IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.4386 OF 2002

Punjab National Bank & Anr. … Appellants Vs. Bernard Lakra … Respondent

O R D E R

The respondent was an award staff working under the first appellant-Bank. On 5.3.1993 he was placed under  suspension  pending  initiation  of  departmental enquiry  in  connection  with  alleged  irregularities relating to his work as Godown Keeper. The bank issued a chargesheet dated 8.4.1993. Subsequently a FIR was lodged on 23.6.1993 by the Bank with Central Bureau of Investigation (CBI). CBI took up the investigation and filed  a  chargesheet  before  the  Special  Court  on 30.9.1993.

2. The Bank paid one-third of pay and allowances as Subsistence  Allowance  during  the  first  three  months

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and thereafter, at the rate of half of the pay and allowance to the respondent. The respondent contended that the enquiry initiated against him was not delayed for any reason attributable to him and therefore on the expiry of one year from the date of suspension he was  entitled  to  full  pay  and  allowances,  as subsistence allowance, in accordance with clause 5(a) (iii)  of  the  Bipartite  Settlement  dated  8.9.1983. According to the Bank, clause 5(a) would apply where the investigation was not entrusted to or taken up by an  outside  agency;  and  in  this  case,  as  the investigation was in fact entrusted to and taken up by CBI  –  an  outside  agency,  clause  5(a)(iii)  was inapplicable.  The  Bank  contends  that  the  case  of respondent  was  governed  by  para  557  of  the  Sastry Award (reiterated by para 17.14 of the Desai Award) and according to those provisions, the respondent was entitled  to  only  half  of  pay  and  allowances  as subsistence allowance.

3. Feeling  aggrieved  the respondent approached  the Orissa High Court for relief. The High Court allowed his writ petition by order dated 14.1.2002. It held that  the  Sastry  Award/Desai  Award  were  inapplicable

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and  what  was  applicable  was  clause  (5)  of  the Bipartite  Settlement  and  in  terms  of  it,  the respondent was entitled to full pay and allowances as subsistence  allowance.  The  said  order  of  the  High Court is challenged in this appeal by special leave. The  question  for  consideration  is  whether  the respondent  was  entitled  to  only  half  of  pay  and allowances  as  subsistence  allowance  even  after  one year.

4. As  the  question  for  consideration  depends  upon the  interpretation  of  the  provisions  of  the Sastry/Desai  Award  and  the  subsequent  Bipartite Settlement dated 8.9.1983, we may conveniently extract the same:

Para 557 of Sastry Award (Reiterated by Para 17.14 of Desai Award)

Having  considered  the  matter  in  all  its aspects,  we  think  that  suspension  allowance should be granted on the following scale :

(1) For the first three months one-third of the pay and allowances which the workman would have got but for the suspension;

(2) Thereafter, where the enquiry is departmental by the bank, one-half of the pay and allowances for the succeeding months. Where the enquiry is by an outside  agency,  one  third  of  the  pay  and allowances  for  the  next  three  months  and

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thereafter  one-half  for  the  succeeding  months until enquiry is over.

Clause 5 of Bipartite Settlement dated 8.9.1983 In partial modification of paragraph 557 of

the Sastry Award and paragraph 17.14 of the Desai Award,  the  following  provisions  shall  apply  in regard  to  payment  of  subsistence  allowance  to workmen under suspension in respect of the banks listed in Schedule 1.

(a) Where the investigation is not entrusted to or taken up by an outside agency (i.e. Police/CBI), subsistence  allowance  will  be  payable  at  the following rates :-

(i) For the first three months one-third of the pay and allowances which the workman would have got but for the suspension.

(ii) Thereafter half of the pay and allowances. (iii) After one year, full pay and allowances if the

enquiry is not delayed for reasons attributable to  the  concerned  workman  of  any  of  his representatives.  

Where  the  investigation  is  done  by  an outside agency and the said agency has come to the conclusion not to prosecute the employee, full pay and allowances will be payable after six months from the date of receipt of report of such agency, or one year after suspension, whichever is later and in the event  the  enquiry  is  not  delayed  for  reasons attributable  to  the  workman  or  any  of  his representative.

4. A careful reading of the above provision shows that  clause  (5)  of  the  Bipartite  Settlement  dated 8.9.1983 dealing with subsistence allowance was not in substitution of para 557 of Sastry Award/Para 17.14 of

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Desai Award, but in modification of para 557 of Sastry Award/Para 17.14 of the Desai Award. In other words in areas  not  dealt  with  or  covered  by  clause  (5)  of Bipartite Settlement, the terms of Para 557 of Sastry Award/Para 17.14 of Desai Award continued to apply.  

5. The  scheme  under  Para  557  of  Sastry  Award/ Para 17.14  of Desai Award is as follows :

(i) For  the  first  three  months  whether  the investigation or enquiry was departmental or by an outside agency, the workman was entitled to one-third  of  the  pay  and  allowances  as subsistence allowance.

(ii) Thereafter, where the enquiry was departmental, the workman was entitled to half of the pay and allowances as subsistence allowance so long as the suspension continued.

(iii) But if the enquiry or investigation was by an outside agency, the workman was entitled to the subsistence allowance to only one-third of the pay and allowances for the next three months (that  is  after  the  first  three  months)  and thereafter half of pay and allowances.

Thus  subsistence  allowance  during  the  suspension period was one-third during first three months when the  enquiry  was  departmental,  and  during  first  six months if the investigation was by an outside agency.

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Thereafter, the subsistence allowance was one-half of the pay and allowances.  

6. The modifications brought about by clause (5) of the Bipartite Settlement, were as under:

(i) Where the investigation was not entrusted to or taken up by an outside agency, the subsistence allowance  was  one-third  of  the  pay  and allowances for the first three months and one- half of pay and allowances thereafter. But if the suspension continued beyond one year and the delay was not attributable to the workman or his representative, full pay and allowances had to be paid as subsistence allowance during the period beyond one year.

(ii) Where the investigation was done by an outside agency  and  the  said  agency  came  to  the conclusion not to prosecute the workman, he was entitled to full pay and allowances after six months from the date of receipt of the report of such agency, or one year after suspension whichever was later (provided the enquiry was not  delayed  for  reasons  attributable  to  the workman or his representative).

7. Clause  (5)  of  the  Bipartite  Settlement,  while modifying the term relating to subsistence allowance in  certain  areas,  did  not  provide  for  a  situation where the investigation is done by an outside agency, and the said outside agency decides to prosecute the workman.  Therefore,  para  557  of  the  Sastry  Award (reiterated in para 17.14 of Desai Award) continued to

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apply  where  the  investigation  was  entrusted  to  an outside agency and that agency decided to prosecute the  workman.  If  para  557  of  the  Sastry  Award  was applicable there can be no doubt or dispute that the workman was entitled only to a maximum of half of the pay and allowances as subsistence allowance.

8. Learned counsel for the respondent sought to make a distinction. He submitted that where the order of suspension was passed in connection with a proposed departmental  action  and  not  with  reference  to  an investigation  by  an  outside  agency,  subsistence allowance will be on the basis that the enquiry was to be carried out departmentally. He submitted that in such  an  event,  even  if  the  investigation  was subsequently entrusted to or taken over by an outside agency,  the  suspension  will  continue  to  be  with reference  to  the  departmental  enquiry.  He  submitted that  only  where  the  suspension  was  itself  with reference to an investigation or enquiry by an outside agency,  the  provisions  relating  to  outside  agency investigation would apply. He pointed out that in this case the order of suspension was passed on 5.3.1993

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pending proposed departmental action. He also pointed out that when the matter was entrusted to an outside agency  the  order  of  suspension  was  not  modified  as being  with  reference  to  investigation  by  outside agency,  but  continued  to  be  a  suspension  pending departmental  action  and  therefore  the  case  of respondent  would  fall  under  the  first  part  of clause (5) of the Bipartite Settlement.  

9. We are of the view that such an interpretation is not  warranted.  What  is  relevant  is  whether  the investigation or enquiry was handed over or taken up by an outside agency, at any stage. Even where the suspension was initially with reference to a proposed departmental  action,  but  subsequently,  the investigation/inquiry  is  taken  up  by  an  outside agency, the provision with reference to outside agency will apply.  

10. We  are  informed  that  in  May  2006,  the  Special Court convicted the respondent and sentenced him to undergo  imprisonment,  and  in  view  of  the  said conviction and sentence, the Bank dismissed him from service on 14.7.2006, in accordance with the rules. It

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is also stated that the respondent has challenged the judgment  of  the  Special  Court  and  the  appeal  is pending  and  the  sentence  has  been  suspended.  These subsequent developments have no bearing on the issue considered by us.

11. We, therefore, allow this appeal, set aside the order of the High Court and uphold the decision of the Bank that the respondent was entitled to only half of pay and allowances as subsistence allowance during the entire period of suspension.              

……………………………………J.      (R V Raveendran)

New Delhi; …………………………………………………………J. September 18, 2008. (Lokeshwar Singh Panta)   

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