Pro Rata

Pro Rata

Literal Meaning

In Proportion.

Explanation & Origin

Pro rata is a Latin term used to describe a proportionate allocation. It essentially translates to “in proportion,” which means a process where whatever is being allocated will be distributed in equal portions.

Explanation – If something is given out to people on a pro rata basis, it means assigning an amount to one person according to their share of the whole. While a pro rata calculation can be used to determine the appropriate portions of any given whole, it is often used in business finance. If money is given out pro rata, everyone gets a fair share. Pro rata is a Latin term meaning “in proportion,” so when you see it you know that something is being distributed or done in equal or fair proportions. If food is distributed pro rata, the greater number of people will get a greater amount of food.

Illustration

Where several debtors are each liable for the whole debt and each is liable for his own share or proportion only, they are said to be bound pro rata.

Case Reference

In the case Bank Of India vs T.S. Kelawala And Ors.Withs.U[1] The High Court has taken the view, firstly, that neither regulations 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 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 recognized as a legitimate form of protest for the workers, the circular acted as a deterrent to the employees from resorting to a legally recognized mode of protest. According to the High Court, the circular even acted as an expedient to stifle the legitimate mode of protest allowed and recognized 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. 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. 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 be- cause 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. 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 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.

In the case of  B.V.S. Rao vs Commissioner Of Income-Tax[2] it was held that The contention on behalf of the petitioner is that no part of the lump sum payment that had been made in lieu of pro rata service pension consequent on the option exercised under the scheme which provided for such option and for payment of a lump sum amount in lieu of the pro rata service pension to the full extent was to be included in the computation of total income under s. 10(10A) of the I.T. Act, 1961. It is also urged that the impugned notice itself is defective and the assumption made that the order of the ITO was erroneous or that it was prejudicial to the interests of the revenue is untenable. It is urged for the respondent that this writ petition is premature and the petitioner is entitled to put forth his contention by way of objection to the notice issued and, therefore, this court should not interfere at this stage. It is also contended that it is for the petitioner to establish that he comes within the ambit of s. 10(10A).

In the case of Monoj Kanti Bose And Ors. vs Bank Of India And Ors[3] Though the notices or orders directing deduction of pay on a pro rata basis for failure or refuel on the part of the employees to carry on with their work during some period of the fixed hours may not be lawful being in excess of the Bank’s power and authority, to my mind, the notice or orders directing deduction of a day’s pay from the salary of the employees who absented themselves and did not report for duty on the 30th of June, the day of half yearly closing of the Bank, stands on a different looting. On this day some of the employees did not attend office without obtaining any leave on the ground that on the basis of the practice prevailing in the Bank they were not required to attend office as they were not corrected with the work of the closing of accounts. This is. therefore, a case of absence for a whole day and this case is not concerned with the question of any pro rata deduction from the salary for failure or refusal to carry on with the work dining sometime of the fixed hours of duty. Unauthorized absence from office for a day necessarily amounts to leave without sanction or authority.

Edited by Vigneshwar Ramasubramania

Approved & Published – Sakshi Raje

Reference

[1] 1990 SCR (3) 214, 1990 SCC (4) 744

[2] 1981 127 ITR 130 KAR, 1981 127 ITR 130 Karn

[3] (1977) IILLJ 285 Cal

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