Case: Bank of India Vs. T.S. Kelawala and Ors

1. These are two appeals involving a common question of law, viz., whether an employer has a right to deduct wages unilaterally and without holding an enquiry for the period the employees go on strike or resort to go-slow. In C.A.No.2581 of 1986 we are concerned with the case of a strike while in the other appeal, it is a case of a go-slow. By their very nature, the facts in the two appeals differ, though the principles of law involved and many of the authorities to be considered in both cases may be the same. For the sake of convenience, however, we propose to deal with each case separately to the extent of the distinction. CIVIL APPEAL No. 2581 OF 1986 2. The appellant in this case is a nationalised bank, and respondents 1 and 2 are its employees whereas respondents 3 and 4 are the Unions representing the employees of the Bank. It appears that some demands for wage-revision made by the employees of all the banks were pending at the relevant time, and in support of the said demands the All India Bank Employees Association had given a call for a countrywide strike. The appellant-Bank issued a circular on September 23,1977 to all its managers and. agents to deduct wages of the employees who would participate in the strike for the days they go on strike. Respondents 3 and 4 i.e., the employees Unions gave a call for a four hours strike on December 29,1977. Hence, the Bank on December 27,1977 issued an Administrative Circular warning the employees that they would be committing a breach of their contract of service if they participated in the strike and that they would not be entitled to draw the salary for the full day if they did so, and consequently, they need not report for work for the rest of the working hours on that day. Notwithstanding it, the employees went on a four-hours strike from the beginning of the working hours on 29th December, 1977. There is no dispute that the banking-hours for the public covered the said four hours. The employees, however, resumed work on that day after the strike hours, and the Bank did not prevent them from doing so. On January 16, 1978, the Bank issued a Circular directing its managers and agents to deduct the full days salary of those of the employees who had participated in the strike. The respondents filed a writ petition in the High Court for quashing the circular. The petition was allowed. The Bank preferred a Letters Patent Appeal in the High Court which also came to be dismissed. Hence, the present appeal. 3. The High Court has taken the view, firstly, that neither regulations nor awards nor settlements empowered the Bank to make the deductions, and secondly, injustice, equity and good conscience the Bank could not by the dictate of the impugned circular attempt to stifle the legitimate weapon given by the law to the workers to ventilate their grievances by resorting to strike. The High Court further took the view that since strikes and demonstrations were not banned in 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. According to the High Court, the circular even acted as an expedient to stifle the legitimate mode of protest allowed and recognised by law. 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 Court also reasoned that under the conditions of service, wages were paid not from day to day or hour to hour but as a fixed sum on a monthly basis. The contract between the Bank and the workers being not a divisible one, in the absence of a specific term in the regulations, awards and settlements, the Bank could not unilaterally reduce the monthly wage and thus give the employees lesser monthly wages than the one contracted. The non-observance by the employees of the terms of the contract may give the employer a cause of action and a right to take appropriate remedy for the breach, but the employer was not entitled to deduct any part of the wages either on a pro rata basis or otherwise. The High Court further opined that the Bank was not without a remedy and the employees cannot hold the Bank to ransom. The Bank could get the four-hours strike declared illegal by recourse to the machinery provided by law or put the erring workers under suspension for minor misconduct under Regulation.19.7, hold an enquiry and if found guilty, impose punishment of warning, censure, adverse remarks or stoppage of increment for not more than six months as prescribed by Regulation.19.8. The High Court also rejected the contention of the Bank that the Bank was entitled to make deductions under S.7(2) of the Payment of Wages Act, 1936 by holding that the provision enabled the employer to deduct wages only if the Bank had power under the contract of employment. 4. The principal question involved in the case, according to us, is notwithstanding the absence of a term in the contract of employment or of a provision in the service rules or regulations, whether an employer is entitled to deduct wages for the period that the employees refuse to work although the work is offered to them. The deliberate refusal to work may be the result of various actions on their part such as a sit-in or stay-in strike at the work-place or a strike whether legal or illegal, or a go-slow tactics. The deliberate refusal to work further may be legal or illegal as when the employees go on a legal or illegal strike. The legality of strike does not always exempt the employees from the deduction of their salaries for the period of strike. It only saves them from a disciplinary action since a legal strike is recognised as a legitimate weapon in the hands of the workers to redress their grievances. It appears to us that this confusion between the strike as legitimate weapon in the hands of the workmen and the liability of deduction of wages incurred on account of it, whether the strike is legal or illegal, has been responsible for the approach the High Court has taken in the matter. 5. It is necessary to clear yet another misconception. There is no doubt that whenever a worker indulges in a misconduct such as a deliberate refusal to work, the employer can take a disciplinary action against him and impose on him the penalty prescribed for it which may include some deduction from his wages. However, when misconduct is not 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, there is no need to hold an inquiry. To insist on an inquiry even in such cases is to pervert the very object of the inquiry. 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. That was certainly not the situation in the present case in respect of any of the employees and that is not the contention of the employees either. Hence, in cases such as the present one, the only question that has to be considered is whether, when admittedly the employees refuse to work by going on strike, the employer is entitled to deduct wages for the relevant period or not. We thought that the answer to this question was apparent enough and did not require much discussion. However, the question has assumed a different dimension in the present case because on the facts, it is contended that although the employees went on strike only for four hours and thereafter resumed their duties, the Bank has deducted wages for the whole day. It is contended that in any case this was impermissible and the Bank could at the most deduct only pro rata wages. Normally, this contention on the part of the workers would be valid. But in a case such as the present one, where the employees go on strike during the crucial working hours which generate work for the rest of the day, to accept this argument is in effect to negate the purpose and efficacy of the remedy, and to permit its circumvention effectively. It is true that in the present case when the employees came back to work after their four-hours strike, they were not prevented from 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. It is for this reason that the Bank had made it clear, in advance, that if they went on strike for the four-hours as threatened, they would not be entitled to the wages for the whole day and hence they need not report for work thereafter. Short of physically preventing the employees from resuming the work which it was unnecessary to do, the Bank had done all in its power to warn the employees of the consequences of their action and if the employees, in spite of it, chose to enter the Banks premises where they had no work to do, and in fact did not do any, they did so of their own choice and not according to the requirement of the service or at the direction of the Bank. In fact, the direction was to the contrary. Hence, the later resumption of work by the employees was not in fulfilment of the contract of service or any obligation under it. The Bank was therefore not liable to pay either full days salary or even the pro rata salary for the hours of work. that the employees remained in the Bank premises without doing any work. It is not a mere presence of the workmen at the place of work but the work that they do according to the terms of the contract which constitutes the fulfilment of the contract of employment and for which they are entitled to be paid.6. It is also necessary to state that though, before the High Court, reliance was placed by the Bank on the provisions of S.7(2)(b) read with S.9 of the Payment of Wages Act, 1936 for a right to deduct the wages for absence from duty, there is nothing on record to show that the provisions of the said Act have been made applicable to the Bank. However, assuming that the Act was applicable to the Bank, we are of the opinion that the relevant discussion of the High Court has missed the contentions urged by the Bank on the basis of the said provisions. What was urged by the Bank was that the said provisions enabled it to deduct wages for absence from duty. Hence, even if the Service rules/regulations were silent on the point, the Bank could legally deduct the wages under the said provisions. The High Court has reasoned 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 Service rules/ regulations. We are unable to appreciate this reasoning, which to say the least, begs the question. 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/regulation to govern the situation.7. Since the admitted position is that the service rules do not provide for such a situation, the question as stated earlier which requires to be answered in the present case, is whether there exists an implied right in the employer-Bank to take action as it has done. There is no dispute that although the service regulations do not provide for a situation where employees on a mass scale resort to absence from duty for whole day or a part of the day whether during crucial hours or otherwise, they do provide for treating an absence from duty of an individual employee as a misconduct and for taking appropriate action against him for such absence. Since the High Court has indicated a disciplinary action under the said provision even in the present circumstances, we will also have to deal with that aspect. But before we do so, we may examine the relevant authorities cited at the Bar. 8. In Buckingham and Carnatic Co. Ltd. v. Workers of the Buckingham and Carnatic Co. Ltd. [(1953) SCR 219] the facts were that on Ist November, 1948 the night-shift operatives of the carding and spinning department of the appellant-Mills stopped work, some at 4 p.m., some at 4.30 p.m., and some at 5 p.m. and the stoppage ended at 8 p.m. in both the departments, and at 10p.m. the strike ended completely. The apparent cause for the strike was that the management of the Mills had expressed its inability to comply with the request of the workers to declare the forenoon of the Ist November, 1948 as a holiday for solar-eclipse. On 3rd November, 1948, the management put up a notice that the stoppage of work on the Ist November amounted to an illegal strike and a break in service within the meaning of the Factories Act and that the management had decided that the workers who had participated in the said strike would not be entitled to holidays with pay as provided by the Act. The dispute having thus arisen, the State Government referred the matter to Industrial Tribunal. The Tribunal held that the workers had resorted to an illegal strike and upheld the view of the management that the continuity of service of the workers was broken by the interruption caused by the illegal strike and as a result the workers were not entitled to annual holidays with pay under S.49-B(1) of the Factories Act. The Tribunal, however, held that the total deprivation of leave with pay was a severe punishment and reduced the punishment by 50 percent and held that the workers would be deprived of only half their holidays with pay. In the appeal before the then Labour Appellate Tribunal, the Tribunal held, among other things, that what happened on the night of the Ist November did not amount to strike and did not cause any interruption in the workers service. The Tribunal observed that "It would be absurd to hold that non-permited absence from work even for half an hour or less in the course of a working day would be regarded as interruption of service of a workman for the purpose of the said section (i,e.,S.49-B(1) of the Factories Act). We are inclined to hold that the stoppage of work for the period for about 2 to 4 hours in the circumstances of the case is not to be regarded as a strike so as to amount to a break in the continuity of service of the workman concerned". In the result, the Tribunal allowed the Unions appeal and ordered that holidays at full rates as provided for in S.49-A of the Factories Act will have to be calculated on the footing that there was no break in the continuity of service. This Court set aside the finding of the Appellate Tribunal 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 S.2(q) of the Industrial Disputes Act existed and it was not a case of an individual workers failure to turn up for work. Hence, it was an illegal strike because no notice had been given to the management, the Mills being a public utility industry. 9. In Secretary of State for Employment v. Associated Society of Locomotive Engineers and Firemen and Ors. (No.2) [(1972) 2 All ER 949] Lord Denning MR observed: " It is equally the case when he is employed as one of many to work in an undertaking which needs the service of all. If he, with the others, takes steps wilfully to disrupt the undertaking to produce chaos so that it will not run as it should, then each one who is a party to those steps is guilty of a breach of his contract. It is no answer for any one of them to say I am only obeying the rule book, or I am not bound to do more than a 40 hour week. That would be all very well if done in good faith without any wilful disruption of services; but what makes it wrong is the object with which it is done. There are many branches of our law when an act which would otherwise be lawful is rendered unlawful by the motive or object with which it is done. So here it is the wilful disruptionwhich is the breach. It means that the work of each man goes for naught. It is made of no effect. I ask: is a man to be entitled to wages for his work when he, with others, is doing his best to make it useless? Surely not. Wages are to be paid for services rendered, not for producing deliberate chaos. The breach goes to the whole of the consideration, as was put by Lord Campbell CJ in Cuckson v. Stones [(1858) 1 E & E 248 at 255, (1843-69) Ali ER Rep 390 at 392] and with other cases quoted in Smiths Leading Cases [13th Edn., Vol. 2,p.48], the notes to Cutter v. Powell [(1795) 6 Term Rep 320, (1775-1802) All ER Rep 159]". 10. In Miles v. Wakefield Metropolitan District Council [1989) 1 LLJ 335]. the facts were that the plaintiff, Miles was the Superintendent-Registrar in the Wakefield Metropolitan District Council. His duties included performing marriages. As part of trade union action, he declined to perform marriages on Saturdays which day was very popular with marrying couples. However, on that day he performed his other duties. The Council, not wanting to terminate his services, imposed a cut in his remuneration. He sued the Council for payment but failed. He appealed to the Court of Appeal and was successful. The appellate court held that he was a statutory official and there was no contractual relation and the only action against him was dismissal. Aggrieved by this appellate decision, the Council went before the House of Lords in appeal. The House of Lords held that the salary payable to the plaintiff was not an honorarium for the mere tenure of office but had the character of remuneration for work done. If an employee refused to perform the full duties which could be required of him under his contract of service, the employer is entitled to refuse to accept any partial performance. In an action by an employee to recover his pay, it must be proved or admitted that the employee worked or was willing to work in accordance with the contract of employment or that such service as was given by the employee, if falling short of his contractual obligations was accepted by the employer as sufficient performance of the contract. In a contract of employment wages and work go together. The employer pays for the work and the worker 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. In the instant case, the plaintiff disentitled himself to salary for Saturday morning because he declined to work on Saturday morning in accordance with his duty. Since the employee had offered only partial performance of his contract, the employer was entitled, without terminating the contract of employment, to decline partial performance, and in that case the employee would not be entitled to sue for his unwanted service. 11. In this connection, Lord Temple man stated as follows: "The consequences of counsels submissions demonstrate that his analysis of a contract of employment is deficient. It cannot be right that an employer should be compelled to pay something for nothing whether he dismisses or retains a worker. On a contract of employment wages and work go together. The employer pays for work and the worker 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 be ready to prove that he worked or was willing to work " 12. It may be mentioned here that on the question whether the employee engaged in some kind of industrial action can claim wages on the basis of quantum merit, only two of the Law Lords expressed themselves in favour, while the other three did not want to express any definite opinion on the question. 13. Among the decisions of the various High Courts relied upon by the parties in support of the respective cases, we find that except for the decision in V. Ganesan v. The State Bank of India & ors. [(1981) 1 LLJ 64] given by the learned Single Judge of the Madras High Court and the decision of the Division Bench of the same Court in that matter and other matters decided together in State Bank of India, Canara Bank, Central Bank etc. & Ors v. Ganesan, Jambunathan, Venkataraman, B.V. Kamath, V.K. Krishnamurthy, etc. & Ors [(1989) 1 LLJ 109], all other decisions, namely, (i) Sukumar Bandyopadhyyay & Ors. v. State of West Bengal & Ors [(1916) IX LIC 1689], (ii) Algemene Bank Nederland, N. V. v. Central Government Labour Court, Calcutta & Ors. ((1978)II LLJ,117] (iii) V. Ramachandran v. Indian Bank [(1979) 1 LLJ 122], (iv) Dharam Singh Rajput & Ors. v. Bank of India, Bombay & Ors. [(1979) 12 LIC 1079], (v) R Rajamanickam, for himself and on behalf of other Awardy Staff v. Indian Bank [(1981) II LLJ 367], (vi) R.N. Shenoy & Ann etc. v. Central Bank of India & Ors. etc. 1983 KLT 381= [(1984) XVII LIC 1493], (vii) Prakash ChandraJohari v. Indian Overseas Bank & Ann [(1986) II LLJ 496], have variously taken the view that it is not only permissible for the employer to deduct wages for the hours or the days for which the employees are absent from duty but in cases such 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 not indivisible. Some of the decisions have also held that the deduction of wages can also be made under the provisions 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 is in enforcement of the contract of employment and hence no disciplinary proceedings need precede it. 14. Even in V. Ganesan v. The State Bank of India & Ors. (supra), it was not disputed on behalf of the employees that the employer, namely, the Bank had no right to deduct pro rate the salary of the officers for the period of absence from duty. What was contended there was that the Bank was not entitled to deduct the salary for the whole three days on which the employees had staged a demonstration for a duration of 30 minutes during working hours on two days and for an hour, on the third day. The learned judge held that by permitting the employees to perform their work during the rest of the day and by accepting such performance the Bank must be deemed to have acquiesced in the breach of contract by the employees. It is on this fact that the learned judge held that the right to deduct salary (obviously for the whole day) 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 that effect. The Division Bench of the said Court in appeal against the said decision and similar other matters (supra) confirmed the reasoning of the learned judge and held that in the absence of either a term in the contract of service stipulating that if an employee abstains from doing a particular work on a particular day, he would not be entitled to emoluments for the whole day or in the absence of a statutory provision laying down such a rule, it was impermissible for the employer to deduct or withhold the emoluments of the employees even for the hours during which they worked. Having accepted the performance of work from the employees for the rest of the day, the Banks are bound to compensate the employees for the work performed by them. In that very case, the Court also held, on the facts arising from the other matters before it, that the refusal to perform the clearing-house work can only be the subject matter of a disciplinary action and it cannot straightaway result in the with holding of the wages for the whole day. Non-signing of the attendance register and doing work is also work for which the employees should be compensated by payment of remuneration. 15. On the specific question whether the management can take action in situations, where either the contract, Standing Order or rules and regulations are silent, both parties relied on further authorities. 16. In Workmen of M/s. Firestone Tyre & Rubber Co. of India (P) Limited v. Firestone Tyre & Rubber Co. [(1976) 3 SCR 369] on which reliance was placed on behalf of the workmen it was held that under the general law of master and servant, an employer may discharge an employee either temporarily or permanently but that cannot be without adequate notice. Mere refusal or inability to give employment to the workmen when he reports for duty, on one or more grounds mentioned in clause (kkk) of S.2 of the Industrial Disputes Act is not a temporary discharge of the workmen. Such a power, therefore, must be found out from the terms of the contract of service or the Standing Orders governing the establishment. Hence, even for lay-off of the workmen there must be a power in the management either in the contract of service or the standing orders governing the establishment. Ordinarily, the workmen, therefore, would be entitled to their full wages when the workmen are laid off without there being any such power. There was no common law right to lay off the workmen, and, therefore, no right to deny the workmen their full wages. 17. In Krishnatosh Das Gupta v. Union of India & Ors. [(1980) 1 LLJ 42], it was a case of the employees of the National Test House, Calcutta who -had staged demonstration after signing the attendance register to register their protest against suspension of some of their colleagues. Though the employees signed the attendance register and attended the office, they did no work on the relevant day. As such, a circular was issued by the Joint Director informing the employees that they would be considered as "not on duty". By a subsequent circular the same Joint Director notified to all departments concerned the decision of the Cabinet that there shall not be pay for no work. Relying on the said circular the Management of the National Test House effected on a mass-scale pay-cut from the pay and allowances of the concerned employees. The circular was challenged by the employees by a writ petition before the High Court. The High Court held that in order to deduct any amount from salary, there must be specific rules relating to the contract of service of the person concerned. 18. On behalf of the employers, reliance was placed on a decision of this Court in Sant Ram Sharma v. State of Rajasthan & Ann [(1968) 1 SCR 111] for the proposition laid down there that in the absence of any statutory rules or a specific provision in the rules, the Government can act by, administrative instructions. The Court has held there that though it is true that the Government cannot amend or supersede statutory rules by administrative instructions, if the rules are silent on any particular point, Government can Mil up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed. 19. In Roshan Lal Tandon v. Union of India [(1968) 1 SCR 185, this Court has stated that although the origin of Government service is contractual in the sense that there is an offer and acceptance in every case, once appointed to his post or office, the Government servant acquires a status, and his rights and obligations are no longer determined by consent of both parties but by statute or statutory rules which may be framed or altered unilaterally by the Government. In other words, the legal position of the Government servant is more of status than of contract. The hallmark of status is the attachment to legal relationships of rights and duties imposed by the public law and not by mere agreement of the parties. The relationship between the Government and the servant is not like an ordinary contract of service between a master and servant. The legal relationship is something entirely different, something in the nature of status. 20. In V.T. Khanzode & Ors. v. Reserve Bank of India & Ann [(1982) 3 SCR 411] , this Court has reiterated that so long as Staff Regulations are not framed, it is open to issue administrative circulars regulating the service conditions in the exercise of power conferred by S.7(2) of the Reserve Bank of India Act, 1934 so long as they do not impinge on any regulations made under S.58 of the Act. 21. The same view with regard to power to issue administrative instructions when rules are silent on a subject has been reiterated by the Court in Paluru Ramakrishnaiah & Ors.etc. v. Union of India & Ann etc. [(1989) 1 JT 595] and in Senior Superintendent of Post Office & Ors. v. Izhar Hussain [(1989) 3 JT 411]. 22. The principles which emerge from the aforesaid authorities may now be stated. Where the contract, Standing Orders or the service rules/regulations are silent on the subject, the management has the power to deduct wages for absence from duty when the absence is a concerted action on the part of the employees and the absence is not disputed. Whether the deduction from wages will be pro rata for the period of absence only or will be for a longer period will depend upon the facts of each case such as whether where was any work to be done in the said period, whether the work was in fact done and whether it was accepted and acquiesced in, etc. 23. It is not enough that 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/ salaries are paid. For the same reason, if the employees put in the allotted work but do not, for some reason - may be even as a protest - 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 therefor 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 employees concerned. 24. When the contract, Standing Orders, or the service rules/ regulations are silent, but enactment such as the Payment of Wages Act providing for wage-cuts for the absence from duty is applicable to the establishment concerned, the wages can be deducted even under the provisions of such enactment. 25. Apart from the aforesaid ratio of the decisions and the provisions of the Payment of Wages Act and similar statutes on the subject, according to us, the relevant provisions of the major legislation governing the industrial disputes, viz., the Industrial Disputes Act, 1947 also lend their support to the view that the wages are payable pro rate for the work done and hence deductible for the work not done. S.2(rr) of the said Act defines "wages" to mean "ail remuneration which would, if terms of employment expressed or implied, were fulfilled, be payable to workman in respect of his employment or work done in such employment " while S.2(q) defines "strike" to mean "cessation of work" or "refusal to continue to work or accept employment by workman". Reading the two definitions together, it is clear that wages are payable only if the contract of employment is fulfilled and not otherwise. Hence, when the workers do not put in the allotted work or refuse to do it, they would not be entitled to the wages proportionately. 26. The decisions including the one impugned in this appeal which have taken the view which is either contrary to or inconsistent with the above conclusions, have done so because they have proceeded on certain wrong presumptions. The first error, as we have pointed out at the outset, is to confuse the question of the legitimacy of the strike as a weapon in the workers hands with that of the liability to lose wages for the period of strike. The working class has indisputably earned the right to strike as an industrial action after a long struggle, so much so that the relevant industrial legislation recognises it as their implied right. However, the legislation also circumscribes this right by prescribing conditions under which alone its exercise may become legal. Whereas, therefore, a legal strike may not invite disciplinary proceedings, as illegal strike may do so, it being a misconduct. However, whether the strike is legal or illegal, the workers are liable to lose wages for the period of strike. The liability to lose wages does riot either make the strike illegal as a weapon or deprive the workers of it. When workers resort to it, they do so knowing full well its consequences. During the period of strike the contract of employment continues but the workers withhold their labour. Consequently, they cannot expect to be paid.27. The second fallacy from which the said decisions suffer is to view the contract of employment as an indivisible one in terms of the wage-period. When it is argued that the wages cannot be deducted pro rata for the hours or for the day or days for which the workers are on strike because the contract, which in this case is monthly, cannot be sub-divided into days and hours, what is forgotten is that, in that case if the contract comes to an end amidst a month by death, resignation or retirement of the employee, he would not be entitled to the proportionate payment for the part of the month he served. This was the iniquitous and harsh consequence of the rule of indivisibility of contract laid down in an English case, Cutter v. Powell [(1795) 6 TR 3201 which was rightly vehemently criticised and later, fortunately not followed. If the employment-contract is held indivisible, it will be so for both the parties. We are also unable to see any difficulty, inequity or impracticability in construing the contract as divisible into different periods such as days and hours for proportionate reimbursement or deduction of wages, which is normally done in practice.28. The third fallacy was to equate disputed individual-conduct with admitted mass conduct. A disciplinary proceeding is neither necessary for feasible in the latter case. The contract of employment, Standing Orders or the service rules provide for disciplinary proceedings for the lapse on the part of a particular individual or individuals when the misconduct is disputed. As things stand today, they do not provide a remedy for mass-misconduct which is admitted or cannot be disputed. Hence, to drive the management to hold disciplinary proceedings even in such cases is neither necessary nor proper. The service conditions are not expected to visualise and provide for all situations. Hence, when they are silent on unexpected eventualities, the management should be deemed to have the requisite power to deal with them consistent with law and the other service conditions and to the extent it is reasonably necessary to do so. The prorate deduction of wages is not an unreasonable exercise of power on such occasions. Whether on such occasions the wages are deductible at all and to what extent will, however, depend on the facts of each case. Although the employees may strike only for some hours but there is no work for the rest of the day as in the present case, the employer may be justified in deducting salary for the whole day. On the other hand, the employees may put in work after the strike hours and the employer may accept it or acquiesce in it. In that case the employer may not be entitled to deduct wages at all or be entitled to deduct them only for the hours of strike. If further statutes such as the Payment of Wages Act or the State enactments like the Shops and Establishments Act apply, the employer may be justified in deducting wages under their provisions. Even if they do not apply, no thing prevents the employer from taking guidance from the legislative wisdom contained in it to adopt measures on the lines outlined therein, when the contract of employment is silent on the subject.29. It is, however, necessary to reiterate that even incases such as the present one where action is resorted to on a mass scale, some employees may not be a party to the action and may have genuinely desired to discharge their duties but could not do so for failure of the management to give the necessary assistance or protection or on account of other circumstances. The management will not be justified in deducting wages of such employees without holding an inquiry. That, however, was not the grievance of any of the employees in the present case, as pointed out earlier.

Decision:
1[ds]We thought that the answer to this question was apparent enough and did not require much discussion. However, the question has assumed a different dimension in the present case because on the facts, it is contended that although the employees went on strike only for four hours and thereafter resumed their duties, the Bank has deducted wages for the whole day. It is contended that in any case this was impermissible and the Bank could at the most deduct only pro rata wages. Normally, this contention on the part of the workers would be valid. But in a case such as the present one, where the employees go on strike during the crucial working hours which generate work for the rest of the day, to accept this argument is in effect to negate the purpose and efficacy of the remedy, and to permit its circumvention effectively. It is true that in the present case when the employees came back to work after theirstrike, they were not prevented from entering the Bank premises. But admittedly, their attendance after thestrike was useless because there was no work to do during the rest of the hours. It is for this reason that the Bank had made it clear, in advance, that if they went on strike for theas threatened, they would not be entitled to the wages for the whole day and hence they need not report for work thereafter. Short of physically preventing the employees from resuming the work which it was unnecessary to do, the Bank had done all in its power to warn the employees of the consequences of their action and if the employees, in spite of it, chose to enter the Banks premises where they had no work to do, and in fact did not do any, they did so of their own choice and not according to the requirement of the service or at the direction of the Bank. In fact, the direction was to the contrary. Hence, the later resumption of work by the employees was not in fulfilment of the contract of service or any obligation under it. The Bank was therefore not liable to pay either full days salary or even the pro rata salary for the hours of work. that the employees remained in the Bank premises without doing any work. It is not a mere presence of the workmen at the place of work but the work that they do according to the terms of the contract which constitutes the fulfilment of the contract of employment and for which they are entitled to be paid.6. It is also necessary to state that though, before the High Court, reliance was placed by the Bank on the provisions of S.7(2)(b) read with S.9 of the Payment of Wages Act, 1936 for a right to deduct the wages for absence from duty, there is nothing on record to show that the provisions of the said Act have been made applicable to the Bank. However, assuming that the Act was applicable to the Bank, we are of the opinion that the relevant discussion of the High Court has missed the contentions urged by the Bank on the basis of the said provisions. What was urged by the Bank was that the said provisions enabled it to deduct wages for absence from duty. Hence, even if the Service rules/regulations were silent on the point, the Bank could legally deduct the wages under the said provisions. The High Court has reasoned 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 Service rules/ regulations. We are unable to appreciate this reasoning, which to say the least, begs the question. 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/regulation to govern the situation.7. Since the admitted position is that the service rules do not provide for such a situation, the question as stated earlier which requires to be answered in the present case, is whether there exists an implied right in theto take action as it has done. There is no dispute that although the service regulations do not provide for a situation where employees on a mass scale resort to absence from duty for whole day or a part of the day whether during crucial hours or otherwise, they do provide for treating an absence from duty of an individual employee as a misconduct and for taking appropriate action against him for such absence. Since the High Court has indicated a disciplinary action under the said provision even in the present circumstances, we will also have to deal with that aspect. But before we do so, we may examine the relevant authorities cited at theare inclined to hold that the stoppage of work for the period for about 2 to 4 hours in the circumstances of the case is not to be regarded as a strike so as to amount to a break in the continuity of service of the workman concerned". In the result, the Tribunal allowed the Unions appeal and ordered that holidays at full rates as provided for inof the Factories Act will have to be calculated on the footing that there was no break in the continuity of service. This Court set aside the finding of the Appellate Tribunal 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 S.2(q) of the Industrial Disputes Act existed and it was not a case of an individual workers failure to turn up for work. Hence, it was an illegal strike because no notice had been given to the management, the Mills being a public utility industry.The decisions including the one impugned in this appeal which have taken the view which is either contrary to or inconsistent with the above conclusions, have done so because they have proceeded on certain wrong presumptions. The first error, as we have pointed out at the outset, is to confuse the question of the legitimacy of the strike as a weapon in the workers hands with that of the liability to lose wages for the period of strike. The working class has indisputably earned the right to strike as an industrial action after a long struggle, so much so that the relevant industrial legislation recognises it as their implied right. However, the legislation also circumscribes this right by prescribing conditions under which alone its exercise may become legal. Whereas, therefore, a legal strike may not invite disciplinary proceedings, as illegal strike may do so, it being a misconduct. However, whether the strike is legal or illegal, the workers are liable to lose wages for the period of strike. The liability to lose wages does riot either make the strike illegal as a weapon or deprive the workers of it. When workers resort to it, they do so knowing full well its consequences. During the period of strike the contract of employment continues but the workers withhold their labour. Consequently, they cannot expect to be paid.27. The second fallacy from which the said decisions suffer is to view the contract of employment as an indivisible one in terms of theWhen it is argued that the wages cannot be deducted pro rata for the hours or for the day or days for which the workers are on strike because the contract, which in this case is monthly, cannot beinto days and hours, what is forgotten is that, in that case if the contract comes to an end amidst a month by death, resignation or retirement of the employee, he would not be entitled to the proportionate payment for the part of the month he served. This was the iniquitous and harsh consequence of the rule of indivisibility of contract laid down in an English case, Cutter v. Powell [(1795) 6 TR 3201 which was rightly vehemently criticised and later, fortunately not followed. If theis held indivisible, it will be so for both the parties. We are also unable to see any difficulty, inequity or impracticability in construing the contract as divisible into different periods such as days and hours for proportionate reimbursement or deduction of wages, which is normally done in practice.28. The third fallacy was to equate disputedwith admitted mass conduct. A disciplinary proceeding is neither necessary for feasible in the latter case. The contract of employment, Standing Orders or the service rules provide for disciplinary proceedings for the lapse on the part of a particular individual or individuals when the misconduct is disputed. As things stand today, they do not provide a remedy forwhich is admitted or cannot be disputed. Hence, to drive the management to hold disciplinary proceedings even in such cases is neither necessary nor proper. The service conditions are not expected to visualise and provide for all situations. Hence, when they are silent on unexpected eventualities, the management should be deemed to have the requisite power to deal with them consistent with law and the other service conditions and to the extent it is reasonably necessary to do so. The prorate deduction of wages is not an unreasonable exercise of power on such occasions. Whether on such occasions the wages are deductible at all and to what extent will, however, depend on the facts of each case. Although the employees may strike only for some hours but there is no work for the rest of the day as in the present case, the employer may be justified in deducting salary for the whole day. On the other hand, the employees may put in work after the strike hours and the employer may accept it or acquiesce in it. In that case the employer may not be entitled to deduct wages at all or be entitled to deduct them only for the hours of strike. If further statutes such as the Payment of Wages Act or the State enactments like the Shops and Establishments Act apply, the employer may be justified in deducting wages under their provisions. Even if they do not apply, no thing prevents the employer from taking guidance from the legislative wisdom contained in it to adopt measures on the lines outlined therein, when the contract of employment is silent on the subject.29. It is, however, necessary to reiterate that even incases such as the present one where action is resorted to on a mass scale, some employees may not be a party to the action and may have genuinely desired to discharge their duties but could not do so for failure of the management to give the necessary assistance or protection or on account of other circumstances. The management will not be justified in deducting wages of such employees without holding an inquiry. That, however, was not the grievance of any of the employees in the present case, as pointed out earlier.There cannot be two opinions thatis a serious misconduct being a coven and a more damaging breach of the contract of employment. It is an insidious method of undermining discipline and at the same time a crude device to defy the norms of work. It has been roundly condemned as an industrial action and has not been recognised as a legitimate weapon of the workmen to redress their grievances. Infact the model standing orders as well as the certified standing orders of most of the industrial establishments define it as a misconduct and provide for a disciplinary action for it. Hence, once it is proved, those guilty of it have to face the consequences which may include deduction of wages and even dismissal from service.37. But by its very nature, the proof ofparticularly when it is disputed, involves investigation into various aspects such as the nature of the process of production, the stages of production and their relative importance, the role of the workers engaged at each stage of production, theactivities and the facilities for production and the activities of the workmen connected therewith and their effect on production, the factors bearing on the average production etc. Thefurther may be indulged in by an individual workman or only some workmen either in one section or different sections or in one shift or both shifts affecting the output in varying degrees and to different extent depending upon the nature of product and the productive process. Even where it is admitted,may in some case present difficulties in determining the actual or approximate loss, for it may have repercussions on production after theceases which may be difficult to estimate. The deduction of wages formay, therefore, present difficulties which may not be easily resoluble. When, therefore, wages are sought to be deducted for breach of contract on account ofthe quantum of deduction may become a bone of contention in most of the cases inevitably leading to an industrial dispute to be adjudicated by an independent machinery statutory or otherwise as the parties may resort to. It is necessary to emphasize this because unlike in the case of a strike where a simple measure of a pro rata deduction from wages may provide a just and fair remedy, the extent of deduction of wages on account of aaction may in some case raise a complex question. The simplistic method of deducting uniform percentage of wages from the wages of all workmen calculated on the basis of the percentage fall in production compared to the normal or average production may not always be equitable. It is, therefore, necessary that in all cases where the factum ofand/or the extent of the loss of production on account of it, is disputed, there should be a proper inquiry on charges which furnish particulars of theand the loss of production on that account. The rules of natural justice require it, and whether they have been followed or not will depend on the facts of each case.38. In the present case, the Industrial Court, as pointed out earlier, has accepted the evidence of the witness of the Company that the workmen had not worked for full eight hours on any day in the month concerned, namely July 1984, and that they were working intermittently only for sometime and were sitting idle during the rest of the time. According to him, the workers had worked hardly for an hour and 15 to 20 minutes on an average during the said month. The witness had also produced notices put up by the Company from time to time showing the daily fall in the production and calling upon the workmen to resume normalcy. There is further no dispute that the copies of these notices were sent to the Union of the workmen as well as to the Government Labour Officer. The Industrial Court did not accept the evidence of the workmen that there was noas alleged by the Company. Accordingly, the Industrial Court has recorded a finding that the pro rata deduction of wages made by the Company for the month of July 1984 did not amount to an act of unfair labour practice within the meaning of the said Act. It does not further appear from the record of the proceedings before the Industrial Court that any attempt was made on behalf of the workmen to challenge the figures of production produced by the Company. These figures show that during the entire month of July 1984, the production varied from 7.06 per cent to 13.9 per cent of the normal production. The Company has deducted wages on the basis,of each days production. In view of the fact that there is a finding recorded by the Industrial Court that there wasresorted toby the workmen and the production was as alleged by the Company during the said period, which finding is not challenged before us, it is not possible for us to interfere with it in this appeal. As stated above, all that was challenged was the right of the employer to deduct wages even when admittedly there is awhich question we have answered in favour of the employer earlier. The question with regard to the quantum of deduction from the wages, therefore, does not arise before us for consideration. It is, however, likely that the workmen did not question the figures of production before the Industrial Court because they were armed with the two decisions of the High Court (supra) which accordinghad negatived the right of the employer to deduct wages even in such circumstances. While, therefore, allowing the appeal, we direct that the appellant will not deduct more than 5 per cent of the wages of the workmen for the month of July 1984.