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V. Ganesan Vs. the State Bank of India and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Case NumberW.P. No. 4386 of 1977, 307, 308, 327 and 330 of 1978, 572, 757 and 758 of 1980
Judge
Reported in(1981)ILLJ64Mad
ActsTamil Nadu Shops and Establishments Act, 1947- Sections 6, 34 and 36; Tamil Nadu Shops and Establishments Rules, 1947 - Rule 12; State Warehousing Corporation Act
AppellantV. Ganesan
RespondentThe State Bank of India and ors.
Cases ReferredIn Apar (Pvt.) Ltd. v. S. R. Samant
Excerpt:
(i) labour and industrial - mandamus - sections 6, 34 and 36 of tamil nadu shops and establishments act, 1947, rule 12 of tamil nadu shops and establishments rules, 1947 and state warehousing corporation act - writ petition for issuance of mandamus prohibiting respondents from deducting 3 day's salary from salary of petitioner - right to get salary is right to property - once held right to get salary is right to property salary for aforesaid period had been arbitrarily and illegally detained by banks - petitioners entitled to maintain petition under article 226 for issue of mandamus because writ is to enforce contract of employment. (ii) jurisdiction - nationalised banks are 'other authorities' within meaning of article 12 and amenable to jurisdiction of high courts under article 226. .....s. padmanabhan, j.1. these writ petitions raise common questions for determination. in w.p. nos. 757 & 758 of 1980, there are some special features which will be dealt with separately. it will be convenient to deal with the facts in w.p. 4386 of 1977. the petitioner is an officer working as sub-accountant in the china bazaar branch of the central bank of india limited. the majority of the officers of the bank as well the other staff who are styled as the award staff are all members of the all india central bank employees' federation. the said federation is affiliated to all india bank employees association. pursuant to the call given by the all india central bank employees' federation, the officers and award staff staged a demonstration for a duration of 30 minutes during working hours on.....
Judgment:

S. Padmanabhan, J.

1. These writ petitions raise common questions for determination. In W.P. Nos. 757 & 758 of 1980, there are some special features which will be dealt with separately. It will be convenient to deal with the facts in W.P. 4386 of 1977. The petitioner is an officer working as sub-accountant in the China Bazaar Branch of the Central Bank of India Limited. The majority of the officers of the Bank as well the other staff who are styled as the Award staff are all members of the All India Central Bank Employees' Federation. The said Federation is affiliated to All India Bank Employees Association. Pursuant to the call given by the All India Central Bank Employees' Federation, the officers and award staff staged a demonstration for a duration of 30 minutes during working hours on the morning of 11-10-1977. There was a similar demonstration for 30 minutes on 17-10-1977 and for an hour on 19-11-1977. The demonstrations were held for the purpose of pressing their demands for bonus, wage revision and other matters. On account of these demonstrations the officers including the petitioner and the award staff could not attend to their work during the period of demonstration. Even prior to the demonstration the first respondent bank had issued circulars that in the event of the officer participating in any demonstration programme launched by the workmen-union/officers-association, a full day's wages of the concerned officers would be deducted irrespective of the duration of the demonstration. Pursuant to the circular, the second respondent the Asst. General Manager of the Bank, proposed to deduct three days salary from salary of the officers, who were absent from duty during the period of demonstration on 11-10-1977, 17-10-1977 and 19-11-1977. The petitioner, therefore, filed this writ petition for the issue of a write of mandamus prohibiting the respondents from deducting three days' salary from the salary of the petitioner as proposed.

2. The affidavit filed in support of the writ petition states that the first respondent-Bank is governed by the provisions of the Tamil Nadu Shops and Establishments Act, 1947. Section 34 of the said Act provides that the wages of the person employed shall be paid to him without any deduction except those authorised by and under the Act. Section 36 provides for deductions of salary for absence from duty in certain cases. In the affidavit reliance is also placed on Rule 12 of the Tamil Nadu Shops and Establishments Rules, 1948 which provides that no deduction for breach of contract shall be made from the wages of any employed person except in the circumstances mentioned in the rule. It is further claimed that the respondents have no power or authority to deduct the whole power part of the salary for the three days in question. The affidavit further states that in any event the respondents will be entitled to deduct only the proportionate salary for the period for which the officers were absent. It is further stated that in the case of award staff the respondents are making only pro rata deductions from their salary. In the circumstances, the proposed action of the respondents to deduct three days salary from the salary of the officers will be hit by Art. 14 of the Constitution of India.

3. A counter affidavit has been filed on behalf of the respondents. It states that on coming to know that there was going to be a demonstration by the officers and award staff of the Bank, the Deputy General manager of the Bank caused circulars to be issued notifying the officers and the award staff that if the officers participated in the proposed demonstrations their salary for the whole day would be cut irrespective to the time for which they absented themselves from work. The said circular was put on the notice board of the various branches of the Bank. The fact that there was a demonstration on 11-10-1977, 17-10-1977 and 10-11-1977 did not prevent any officer, if so minded to attend to his duty. It is further pleaded that as per the terms of the contract of employment the petitioner has to perform the work for the whole day and earn his salary. The contract of work is not divisible so as to enable the officers at their free will to stay away from work for a few hours on a day and claim salary on a pro rata basis. In view of the fact that the petitioner did not fulfill his part of the contract, the respondents are not bound to pay the salary of the petitioner for the three days in question. If further made clear in the affidavit that the case of the petitioner that the respondents are deducting three days salary from the salary of the petitioner is not correct. On the other hand, the respondents are not paying the salary for the three days in question by reason of the fact that the petitioner did not work for the full day on the three days. Having committed a breach of the contract of employment, the petitioner will not be entitled to claim salary for the period of his absence. The counter-affidavit also states that the Government of Tamil Nadu in the exercise of the powers conferred by S. 6 of the Tamil Nadu Shops and Establishment Act, 1947 have exempted the Central Bank of India and other Banks from all but five sections of the said Act, the sections being 31, 41, 43, 50 and 51. Consequently, S. 36 of the Tamil Nadu shops and Establishments Act does not apply to the Bank.

4. Mr. Dolia, the learned counsel for the petitioner in all the write petitions, at the very outset, conceded that the reliance placed in the affidavit filed in support of the writ petition on S. 36 of the Tamil Nadu shops and Establishment Act and Rule 12 of the rules made under the Act was misconceived as all the Banks who are the respondents in these writ petitions are exempted from the operation of the Act and the rules made thereunder except the five sections referred to above. The learned counsel further made it clear that the petitioners in all the writ petitions were not pressing the contention that the Banks have no right at all to deduct the salary of the officers for the period of absence from duty. The learned counsel made it clear that he was only pressing the contention that the Banks would not be entitled to cut the salary for the full three days. On the other hand, they would be entitled only to deduct the pro rata salary for the duration of the officers absence on the three days in question. According to Mr. Dolia, there is no common law right empowering an employer to deduct salary from the salary due to an employee on the principle of 'no work no pay'. Such a right can be exercised only if there is a term in the contract of employment or if there is a statutory provision to that effect. In this connection, the learned cousel draw my attention to S. 9 of the Payment of Wages Act and S. 36 of the Tamil Nadu Shops and Establishment Act which authorised deduction of wages from the wages due to an employee in certain circumstances.

5. Mr. M. R. Narayanswami, the learned counsel for the respondents-Banks, except the State Bank of India and the Syndicate Bank, state that even though it has been held that the first respondent is amenable to the jurisdiction of this Court under Art. 226 of the Constitution, the relief of the issue of a writ of mandamus asked for by the petitioner could not issue for two reasons : firstly, the relationship between the petitioner and the first respondent is purely contractual. As per the terms of the contract, the petitioner has to work and earn his salary. The payment of salary to the petitioner is not a public duty enjoined on the first respondent Bank which could be enforced by the issue of a writ of mandamus. There is no statutory obligation on the part of the bank to pay salary to the petitioner for the days on which he did not work in terms of the contract of employment Secondly, a writ of mandamus is an extraordinary remedy which is within the discretion of the Court either to grant or refuse. Such writs can be issued only in the interest of justice. Here is a case, Mr. Narayanswami argued, where after having committed a breach of the contract of employment the petitioner has come of the Court for the issue of a writ of mandamus compelling the Bank to pay the salary for the period for which he did not perform his part of the contract. If the Court were to issue a writ of mandaums as prayed for the Court would only be assisting a person who had committed a breach of the contact. In the circumstances, the petitioner who is in the position of a wrong-doer will not be entitled to the discretionary remedy of mandamus. On the merit, Mr. Narayanaswami contended that the principle that is applicable in all these cases is 'no work no pay'. It is implicit in the contract of employment that the petitioner has to earn his pay by doing the work for which he has entered into the contract with the employer. In the submission of Mr. Narayanswami, the provisions of the Payment of Wages Act and the Tamil Nadu Shops and Establishments Act constitute only restrictions on the common law right of an employer to cut the wages of the employees in case of branch of the contract. It will be wrong to say that the said provisions conferred a right on the employers to cut the wages of the employees in certain circumstances which right was not available before the said enactments.

6. Mr. Govind Swaminathan, appearing for the respondents in W.P. No. 572 of 1980 besides adapting the contentions of Mr. Narayanaswami further stated that the affidavit in support of the writ petition is based only on Ss. 24 and 36 of the Tamil Nadu shops and Establishments Act. In view of the fact that Mr. Dolia has given up the case based on the Tamil Nadu shops and Establishments Act, the writ petition has to be dismissed in limine as the affidavit does not contain any other ground of attack on the proposed action of the Bank to cut three days salary. It may be stated in this context that in this case the demonstration were on three days, i.e., 23rd, 25th and 28th January, 1980. On the 23rd the officers and award staff were absent for a period of two hours from 10 to 12 noon. When they turned up at 12 noon they were not allowed to work. However, they remained in office. On 25th and 28th they were absent from 12 noon to 1 p.m. Thereafter they were permitted to work. Mr. Dolia did not press the claim for the salary for 23rd on the ground that the question whether the petitioner would be entitled to salary for the 23rd would be a matter for industrial dispute. However, he pressed his claim for pro rata salary for 25th and 28th January, 1980. Mr. Sampath Kumar who appeared for the Syndicate bank adapted the arguments of Mr. Narayanswami.

7. It is now settled law and the proposition is not disputed by the learned counsel for the respondents that the nationalised Banks are 'other authorities' within the meaning of Art. 12 of the Constitution of India and amenable to the jurisdiction of the High Courts under Art. 226 of the Constitution of India.

8. The next question that arises for consideration is whether the writ petitions should be dismissed as not maintainable on the ground that the petitioners are seeking to enforce a contractual obligation, viz., the obligation of the master to pay the salary due to the employees in terms of the contract of employment. Mr. M. R. Narayanaswami cited the decision in Lokharaj v. Dy. Custodian, Bombay, : [1966]1SCR120 , in Praga Tools Corpn v. C. V. Imanual, : (1969)IILLJ479SC and in Kulchhinder Singh v. Hardayal Singh, : (1976)IILLJ204SC and contended that a writ of mandamus will not lie to enforce the terms of the contract of employment. It is also contended that the petitioners could not be said to be in public employment. No doubt, in the decisions cited by Mr. Narayanaswami it has been held that a writ if mandamus may be granted where there is a statutory or a public duty imposed upon the officer concerned and there is a failure on the part of that officer to discharge the said obligation and that any duty or obligation failing upon a public servant out of contract entered into by him such public servant cannot be enforced by the machinery of a writ under Art. 226 of the Constitution of India. However the recent decision in Ramana v. I. A. Authority of India, : (1979)IILLJ217SC , is authority for the proposition that even in matters involving contractual rights the Government cannot act arbitrarily and such action of the Government will amenable to the jurisdiction of the Court under Art. 226 of the Constitution of India. Bhagwati, J., has observed as follows :

'Today the Government, in a welfare State is the regular and dispenser of special services and provider of large number of benefits, including jobs contracts, licences, quotas, mineral rights, etc. The Government pours forth wealth, money, benefits services contracts, quotas and licences. The valuables dispensed by Government take many forms, but they all share one characteristic. They are steadily taking the place of traditional forms of wealth. These valuables which derive from relationships to Government are of many kinds. They comprise social security benefits, cash grants for political sufferers and the whole scheme of State and local welfare, Then, again, thousands of people are employed in the State and the Central Government and local authorities. Licences are required before one can engage in many kinds of business or work. The power of giving licenses means power to withhold them and this gives control to the Government or to the agents of Government on the lives of many people. Many individuals and many more businesses enjoy largess in the form of Government contracts. The contracts often resemble subsidies. It is virtually impossible to lose money on them and many enterprises are set up primarily to do business with Government. Government owns and controls hundreds of acres of public land valuables for mining and other purposes. These resources are available for utilisation by private corporations and individuals by way of lease or licence. All these mean growth in the Government largess and with the increasing magnitude and range of governmental functions as we move closer to a welfare State, more and more of our wealth consists of these new forms, Some of these forms of wealth may be in the nature of legal rights but the large majority of them are in the nature of privileges. But on that account, can it be said that they do not enjoy any legal protection Can they be regarded as gratuity furnished by the State so that the state may withhold, grant or revoke it as its pleasure Is the position of the Government in this respect the same as that of a private giver We do not think so. The law has not been slow to recognise the importance of this new kind go wealth and the need to protect individual interest in it and with that and in view, it has developed new forms of protection. Some interest in Government largess, formerly regarded as privileges, have been recognised as rights while others have been given legal protection not only by forging procedural safeguards but also by confirming/structuring and checking Government discretion in the matter of grant of such largeness. The discretion of the Government has been held to be not unlimited in that the Government cannot give or withhold largess in its arbitrary discretion or as its sweet will. It is insisted, as pointed out by Professor Reich in an especially stimulating article on 'The New Property' in 73 Yle Las Journal 733, 'that Government action be based on standards that are not arbitrary unauthorised.' The Government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licences only in favour of those having gray hair or belonging to a particular political party or professing particular religious faith. The Government is still the government when it acts in the matter of granting largess and it cannot act arbitrarily. It does not stand in the same position as a private individual.

So far as this case is concerned the matter can be viewed from a slightly different angle. In Sukhdev Singh v. Bhagatram : (1975)ILLJ399SC , it has been held that even though an employee in a statuary corporation will not have the status of a civil servant his employment will amount to public employment. Mathew, J. has observed at paragraph 116 as follows : 'Even assuming that the regulations have no force of law, I think since the employment under these corporations is public employment an employee would get a status which would enable him to obtain declaration for continuous in service if he was dismissed or discharged contrary to the regulations.' The learned Judge has further observed as follows : 'The original concept of employment was that of master and servant. It was therefore, held that a Court will not specifically enforce a contract of employment ... The over-tones of this ancient doctrine are discernible in the judicial opinion which rationalised the employer's absolute right to discharge the employee. Such a philosophy of the employer's dominion over his employee may have been in tune with the rustic simplicity of by gone days. But that philosophy is incompatible with these days of large, scale industries and Government enterprises conducted by bodies which are created under special statutes as more contract of personal service.'

The learned Judge then quoted the following observations of Lord Willberforce in Mollock v. Abrdeen Corporation, 1971 1 W.L.R.1578 :

'A comparative list situations in which persons have been held entitled or not entitled to a hearing, or to observation of rules of natural justice, according to the master and servant test, looks illogical and even bizarred. A specialist surgeon is denied protection which is given to a hospital doctor; a University Professor, as a servant has been denied the right to be heard, a dock labourer and an undergraduate have been granted it; examples can be multiplied. One may accept that if there are relationship in which all requirements of the observance of rules of natural justice are excluded (and I do not wish to assume that this is inevitably so), these must be confined to what have been called 'pure master and servant cases', which I take to mean cases in which there is no element of public employment or service, no support by statute, nothing in the nature of an office protection. If any of these elements exist, in my opinion, whatever the terminology used, and even though in some inter parties aspects the relationship may be called that of master and servant, there may be essential procedural requirements to be observed, and failure to observe them may result in a dismissal being declared to be void. 'Then the learned Judge added : 'I think that employment under public corporations of the nature under consideration here is public employment and, therefore, the employee should have the protection which appertains to public employment.

9. In Managing Director v. Vijay Narayan Vajpayee, 1960 I L.L.J.222, Sarkaria, J., has observed as follows :

'The appellant is a Corporation (U.P. Warehousing Corporation) constituted under the State Warehousing Corporation Act and it is a statutory body wholly controlled and managed by the Government. Its status is analogous to that of the Corporations which were under consideration in the Sukhdev Singh's case, 1975 II L.L.J.399; 3 S.C.R. 619. The ratio of the Sukhdev's case squarely applied to the instant case. Even if at the time of the dismissal, the statutory, regulations had not been framed or had not come into force, then also the employment of the respondent was public employment and the employer, the statutory body, could not terminate the services of its employee without the due enquiry ordinance with the statutory regulations, if any, if force, or in the absence of such regulations, in accordance with the rules of natural justice.

Chinnappa Reddy, J. in his concurring judgment has observed as follows :

'In a country like India which teems with population, where the State, its agencies, its instrumentalities, its corporation are the biggest employers and where millions seek employment and security to confine the applicability of the equity clauses of the constitution, in relation to matters of employment, strictly to direct employment under the Government is perhaps to mock at the Constitution and the people. Some element of public employment is all that is necessary to take the employee beyond the reach of the rule which denies him access to a Court to enforce a contract of employment and denies him the protection of Arts. 14 and 16 of the Constitution.

I am, therefore, of the view that in the case of employees of statutory corporations such as the nationalised Banks an element of public employment is present and that the employees of such statutory corporations can enforce the right under the contract of employment.

Further if the right to receive salary is a right to property, the same cannot be withheld by the respondents arbitrarily. In M. M. Pathak v. Union of India : (1978)ILLJ406SC , the question arose whether the right of an employee to bonus was property. In that context, the learned Judge has observed as follows : 'It was held by this court in State of Madhya Pradesh v. Renojirao Shinde and others, 1968 3 S.C.R.480, that a right to receive cash grant annually from the State was property within the meaning of that expression in Art. 19(1)(f) and clause (2) of Art. 31. The right to pension was also regarded as property for the purpose of Art. 19(1)(f) by the decisions of this Court in Deokinand Prasad v. State of Bihar, 1971 I L.L.J.537 and State of Punjab v. K. R. Cary and Sobheq Sai Mehta, 1975 2 S.C.R.405. This Court adopted the same line of reasoning when it said in State of Gujarat and others v. Sri Ambic Mills Ltd., Ahemdabad, : [1974]3SCR760 , that 'unpaid accumulations represent the obligation of the employer to the employees and they are the property of the employees'. Mathew, J. speaking on behalf of the Court observed that the obligation on to the employees owned by the employers was 'property from the stand point of the employees. It would, therefore, be seen that property within the meaning of Art. 19(1)(f) and clause (2) of Art. 31 comprises every form of property, tangible or intangible including debts and choses in action, such as unpaid accumulation of wages, pension, cash print and constitutionally protected Privy Purse. The debts due and owing from the Life Insurance Corporation in respect of annual cash bonus were, therefore, clearly property of Class III and Class IV employees within the meaning of Art. 31 clause (2). And so also was their right to receive annual cash bonus for the period from the date of commencement of the impugned Act upto 31st March, 1977, for that was a legal right enforceable through a Court of law by issue of a writ of mandamus, (vide the observations of Hegde, J. at page 194 in the Privy Purse case). Hedge, J. also pointed out in a separate but concurring judgment that since the right to get the Privy Purse was legal right 'enforceable through the Courts' it was undoubtedly property and its deprivation was sufficient to found a petition based on contravention of Art. 31(2).'

10. In Kul Bhushan v. Punjab National Bank, 1979 Lab. I.C.699, it has been held as follows : 'There can be no doubt, and any such doubt has since been resolved by the Supreme Court in the case of M. M. Pathak, 1978 Lab. I.C. 612 S.C., that the expression 'property' used in Arts. 19 and 31 must receive the widest interpretation and must be held to refer to property of every kind including debts and chooses in action such as unpaid accumulation of wages, pension, cash grants and constitutionally protected privy purse. The right to receive wage under a contract of employment with the State, either by virtue of the provisions of the contract or of any statutory provisions regulating it must, therefore, be held to be property, the deprivation of which would attract the fundamental right. It must, however, be remembered that the right to receive a wage being subject to the terms of the contract, as indeed the statutory rules, if any. In that behalf, it would not be an absolute right in the sense that if the contract of employment provides or there is a provision in the statutory rules in that behalf, an employee may be deprived of the right to receive wage altogether of for a temporary period of time as, for example, where he is suspended from service in accordance with the terms of the contract of the rules.'

11. I, therefore, hold that the right to get salary is a light to property. When once it is held that the right to get salary is right to property, then in the context of the contention of the petitioners that the salary for the period for which they had worked has been arbitrarily and illegally detained by the Banks, the petitioners will certainly be entitled to maintain the petition under Art. 226 of the Constitution for the issue of a writ of mandamus because that is a right which can be enforced, overrule the preliminary objection raised by the learned counsel for the respondents regarding the maintainability of the writ petitions on the ground that the relief that is sought in the writ petition is to enforce the contract of employment.

12. I am not impressed with the other contention of Mr. Narayanaswami that the petitioners had committed breach of contract of employment by not reporting for duty during the peak hours of the day and consequently the relief of mandamus compelling the respondents to pay the salary for the period they worked during the subsequent hours of the same day should be refused on equitable grounds. If it is found that the respondents are not entitled in law to deduct the salary of the petitioners for the period during which they worked then it cannot be said to relief can be granted merely because they were absent for certain part of the day.

13. In view of the fact that Mr. Dolia did not press his original contention that the petitioners would be entitled to be paid even for the hours during which they were absent, it is necessary to consider that question. It is not disputed that the petitioners were absent for 30 minutes on each of the days on 11-10-1977 and 17-10-1977 and for an hour on 19-11-1977. It is also not disputed that they turned up for duty later on and were allowed to work by the respondents.

14. The argument of the learned counsel for the respondents was that the contract of employment was indivisible. The petitioners were bound to work for the whole of the month for which the salary had been agreed to be paid. The working hours for the staff had been fixed both by the Sastri Award and Desai Award. The Awards have also prescribed for payment of overtime work. It is also argued that the nature of the work in Banks differ widely from the nature of the work in other commercial establishments and Government offices. The volume of business done in Banks would be much during peak hours when cash transactions were carried on and the needs of the customers had to be attended to. In the circumstances, the petitioners having been absent during the peak hours in the morning had failed to perform the substantial part of the work for the day. It was idle on the part of the petitioners to contend that they had returned to duty for the day because the duties they had to perform after the peak hours cannot be said to be so important as the duty they had to perform during peak hours. By absenting themselves during the peak hours the petitioners had caused great inconvenience to the public as well as the Banks apart from causing financial loss to the Bank. It was further argued that the contract of employment can be decided only into number of days and it cannot be divide further into number of hours, minutes and seconds. If the petitioners refused to perform the work for the required number of hours as fixed in the Sastri and Desai Awards, the Banks would be then within their competence to deduct the salary for a day despite the fact that the petitioners were allowed to work for rest of the day. If the petitioners had the right to obtain from working for a part of the day, the Banks had equally the right to refuse to pay their salary for the day. The right then of the petitioners will be to institute a civil suit for damages for breach of contract, if any, on the part of the Banks to pay the salary.

15. On the other hand, Mr. Dolia argued that if the entire matter was considered on the basis of the law of contract, when the petitioners committed breach of the contract by not turning up for work for certain hours during the three days, it would have been open to the Banks to accept the breach and to terminate the contract of employment. On the other hand, by not terminating the contract but by allowing the petitioners to work after their abstention from duty, the Banks must be deemed to have acquiesced the breach of the contract said to have been committed by the petitioners and they cannot, therefore, refuse to pay the salary for the period of the day for which they had worked. This according to Mr. Dolia fit in with the principle of 'no work, no pay. 'Having allowed the petitioners to work for a part of the day, the law of contract obliged the Banks to pay for the period for which the petitioners had worked. Mr. Dolia also pleaded that it will not be open to the Banks to unilaterally decide that for the breach of the contract committed by the petitioners, they would withhold the salary for the rest of the day as that would amount to permitting the Banks to decide the amount of damage for partial failure of the consideration unilaterally. Secondly, in the submission of Mr. Dolia, the employment of the petitioners involved an element of public employment. They had a statutory status though they were not civil servants. In the circumstances, if the petitioners had been absent without authority for a part of the day, the only remedy available to the Banks would have been to proceed against the petitioners for misconduct, after due regard that the principles of natural justice. It will not be open to the petitioners to withhold the salary for the period for which they had worked as the right to get salary was a right to property.

16. I shall first consider the question raised by the counsel on either side on the principles of the law of contract. It is the case of the respondents that by abstaining from duty for a portion of the day, the petitioners committed breach of the contract. Once the petitioners had refused to fulfill their part of the contract which was to do work for certain fixed hours for each day, the Banks were equally entitled to refuse to perform their part of the contract. Admittedly, the contract may be discharged by breach, that is to say, a party to the contract may be discharged from further liability to perform it by reason of the other party's default. At the same time, it is equally well-settled that an innocent party to the contract is not bound to treat the contract as discharged. He may, at his option elect either to treat the contract as a continuing contract, or to say that the breach by the other party has discharged his liability. It the chooses the former course, he can still sue for damages for any loss sustained as a result of the breach. But the contract, with all its terms and conditions, remains alive for the benefit of the wrongdoer as well as of himself. Each party is entitled to hold the other to his bargain and to continue to tender due performance on his part. But if the innocent party continues to press for performance, or accepts performance, by the other party after becoming award of the breach, he will be held to have affirmed the contract.

17. If one of two parties to a contract breaks the obligation which the contract imposes, a new obligation will in every case arise - a right of action conferred upon the party injured by the breach .... In such cases, it is common but it is not strictly accurate, to speak of the contract as having been discharged by the breach. This phrase, though convenient, is a loose one. A breach does not, of itself, after the obligations of either party under the contract; what it may do is to justify the injured party, if he chooses, in regarding himself as absolved or discharged from the further performance of the contract. It does not automatically terminate his obligation; he has the option either to treat the contract as still in existence or to regard himself as discharged. If he does not 'accept' the discharge of the contract by the other party, he is entitled to continue to insist on performance (vide Principles of the English Law of Contract by Anson, 22nd edition, page 437).

18. In Halsbury's Laws of England, Vol. 8, third edition page 173, is has been stated thus; 'A contract cannot be rescinded in the strict legal sense of the terms without the consent of both parties on an order of the Court, and a mere intimation by one party of his intention not to perform his promise does not discharge the contract unless the mother party elects to treat it as a breach of the contract.'

19. In Heyman v. Darwins, 1942 A.C.356, Darwings Ltd, manufacturers of steel in Sheffeld, appointed Heyman and another to be sole selling agents of their tool steels in a wide area of territories including the western hemisphere, Australia, New Zealand and India. The agents were to sell in the name of the manufacturers subject to the terms with which we are not concerned here. The agreement contained an arbitration clause stating that 'If any dispute shall arise between the parties hereto in respect of this agreement or any of the provisions herein contained or anything arising here out the same shall be referred for arbitration in accordance with the provisions of the Arbitration Act, 1889, or any then subsisting statutory modification thereof. 'By the turn of events, the agents took the stand that the principal had repudiated the contract and they filed an action for a declaration that the principals had repudiated the agreement and claimed damages under various heads. The principals applied for the action to be stayed under S. 4 of the Arbitration Act. Cassels, J., in chambers refused to grant stay. The Court of Appeal held that the Arbitration clauses applied and the principals were entitled to grant of stay and that Cassels, J., had wrongly exercised his discretion. Heyman and another, agents took up the matter to the House of Lords. Viscount Simen, L.C., observed thus : 'I have never been able to understand, said Scrutton, L.J. in Golding v. London & Edinburgh Insurance Co. Ltd., 1952 43 LI. L. Rep.487, 'what effect the repudiation of one party has unless the other party accepts the repudiations'. If one party so acts or so expresses himself, as to show that he does not mean to accept and discharge the obligations of a contract any further, the other party has an option as to the attitude he may take up. He may, notwithstanding the so-called repudiation, insist on holding his co-contractor to the bargain and continue to tender due performance on his part. In that event, the co-contractor has the opportunity of withdrawing from his false position, and even if he does not, may escape ultimate liability because of some supervening event not due to his own fault which excuses or puts an end to further performance; a classic example of this is to be found in Avery v. Bowden, [1955] 5 E & b 714. Alternatively, the other party may prescribed the contract, or (as it is sometimes expressed) 'accept the repudiation' by so acting as to make plain that in view of the wrongful action of the party who has repudiated, he claims to treat the contract on at an end, in which case he can sue at once of damages. 'Rescission (except by mutual consent or by a competent Court) 'said Lord Sumner in Hirji Mulji v. Choog Yue Steamship Co. Ltd., 1962 A.C.497, 'is the right of one party, arising upon 'conduct by the other, by which he intimates his intention to abide by the contract no longer. It is a right to treat the contract as at a end if he chooses, and to claim damages for its total breach, but it is a right in his option. But repudiation by one party standing alone does not terminate the contract. It takes two to end it, by repudiation, on the new side, and acceptance of the repudiation on the other.' Then the learned Law Lord held that the arbitration clause applied. Lord Macmillam spoke as follows :

'Repudiation, then, in the sense of a refusal by one of the parties to a contract to perform his obligations thereunder, does not of itself abrogate the contract. The contract is not rescinded. It obviously cannot be rescinded by the action of one of the parties alone. But, even if the so called repudiation is acquiesced in or accepted by the other party, that does not end the contract. The wronged party has still his right of action, for damages under the contract which has been broken, and the contract provides the measure of those damages. It is inaccurate to speak in such cases of repudiation of the contract. The contract stands, but one of the parties has declined to fulfill his part of it. There has been what is called a total breach or a beach going to the root of the contract and this relieves the other party of any further obligation to perform what he for his part has undertaken. Now, in this state of matters, why should it be said that the arbitration clause, if the contract contains one, is no longer operative or effective A partial breach leaves the arbitration clause effective. Why should a total breach a brogate it The repudiation being to of the contract but of obligations undertaken by one of the parties, why should it imply a repudiation of the arbitration clause so that it can be anger be invoked for the settlement of disputes arising in consequence of the repudiation I do not think that this is the result of what is termed repudiation.'

20. In white and Carter (Councils) Ltd. v. McGreagar, 1962 A.C.413, the appellants, advertising contractors agreed with the respondent, a garage proprietor, to display advertisements for his garage for three years. On the same day, the respondent repudiated the agreement and requested the appellant refused to cancel the contract. The appellants refused to do so, and elected to treat the contract as still in existence. They displayed advertisements as agreed and sued for the full price; they were under no obligation to treat the contract as discharged and sue for damages.

21. In State of Kerala v. C.C. Refineries : [1968]3SCR556 , the Supreme Court has observed thus :

'Breach of contract by one part does not automatically terminate the obligation under the contract; the injured party has the option either to treat the contract as still in existence, or to regard himself as discharged. If he accepts the discharge of the contract by the other party, the contract is at an end. If he does not accept the discharge, he may insist on performance.'

22. I am, therefore, of the fives that by permitting the petitioners to perform their work for the rest of the day and by accepting such performance, the banks must be deemed to have acquiesced in the breach committed by the petitioners. In the light of the contention of the Banks that it is a matter of pure contract of employment between the petitioners and the Banks and that the petitioners have committed breach thereof, the Banks should have treated the contract as having been discharged by breach committed by the petitioners. This they did not do. On the other hand, they acquiesced in the breach which meant that in a sense they recognised the continuance of the contract. They allowed the petitioners to work and accepted performance of their part of the contract by the petitioners after becoming aware of the breach. It will, therefore, be idle on the part of the respondents to contend that they were not bound to pay for the period for which the petitioners had worked. As already stated, there has been no effective discharge of the contract by breach. the contract continued to be in force by reason of the affirmation of the same by the Banks after becoming aware of the breach. The petitioners, therefore, by working for the remaining part of the day had earned the salary for the day. This the Banks are not entitled to withhold.

23. Viewed from the angle that the employment of the petitioner involved an element of public employment and that they have a statutory status though not the status of a civil servant, it has to be held that in the absence of any statutory provision for withholding the salary of the petitioners the Banks will not be entitled to deduct the salary for the period for the which they had worked. I have already found, that the right to get salary earned by them, is a right to property since by doing work same and it has become a debt payable to them. In the circumstances, the same cannot be arbitrarily withheld by the Banks.

24. It is necessary, in this connection, to refer to some of the authorities cited at the Bar by counsel on both sides.

25. The first case to be cited is the decision in M. K. Bose v. Bank of India, : (1977)IILLJ285Cal , where a similar question arose. The employees of the Bank absented themselves from work and participated in demonstrations for certain periods for four days. The Bank, therefore, issued two orders deducting their wages on a pro rata basis for the time during which they were absent from their desk and participated in the demonstration. The Bank employees forming the award staff filed a writ petition in the Calcutta High Court and raised the following contentions; (1) In the absence of any specific provision in the contract of employment or in any statute the Bank has no authority to effect any cut in the salary. (2) the monthly pay of an employee is his property and employee can be deprived of it except in due process of law. (3) any reduction in salary affects his right and interests prejudicial and as such it cannot be done without giving him an opportunity to make representations. (4) the order is motivated by mala fides and (5) the Bank being a statutory body, a writ will lie. Sen J. observed as follows : 'After nationalisation the Bank had become a national undertaking and it had to act within the bounds of its jurisdiction. When it goes beyond it and when it acts in violation of the principles of natural justice, its action can be questioned in writ proceedings .... Unless the employed is empowered or authorised by any act or under the terms and conditions of the employment to deduct any part of the salary from the salary payable to the employee, any such deduction will be unauthorised and in excess of the power employer and will, therefore, be illegal. Under the conditions of service contained in the two awards and the settlement, there is no provision authorising the Bank to deduct any part of the salary on a pro rata basis for failure or refusal on the part of the employee to carry on their work during any part of the working hours after the employers have attended office and joined their duties. In the instant case, as neither the contract of employment nor any other law authorises the Bank to deduct any part of the salary on the ground of the employee's refusal or failure to do the work during the said period, the notice or order directing deduction on a pro rata basis from the salary payable to the employees must be held to be without any lawful authority and in excess of the powers enjoyed by the Bank .... In the instant case, the contract of employment is not a divisible one. The consideration for payment of salary to the employee may be the service to be rendered by him. The consideration is not related to any fixed period of work for any month. The consideration is one and indivisible and is not entirely dependent on the particular hours of work put in. The consideration is one, the failure or refusal on the part of the employee to do a fixed period of work on any particular day results in particle failure of the consideration in consequence where of an employer may claim compensation against the employee; but the employer cannot claim the right to deduct any part of the salary on any pro rata basis or otherwise.' It will, therefore, be seen that Sen, J., went to the extent of holding that the Bank will not be entitled to deduct the salary on a pro rata basis even for the period for which the employees were actually absent.

26. The next case to be cited is the decision in algemene Bank v. Central Government Labour Court, Calcutta, : (1978)IILLJ117Cal . There, the employees of the Bank which was governed by the Shops Act abstained from work on a day between 3 p.m. and 5-45 p.m. to hold a demonstration and meeting at the Bank premises. The Bank deducted the wages of the employees for the relevant period on the principle 'no work, no pay'. One of the employees filed a petition before the Central Government Labour Court under S. 33C(2) which was allowed. In the circumstances, the Bank filed a writ petitioner in the High Court of Calcutta. It was held by Mukherjee, J., that a contract of employee's right to remuneration depending generally upon the performance of work done by me during the period of employment. Wages were payment for the services rendered and deduction form wages pro rata for failure of consideration from the the employee's side was permissible in law. Deductions in such cases were not penalty. According to the West Bengal Shops and Establishment Act, 'Wages' meant remuneration payable if the terms of employment were fulfilled. Performance of work for a specified period was one of the principal terms of employment. No wages, therefore became payable under the Act for the said period of unauthorised absence from work on the part of the employee.' It will be noted that this is a case where it was held that the Bank was entitled to deduct wages pro rata basis for the period for which the employees were absent. further, unlike in the present case, the provisions of the West Bengal Shops and Establishment Act applied.

27. The next case to be referred to is Dharam Singh v. Bank of India, Bombay, 1979 Lab. I.C.1079. In this case also the employees of the Bank did not report for work for a part of the day. The question arose whether the Bank was entitled to deduct the salary for the whole day. The provisions of the Payment of Wages Act applied to the facts of that case. The learned Judges of the Punjab and Haryana High court held :

'If absence from duty for a part of the day could be legitimately and rightly held as absence for the whole day the Banks were entitled to deduct the wages for the whole day under S. 16 of the Punjab Shops and Commercial Establishments Act read with Ss. 7(2)(b) and 9 of the Payment of Wages Act.'

The learned Judges came to the conclusion that absence during part of the day would mean absence for the whole day on the ground that under the bipartite settlement between the employees and the management the employees were bound to work for the minimum hours fixed for a day and consequently even though the bipartite settlement was silent as to whether stoppage of work for a part of the day could be treated as absence from duty for the whole day or not, it was reasonable to assume that working hours of each day was considered as one single unit which could not be split up into further sub-units.

28. In v. Ramachandran v. Indian Bank : (1979)ILLJ122Mad , a Bench of this Court held that the India Bank was entitled on similar circumstances to deduct wages on a pro rata basis for the period of absence of the employees during working hours on a particular day.

29. In Apar (Pvt.) Ltd. v. S. R. Samant, : (1980)IILLJ344Bom , by a settlement entered into between the employer and employees, the employees agreed to make all their efforts to eliminate the factors of low production and to bring up the same to the productivity level of 1964 and to maintain and improve the same. The employees further agreed to maintain discipline and not to raise any demand involving financial burden on the company except the demand for bonus till the settlement was terminated in accordance with law. The settlement was binding on the parties upto the end of April, 1977. Later differences arose between the employer and the employees. The employees launched on go-slow tactics resulting in low production. In the circumstances, the employer put up a notice stating that because of the attitude of indiscipline no the part of the employees and deliberate go-slow tactics resulting into low prediction, the employers was relieved his commitments and obligations imposed upon him by the agreements. Accordingly, in terms of the notice, the employer did not pay wages and other emoluments as per the terms of the settlement. The question raised before the Bombay High Court was whether the employer could unilaterally reduces the wages the ground that the employees had adopted go-slow tactics in violation of the terms of the settlement and whether the employer in such circumstances could invoke the principle of 'no work, no pay'. It was contended on behalf of the employer that the principle of 'no work, no wages' applied and that inasmuch as the employees had committed breach of their obligation they could not be heard to complaint that the other party had not implemented its obligation. On the other hand, it was contended on behalf of the employees that in the settlement there was a total absence of any specific term or condition entitling the employer to reduce pay or wages on the ground that the employees has not fulfilled their part of the settlement. The learned Judges of the Bombay High Court considered the question independent of the fact as to whether the employees did indulge into acts of indiscipline and deliberate go-slow tactics. The learned Judges observed as follows : 'Undisputed position is that all these workers including the second respondent were on the permanent roll of the petitioner and were being paid on monthly basis. They had fixed duty hours and had attended the duty within the period and indeed did work. The moment this is established it is clear that they become entitled to wages as defined under the payment of wages act. Wages include not only actual wages but also potential one. The employees do not earn wages, hour to hour or minute to minute. The contract of employment admittedly was subsisting in spite of the so-called go-slow work. It is pertinent to note that no norms have been fixed either workman wise or department wise, to spell out the individual liability or responsibility to do particular quantity of work. In these state of affairs it seems to us that reduction of wages of of the emoluments on the allegation that the workers on general had resorted to go-slow is wholly impermissible in law, specially when they were not piece-rated employees. There can arise a case of settlement under which such deduction is specifically provided for. Different consideration may arise in such a case. Settlement in question contains no provision authorising the petitioner to deduct and part of the salary either on pro rata basis or to the bare statutory minimum for failure or refusal on the part of the employees to carry on their work in such manner as would bring particular production level. This is not to suggest that the individual worker or the workers in general can commit misconduct and still can go scotfree. The standing orders as well as the terms of the settlement provide for remedy relating to such misconduct on the part of the employees. Remedies include having disciplinary action, claim for damages on partial failure of consideration and complaining of unfair labour practice on the part of the employees to the appropriate Tribunal in terms of Maharashtra Act No. 1 of 1972'. The learned Judges further observed as follows :

'In our judgment, therefore, in the absence of a specific term in settlement or statutory provision an employer has no right to reduce the wages or the emoluments on the allegation that the workers had resorted to go-slow tactics or had not performed their part of the obligation in a settlement. Applying this test to the present case e see absolutely no justification on the part of the management to issue the disputed notice dated 21st August, 1975 reducing the wages to the bare minimum fixed under the Minimum Wages Act and in going behind even the earlier agreement dated the 23rd January, 1971. It is clear that the management has proceeded on the assumption that the workers have indulged not serious types of misconduct. Reducing of wages under the circumstances is clearly a punishment. Such penal action is not permissible without holding necessary enquiry as it is violative of principles of natural justice. There is absolutely no justification for such action, specially when it has been taken unilaterally. After all pay packet is the property of the workman and there can be no deprivation of it except in due process of law.'

Mr. Narayanaswami sought to distinguish this case on the ground that it involved the case of consideration of a settlement. I am unable to agree. The learned Judges have considered the question on the principles of law and they have held that in the absence of any provision in the settlement or any statutory provision, the employer will not be entitled to deduct the salary of an employee either on the ground that he had resorted to-slow tactics or that he had not performed his part of the obligation under the contract.

30. On a consideration of the decisions cited I am in agreement with the opinion expressed by Sen, J., of the Calcutta High Court that the contract of employment is on a monthly basis and it cannot be divided into number of day or number of hours and minutes. The contract of employment is one while and indivisible. I am not inclined to agree with the view taken by the Punjab and Haryana High Court that the contract of employment is divisible into days and it cannot be divisible into hours or minutes. Further, there is absolutely no provision in the bipartite settlement or in the award that the Banks will be entitled to deduct the salary for a day if an employee is absent for a part of a day. In the absence of any statutory provision or any provision in the contract of employment authorising the Banks to deduct one day's salary if an employee absents himself for a part of the day, the Banks will not have jurisdiction to deduct the salary for the period which he had worked for the day. I may repeat, I have not considered the question whether the Banks will be entitled to deduct pro rata salary for the period of absence of an employee in view of the stand by Mr. Dolia. But in view of the concession made by Mr. Dolia I hold that the Banks will be entitled to deduct the pro rata salary of the petitioners for the period of their absence from duty, but they will not be entitled to deduct the whole day's salary.

31. As regards the contention of W.P. No. 572 of 1980 the main attack in the affidavit filed in support of the writ petition was based n S. 36 of the Tamil Nadu Shops and Establishments Act. Mr. Govind Swaminathan contended that in view of the facts that Mr. Dolia has given up the case based on the Tamil Nadu Shops and Establishments Act, this writ petition should be dismissed in limine. Since all the writ petitions were argued on the basis of the contention of Mr. Dolia that the banks have to jurisdiction to deduct the salary for the period during which they had worked, I do not think this writ petition should be dismissed on the technical plea advanced by Mr. Govind Swaminathan.

32. In W.P. Nos. 757 and 758 of 1980, it is not the case of the Bank that the petitioners absented themselves for any part of the day. The only complaint is that the petitioners and other officers working in the administrative unit lent support and disrupted the very important work of clearing thereby jeopardising the interest of the Bank and caused permanent impairment of its image. The very complaint is that they have subscribed their signature to the memorandum calling upon the employees not to work for the whole day. There is no case that there officers did not attend duty during any part of the day between 3-1-1980 and 12-1-1980. In the circumstances, these petitioners are also entitled to succeed.

33. In the result, all the writ petitions are allowed but under the circumstances without costs.


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