RAM LAKHAN ETC. ETC.versusPRESIDING OFFICER AND ORS.

                           RAM LAKHAN ETC. ETC.                                     A
                                     v.
                         PRESIDING OFFICER AND ORS.

                               NOVEMBER 17, 1999

       [S. SAGHIR AHMAD, D.P. MOHAPATRA AND R.P. SETHI, JJ.]                        B

           Industrial Disputes Act, 1947:

            S. 33(1)-Employees under suspension-Claim for Subsistence
     Allowance-Industrial dispute pending before Industrial Tribunal-               C
     Employer's application for permission to dismiss the employees on completion
     of inquiry-Held, Management can, pending disposal of the application,
     place the employee under suspension, but it has to pay Subsistence Allowance
     to the employee-No conflict between Hotel Imperial's case• and Fakirbhai's
     case**-Subsistence Allowance shall be paid to the employees for the whole      D
     period of suspension as provided under the Standing Orders or under the
     Rules-If there is no such provision, they would be entitled to be paid full
     salary even during the period of suspension.
..        *The Management, Hotel Imperial, New Delhi & Ors. v. Hotel Workers'
     Union, AIR (1959) SC 1342,                                                     E
           **Fakirbhai Fulabhai Solanki v. Presiding Officer & Anr., [1986] 3
     SCC 131 = (1986) 2 SCR 1059 = AIR (1986) SC 1168, explained and
     reiterated.

           TCajeev. U. JormanikSiem, (1961] 1SCR750=AIR(1961) SC276; p
     R.P. Kapur v. Union of India, (1964J 5 SCR 431 = AIR 1964 SC 787;
     Balvantray Ratilal Patel v. State of Maharashtra, [1968] 2 SCR 577 =AIR
     (1968) SC 800; State of Madhya Pradesh v. State of Maharashtra & Ors.,
     AIR (1977) SC 1466 = (1977] 2 SCR 555 = (19771 2 SCC 288; State of
     Maharashtra v. Chanderbhan, [1983] 3 SCR 337 = (1983] 3 SCC 387 =
     AIR, (1983) SC 803; O.P. Gupta v. Union of India & Ors., (1987) 4 SCC 328 G
     and Khem Chandv. Union of India, (1963) Supp. 1 SCR 229 =AIR, (1963)
     SC 687.

          V.P. Gindroniya v. State of Madhya Pradesh & Anr., AIR (1970) SC
     1494; The Vice-Chancellor, Jammu University & Anr. v. Dushinant Kumar
                                                                                    H
                                        463
    464                     SUPREME COURT REPORTS [1999] SUPP. 4 S.C.R

A Rampa/, AIR (1977) SC 1146 and Capt. M Paul Anthony v. Bharat Gold Mines
    Ltd & Anr., [1999] 2 SCC 456 = [199913SCC679, referred to.

          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6566of1999.

                                         WITH

B         C.A. Nos. 6567/1999 and 6568/1999.

          From the Judgment and Order dated 17.10.94 of the Delhi High Court
    in C.W.P. No. 4279of1994.

          Rajirider Sachar, Mahesh Srivastava, V.D. Khanna, Ms. Ninnala Gupta
C   and J.M. Nanavati for Mis. J.M. Nanavati Associates for the Appellants.

         Harvinder Singh, Deepak Sabharwal and B.R. Sabharwal for the
    Respondents.

          The following Order of the Court was delivered:
D
          S. SAGHIR AHMAD, J. Leave granted in all the Special Leave Petitions.

         The appellants were the employees of the Swatantra Bharat Mill against
    whom charge-sheets were issued in the year 1986 and they were subsequently
    suspended.
E         Since an industrial dispute was already pending before the Industrial
    Tribunal vide Delhi Administration Notification No. F-24(798)/94-Lab dated
    1.4.86, an application was filed by the management under Section 33(1) of the
    Industrial Disputes Act, 194 7 for permission to dismiss the employees on
    completion of enquiry. This application was opposed by the appellants who
F   filed objections and claimed that they were entitled to be paid Subsistence
    Allowance during the pendency of the disciplinary proceedings for the period
    of suspension. On this, the Tribunal framed the following preliminary issue:-

            "At what rate, if any, the Management is to pay the subsistence
            allowance to the workman"
G
          The Presiding officer, Industrial Tribunal, Tis Hazari, Delhi, relying upon
    the decision of this Court in The Management, Hotel Imperial, New Delhi &
    Ors. v. Hotel Workers Union, AIR [1959] SC 1342, dismissed the objections
    of the appellants and held that they were not entitled to any Subsistence
    Allowance. The appellants thereafter filed Writ Petitions in the High Court of
H   Delhi which were dismissed by the impugned judgment reading as under:-
    RAM LAKHAN v. PRESIDING OFFICER [S. SAGHR AHMAD, J.] 465

       "In view of the decision of the larger Bench of the Supreme Court in        A
       the case of The Management, Hotel Imperial, New Delhi & Ors. v.
       Hotel Workers' Union reported as AIR (1959) SC 1342, we are not
       inclined to interfere in this petition.

        Dismissed."
                                                                                   B
      It appears that the decision of this Court in Fakirbhai Fulabhai Solanki
v. Presiding officer & Anr., [1986] 3 SCC 131 = [1986] 2 SCR I 059 = AIR (1986)
SC 1168, was cited before the High Court, but it did not follow the decision
and preferred to follow the Judgment in Hotel Jmperial's case (supra).

       This Court, while entertaining these appeals had passed the following       C
order on 2.1.1996 :-

            "In view of the fact that the judgment in Hotel Imperial's case was
        rendered by a three Judge Bench, we consider it appropriate that
        these petitions be listed before a three Judge Bench. Appropriate          D
        order from the Hon 'ble the Chief Justice may be obtained in this
        behalf.

            In the event the special leave petitions cannot be listed within the
        next two weeks, the application for interim stay may be put up before
        the three Judge Bench within that period."                                 E
      It is iITthese circumstances that the matter has come up before us.

      In Hotel Jmperial's case (supra), this Court had laid down as under:

            "We have, therefore to see whether it would be reasonable for an
        Industrial Tribunal where it is dealing with a case to which Section 33    F
        of the Act applies, to imply a term in the contract giving power to the
        master to suspend a servant when the master has come to the
        conclusion after necessary enquiry that the servant has committed
        misconduct and ought to be dismissed, but cannot do so because of
        Section 33. It is urged on behalf of the respondents that there is         G
        nothing in the language of Section 33 to warrant the conclusion that
        when an employer has to apply under it for permission he can suspend
        the workmen concerned. This argument however, begs the question
        because if there were any such provision in Section 33, it would be
        an express provision in the statute authorising such suspension and
        no further question of an implied term would arise. What we have to        H
     466                    SUPREME COURT REPORTS (1999] SUPP. 4 S.C.R.

A           see is whether in the absence of an express provision to that effect
            in Section 33, it will be reasonable for an Industrial Tribunal in these
            extraordinary circumstances arising out of the effect of Section 33 to
            imply a term in the contract giving power to the employer to suspend
            the contract of employment, thus relieving himself of the obligation
            to pay wages and relieving the servant of the corresponding obligation
B           to render service. We are of the opinion that in the peculiar
            circumstances which have arisen on account of the enactment of
            Section 33, it is but just and fair that Industrial Tribunals should imply
            such a term in the contract of employment .........

                 We are, therefore, of opinion that the ordinary law of master and
c           servant as to suspension can be and should be held to have been
            modified in view of the fundamental change introduced by Section 33
            in that law and a term should be implied by Industrial Tribunals in the
            contract of employment that if the master has held a proper enquiry
            and come to the conclusion that the servant should be dismissed and
D           in consequence suspends him pending the permission required under
            Section 33 he has the power to order such suspension, thus suspending
            the contract of employment temporarily, so that there is no obligation
            on him to pay wages and no obligation on the servant to work. In
           dealing with this point the basic and decisive consideration introduced
           by Section 33 must be borne in mind. The undisputed common law
E          right of the master to dismiss his servant for proper cause has been
           subjected by Section 33 to a ban; and that in fairness must mean that,
           pending the removal of the said statutory ban, the master can after
           holding a proper enquiry temporarily terminate the relationship of
           master and servant by suspending his employee pending proceedings
F          under Section 33. It follows therefore that if the tribunal grants
           permission, the suspended contract would come to an end and there
           will be no further obligation to pay any wages after the date of
           suspension. If, on the other hand, the permission is refused, the
           suspension would be wrong and the workmen would be entitled to all
           his wages from the date of suspension."
G
                                                               (Emphasis supplied)

        This Court in Hotel Imperial's case (supra) was thus concerned with the
  preliminary question whether the Management during the pendency of its
  application under Section 33(1) of the Industrial Disputes Act can legally
H suspend the employees after holding a proper departmental enquiry. The
    RAM LAKHAN v. PRESIDING OFFICER [S: SAGHR AHMAD, J.] 467

question whether an employee would be entitled to Subsistence Allowance           A
during the period of suspension was not directly involved in that case, in
which it was held that if the master had held a proper enquiry and come to
the conclusion that the servant was to be dismissed and in consequence
thereof suspends him pending the permission required under Section 33, he
could legally do so with the result that the contract of employment would         B
stand suspen~ed temporarily so that "there would be no obligation on him
to pay wages and no obligation on the servant to work''. This observation
reflects the well-recognised rule that when an employee is suspended, he
does not get full wages and he is also not put on duty. He gets only reduced
salary (subsistence Allowance), prescribed by the Rules.

       The view expressed in Hotel lmperial's case (supra) was reiterated in
                                                                                  c
T. Cajee v. U. Jormanik Siem, [ 1961] 1 SCR 750 = AIR (1961) SC 276. To the
same effect is the decision of this Court in R.P. Kapur v. Union of India,
[1964] 5 SCR 431 =AIR 1964 SC 787. Thereafter, the Court rendered its
decision in Balvantray Ratilal Patel v. State of Maharashtra, [1968] 2 SCR
577 = AIR 1968 SC 800, in which it was laid down that an employer can             D
suspend an employee pending an enquiry into his misconduct and the only
question that can arise in such a suspension will relate to the payment of his
wages during the period of such suspension. It was further observed that the
power to suspend, in the sense of a right to. forbid an employees to work,
is not an implied term in an ordinary contract between master and servant and     E
that such a power can only be the creature either of a statute governing the
contract, or of an express term in the contract itself. The Court further
observed that the absence of such a power either as an express term in the
contract or in the rules framed under some statute would mean that an
employer would have no power to suspend an employee and if he does so,
in the sense that he forbids the employee to work, he will have to pay the        F
employee's wages during the period of suspension. The Court also came to
the conclusion that an order of interim suspension can be passed against the
employee while an enquiry is pending into his conduct even though there is
no such term in the contract of employment or in the rules, but in such a case
the employee would be entitled to his remuneration for the period of suspension   G
if there is no statute or rule under which it could be withheld.

      The whole case law was reviewed by this Court in V.P. Gindroniya v.
State of Madhya Pradesh & Anr., AIR 1970 SC 1494, in which.the decisions
in Hotel Imperial 's case as also in the case of Balvantray Ratilal, both
referred to above, were considered. Gindroniya 's decision (supra) was followed   H
    468                     SUPREME COURT REPORTS [1999] SUPP. 4 S.C.R.

A    in The Vice-Chancellor, Jammu University & Anr. v. Dushinant Kumar Rampa/,
     AIR ( 1977) SC 1146 and it was laid down as under:

             'It will, therefore, be seen that where there is power conferred on the
            employer either by an express term in the contract or by the rules
            governing the terms and conditions of service to suspend an employed
B           the order of suspension has the effect of temporarily suspending the
            relation of master and servant with the consequen ;e that the employee
            is not bound to render service and the employer is not bound to pay.
            In such a case the employee would not be entitled to receive any
            payment at all from the employer uruess the contract of employment

c           or the rules governing the terms and conditions of service provide for
            payment of some subsistence allowance."

          In State of Madhya Pradesh v. State of Maharashtra & Ors., AIR (1977)
    SC 1466 =[I 977] 2 SCR 555 = (1977] 2 SCC 288, it was laid down that an order
    of suspension does not put an end to the Govt. service. It was further
D   observed that suspension merely suspends the claim of salary as the employee
    is paid suspension allowance during the period of suspension. For this
    purpose, reliance was placed upon an earlier decision of this Court in Khem
    Chand v. Union of India, [ 1963] Supp. I SCR 229 = AIR 1963 SC 687.

          The Right to Life, guaranteed to a person under Article 21 of the
E   Constitution, was read into the Service Rules relating to payment of Subsistence
    Allowance and it was for this reason that this Court in State of Maharashtra
    v. Chanderbhan, (1983] 3 SCR 337 = (1983] 3 SCC 387 =AIR (1983) SC 803,
    struck down a Service Rule which provided for payment of a nominal amount
    of Rupee one as Subsistence Allowance to an employee placed under
F   suspension.

          In Fakirbhai Fulabhai Solanki v. Presiding Officer & Anr., [1986] 3
    SCC 131 = (1986] 2 SCR I 059 =AIR (1986) SC 1168, the decision of this Court
    in Hotel lmperial's case (supra) was considered and it was laid down as
    under:
G
               "6. The learned counsel for the management however relied upon
           the decision of this Court in Management of Hotel Imperial, New
           Delhi v. Hotel Workers' Union. In that case this Court was mainly
           concerned with the right of the management to suspend a workman
           where the management had taken a decision to dismiss him but could
H          not immediately give effect to such decision owing to the restriction
RAM LAKHAN v. PRESIDING OFFICER [S. SAGHR AHMAD, J.] 469

  imposed by Section 33 (I) of the Act which required the management      A
  to obtain the permission of the Tribunal when a reference was pending
  adjudication before it... ..... "

  It was further observed as under:-

       "7. In the above decision it was laid down that the management B
  should be deemed to possess the power to suspend an employee in
  respect of whom a decision had been taken to dismiss him but an
  application for permission had to be filed until the application for
  permission was decided. The court in giving the above decision also
  relied on an earlier decision of the court in Ranipur Colliery v.
  Bhuban Singh, AIR (1959) SC 833. In that case it was pointed out that C
  but for the ban on the employer by Section 33(1) the employer would
  have been entitled to dismiss the employee immediately after the
  completion of his enquiry on coming to the conclusion that the
  employee was guilty of misconduct but section 33 stepped in and
  stopped the employer from dismissing the employee immediately on D .
  the conclusion of his enquiry and compelled him to seek permission
  of the Tribunal. It was therefore, held that it was reasonable that the
  employer having done all that he could do to bring the contract of
  service to an end should not be expected to continue paying the
  employee thereafter. It was pointed out that in such a case the
  employer would be justified in suspending the employee without pay E
  as the time taken by the Tribunal to accord permission under Section
  33 of the Act was beyond the control of the employer. Lastly, it was
  observed that tlits would not cause any hardship to the employee for
  ifthe Tribunal granted permission the employee would not get anything
  from the date of his suspension without pay while if the permission F
  was refused he would be entitled to his back wages from such date."
                                                  (Emphasis supplied)

It was also observed as under:

      "8. But in neither of the above two decisions the court considered G
  the question from the angle from which we have approached the
  problem. In neither of them the court had the occasion to consider
  whether the denial of payment of subsistence allowance during the
  pendency of the proceedings under Section 33(3) of the Act would
  amount to violation of principles of natural justice. They approached
  the question from the angle of the common law right of a master to H
    470                     SUPREME COURT REPORTS [1999] SUPP. 4 S.C.R.

A           keep a workman under suspension either during the pendency of a
            domestic enquiry into an act of misconduct alleged to have been
            committed by a workman or during the pendency of an applications
            under section 33 of the Act. Those were perhaps halcyon days when
            such application were being disposed of quickly. If the court had
            realised that such applications would take nearly six years as it has
B           happened in this case their view would have been different. An
            unscrupulous management· may by all possible means delay the
            proceedings so that the workman may be driven to accept its terms
            instead of defending himself in the proceedings under Section 33 (3)
            of the Act. To expect an ordinary workman to wait for such a long time
c           in these days is to expect something which is very unusual to happen.
            Denial of payment of at least a small amount by way of subsistence
            allowance would amount to gross unfairness."

          This Court thus explained the decision in Hotel Imperia/'s case (supra)
    and held that the principal question involved in that case related to the right
D   of the employer to suspend an employee under the general law of master and
    servant and not whether he would be entitled to Suspension Allowance.

          In anofaer decision, namely in O.P. Gupta v. Union of India & Ors.,
    [ 1987] 4 sec 328, it was held as under :

E   "An order of suspension of a government servant does not put an end to his
    service under the government. He continues to be a member of the service
    in spite of the order of suspension. The real effect of suspension as explained
    by this Court in Khem Chand v. Union of India is t!!_at he continues to be
    a member of the government service but is not permitted to work and further
    during the period of suspension he is paid only some allowance -- generally
F   called subsistence allowance -- which is normally less than the salary instead
    of the pay and allowances he would have been entitled to if he had not been
    suspended. There is no doubt that an order of suspension, unless the
    departmental inquiry is concluded within a reasonable time, affects a
    government servant injuriously. The very expression 'subsistence allowance'
G   has an undeniable penal significance. The dictionary meaning of the word
     'subsist' as given In Shorter Oxford English Dictionary, Vol. JI at p. 2 I 7 I
    is "to remain alive as on food: to continue to exist. " "Subsistence" means
    - means of supporting life, especially a minimum livelihood. "

                                                             (Emphasis supplied)
H         In Capt. Paul Anthony v. Bharat Gold Mines ltd. & Anr., JT (1999) 2
    RAM LAKHAN v. PRESIDING OFFICER [S. SAGHR AHMAD, J.] 471

SC 456 = (1999) 3 sec 679, it was observed as under:                              A
            "To place an em'ployee under suspension is an unqualified right
        of the employer. This right is conceded to the employer in service
        jurisprudence everywhere. It has even received statutory recognition
        under service rules framed by various authorities, including Govt. of
        India and the State Governments. (See: for example, Rule 10 of Central    B
        Civil Services (Classification, Control & Appeal) Rules. Even under
        the General Clauses Act, this right is conceded to the employer by
        Section 16 which, inter a/ia, provides that power to appoint includes
        power to suspend or dismiss."

       Applying the principles laid down in the decisions referred to above to
                                                                                  c
the facts of this case, it has to be conceded that if the Management has held
a departmental enquiry against an employee, it has the right to place that
employee under suspension, if on the basis of the findings recorded at the
departmental enquiry, the Management is, primafacie, of the opinion that the
employee, on account of the charges having been proved was liable to be           D
_dismissed from service, but the final order of dismissal could not be passed
on account of a Reference raised under the Industrial Disputes Act, 194 7,
which was already penifing before the Tribunal. In such a situation, if the
Management makes an application under Section 33 (I) of the Industrial
Disputes Act for permission of the Tribunal to dismiss such employee from         E
service the management can, pending disposal of his application under Section
33(1 ), place that employee under suspension. Once the employee is placed
under suspension, the Management cannot take any work from the suspended
employee nor can the employee claim full salary from the Management. But
the Management has to pay the Subsistence Allowance to the employee so
that he may sustain himself till the application under Section 33(1} is finally   F
disposed of.

      Read in the light of the above discussion, there will not be found any
conflict of opinion between the decisions rendered by this Court in Hotel
lmperial's case (supra) and in Fakirbhai 's case (supra). While right to place
an employee under suspension pending disposal of the application under            G
Section 33(1) is to be conceded to the Management on the basis of the
decision in Hotel lmperial's case (supra}, the right of the employee to receive
Subsistence Allowance during the period of such suspension has to be
conceded to the employee on the basis of the decision in Fakirbhai 's case
(supra) and other decisions of this Court referred to above wherein the           H
    472                     SUPREME COURT REPORTS [1999] SUPP. 4 S.C.R.

A employee has been held to be entitled to Subsistence Allowance during the
    period of suspension.

         We are conscious of the observation made by this Court in Hotel
    Imperial' case (supra) that the Management has no control over the disposal
    of application under Section 33(1) filed before the Industrial Tribunal and,
B   therefore, if it has placed the employer under suspension, it will not be under
    any obligation to pay salary to the suspended employee for the period over
    which the application under Section 33(1) remains pending with the Tribunal.
    The Court further observed that if the application under Section 33(1) is
    allowed, the employee would be dismissed from service but if the application
C   is rejected, the employee would be paid all the arrears of salary.

          Just as the employer has no control over the disposal of the application
    under Section 33(1) of the Industrial Disputes Act, so also the employee has
    no control over 'the disposal of that application. Whether the employee would
    be retained in service or removed would be dependent upon the fate of the
D   application. While the Management can afford to wait for the disposal of that
    application, it would be impossible for an employee who survives only on his
    salary to wait for the disposal of that application for an indefinite period. It
    would not be possible for him to sustain himself. It is in this light that the
    right to receive reduced salary (Subsistence Allowance) for the period of
E   suspension has to be read along with the right ofthe management to place
    the employee under suspension pending disposal of the application under
    Section 33(1) of the Industrial Disputes Act. Thus, the right of Management
    to suspend and the right of the employee to receive Subsistence Allowance
    are intertwined and both must survive together.

p         For the reasons stated above, the appeals are allowed, the impugned
    judgments passed by the Delhi High Court as also the judgment passed by
    the Industrial Tribunal are set aside with the direction that the Subsistence
    Allowance shall be paid to the appellants for the whole of the period of
    suspension at such rates as is provided under the Standing Orders or the
    Service Rules and if there is no such provision, they would be entitled to be
G   paid full salary even during the period of suspension. The arrears of
    Subsistence Allowance shall be paid to the appellants within three months
    from the date on which the certified copy of this Order is produced before
    the concerned Officer.

H   RP.                                                          Appeals allowed.