The Vijaya Bank, Dena Bank and Bank of Baroda Amalgamation v. Strikes in progress – Is it legal and justified?; where does the issue stand now?

- Written by: Avinash Alladi

INTORDUCTION TO FACTS:
The Bank Unions Strike has been one of the widespread and popular news during the past two months in India. It all started off when the Indian Banks Association (IBA) protested against the wage hike offer from 6% to 8% as the Bank employees union were unhappy with this number and had rejected this offer thereby threatening to go on strike on 26th December 2018. The fundamental reason for banks (employers) to dishonour the hike upto 15% is because of the high-level non-performing assets (NPAs) and successive quarterly losses. The wage revision is due for the 11th Bipartite Settlement from 11th November 2017. Such a wage revision occurs once in every five years for bank employees. Nine Unions had under the garb of United Forum of Bank Union (UFBU) also demanded hike in wages for employees from scale 1 to 7 whereas IBA’s wage hike protest only pertains to scale 1 to 3 employees. Since the unions have rejected the proposals from their employers on introducing variable pay, the unions had finally decided to highlight their opposition against the bank merger.

This protest was against the proposed merger of Bank of Baroda, Dena Bank and Vijaya Bank. Once the merger is completed, the merged entity would be the 3rd largest lender after State Bank of India and HDFC Bank. The UFBU had called for the strike as soon as the Government in September 2018 approved the merger. The reason according to the All India Bank Employees Association (AIBEA) was that the merger was economically unsound, as it would affect the interests of employees, their jobs and job securityas well as employment opportunities for people at large. The reason also quoted by the AIBEA was that the merger would increase the number of NPA’s and result in closure of rural branches thereby causing inconvenience to the public in rural areas who still are not receiving the benefits of full fledged banking services. In total 10 lakh employees went on strike in opposition to this merger. The bank strike started by the AIBEA from 21st December 2018 and was ended by UFBU on 26th December 2018pertaining to the main issue of wage revision and the opposition against the bank merger respectively. The strike of the union of public sector bank officers had impacted banking operations across the country for basic services like deposits, withdrawals, cheque clearances and issuance of drafts and other instruments.

RULE OF LAW:
Strikes have always been viewed as the weapon of the employee against the employer but the bitter truth is that right to strike is not a fundamental right but only a statutory right as per the Industrial Disputes Act, 1947. Section 22(1) of the Act lays down the prohibition on strikes by persons employed in public utility services; Strikes cannot be conducted without giving a notice to the employer within 6 weeks prior to the strike or within 14 days from giving such notice or during the pendency of any conciliatory proceedings and 7 days after such proceedings or before the expiry of the date of strike mentioned in the notice given to the employer.

ANALYSIS:
Strikes have been classified as a statutory right based on various case laws. In the case ofAll India Bank Association v. National Industrial Tribunal, the issue was whether the right guaranteed to form a union in Article 19(1)(c) of the Constitution of India carries within it a concomitant right that the achievement of the object which it was formed. Court while rejecting the contention held that the right to form unions guaranteed by Article 19(1)(c) thus does not carry with it a fundamental rightin the union so formed to achieve every object for which it was formed.Even a very liberal interpretation of Article 19(1)(c) cannot lead to the conclusion that the trade unions have a guaranteed right to an effective collective bargaining. The right to strike and right to lockout may be controlled or restricted by appropriate industrial legislation and the validity of such legislation would have to be tested not with reference to the criteria laid down in clause 4 of Article 19 but by totally different considerations. Kameshwar Prasad v. State of Bihar it was held that a demonstration is a visible manifestation of the feelings or sentiments of an individual or a group. It is thus a communication of one’s own ideas to others to whom it is intended to be conveyed. There are forms of demonstration, which would fall within the freedoms guaranteed under Article 19 (1)(a) and Article 19(1)(b) of the Constitution of India. A violent and disorderly demonstration does not come under these clauses. Peaceful and orderly demonstration would fall within the purview of these clauses and is a fundamental right but not strike. Similarly in T.K Rangarajan v. Government of Tamil Nadu, the Supreme Court referred to Kameshwar Prasad and All India Banks Association case and upheld that strike is not a fundamental right and there is no moral or equitable right to go on strike.

Merely being a statutory right is not sufficient to go on strike but such strike must be looked from the perspective of legality and justifiability. In the case of India General Navigation & Railway Co Ltd v. Workmen, the Court had only looked at the legality of the strike but not justifiability, as this was a case of employees of public utility services. The strike cannot be categorized as perfectly justified in public utility services and thus the strike was illegal as per Section 22 of the Act and unjustified. Further, the Court had ruled that only violent protestors would be dismissed but not those employees who had conducted strike in a peaceful manner. Subsequently in Crompton Greaves v. The Workmen, the Supreme Court analyzed that a strike is illegal if it breaches statutory provisions and justifiability must be viewed from the standpoint of fairness and reasonableness of demands made by the workmen and such demands must be bonafide and urgent in nature. Even a peaceful strike may be classified as illegal if it violates a statutory provision.

After analyzing these abovementioned case laws, we may draw an analogy into the present case of the strikes conducted by AIBEA, UFBU and IBA and make reference to whether the strikes satisfy the criteria under section 22 of the Industrial Disputes Act, 1947. The advocates arguing on behalf of the bank employees may lay emphasis on argument pertaining to the non-increase in wages due to adverse financial reasons of the banks NPAs. Financial inability is not a valid statutory reason for an employer to deny increase in wages or wages. On the contrary, the advocates arguing on behalf of the employers may argue on the grounds of illegality of the strikes as the strike has caused stoppage of work for consecutive days and the public are affected at large due to the non-functioning of public sector banks. Several writ petitions can be filed in high courts across the country by banking customers whose right to banking were affected adversely and had faced losses and thereby pray the Courts for granting ad-interim injunctions to stop the strikes conducted by the Unions any further.

Although many options seem viable, it would be beneficial if employees use strike as a tool of last resort and only in the form of peaceful demonstrations and amicable means such as conciliation. In Syndicate Bank v. K. Umesh Nagar, the Court had held that the strike is a weapon evolved by workers directly actionable during the long struggle with employers as a last resort. This is due to the abnormal aspect of employer employee relationship involving withdrawal of labour, production and running of the enterprise. It is used by labour to bring the employer’s see their stand viewpoint over the dispute between them. It is for this reason the Act while not denying right of workmen to strike, has tried to regulate it along with employers right to lockout and also has provided peaceful machinery such as conciliation, arbitration and adjudication. The strike or lockout must not be resorted to because one party has requisite economic power to muscle the other. The strike or lockout has to be used sparingly for the redressal or urgent and pressing grievances when no means are available or when available, means have failed to resolve it.

RECENT DEVELOPMENT:
The recent development in the case of the proposed merger of the three banks is that on 15th January 2019, the Delhi High Court’s Division Bench has issued notices to the AIBOC’s challenge to the amalgamation, Central Government, Reserve Bank of India as well as the three banks. The petitioners in this ongoing case have alleged that the Scheme (Amalgamation of Vijaya Bank & Dena Bank with Bank of Baroda Scheme, 2019) that is to follow procedure as per Section 9(6) of The Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980 is unconstitutional and is in violation of Article 14 of the Constitution of India and that the scheme was passed without consultation with the Reserve Bank of India. The petitioners have also alleged that the Scheme would affect the service conditions of the employees, the entity’s subsistence, the officers, workmen, common national interest and healthy competition in the Banking Sector. Also, another important issue argued upon was that both Dena Bank and Bank of Baroda that have negative RoA(return on assets) and high NPAs would be detrimental to the successfully performing Vijaya Bank in consequence.

CONCLUSION:
Hence, in light of the abovementioned information, it is clear that both sides have a valid point of argument in place either with respect to strike being illegal and foreseeable loss due to the merger and only upcoming litigation and Court decisions can decide the outcome of this issue.