servants= wages. 6S The principles can be summarised as follows I whether or not the reduction was in breach of the contract between the applicant and the state: if it was, the deprivation of salary amounts to an unauthorised compulsory taking of property, if not, the reduction could not be unauthorised or unconstitutional. The majority allowed the applicant =s appeal, but st one of the tw gs JA, see 208D-1)referred to the prop Cummings JA held that the reduction in salary was in breach of the applicant=s contract with the state, and therefore illegal. As such it amounted to an unauthorised compulsory taking of property in contravention of the constitutional property guarantee. In Deokinandan Prasad v The State of Biharand Others AIR (58) 971 SC 1409, the petitioner was a teacher who was charged and found guilty of certain charges. The Disciplinary Authority passed an order demoting the petitioner to a lower position and directing that a censure entry be recorded aga inst him. The Director of Public Instruction then passed an order terminating the employment of the petitioner due to absence from duty formore than five years. When the petitioner reached the age of 58, he applied for the payment of his pension. An order was passed stating that the petitioner=s application for his pension was refused in terms of rule 46 of the Bihar Pension Rules, according to which no pension may be granted to a public servant whose service was terminated due to misconduct, insolvency or inefficiency. The petitioner challenged all the above orders, claiming that the property clause was removed from the Indian Constitution in 1978; see notes 95 and 111 )In an earlier decision of a single judge in the Punjab High Court, Bhagwant Singh v Union of India(AIr (49)1962 Punj 503: confirmed by the Letters Patent Bench in Union of India v Bhagwant Singh ILR(1965)2 Punj 1, and aga in by a Full Bench of the Punjab and Harayana High Court in KR Erry v The State of Punjab ILR (1967) I Punj& Har 278(FB), it was decided that the right to receive a sa lary and a pension constitutes property and that any interference with it will be a breach ofart 31(1), with the result that this right can only be deprived by the authority of law, and not by an adm inistrative action. These decisions denied, therefore, that a pension was a >bounty= which was payable and retractable on the pleasure of the govemment. The upreme Court confirmed that the right to a sum of money was property in State of Madhya Pradesh Ranorijao Shinde 1968]3 SCR 489=AIR (55)1968 SC 1053. The cancellation of the petitioner=s property was therefore declared unconstitutional in Deokinandan Prasad 6> In Attorney-General v Alli and Others[1989]LRC(Const )474(CAG), the Court of Appeal of Guyana had to decide on the valid ity of a statutory wage freeze. In 1977 the Trades Union Congress entered into a collective agreement with the govemment of Guyana for m inimum wages and an annual increment in respect of public servants. In Guyana Sugar Corporation Ltd v Teemal(1967) 10 Wir 187(CAG)the court held that an employer who withheld payment of an a greed increase in salary and other benefits in 1979 on the ground that the collective agreement took effect, committed breach of contract as the collective agreement was unenforcea ble and of no effect unless expressly incorporated in an employee =s contract of rvice. In April 1984 the Labour(Amendment) Act 1984 was enacted to amend s 142 of the Constitution. Section 3 of the Amendment Act excluded wage regulation legislation, with retrospective effect dating back to before the coming into effect of the Constitution, from the operation of s 142, which requires a written law and compensation forcompulsory acquisitions Section 7 of the Act provided that the wage agreement of 1977 was deemed to be legally enforceable and that wages were to be frozen at their 1978 level, notwithstanding any judgment, decree or court order, so that the decision in the Teemal case was effectively reversed. In 1984 the respondents challenged the constitutionality of this Act and the trial court struck down ss 7 and 28C of the Act. The question is whether a so-called >wage freeze= imposed by law amounted to an unconstitutional acquisition of property. The court referred to the exclusions in ss 142(2) and 142(3), and specifically the exclusion of provisions that regulate wages in terms ofs 142(3 (ua) The >wa ge freeze= was analysed with reference to two questions: (a) whether the law in question could be valid, although it purports to have retroactive effect going back to a time before the introduction of the Constitution itself; and(b) whether the >wage freeze= is a law regulating wages as meant in the exclusion in s 142(3). With regard to the second question the court decided(per Massiah C, at 51 1a-b)that the provisions in question did not amount to wage regulations, because it did not have the beneficial objectives
16 servants= wages.65 The principles can be summarised as follows: question whether or not the reduction was in breach of the contract between the applicant and the state: if it was, the deprivation of salary amounts to an unauthorised compulsory taking of property, if not, the reduction could not be unauthorised or unconstitutional. The majority allowed the applicant=s appeal, but just one of the two majority judgments (per Cummings JA, see 208D-I) referred to the property question. Cummings JA held that the reduction in salary was in breach of the applicant=s contract with the state, and therefore illegal. As such it amounted to an unauthorised compulsory taking of property in contravention of the constitutional property guarantee. In Deokinandan Prasad v The State of Bihar and Others AIR (58) 1971 SC 1409, the petitioner was a teacher who was charged and found guilty of certain charges. The Disciplinary Authority passed an order demoting the petitioner to a lower position and directing that a censure entry be recorded against him. The Director of Public Instruction then passed an order terminating the employment of the petitioner due to absence from duty for more than five years. When the petitioner reached the age of 58, he applied for the payment of his pension. An order was passed stating t hat the petitioner=s application for his pension was refused in terms of rule 46 of the Bihar Pension Rules, according to which no pension may be granted to a public servant whose service was terminated due to misconduct, insolvency or inefficiency. The petitioner challenged all the above orders, claiming that the order of 12 June 1968 violated his rights under arts 19(1)(f) and 31 of the Indian Constitution. (The property clause was removed from the Indian Constitution in 1978; see notes 95 and 111.) In an earlier decision of a single judge in the Punjab High Court, Bhagwant Singh v Union of India (AIR (49) 1962 Punj 503; confirmed by the Letters Patent Bench in Union of India v Bhagwant Singh ILR (1965) 2 Punj 1, and again by a Full Bench of the Punjab and Harayana High Court in KR Erry v The State of Punjab ILR (1967) 1 Punj & Har 278 (FB)), it was decided that the right to receive a salary and a pension constitutes property and that any interference with it will be a breach of art 31(1), with the result that this right can only be deprived by the authority of law, and not by an administrative action. These decisions denied, therefore, that a pension was a >bounty= which was payable and retractable on the pleasure of the government. The Supreme Court confirmed that the right to a sum of money was property in State of Madhya Pradesh v Ranorijao Shinde [1968] 3 SCR 489 = AIR (55) 1968 SC 1053. The cancellation of the petitioner=s property was therefore declared unconstitutional in Deokinandan Prasad. 65 In Attorney-General v Alli and Others [1989] LRC (Const) 474 (CAG), the Court of Appeal of Guyana had to decide on the validity of a statutory wage freeze. In 1977 the Trades Union Congress entered into a collective agreement with the government of Guyana for minimum wages and an annual increment in respect of public servants. In Guyana Sugar Corporation Ltd v Teemal (1967) 10 WIR 187 (CAG) the court held that an employer who withheld payment of an agreed increase in salary and other benefits in 1979 on the ground that the collective agreement took effect, committed breach of contract as the collective agreement was unenforceable and of no effect unless expressly incorporated in an employee=s contract of service. In April 1984 the Labour (Amendment) Act 1984 was enacted to amend s 142 of the Constitution. Section 3 of the Amendment Act excluded wage regulation legislation, with retrospective effect dating back to before the coming into effect of the Constitution, from the operation of s 142, which requires a written law and compensation for compulsory acquisitions. Section 7 of the Act provided that the wage agreement of 1977 was deemed to be legally enforceable and that wages were to be frozen at their 1978 level, notwithstanding any judgment, decree or court order, so that the decision in the Teemal case was effectively reversed. In 1984 the respondents challenged the constitutionality of this Act and the trial court struck down ss 7 and 28C of the Act. The question is whether a so-called >wage freeze= imposed by law amounted to an unconstitutional acquisition of property. The court referred to the exclusions in ss 142(2) and 142(3), and specifically the exclusion of provisions that regulate wages in terms of s 142(3)(iia). The >wage freeze= was analysed with reference to two questions: (a) whether the law in question could be valid, although it purports to have retroactive effect going back to a time before the introduction of the Constitution itself; and (b) whether the >wage freeze= is a law regulating wages as meant in the exclusion in s 142(3). With regard to the second question the court decided (per Massiah C, at 511a -b) that the provisions in question did not amount to wage regulations, because it did not have the beneficial objectives
A money debt, once vested accord ing to the normal principles of law, constitutes property for purposes of the protection of a constitutional property clause. Such a debt can vest by contract, or by court order, or by legislation, depend ing on the nature of the debt statutory cancellation of such a vested debt benefits the state by absolving it from the duty to pay, and therefore constitutes a compulsory acquisition of property, which may be subject to payment of compensation in terms of the relevant property clause An interesting variation on the question of cancellation of state debts appears in the decision of the Zimbabwe Supreme Court in Chairman, Public Service Commission, and Others v Zimbabwe Teachers= Association and Others. bb Public servants in Zimbabwe had been paid an annual bonus since 1974. In September 1995 it was announced by regulation that the annual bonus for 1995 would not be paid. The Zimbabwe Teachers= Association attacked this decision on behalf of all public servants, averring that it was unlawful and unconstitutional to withhold the bonus The High Court declared the regulation unlawful, and the Public Service Commission appealed against this decision. The question was whether the regulation amounted to a compulsor acquisition of property in conflict with the property clause in the Zimbabwean Constitution The majority of the Supreme Court decided that an annual bonus is part of a public servant=s remuneration, but distinct from and not part of the salary as such, and that a bonus could consequently be reduced or eliminated lawfully, provided it was done in proper form and that there was no provision in the Constitution or elsewhere that forbade such action. This decision was based on the finding that a bonus does not become a vested right before the year in question is completed. This part of the decision, based as it was on a finding on the facts, seems acceptable, although the minority/ disagreed, arguing that the bonus was a vested right and therefore property that was protected by section 16. However, the majority chose to proceed beyond the factual finding and make a further ruling on the possibil ity that the bonus was property. In such a case, the majority decided, even though the law in question extinguishes a state debt and although the state gains a correspond ing benefit, the state does not acquire any right or interest which it did not possess before, and therefore the cancellation of the bonus doe not amount to a compulsory acquisition that was affected by section 16. This find ing is in line usually associated with wage regulations. Therefore the measures in question were outside the scope of the exclusion in s 142(3), which means that they amounted to unconstitutional acquisitions of property without com pensation 1997(1)SA209(ZSC) See note 42 Per Gubbay CJ, Korsah JA and Ebrahim JA, at 216D, 217A-C At 219G. 22IC-E Per McNally JA and Muchechetere JA at 226B At224H-J225A-B
17 - A money debt, once vested according to the normal principles of law, constitutes property for purposes of the protection of a constitutional property clause. Such a debt can vest by contract, or by court order, or by legislation, depending on the nature of the debt. - A statutory cancellation of such a vested debt benefits the state by absolving it from the duty to pay, and therefore constitutes a compulsory acquisition of property, which may be subject to payment of compensation in terms of the relevant property clause. An interesting variation on the question of cancellation of state debts appears in the decision of the Zimbabwe Supreme Court in Chairman, Public Service Commission, and Others v Zimbabwe Teachers= Association and Others.66 Public servants in Zimbabwe had been paid an annual bonus since 1974. In September 1995 it was announced by regulation that the annual bonus for 1995 would not be paid. The Zimbabwe Teachers= Association attacked this decision on behalf of all public servants, averring that it was unlawful and unconstitutional to withhold the bonus. The High Court declared the regulation unlawful, and the Public Service Commission appealed against this decision. The question was whether the regulation amounted to a compulsory acquisition of property in conflict with the property clause in the Zimbabwean Constitution.67 The majority of the Supreme Court68 decided that an annual bonus is part of a public servant=s remuneration, but distinct from and not part of the salary as such, and that a bonus could consequently be reduced or eliminated lawfully, provided it was done in proper form and that there was no provision in the Constitution or elsewhere that forbade such action. This decision was based on the finding69 that a bonus does not become a vested right before the year in question is completed. This part of the decision, based as it was on a finding on the facts, seems acceptable, although the minority70 disagreed, arguing that the bonus was a vested right and therefore property that was protected by section 16. However, the majority chose to proceed beyond the factual finding and make a further ruling on the possibility that the bonus was property. In such a case, the majority decided,71 even though the law in question extinguishes a state debt and although the state gains a corresponding benefit, the state does not acquire any right or interest which it did not possess before, and therefore the cancellation of the bonus does not amount to a compulsory acquisition that was affected by section 16. This finding is in line usually associated with wage regulations. Therefore the measures in question were outside the scope of the exclusion in s 142(3), which means that they amounted to unconstitutional acquisitions of property without compensation. 66 1997 (1) SA 209 (ZSC). 67 See note 42. 68 Per Gubbay CJ, Korsah JA and Ebrahim JA, at 216D, 217A-C. 69 At 219G, 221C-E. 70 Per McNally JA and Muchechetere JA at 226B. 71 At 224H-J, 225A-B