Holding

An employer may lawfully deduct wages for the period of a mass strike or go‑slow, but in the go‑slow case the deduction must not exceed 5% of the monthly wages.

Summary

The Supreme Court considered two appeals involving Bank of India and a private company concerning wage deductions during industrial actions. In the first appeal, employees participated in a four‑hour strike covering crucial banking hours; the Bank had issued a circular stating that participants would forfeit the full day's salary. The Court held that when a mass strike results in no work being performed for the remainder of the day, the employer may deduct the entire day's wages without a disciplinary inquiry. In the second appeal, workers engaged in a go‑slow in July 1984, leading the company to withhold full wages; the Industrial Court had found no unfair labour practice. The Supreme Court affirmed the employer’s right to deduct wages for go‑slow but limited the deduction to no more than 5% of the monthly wages. Both appeals were allowed, setting aside the High Court’s order in the strike case and modifying the wage deduction in the go‑slow case.

Issues considered

Whether an employer can deduct the full day's wages for employees who participate in a mass strike, even if they resume work after the strike hours, without conducting an individual inquiry.
Whether an employer may deduct wages for a go‑slow without a specific contractual or statutory provision, and what extent of deduction is permissible.

Legislation cited

Industrial Disputes Act, 1947s. 2(q), s. 2(rr)
Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971
Payment of Wages Act, 1936s. 7(2), s. 9
Reserve Bank of India Act, 1934s. 7(2)
Shops and Establishments Act

Subjects

strikego‑slowwage deductionPayment of Wages ActIndustrial Disputes Actunfair labour practicemass industrial actiondisciplinary action

Judgment

BANK OF INDIA
A
v.
T.S. KELAWALA AND ORS.

WITH

B S.U. MOTORS PRIVATE LID.
v.
Tiffi WORKMEN EMrLOYED UNDER IT
·'"{
MAY 4, 1990 -...,

(KULDIP SINGH AND P.B. SAWANT, JJ.)
c
Payment of Wages Act, 1936: Sections 7(2) and 9-Absence from
work or indulging in go-slow tactics-Pro-rata deduction/non-payment
of wages by employer-Whether justified.
j

D In the former appeal, the appellant is a nationalised Bank. In
1977, some demands for wage revision made by the employees of all
Banks were pending and in support of their demands, a call for a
country wide strike was given. The appellant-Bank issued a Circular ou
September 23, 1977 to its managers and agents directing them to deduct
wages of the employees for the days they go on strike. The respondent·
E Unions gave a call for a four hour strike on December 29, 1977. Two
days before the strike, the appellant-Bank issued an Administrative
Circular warning the employees that if they participate in the strike, "'
they would be committing a breach of their contract of service and they
would not be entitled to salary for the full day and they need not report

~
for work for the rest of the working hours on that day. However, the
F employees went on strike as scheduled, for four hours which included
banking hours of the public, and resumed duty thereafter. The
appellant-Bank did not prevent them from doing so. The appellant· '
.;.
Bank hy its circular directed the managers and agents to deduct the full
day's salary of those employees who participated in the strike. On a
writ petition tiled by the respondents, the High Court quashed the said
G Circular. The Letters Patent Appeal filed by the appellant was dismis·
sed. Hence, the appeal by the Bank.

In the latter appeal, the appellant is a company whose workers
had indulged in "go-slow" in July 1984, thereby bringing down pro- 1'
duction. The workers did not attend to their work and were loitering in
H the premises and were indulging in go-slow tactics to pressurise the

214
BANK OF INDIA v. KELAWALA 215

company to concede their demands. The company suspended its opera-
··-.,. tion by giving a notice of lock out. It did not pay wages to the workers
A
for July, 1984 on the ground that they did not work during all the
working hours and had not earned their wags. The workers' union filed
a complaint before the Industrial Court complaining that the appellnat-
company had indulged in unfair labour practice and that the lock-out
declared was illegal. The Industrial Court held that the deduction of B
wages for July, 1984 on account of the go-slow W31' not justified. It also
declared that.the company had committed an unfair labour practice by
not paying full monthly wages to the workers and directed the company
to pay the said wages for the month of July, 1984. Aggrieved, the
appellant company has preferred the appeal.

Allowing the appeals, this Court, c
' '>- . HELD: J.l . There is no doubt that whenever a worker indulges in
a misconduct such as a deliberate refusal to work, the employer can
take disciplinary action against him and impose on him the penalty
prescribed for it which may include some deduction from his wages. D
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 strike it is not possible to bold an
inquiry against every employee nor is it necessary to do so unless, of E
course, an employee contends that although he did not want to go on
strike and wanted to resume bis 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. It is F
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 G
not be entitled to the wages for the whole day and hence they need not
report for work thereafter. Short of physically preventing the emp-
loyees from resuming the work which it was unnecessary to do, the
Bank had done all in its power to warn the employees of the consequ-
ences of their action and if the employees, in spite of it, chose to enter
the Bank's premises where they had no work to do, and in fact did not H
216 SUPREME COURT REPORTS I1990] 3 S.C.R.

do any, they did so of their own choice and not according to the require-
A ment 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 fulfihnent of the contract of service or any obliga-
tion under it. The Bank was therefore not liable to pay either full day's
salary or even the pro rata salary for the hours or work that the
B 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 consitutes the ...,·\
fulfilment of the contract of employment and for which they were
entitled to be paid. [222E-H; 223A-F]

1.2 Although the service regulations do not provide for a situa-
c tion 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 .1
individual employee as a misconduct and for taking appropriate action
against him for such absence. [2240-E]
D
2.1. 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. [231F]
E
2.2. 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
F strike may not invite disciplinary proceedings, an 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 not 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
G employment continues but the workers withhold their labour. Conse-
quently, they cannot expect to be paid. [232C-E]

2.3. The contract, which is this case is monthly, cannot be sub-
divided into days and hours. If the contract comes to an end amidst a
month by death, resignation or retirement of the employee, he would
H not be entitled to the proportionate payment for the part of the month
BANK OF INDIA v. KELAWALA 217

he served. If the employment-contract is held indivisible, it will be so
for both the parties. There is no difficulty, inequity or impracticability A
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. [232G-H; 233A]

2.4. The contract of employment, Standing Orders or the service B
rules provide for disciplinary proceedings for the lapse on the part of a
.\. particular individual or individuals when the misconduct is disputed.
'y As things stand today, they do not provide a remedy for mass-mis-
conduct 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. When they are silent on unex- c
pected 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 pro rata deduction of wages is not an unreasonable exercise of
power on such occasions. Whether on such occasions, the wages are D
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 acqquiesce in it. In that case the employer E
may not be entitled to deduct wages at all or be entitled to deduct only
for the hours of strike. If statutes such as the Payment of Wages Act or
the State enactments like the Shops and Establishments Act apply, the
employer ,-.ay be justified in deducting wages under their provisions.
Even if they do not apply, nothing prevents the employer from taking
guidance from the legislative wisdom contained in it to adopt measures F
on the lines outlined therein, when the contract of employment is silent
on the subject. [233B-F l

V. T. Khanzode & Ors. v. Reserve Bank of India & Anr., [1982] 3
SCR 411; Paluru Ramkrishnaiah & Ors. etc. v. Union of India & Anr.
etc., [1989] l JT 595 and Senior Superintendent of Post Office & Ors. v. G
Izhar Hussain, [1989] 3 JT 4ll, relied on.

Buckingham and Carnatic Co. Ltd. v. Workers of the Bucking-
ham and Carnatic Co. Ltd., [1953] SCR 219; V. Ganesan v. The State
Bank of India & Ors., [1981] 1 LLJ 64; State Bwk of India, Canara
Bank, Central Bank etc. & Ors. v. Ganesan, Jambunathan, Venkatara- H
218 SUPREME COURT REPORTS [ 1990) 3 S.C.R.

man, B. V. Karnath, V.K. Krishnamurthy, etc. & Ors., [1989] I LU 109;
A
Sukumar Bandyopadhyyay & Ors. v. State of West Bengal & Ors.,
[1976) IX LIC 1689; Algemene .Bank Nederland, N. V. v. Central
Government Labour Court, Calcutta & Ors., [1978) II LU, i 17; V.
Ramachandran v. Indian Bank, [1979) I LLJ 122; Dharam Singh Rajput
& Ors. v. Bank of India, Bombay & Ors., [1979) 12 LIC 1079; R.
B Rajamanickam, for himself and on behalf of other Award Staff v.
Indian Bank, [1981) II LLJ 367; R.N. Shenoy & Anr. etc. v. Central
Bank of India & Ors. etc., [1984] XVII LIC 1493; Prakash Chandra
Johari v. Indian Overseas Bank & Anr., [1986) II LLJ 496; Workmen of
M fs.Firestone Tyre & Rubber Co. of India (P) Ltd. v. Firestone Tyre &
Rubber Co., [1976) 3 SCR 369; Krishnatosh Das Gupta v. Union of
India & Ors., [1980) 1 LLJ 42; Sant Ram Sharma v. State of Rajasthan &
c Anr., [1968) 1SCR111; Roshan Lal Tandon v. Union of India, [1968]
1 SCR 185; Secretary of State for Employment v. A>Sociated Society of
Locomotive Engineers and Firemen and Ors. (No. 2), I1972] 2 All ER
949; Miles v. Wakefield Metropolitan District Council, [1989] I LLJ 335
and Cutter v. Pwell, [1795) 6 TR 320, referred to.
D
3. J. There cannot he two opinions that go-slow is a serious mis-
conduct being a covert 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
E as a legitimate weapon of the workmen to redress their grievances. In
fact 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 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. [237G-H: 238Al
F
3.2. The proof of go-slow, particularly when it is dispnted,
involves investigation into various aspects such as the nature of the
process of production, the stages of prodnction and their relative
importance, the role of the workers engaged at each stage of produc-
tion, the pre-production activities and the facilities for production and
G the activities of the workmen connected therewith and their effect on
production, the factors hearing on the average production etc. The
go-slow further may be indulged in by an individual work.man 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 pro-
H cess. Even where it is admitted, go-slow may in some case present
BANK OF INDIA v. KELAWALA 219

difficulties in determining the actual or approximate loss, for it may
A
have repercussions on production after the go-slow ceases which may be
~-
difficult to estimate. The deduction of wages for go-slow· may, there-
fore, present difficulties which may not he easily resoluble. When,
therefore, wages are sought to he deducted for breach of contract on
account of go-slow, the quantum of deduction may become a bone of
contention in most of the cases inevitably leading to an industrial dis- B·
pule to be adjudicated by_an independent machinery statutory or
'>
,. otherwise as the parties may resort to. The simplistic method of deduct-
ing 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 factom of go-slow and /or
the extent of the loss of production on account of it, is disputed, there c
should be a proper inquiry on charges which furnish particulars of the
'
go-slow and 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. [2388-G]
D
3.3. In the instant case, there is a finding recorded hy the lndust-
rial Court that there was a gil-slow resorted to by tbe workmen result-

~ ing in loss of production during the said period. Since the said finding is
not challenged, it is not possible to interfere with it in this appeal.
Though the appellant is justified in deducting wages for the said period,
.?' in the facts and circumstances of the case it is directed that it will not E
deduct more than 5 per cent of the wages of the workmen for the month
of July, 1984 when they indulged in go-slow tactics. [239D-F]
..,.
-) M /s. Bharat Sugar Mills Ltd. v. Shri Jai Singh & Ors., [1962] 3
SCR 684; T.S. Kelwala & Ors. v. Bank of India & Ors., [1981] 43 FLR
341 and Apar (Pvt) Ltd. v. S.R. Samant & Ors., [1980] II LU 344, F
referred to.
)..

CIVIL APPELLA1E JURISDICTION: Civil Appeal No. 2581
of 1986.

Appeal by Certificate from the Judgment and Order dated G
15.10.1985 of the Bombay High Court in Appeal No. 547of1984.

__:,, WITH

Civil Appeal No. 855 of 1987.
H
220 SUPREME COURT REPORTS [ 1990) 3 S.C.R.

From the Judgment and Order dated 8.12.1986 of the Industrial
A
Court, Maharashtra, Bombay in Complaint (ULP) No. 1202 of 1984.

Ashok Desai, Attorney General, G.B. Pai, J. Ramamurthy,
Jitendra Sharma, B.N. Dutt, H.S. Parihar, Vipin Chandra, R.F. Nari-
man, P.H. Parekh, N.K. Sahu, Mrs. Urmila Sirur and Raj Birbal for
B the appearing parties.

The Judgment of the Court was delivered by

SAWANT, J. These are two appeals involving a common ques-
tion of law, viz., whether an employer has a right to deduct wages
unilaterally and without holding an enquiry for the period the emp-
'C loyees go on strike or resort to go-slow. In CA No. 2581of1986we 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 con-
D venience, however, we propose to deal with each case separately to the
extent of the distinction.

Civil Appeal No. 258 lof 1986

2. The appellant in this case is a nationalised bank, and respon-
E dents 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 Septem-
F ber 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
G 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 conse-
quently, they need not report for work for the rest of the working
hours on that day. Notwithstanding it, the employees went oh 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
H public covered the said four hours. The employees, however, resumed
BANK OF INDIA v. KELAWALA [SAWANT, J.) 221

work on that day after the strike hours, and the Bank did not prevent
A
r them from doing so. On January 16, 1978, the Bank issued a Circular
directing its managers and agents to deduct the full day's salary of
those of the employees who had participated in the strike. The respon-
dents 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 B
:irrieal.
.
).

The High Court has taken the view, firstly, that neither regula-
" lions nor awards nor settlements empowered the Bank to make the
deductions, and secondly, in justice, 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 c
,._ 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 recog- D
nised 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 accord-
ing to the Court amounted to unilaterally changing the service condi-
lions depriving the workers of their fixed monthly wages under the
__/ contract of service. The Court also reasoned that under the conditions E
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 uni-
laterally reduce the monthly wage and thus give the employees lesser
monthly wages than the one contracted. The non-observance by the F
employees of the terms of the contract may give the employer a cause
,f.-
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 G
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 warn-
-\.. ing, 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 H
222 SUPREME COURT REPORTS [1990] 3 S.C.R.

deductions under Section 7(2) of the Payment of Wages Act, 1936 by
A
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 employ-
B ment 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.
c 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 legiti-
mate weapon in the hands of the workers to redress their grievances. It
appears to us that this confusion between the strike as a legitimate
D weapon in the hands of the workmen and the liability of deduction of
wages incurred on account ofit, 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
E 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,
F 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. 1n 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
G 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 pre-
sent one, the only question that has to be considered is whether, when
admittedly the employees refuse to work by going on strike, the emp-
H toyer is entitled to deduct wages for the relevant period or not. We
BANK OF INDIA v. KELAWALA [SAWANT, J.I 223

thOught that the answer to this question was apparent enough am\ did
A
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 B
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' nega.te 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 c
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 threatended, they would not be entitled to the wages for the whole D
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 Bank'spremises where they had no work
?' to do, and in fact did not do any, they did so of their own choice and E
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 day's salary or even the pro rata salary for
the hours of work that the employees remained in the Bank premises F
;_ 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 employ-
ment and for which they are entitled to be paid.

6. It is also necessary to state that thongh, before the High G
Court, reliance was placed by the Bank on the provisions of Section
7(2)(b) read with Section 9 of the Payment of Wages Act, 1936 for a
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 Act was applicable to
the Bank, we are of the opinion that the relevant discussion of the H
224 SUPREME COURT REPORTS [ 1990] 3 S.C.R.

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 come
B into play only when the employer has power to do so, probably mean-
ing 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 th~ situation.
c
7. Since the admitted position is that the service rules do not
provide for such a sitution, 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
D 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
E 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
F on 1st 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 10 p.m. the strike ended comp-
letely. The apparent cause for the strike was that the management of
the Mills had expressed its inability to comply with the request of the
G workers to declare the forenoon of the Jst November, 1948 as a holi-
day for solar-eclipse. On 3rd November, 1948, the management put up
a notice that the stoppage of work on the 1st 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 holi-
H days with pay as provided by the Act. The disputes having thus arisen,
BANK OF INDIA v: KELAWALA [SAWANT, J.] 225

the State Government referred the matter to Industrial Tribunal. The
A
Tribunal held that the workers had resorted to an illegal strike and
''r· upheld the view of the management that the c<'ntinuity 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 Section 49-B(l) of the Factories Act. The Tribunal, how-
ever, held that the total deprivation of leave with pay was a severe B
p>>nish!!'P!lt and reduced the punishment by 50 per cent 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 1st
November did not amount to a strike and did not cause any interrup-
tion in the workers' service. The Tribunal observed that "It would be
absurd to hold that non-permitted absence from work even for half an c
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 sec-
~ -
tion (i.e., Section 49-B(l) 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 D
amount to a break in the continuity of service of the workman con-
cerned". In the result, the Tribunal allowed the Union's appeal and
ordered that holidays at full rates as provided for in Section 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 E
disputed that there was a ce'ssation of work by a body of persons
employed in the Mills and that they were acting in combination and
their refusal to go back to work was concerted, and the necessary
ingredients of the definition of "strike" in Section 2 (q) of the Indust-
rial Disputes Act existed and it was not a case of an individual worker's
failure to tum up for work. Hence, it was an illegal strike because no F
notice had been given to the management, the Mills being a public
utility industry.

In Secretary of State for Employment v .Associated Society of
Locomotive Engineers and Firemen and Ors. (No. 2), I1977] 2 All ER
949, Lord Denning MR observed: · G

" ... It is equa]]y the case when he is employed as one of
many's 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 ~uilty H
226 SUPREME COURT REPORTS [1990] 3 S.C.R.

of a breach of his contract. It is no answer for any one of
A
them to say 'I am only obeying the rule book', or 'I am not
bound tCN!o more than a 40 hour week'. That would be all
very well if done in good faith without any wilful disrup-
tion of services; but what makes it wrong is the object with
which it is done. There are many branches of our law when
B an act which would otherwise be lawful is rendered unlaw-
ful by the motive or object with which it is done. So here it
is the wilful disruption which 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
c 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, (1983-
60) All ER Rep 390 at 392 and with other cases quoted in
Smith's Leading Cases (13th Edn., Vol. 2, p. 48), the notes
D to Cutterv. Powell, [1795] 6 Term Rep 320, (1775-1802) All
ER Rep 159)".

In Miles v. Wakefield Metropolitan District Council, [1989] I LLJ
335 the facts were that the plaintiff, Miles was the Superintendent-
Registrar in the Wakefield Metropolitan District Council. His duties
E included performing marriages. As part of trade union action, he
declined to perform marriages on Saturdays which day was very popu-
lar 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.
F 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
G 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
H falling short of. his contractual obligations was accepted by the
BANK OF INDIA v. KELAWALA (SAWANT, J.] 227

employer as sufficient performance 'Jf the contract. In a contract of
A
~ 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 B
morning becuase he declined to work on Saturday morning in accor-
!'..... dance 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 perfor-
mance, and in that case the employee would not be entitled to sue for
,-- his unwanted service.
c
In this connection, Lord Templeman stated as follows:
·~··
"The consequences of counsel's submissions demonstrate
that his analysis of a contract of employment is deficient. It
cannot be right that an employer should be compelled to D
pay something for nothing whether he dismisses or retains
a worker. In 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 E
his pay he must allege and be ready to prove that he
worked or was willing to work ..... "
''i It may be mentioned here that on the question whether the emp-
Ioyee engaged in some kind of industrial action can claim wages on the
basis of quantum meruit, only two of the Law Lords expressed F
)- themselves in favour, while the other three did not want to express any
definite opinion on the question.

9. Among the decisions of the various High Courts relied upon
by the parties in support of the respective cass, we find that except for
the decision in V. Ganesan v. The State Bank of India & Ors., [1981] 1 G
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
A. matter and other matters decided together in State Bank of India,
Canara Bank, Central Bank etc. & Ors. v. Ganesan, Jambunathan,
Venkataraman, B. V. Karnath, V.K. Krishnamurthy, etc. & Ors.,
[1989] 1 LLJ 109, all other decisions, namely, (i) Sukumar Bandyo- H
228 SUPREME COURT REPORTS [1990] 3 S.C.R.

padhyyay & Ors. v. State of West Bengal & Ors., [1976] IX UC 1689; (ii)
Algemene Bank Nederland, N. V. v. Central Government Labour
Court, Calcutta & Ors., [1978] II LU, 117; (iii) V. Ramachandran v.
Indian Bank, [1979] 1 LU 122; (iv) Dharam Singh Rajput & Ors. v.
Bank of India, Bombay & Ors., [1979] 12 UC 1079; (v) R.
Rajamanickam, for himself and on behalf of other Award Staff v.
J3 Indian Bank, [1981] II LU 367; (vi) R.N. Shenoy & Anr. etc. v.
Central Bank of India & Ors. etc., [1984] XVII UC 1493 and (vii)
Prakash Chandra Johari v. Indian Overseas Bank & Anr., l 1986] II LU
496, have variously taken the view that it is not only pennissible 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
c 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
D contract of employment and hence no disciplinary proceedings need
precede it.

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 rata the salary of the
E 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 pennitting t
the employees to perfonn their work during the rest of the day and by
F accepting such perfonnance 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 tenn in the contract or when there was
a statutory provision to that effect. The Division Bench of the said
G Court in appeal against the said decision and similar other matters
(supra) confinned the reasoning of the learned Judge' and held that in
the absence of either a tenn 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
H impermissible for the employer to deduct or withhold the emoluments
BANK OF INDIA v. KELAWALA [SAWANT, J.] 229

of the employees even for the hours during which they worked. Having
A
· 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 ony be the subject matter of a
disciplinary action and it cannot straightaway result in the withholding B
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 com-
pensated by payment of remuneration.

10. 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.
c
In Workmen of Mis. 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 D
employee either temporarily or permanently but that cannot be with-
out 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 Section 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 E
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, F
).. therefore, no right to deny the workmen their full wages.

In Krishnatosh Das Gupta v. Union of India & Ors., [1980] 1 LU
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. G
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 H
230 SUPREME COURT REPORTS (1990] 3 S.C.R.

circular the Management of the National Test House effected on a
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.
B
On behalf of the employers, reliance was placed on a decision of

~
this Court in Sant Ram Sharma v. State of Rajasthan & Anr., (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
c statutory rules by administrative instructions, if the rules are silent on
any particular point, Government can fill up the gaps and supplement
the rules and issue instructions not inconsistent with the rules already ..;
.

framed.

D In Roshan Lal Tandon v. Union of India, (1968] 1SCR185, this
Court has stated that although the origin of Government service is
contractual in the sense that there is an offer and acceptance in eveiy
case, once appointed to his post or office, the Government servant
acquires a status, and his rights and obligations are no longer deter-
mined by consent of both parties but by statute or statutory rules
E 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 \o
legal relationship 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
F between a master and servant. The legal relationship is something
entirely different, something in the nature of status. .\

In V. T. Khanzode & Ors. v. Reserve Bank of India & Anr.,
[ 1982] 3 SCR 411, this Court has reiterated that so long as Staff
Regulations are not framed, it is open to issue administrative circulars
G regulating the service conditions in the exercise of power conferred by
Section 7(2) of the Reserve Bank of India Act, 1934 so long as they do
not impinge on any regulations made under Section 58 of the Act.
f.
The same view with regard to power to issue administrative
instructions when rules are silent on a subject has been reiterated by
H the Court in Paluru Ramkrishnaiah & Ors. etc. v. Union of India &
BANK OF INDIA v. KELAWALA [SAWANT, J.[ 231

Anr. etc., l 1989 J 1 JT 595 and in Senior Superintendent of Pos1 Office &
A
·'t- Ors. v.IzharHussain, [1989]3JT411.
11. The principles whch emerge from the aforesaid authorities
may now by 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 B
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.
c
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 hot
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 D
such as signing the attendance register, no deduction can be effected
from their wages. When there is a dispute as to whether the employees
attended the place of work or put in the allotted work or not, and if
they have not, the reasons therefore etc., the dispute has to be
investigated by holding an inquiry into the matter. In such cases, no
-" deduction from the wages can be made without establishing the omis- E
sion and/or commission on the part of the employees concerned.

When the contract, Standing Orders, or the service rules/regula-
tions 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 F
provisions of such enactment.

12. Apart from the aforesaid ratio of the deeisions and the provi-
sions 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, G
1947 also lend their support to the view that the wages are payable pro
rata for the work done and hence deductible for the work not done.
Section 2 (rr) of the said Act defines "wages" to mean "all remumera-
tion .......... 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 Section H
232 SUPREME COURT REPORTS [1990] 3 S.C.R.

2(q) defines "strike" to mean "cessation of work" or "refusal to con-
A
tinue to work or accept employment by workman". Reading the two -.(
definitions together, it is clear that wages are payable only if the con-
tract 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.
B
13. The decisions including the one impugned in this appca!
which have taken the view which is either contrary to or inconsistent "
with the above conclusions, have done so because they have proceeded v"
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
c 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 ..,(

D
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, an illegal strike may do so, it being a misconduct. How-
ever, whether the strike is legal or illegal, the workers are liable to lose
4
wages for the period of strike. The liability to lose wages does not
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 conse-
E quences. During the period of strike the contract of employment ....
continues but the workers withhold their labour. Consequently, they
cannot expect to be paid.

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-
F 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 propor-
G tionate payment for the part of the month he served. This was the
inequitous and harsh consequence of the rule of indivisibility of con-
tract laid down in an English case, Cutter v. Powell, [1795] 6 TR 320
which was rightly vehemently criticised and later, fortunately not fol- )--..
lowed. 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
H impracticability in construing the contract as divisible into different
BANK OF INDIA v. KELAWALA [SAWANT, J.J 233

periods such as days and hours for proportionate reimbursement or
A
deduction of wages, which is normally done in practice.

The third fallacy was to equate disputed invididual-conduct with
admitted mass conduct. A disciplinary proceeding is neither necessary
nor feasible in the latter case. The contract of employment, Standing
Orders or the service rules provide for disciplinary proceedings for the B
lapse on the part of a particular individual or individuals when the
misconduct is disputed. As things stand today; they do not provide a
;.
'y 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 c
should be deemed to have the requisite power to deal with them con-
sistent with law and the other service conditions and to the extent it is
reasonably necessary to do so. The pro rata 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, D
however, depend on the facts of each case. Although the employees
may strike only for some hours but there i.s no work for the rest of the
day as in the present case, the employer mav 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 E
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, nothing prevents the employer from taking
guidance from the legislative wisdom contained in it to adopt measures F
on the lines outlined therein, when the contract of employment is
).. 0ilent on the subject.

14. It is, however, necessary to reiterate that even in cases such
as the present one where action is resorted to on a mass scale, soine
employees niay not be a party to the action and may have genuinely G
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 willnot 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. H
234 SUPREME COURT REPORTS [ 1990] 3 S.C.R.

15. Hence, we are unable to sustain the impugned decision
A
which is untenable in law. The decision is accordingly set aside with no
order as to costs.

Civil Appeal No. 855 of 1987

B 16. The facts in this case are different from those in the earlier
appeal. In this case, the allegation of the employer Company is that
the workers had indulged in "go-slow" and as a result there was negli-
gible production in the month of July 1984. The workers did not attend
to their duty and only loitered in the premises and indulged in go-slow
tactics only with a view to pressurise the Company to concede
demands. The Company was, therefore, compelled to suspend its
c operation by giving a notice of lock out. According to the Company,
therefore, since the workers had not worked during all the working
hours, they had not earned their wages. Hence, the Company did not
pay the workers their wages for the entire month of July 1984. The
workers' Union, therefore, filed a complaint before the Industrial
D Court under the Maharashtra Recognition of Trade Unions and Pre-
vention of Unfair Labour Practices Act, 1971 (MRTU & PULP Act,
for short) complaining that the Company had indulged in unfair labour
practice mentioned in Item 9 of Schedule 4, from 7th August, 1984
which was the date for payment of salary for the month of July 1984,
and under Item 6 of Schedule 2 of the Act with effect from 14th
E August, 1984 since the Company had declared a lock-out from that
day. It was also alleged that since no specific date of the commence-
ment of the alleged lock-out had been specified, it was an illegal one.

17. It appears that the Company had declared the lock-out by
notice dated July 30, 1984 and the lock out was effected from August
F 14, 1984. Subsequently, there were negotiations between the Union
and the Company, and a settlement was reached on October 15, 1984
as a result of which the lock out was lifted with effect from October 16,
1984. The terms of the settlement were formally reduced to writing on
November 30, 1984.

G 18. In this appeal, we are not concerned with the lock-out and
the subsequent settlement. The question that falls for consideration
before us is whether the Company was justified in denying to the
workers the full monthly wages for the month of July 1984. On this
question, the Industrial Court accepted the oral testimony of the Com-
pany's witnesses that the workmen had not at all worked for full eight
H hours on any day in July 1984 and that they were working intermit-
BANK OF INDIA v. KELAWALA ISAWANT, J.] 235

tently only for some time and sitting idle during the rest of the day.
A
On an average the workers had not worked for more than one hour and
'r 15 to 20 minutes per day, during that month. The Industrial Court did
not accept the evidence of the Union's witness that the witness and the
other workmen had worked on all the days during the entire month of
July 1984 because he admitted that after the Company told the
workers that it could not concede to the demands, the workers had B
started staging demonstration. Although the witness denied that from
July 3, 1984, the workers started indulging in go-slow, he admitted that

' the Company was displaying notices from time to time with effect from
July 4, 1984 alleging that the workers were not giving production and
that they were loitering here and there. According to the Industrial
Court in the circumstanceo, it did not see any good reason to disbelieve
the Company's witnesses. The Court further held that normally in view
of this evidence on record, it would have held that the pro rata deduc-
c
tion of wages made by the Company for the month of July 1984 would
">- not amount to an act of unfair labour practice falling under Item 9 of
Schedule IV of the MRTU and PULP Act. However, in view of the

~
two judgments of the Bombay High Court in T.S. Kelwala & Ors. v. D
Bank of India & Ors., (1981] 43 FLR 341 i.e. the one impugned in the
earlier appeal and Apar (Pvt) Limitedv. S.R. Samant & Ors., [1980] II
LLJ 344, the Court had to hold that the non-payment of full wages to
the workmen for the month of July 1984 was an act of unfair labour
practice falling under the said provision of the Act. The Court further
, held that admittedly the workers were not piece-rated and there was E
no agreement or settlement allowing the Company to deduct wages on
the ground that they were indulging in "go-slow" or that they had not
given normal production. According to the Court, the remedy of the
... Company against the workmen may lie elsewhere. Thus, the Court
taking sustenance from the Bombay High Court Judgments referred to
above held that the deduction of wages during the month of July, 1984 F
on account of the go-slow was not justified, and declared that the
Company had commited an unfair labour practice by not paying full
monthly wages to the workmen, and directed the Company to pay the
said wages for the month of July 1984. It is this order of the Industrial
Court which is challenged directly in this Court by the present appeal.
G
19. Since one of the two decisions of the Bombay High Court on
which the Industrial Court relied was rendered in another context and
.A it has already been discussed in the other appeal, we may refer here
only to the other decision, viz., Apar (Pvt) Ltd. v. S.R. Samant &
Ors., (supra) which is pressed in service before us on behalf of the
workmen. The facts in that case were that by a settlement dated Au- H
236 SUPREME COURT REPORTS [1990] 3 S.C.R.

gust 3, 1974 the workmen were allowed increase in the basis wages,
A dearness allowance, house rent, etc. in addition to the production
bonus in terms of a scheme. That settlement was binding on the parties
upto the end of April 1977. The matters ran a smooth course till
August 1975. However, from September 1975, the Company refused
to pay the production bonus and with effect from 15th October, 1975 it
8 refused to pay the wages, dearness allowances etc. as per the settle-
ment. On August21, 1975, a notice was put up by the Company stating
that because of the attitude of indiscipline on the part of the workers
and deliberate go-slow tactics resulting in low production, the manage-
ment was relieved of its commitments and obligation imposed upon it
by the settlement. A notice in terms of Section 9A of the Industrial
Disputes Act, 1947 was also put up indicating a certain scale of wages
c to which only the workers would be entitled. These wages were not
more than the wages under the Minimum Wages Act and were even
less than what was agreed to in the earlier agreement of Januarry 23,
1971. A complaint was, therefore, filed under the MRTU & PULP Act
before the Industrial Court, and the Industrial Court recorded a find-
D ing that the figures of production produced by the Company before it
related only to few departments. Out of total of 700 employees who
were working earlier, 116 were retrenched at the relevant time. The
Company's allotment of material, viz., aluminium was also reduced
from 7390 metric tonnes to 2038 and there was no supply of even that
allotted quantity. The Court further referred to certain inconsistent
E statements made by the factory-manager and held that the manage-
ment had failed to discharge the burden of proof of justifying the
drastic reduction of the wages and other emoluments. The Court
therefore recorded a finding that the Company had engaged in an
unfair labour practice. Against the said decision, the Company prefer-
red a writ petition before the High Court. The High Court on these
F facts held that the wages could be deducted only in terms of a statutory
provision or of a settlement. A reduction of wages on the allegation
that the workers in general had resorted to go-slow was wholly
impermissible in law specially when the workmen were not piece-rated
employees. The High Court referred to the cases where reduction of
wages for absence from duty for striking work was held as valid such as
G Major Kanti Bose & Ors. v. Bank of India & Ors., (supra);
V. Ramachandran v. Indian Bank, (supra) and Algemene Bank, Neder-
land v. Central Government Labour Court, Calcuua, (supra) and held
that those cases were distinguishable because they related to absence
from duty and not go-slow.

H In Mis. Bharat Sugar Mills Ltd. v. Shri Jai Singh & Ors., [1962) 3
BANK OF INDIA v. KELAWALA [SAWANT, J.] 237

SCR 684 the facts were that certain workmen of the ~ppellant-Mills
A
resorted to "go-slow". The appellant-Mills held a domestic inquiry
and as a result thereof decided to dismiss 21 workmen, and apply to
the Industrial Tribunal under Section 33 of the Industrial Disputes Act
for permission to dismiss the workmen. Evidence was laid before the
Tribunal to prove the charge against the workmen. The Tribunal held
that the domestic enquiry was not proper, that the appellant was guilty B
of mala fide conduct and victimisation, that except in the case of one
. workman, the others were guilty of deliberate go-slow and accordingly
granted permission in respect of the one workman only. It is against
the said decision that the appellant-Mills had approached this Court.
r. This Court held that the evidence produced before the Tribunal clearly
established that 13 out of the 20 workmen were guilty of deliberate
go-slow and in that connection observed as follows: c
'
"Go-slow which a picturesque description of deliberate
delaying of production by workmen pretending to be
engaged in the factory is one of the most pernicious
practices that discontended or disgruntled workmen some- D
time resort to. It would not be far wrong to call this dis-
honest. For, while thus delaying production and thereby
reducing the output the workmen claim to have remained
employed and thus to be entitled to full wages. Apart from
this also, "go-slow" is likely to be much more harmful than
total cessation of work by strike. For, while during a strike E
much of the machinery can be fully turned off, during the
"go-slow" the machinery is kept going on a reduced speed
which is often extremely damaging to machinery parts. For
all these reasons "go-slow" has always been considered a
serious type of misconduct."
F
This Court, therefore, set aside the order of the Tribunal refusing
permission to dismiss 13 of the workmen.

20. There cannot be two opinions that go-slow is a serious mis-
conduct being a covert and a more damaging breach of the contract of
employment. It is an insidious method of undermining discipline and G
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 recog-
nised as a legitimate weapon of the workmen to redress their grie-
vances. In fact the model standing orders as well as the certified stand-
ing orders of most of the industrial establishments define it as a mis-
conduct and provide for a disciplinary action for it. Hence, once it is H
238 SUPREME COURT REPORTS [1990] 3 S.C.R.

proved, those guilty of it have to face the consequences which may
A include deduction of wages and even dismissal from service.

But by its very nature, the proof of go-slow, particularly when it
is disputed, involves investigation into various aspects such as the
nature of the process of production, the stages of production and their
B relative importance, the role of the workers engaged at each stage of
production, the pre-production activities and the facilities for produc-
tion and the activities of the workmen connected therewith and their
effect on production, the factors bearing on the average production
etc. The go-slow further 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
c different extent depending upon the nature of product and the produc-
tive process. Even where it is admitted, go-slow may in some case
present difficulties in determining the actual or approximate loss, for it
may have repercussions on production after the go-slow ceases which
may be difficult to estimate. The deduction of wages for go-slow may,
D therefore, present difficulties which may not be easily resoluble.
When, therefore, wages are sought to be deducted for breach of con
tract on account of go-slow, the quantum of deduction may become a

·.~
bone of contention in most of the cases inevitably leading to an indust-
rial dispute to be adjudicated by an independent machinery statutory
or otherwise as the parties may resort to. It is necessary to emphasize
E this because unlike in this 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 a go-slow action may in
some case raise a complex question. The simplistic method of deduct-
ing uniform percentage of wages from the wages of all workmen

F
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 of go-slow
and/or the extent of the loss of production on account of it, is disputed,
l
there should be a proper inquiry on charges which furnish particulars of
the go-slow and the loss of production on that account. The rules of
natural justice require it, and whether they have been followed or not
G will depend on the facts of each case.

21. 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
H intermittently only for sometime and were sitting idle during the rest
BANK OF INDIA v. KELAWALA (SAWANT, J.J . 239

of the time. According to him, the workers had worked hardly for an A
-"'r- hour and 15 to 20 minutes on an average during the said month. The
· witness had also proauced 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
B
l as to the Government Labour Officer. The Industrial Court did not
I", accept the evidence of the workmen that there was no go-slow as
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 c
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 of 13.9 per cent of the normal production. The Company
has deducted wages on the basis of each day's production. In view of
the fact that there is a finding recorded by the Industrial Court that D
there was a go-slow resorted to by 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 a go-slow
__;.-·- which question we have answ~red in favour of the employer earlier. E
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 Curt (supra) which according to them, had
negatived the right of the employer to deduct wages even in such F
J:.. 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.

22. The appeal is allowed accordingly with no order as to costs.
G
G.N. Appeals allowed.