. But admittedly, their attendance after the four hours strike was useless because there was no work to do during the rest of the hours. Bank further contended that the later resumption of work by the employees was not in fulfillment of the contract of service or any obligation under it. Hence the bank was not liable to pay either wages for the full day or even the pro-rate salary for the hours of work. It is not a mere presence of the workmen at the place of work but the work that they do accordingly to the terms of the contract which constitutes the fulfillment of the contract of employment and for which they are entitled to be paid.

Bank also contended that the provision of section 7(2) (b) read with section 9 of the Payment of wages act, 1936 for the right to deduct the wages for absence from the duty. But there was nothing no record where to show that the provision of the act have been made applicable to the Bank. They also contended that even if the service rules and regulations were silent on the point, the Bank could legally deduct the wages under the said provisions. But the court has been given the reason that the power given by the said provisions comes into play only when the employer has power to do so, probably meaning thereby, the power under the rule and regulations.

It is therefore necessary to point out that if the Act was applicable, the bank would certainly have had the power to deduct the wages under the said provisions in the absence of any service rule and regulation to govern by the situation. Since the admitted position is that the service rules do not provide for such a situation.

Most of the court relied upon the earlier decision [15] where court observed that it is not only permissible for the employee to deduct wages for the hours or the day for which the employees are absent from the duty but in such cases as the present it is permissible to deduct wages for the whole day even if the absence is for a few hours. It is also held that the contract is indivisible. Some of the decisions have also held that the deduction of wages can also be made under the provision of the Payment of Wages Act and similar statutes where they are applicable. It is further held that deduction of wages in such cases is not a penalty but it is enforcement of the contract of employment and hence no disciplinary proceedings need procede it [16] .

II) Court also has given reasoning of the above two questions with the new principle of “no work no pay” which was first time brought in the case of V Ganesan v State Bank of India, where learned Judge held that the right to deduct salary on the principle of “no work no pay” could be exercised only when there was a term in the contract or when there was a statutory provision to the effect though the decision was overruled by the Division bench.

Here court relied upon the Secretary of State for Employment V Association Society of Locomotive Engineers and Firemen [17] and Miles v Wakefield Metropolitan District Council [18] where House of Lords held that in a contract of employment wages and work go together. The employer pays for the work and the workers works for his wages. If the employer declines to pay, the worker need not work. If the worker declines to work, the employer need not pay. In an action by a worker to recover his pay, he must allege and prove that he worked or was willing to work.

Depend on this view in the instant case court observed that “it was not enough the employees attend the place of work. They must put in the work allotted to them. It is for the work and not for their mere attendance that the wages are paid. For the same reason-may be even as protests comply with the formalities such as signing the attendance register, no deduction can be effected from their wages. When there is a dispute as to whether the employees attended the place of work or put in the allotted work or not, and if they have not, the reasons therefore etc, the dispute has to be investigated by holding an inquiry into the matter. In such cases, no deduction from the wages can be made without establishing the omission and or commission on the part of the employee concern.” [19]

Court also explained that where the contract, Standing Order or the service rules or regulations are silen on the subject the management has the power to deduct the salary for the absence from the 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 pro0rate for the period of absence only or will be for a longer-period will depend upon the fact of each case such as whether there was any work to be done in the said period, whether it was accepted and acquiesced in etc. where the employees strike only for some hours but there is no work for the rest of the day, the employer in such situation are entitle to deduct wages for the whole day. But the employees may put in the work after the strike period and the employer may accept it or acquiesce in it. In that case the employer may not be entitled to deduct wages at all or be entitled to deduct wages only for the strike period.

Here court adverted to the statutory definition of “strike” and “wages”. Court observed the language of the definition of “wages” which incorporated under section 2(rr) of the Industrial Dispute Act. It means “all remuneration which would provides in terms of employment, expressed or implied were fulfilled, be payable to workmen in respect of his employment or work done in such employment.

On the other hand the definition of “strike” which come under the section 2(q) of the said Act, means “cessation of work” or refusal to continue to work or accept employment by the workmen”

Thus in this definition, the legislature has unequivocally incorporated the doctrine of “no work no pay”. When the workmen go on strike they cease to work, refuse to continue to work. Therefore they fail to fulfill the terms of the contract of employment. Hence when the workers do not put in the allotted work or refuse to do it, they would only be entitled to the wages proportionately.

In conclusion, Supreme Court held in the instant case that the legality or illegality of the strike had nothing to do with the liability for a deduction of the wages and even if the strike was legal, it did not save the workers from losing the salary for the period of strike. Hence both legal as well as illegal strikes invite a deduction of the wages, on the principle that whoever voluntarily refrains from doing work when it is offered to him, is not entitled for payment for work he has done. In other side court upheld the doctrine of “no work no pay” [20]

Conclusion:

In the case of Syndicate Bank v K. Umesh Nayak [21] where court developed the concept of legal or illegal strike and justified or unjustified strike which had not consider the previous case. Here court clearly said that the workers are not entitled to wages for the strike period even if the strike is legal. They would be entitled to the wages for the strike period if the strike has to be both legal and justified.

Bank contended before the High Court that since under the Provision of sub sec(1) of section 22 of the Industrial Dispute Act the employees were prohibited from resorting to strike during the pendency of the conciliation proceedings and since admittedly the conciliation proceedings were pending to resolve an industrial dispute between the parties, the strike in illegal.

The employee contended that the dispute had arisen because while the Bank was required to take approval of the Central Government for the settlement of the question, but there no such approval was necessary and there was no condition incorporated in the settlement. Employee further argued that the conciliation proceeding were valid pending on the date of the strike. and there could be no valid conciliation proceeding as there was no industrial dispute. Hence the sub sec (1) of sec 22 did not come into picture.

The learned single Judge upheld the Bank contention on depend on T.S Kelawala’s decision but it was reversed by the Division Bench where court held that the approval of the Central Government as a condition precedent to their implementation was not incorporated in the settlement nor was such approval necessary. Hence there was no valid industrial dispute for which conciliation proceeding could be held. So sub section (1) of section 22 of the ID Act did not applicable. Therefore the strike was not illegal. The court also held that the strike was in circumstances justified since it was the bank management’s unjustified attitude in not implementing the settlement which was responsible for the strike.

Court further held on the relied upon the two decisions of b Chumakulam Tea Estate and Crompton Greaves that since strike was legal and justified, no deduction of wages for the strike day could be made from the salaries of the employees.

Court observed that a strike may be illegal if it contravenes the provision of section 22, 23 or 24 of the act or any other law or terms of the employment upon employment depending upon the facts of each case. Similarly a strike may be justified or unjustified depending upon the several factors such as the service conditions of the workmen, the nature of the demand of the workmen the cause which led to the strike, the urgency of the cause or the demands of the workmen the reason not resorting to the dispute resolving machinery provision by the act or the contract of employment or the service rules and regulations ect.

As we understood from this decision that if the strike is legal and justified workers are entitled the get wages, though the T.S. Kelawala was not completely overruled by the Supreme Court. But Supreme Court did not entertain any conflict in regarding to the principle of “no work no pay” in this case.

If we look at the legislative definition of “wages” and “strike” [22] , the legislature unequivocally incorporated the doctrine of “no work no pay”. From the juxtaposition of these definitions clearly given the view that the workmen who go on strike, he is not entitled to get wages during the strike period. On the clear and unambiguous language of the statute, the question of legality or illegality or justifiable or unjustifiable of the strike are irrelevant. Likewise in the in the case of “lock out” the question of nature of strike are also irrelevant. In the view of the plain language of the definition of a ‘lock out’ in sec 2(1), an employer who declares a ‘lock out’ is liable to pay wages to the workmen for the period of the ‘lockout’ because he disables them to fulfill the terms of the contract of employment, by closing the place of employment.

Even we can see the general law of contract an employee who does not perform the work of him, under the contract, he will not be entitled to wage for such period, because of a failure of the consideration.

If we noticed the observation of Lord Denning in Secretary of State for Employment V Association Society of Locomotive Engineers and Firemen [23] we can see that “Wages are to be paid for services rendered not for producing deliberate chaos”.

If we focused the observation of J Sawant, we can found that there was no contradictory view has been taken by him in Kelawala from Chrakulam and Crompton case. But this observation goes in wrong way. Because, J Sawant himself overruled the decision of Chrakulam and Crompton cases in the T.S Kelawala . In kelawala he clearly held that no wages are payable in the case of strike, whether the strike was legal or illegal where in Crompton case court said in order to be entitled to wages, the strike should be both legal and justified. In fact the line of the reasoning is proceeds in opposite direction. Therefore J Sawant further observed in the Syndicate bank case that there was nothing contrary in Kelawala is intriguing.