FAKIRBHAI FUl.ABHAI SOLANKI

PRESIDING OFFICER & ANR.

MAY 8, 1986

[E, S. VENKATARAMIAH AND SABYASACHI MUKHARJI, JJ,]

Industrial Disputes Act, 1947 : s.33(3) - Subsistence

allowance - Denial of - whether violates principles of natural justice - Whether vitiates proceedings before the Tribunal •

._ Suspension from service - Whether puts an end to relationship of master and servant - Right to subsistence

-tallowance - Whether to be read into the Standing Orders.

1 Administrative Law.

Labour disputes: Dismissal - Non-payment of Subsistence allowance for the period of suspension - Whether violation of principles of natural justice/reasonable opportunity to defend.

Sub-section (3) of s.33 of the Industrial Disputes Act,

, Al 1947 provides that no employer shall, during the pendency of any proceeding in respect of an industrial dispute, take action against any protected workman concerned (a) by altering, to his prejudice the conditions of service applicable to him i1111ediately before the colmlll!!ncement of such proceedings, or (b) by discharging or punishing, whether by •· t dismissal or otherwise, such protected workman, save with the express permission in writing of the authority before which

-~ the proceeding is pending.

The appellant, a protected workman, was found guilty after a disciplinary enquiry of the act of misconduct alleged to have been comf.tted by him.

The management made an application before the Industrial Tribunal under sub-s.(3) of s. 33 of the Act for peraission to dismiss him. lie was, -ti' however, suspended froa service with effect from August 13, i 1979 pending disposal of the application but without any wages or allowances. The appellant thereupon filed a complaint before the Tribunal under s. 33A of the Act allegng violation

of s.33 by the management. In the standing orders governing the appell1nt there was no provision for payment of any sub- \ sistence allowance during the pendency of an application under s.33(3), The Tribunal while disposing of both the applications granted permission to the management to dismiss the appellant from service.

In these appeals by special leave it was contended for the appellant that the permission accorded to the management was vitiated as the non-payment of subsistence allowance had resulted in denial of reasonable opportunity to the appellant to defend himself effectively before the Tribunal in the proceedings under s.33(3) of the Act.

Allowing the appeal, the Court, i

HELD: l, The work.man against whom an application is made ,~ under s.33(3) of the Industrial Disputes Act, 1947 should be paid reasonable amount by way of subsistence allowance to enable him to maintain himself and the members of his family, and also to meet the expenses of litigation before the Tribunal. If no amount is paid during the pendency of such an application, the work.man concerned can be said to have been denied a reasonable opportunity to defend himself in the JI, proceedings before the Tribunal. Such denial leads to violation of the principles of natural justice and consequently vitiates the proceedings before the Tribunal and any decision given in those proceedings against the workman concerned.

[1066 B-0]

i . 2, A workman does not cease to be a work.man until the Tribunal grants permission under s.33(3) of the Act to dismiss L him and the management does so pursuant to such permission. T

[1065 B-C]

An order of suspension by itself does not put an end to the e!lployment. The work.man continues to be an employee during

the period of suspension. Though such an order prevents the employee from rendering his services bUt that dbes not put an end to the relationship of master and servant between the 'r management and the work.man. [1065 C-D]

)fmU!g •t of Hotel hperia1 v. Hotel Workers' Union, [1960] 1 SCR 476 and lanipar Colliery v. lbusban Si.Dgh & On., 1959 LLJ Vol.II 231 distinguished.

FAKIRBHAI v. PRESIDING OFFICER 1061

State of Maharashtra v. Oiandrabban Tale, (1983]

2 SCR >f 387 and Iba Qiaad v. i.rl.on of India, (1963] Supp. 1 SCR 229 referred to.

3, If the order passed at the conclusion of a domestic enquiry is only one of suspension (even though the management has decided to dismiss him) where the workman has a chance of being reinstated with back wages on the permission being refused under s.33(3) of the Act, it cannot be said that the •workman is not entitled to any monetaryrelief at all. In such a case the right of the workman to receive some reasonable &S>Unt, which may be fixed either by the standing orders or in the absence of any standing order by the authority before which the application is pending by way of subsistence -t-allowance during the pendency of the application under s.33(3) of the Act, with effect from the date of suspension should be -I implied as a term of the contract of employment. (1070 I>-F]

4. The case fall:tng under s.33(1) of the Act is not in any way different from a case falling under sub-s.(3) of s.33 and in both these cases previous permission of the authority concerned should be obtained before any action is taken against the workman concerned. In a case where the proceedings are c011pleted and the order of dismissal is successfully challenged on the ground of non-paYJl!llt of subsistence allowance for the period of suspension during.the pendency of the application under s.33(1) or s.33(3) of the Act, it shall be open to the management to ask for the permission of the authority again under s. 33(1) or s.33(3) of the Act after t paying or offering to pay to the workman concerned within a

~ reasonable time to be fixed by the authority the arrears of subsistence allowance. (1071 A-D]

~ In the instant case, no material has been placed before the Court to show that the appellant had sufficient means to defend himelf before the Tribunal. He has not been paid even the barest subsistence allowance during the pendency of the application under s.33(3) of the Act. Having regard to the circumstances of the case, grant of an opportunity to the management to apply for pend.ssion again under s.33(3) of the i Act is declined. The punishment of dismissal i111>osed on the appellant appears to be excessive. The order/award of the Tribunal is set aside. The application 118de by the management

under s.33(3) of the Act is dismissed, and the complaint filed by the appellant under s.33A of the Act accepted. The \ management is directed to reinstate the appellant in service with effect from the date of suspension and to pay him all the wages and allowances, as if there was no break in the continuity of his service. (1066 D-E; 1071 D-F]

CIVIL APPELIATE JURISDICTION : Civil 546(NL) of 1986, Appeal Nos. 545-

From the Award dated 5.8.1985 of the Industrial Tribunal at Gujarat in complaint No, (IT) 124 of 1979 and application (IT) No. 88 of 1979 in reference (IT) No. 434 of 1978.

A.K. Goel for the Appellant. +

P.H. Parekh and Uday Lalit for the Respondents.

The Judgment of the Court was delivered by

Vl!NKATARAMIAH, J. These two appeals by special leave are , ... filed under Article 136 of the Constitution of India against the Order/Award dated 5.8.1985 in Application (IT) No. 88 of 1979 and Complaint (IT) No. 124 of 1979 in Reference (IT) No. 434 of 1978 on the file of the Industrial Tribunal, Gujarat by~ the appellant Fakirbhai Fulabhai Solanki against the Management of the Alembic Chemical Works Co. Ltd., Baroda.

During the pendency of a referene made under the Industrial Disputes Act, 1947 (hereinafter referred to as 'the i, Act') to the Industrial Tribunal, Gujarat the management served a charge-sheet on the appellant who was one of the workmen working in the factory belonging to the management of the Alembic Chemical Works Co. Ltd., Baroda asking him to show cause why disciplinary action should not be taken against him for an alleged Act of misconduct said to have been committed by him on July 12, 1979. The act of misconduct attributed to the appellant was that he was playing cards along with two

other workmen during the working hours of the factory. It was '.. alleged that the appellant had given a letter addressed to 'r Shrl R.A. Desai, Manager, Industrial Relations, Alembic Chemical Works Co. Ltd. admitting his guilt and tendering apology.

The disciplinary enquiry was held against all the three work-

FAKIRBHAI v. PRESIDING OFFICER [VENKATARA.ll!IAH, J,) 1063

f men including the appellant. At the conclusion of the enquiry the appellant was found guilty of the act of misconduct alleged to have been conmitted by him by the Inquiry Officer

Shri J.N. Patel, Director (Manufacturing) of the Alembic Chemical Works Co. Ltd. and it was decided by the management to dismiss him but because the appellant was a protected workman as defined in the Explanation to sub-section (3) of section 33 of the Act and the permission of the Tribunal had to ibe obtained before dismissing lliin as required by sub-section

(3) of section 33 of the Act, the management made an application (IT) No. 88 of 1979 before the Tribunal for such permission. The appellant was, however, suspended from service with effect from 13. 8.1979 pending disposal of the application +before the Tribunal after he had been found guilty at the domestic enquiry but without any wages or allowances. The -1appellant also filed an application before the Tribunal under section 33A of the Act complaining violation of section 33 of the Act by the management. The complaint of the appellant was registered as Complaint (IT) NO. 124 of 1979 in Reference (IT) No. 434 of 1978. Both, the application under section 33(3) of the Act and the complaint under section 33 A of the Act, were filed in the year 1979. The Tribunal was able to dispose of them finally only on August 5, 1985. The Tribunal granted ..., permission to the management to dismiss the appe Hant and rejected the complaint filed by him.

Aggrieved by the said decision of the Tribunal the appellant has filed these two appeals.

In the Standing Orders governir.g the appellant there was no provision for payment of any subsistence allowance (either

the whole of the allowance which the workman was entitled to F jdraw or a part thereof) during the pendency of an application

)made by the management under section 33(3) of the Act for permission to dismiss protected workman.

Admittedly the appellant was not paid any allowance from 13.8.1979 to August 5, 1985 on which date the Tribunal accorded its permission to the management to dismiss him from service.

,) In these appeals the learned counse 1 for the appellant '(has confined his submission to the effect of non-payment of any subsistence allowance on the decision of the Tribunal under section 33(3) of the Act. It is urged by the learned counsel for the appellant that since the appellant was denied H

the subsistence allowance it was not possible for him to t defend himself effectively before the Tribunal in the proceedings relating to the permission prayed for by the management under section 33(3) of the Act and, therefore, the permission accorded by the Tribunal was vitiated. In support of his case he has relled upon the decision of this Court in State of Maharashtra v. lllandrabhan Tale, [1983] 2 s.c.c. 387.

In that case the respondent Chandrabhan Tale was a Government servant.

He was convicted and sentenced to~. imprisonment by the Trial Court in a criminal case. He filed an appeal against his conviction and sentence and remained on bail throughout without undergoing the sentence of imprisonment. He was, however, kept under suspension pending trial of the criminal case and was paid normal subsistencef allowance under the main rule 21 of the Bombay Civil Services Rules, 1959 from the date of his suspension until the date on~ which he was convicted and sentenced to imprisonment by the Trial Court.

But from the date of his conviction the subsistence allowance was reduced to the nominal sum of Re.I per month under the second proviso to rule 15(1) (ii )(b) of the Bombay Civil Services Rules,

1959. The order reducing his subsistence allowance was questioned in this Court in the above case. The Court held that the second proviso to rule 15(l)(ii)(b) of the Bombay Civil Services Rules, 1959 which._ directed the reduction of the subsistence allowance to Re. I per month was unreasonable and void. The Court further held that a. civil servant under suspension was entitled to the normal subsistence allowance even after his conviction by the Trial Court pending considration of his appeal filed against his conviction until the appeal was disposed of finally one-f • way or the other, whether he was on bail or lodged in prison on conviction by the Trial Court. Relying upon the above deci:~ sion the learned counsel for the appellant contended that( there was denial of reasonable opportunity to the appellant to defend himself before the Tribunal in the proceedings initiated by the application made under section 33(3) of the Act.

Sub-section (3) of section 33 of the Act provides that notwithstanding anything contained in sub-section (2) thereof '-. no employer shall during the pendency. of any such proceeding)' in respect of an industrial dispute, take any action against any protected workman concerned in such dispute -

(a) by

altering, to the prejudice of such protected workman, the f conditions of service applicable to him immediately before the co111Dencement of such proceedings; or (b) by discharging or punishing whether by dismissal or otherwise, such protected workman, save with the express permission in writing of the authority before which the proeeeding is pending. It follows from the provisions of sub-section (3) of section 33 of the Act that the workman does not cease to be a wrkman until the Tribunal grants permission to dismiss the workman and the ,,. management dismisses the workman pursuant to such permission.

An order of suspension by itself does not put an end to the employment. The workman continues to be an employee during the period of suspension and it is for this raason ordinarily the various standing orders l.n force in several factories and industrial establishments provide for payment of subsistence allowance which is normally less than the usual salary and allowance that are paid to the workman concerned. An order of suspension no doubt prevents the employee from rendering his service but it does not put an end to the relationship of master and servant between the management and the workman.

When an applicaton is made under section 33(3) of the Act the workman is entitled to defend himself before the Tribunal. In those proceedings it is open to him to show that the domestic enquiry held against him was not in accordance with law and _.. principles of natural justice and the action proposed to be taken against him by the management is unjust and should not be permitted. Sometimes it may be necessary to either of the parties to lead evidence even before the Tribunal.

The proceedings before the Tribunal very-often take a long time to , i come to an end. In this very case the proceedings were pending before the Tribunal for nearly six years. Most of the workmen are not in a position to maintain themselves and the members j_ of their families during the pendency of such proceedings. In

i addition to the cost of maintenance of his family the workman has to find money to meet the expenses that he has to incur in connection with the proceedings pending before the Tribunal.

In this case the appellant was in receipt of salary and allowances till the end of the disciplinary enquiry. But from .> 13.8.1979 he was not paid even the barest subsistence allowance till August 5, 1985 when the Tribunal passed its 1 order/award on the application of the management and the complaint of the appellant. It is true that in the instant case the Tribunal granted the application of the management

and rejected the complaint of the appellant. It was also quite possible that the Tribunal could have rejected the application _. of the management and upheld the complaint of the appellant in which case the appellant would have been entitled to continue to be an employee under the management of the factory and the disciplinary enquiry held aginst him would have had no effect at all. Because it is difficult to anticipate the result of the application made before the Tribunal it is reasonable to hold that the workman against whom the application ls made should be paid some amount by way of subsistence allowance to enable him to maintain hi!llself and the members of his family and also to meet the expenses of the litigation before the Tribunal. And if no al!k)unt is paid during the pendency of such an application it has to be held that the workman concerned has been denied a reasonable opportunity to defend himself in ithe proceedings before the Tribunal. Such denial leads to violation of principles of natural justice and consequently t vitiates the proceedings before the Tribunal under sub-section

(3) of section 33 of the Act and any decision given in those proceedings against the worklllan concerned. No material has been placed bef or~ us in this case to show that the appellant had sufficient means to defend himself before the Tribunal.

The learned counsel for the management however relied upon the decision of this Court in the Management of Hotel " Imperial, New Delhi & Ors. v. Hotel Workers' Union, [1960] 1 S.C.R. 476. 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 not immediately give effect to such decision owing to the restriction imposed by section 33(1) of the Act which required the f' management to obtain the perlllission of the Tribunal when a reference was pending adjudication before it. In that case

I,. this Court observed at pages 485, 488-489 thus: (

''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 of the Act applies, to imply a term in the contract giving power to the naster to suspend a servant when the master has come to the conclusion after necessary enquiry that the servant has conmdtted misconduct and ought to be dismissed, but cannot do sq because

- -

of section 33. It is urged on behalf of the f respondents that there is 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 i.f there were any such provision in s. 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 see is whether in the absence of an express provision to that effect in s. 33, it will be reasonable for an Industrial Tribunal in these extraordinary circumstances arising out of the effect of s. 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 to render service. We are of opinion that in the peculiar circumstances which have arisen on account of the enactment of s. 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 servant as to suspension can be and should be held to have been modified in view of the fundamental change introduced by s. 33 in that law and a term should bE! implied for 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 in consequence suspends him pending the permission required under s. 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 s. 33 Olis t be borne in mind. The undisputed COlllBOn law right of the master to dismiss his servant for proper cause has been

subjected by s. 33 to a ban; and that in fairness llllSt 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 under s. 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." i In the above decision it was laid down that the manage-t ment 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. l!huban Singh & Ors.,

[ 1959] L. L. J. Vol. II 231. In that case it was pointed out that 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

<II the employees immediately on the conclusion of his enquiry and compelled him to seek permission of the Tribunal.. It was, f, 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 t..l continue payingJ the employee thereafter. It was pointed out that in such a case the employer would be justified in suspending the employee without pay 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 this would not cause any hardship to the employee for if the Tribunal granted permission the employee would not get anything from the date of his suspension without pay while if the Y permission was refused he would be entitled to his back wages from such date.

f But in neither of the above two decisions the Court considered 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 keep a • workman under suspension either during the pendency of a dom=stic enquiry into an act of misconduct alleged to have been committed by a workman or during the pendency of an application under section 33 of the Act. Those were perhaps halcyon days when such applications were being disposed of t quickly. If the Court had rea Used that such applications would take nearly six years as it has happened in this case i thel.r 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 in these days is to expect something which is very unusual to happen. Denial of payment of atleast a small amount by way of subsistence allowance would amount to gross unfairness. ~

Apart from the violation of the principles of natural justice, the very concept of the relationship of master and servant has undergone a sea-change since the date on which Hotel 1-perial's case (supra) was decided. We have pointed out that in that case this Court recognised the power of suspension without pay vested in the management after it had decided to dismiss an employee where it had to make an application for permission under section 33(1) of the Act. The case falling under sectior. 33(1) of the Act is not in any way different from a case falling under sub-section (3) of section 33 and in both these cases previous permission of the authority concerned should be obtained before any action is taken against the workman concerned unlike a case falling under section 33(2)(b) of the Act where only its approval to an action already taken is required to be sought. This Court further observed in the above decision that the management could relieve itself of the obligation to pay wages during the period of such suspension.

Now what is the effect of suspension? Does it put an end to the relationship of master and servant altogether? It does

not. This Court has in its subsequent decision in Kliem Clland

v. Union of India, [1963] Supp. 1 S.C.R. 229, at pages 236-237 observed thus :

"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 the order of suspension is that + though he continued to be a member of the Government service he was not permitted to work, and further, during che period of his suspension he was paid only some allowance - generally called "subsistence allowance" - which is normally less t than his salary - instead of the pay and allowances he would have been entitled to if he had not been suspended. There is no doubt that the order of suspension affects a government servant injuriously. 'fllere is no basis for thinking however that because of the order of suspension he ceases to be a member of the service."

If the order passed at the conclusion of domestic enquiry is only one of suspension (even though the management has decided to dismiss him) where the workman has a chance of being reinstated with back wages on the permission being refused under section 33(3) of the Act, it cannot be said that the workman is not entitled to any monetary relief at all. In such a case the right of the workman to receive some reasonable amount which may be fixed either by the Standing Orders or in the absence of any Standing Order by the authority before which the application is pending by way of subsistence allowance during the pendency of the application f under section 33(3) of the Act with effect from the date of suspension should be implied as a term of the contract of employment having regard to the observat tons made in Kbea Chand's case (supra). In the two earlier decisions referred to above this aspect of the matter has not been considered.

It is likely that in some cases filed under section 33(1) r or section 33(3) of the Act (which are 'permission' clauses and not 'approval' clauses) pending before any authority, the management may not be payl.ng any subsistence allowance to the workman concerned. We, therefore, clarify that in such cases

it shall be open to the management to pay within a reasonable t time to be fixed by the authority, the subsistence allowance for the period during which the workman is kept under suspension without wages and to continue the proceedings. Such subsistence allowance shall be the amount flxed under the Standing Orders, if any, which the management is H.able to pay to the workman if he is kept under suspension during the pendency of such application or in the absence of any such Standing Order by the authrity before which such application ls pending. In a case where the proceedings are completed and the order of dismissal ts successfully challenged on the ground of non-payment of subsistence allowance for the period of suspension during the pendency of the application under j_ section 33(1) or section 33(3) of the Act it shall be open to

r the management to ask for the permission of the authority '+again under section 33(1) or section 33(3) of the Act after paying or offering to pay to the workman concerned within a reasonable time to be fixed by the authority concerned the arrears of subsistence allowance at the rate stated above. But in the instant case however having regard to the circumstances of this case we do not wish to grant any such opportunity to the management to apply for permission again under section 33(3) of the Act. On facts we are of the view that the punishment of dismissal imposed in this case on the appellant r appears to be excessive but our decision however is not based on this ground.

We, therefore, set aside the order/award of the Tribunal and dismiss the application made by the management under , 1 section 33(3) of the Act. We accept the complaint filed by the appellant under section 33A of the Act. The management is directed to reinstate the appellant in its service and to pay fhim all the wages and allowances due to him from August 13,

, 1979 as if there was no break in the continuity of his service. The appeals are accordingly allowed •rlth costs.

P. S.S.

Appeals allowed.