Ram Lakhan v. Presiding Officer

FACTS

• The appellants were employees of Swatantra Bharat Mill who were issued a charge sheet and suspended in 1986.

• An industrial dispute was pending before the Industrial Tribunal.

• The Management applied for permission to dismiss the employees after a domestic inquiry, as required under Section 33(1) of the Industrial Disputes Act, 1947.

• The appellants opposed this application, claiming they were entitled to subsistence allowance during the suspension period, relying on precedents like the Fakirbhai case.

• The core of the legal challenge was reconciling the Management's right to suspend the employees pending the application (as per the Hotel Imperial case) with the employee's right to receive subsistence allowance during that suspension period.

ISSUES

• Whether an employee would be entitled to subsistence allowance during the period of suspension pending the disposal of the employer's application for approval/permission under Section 33(1) of the Industrial Disputes Act.

JUDGEMENT

• The apex court held that the Management has no control over the disposal of the application under Section 33(1) filed before the Industrial Tribunal.

• However, the Court implied that the Management is under an obligation to pay subsistence allowance to the suspended employee for the period the application remains pending.

• The Management's argument that it should not be under any obligation to pay salary was countered by the necessity of paying subsistence allowance until the Tribunal finally disposes of the application.

• Outcome of Suspension: If the application under Section 33(1) is allowed, the employee would be dismissed. If the application is rejected, the employee would be paid all the arrears of salary (full pay for the suspension period, treating it as duty).

OBSERVATION & RESTRAINTS ON MANAGERIAL PREROGATIVES

The core of the judgment revolves around balancing the Managerial Prerogative (Section 33) with employee welfare, which are the main Restraints on Managerial Prerogatives in this context:

1. Restraint on Punishment (Section 33)

• The Court affirmed that the Management has the right to suspend an employee if, after a departmental enquiry, it prima facie believes the employee is liable for dismissal.

• However, because an industrial dispute is pending, the Management's right to finally dismiss the employee is restrained by Section 33(1). The final order of dismissal cannot be passed without the express permission or approval of the Tribunal.

2. Restraint on Non-Payment (Subsistence Allowance)

• The Court held that the right of the Management to suspend and the right of the employee to receive subsistence allowance are intertwined and both must survive together.

• The Management cannot take any work from the suspended employee, nor can the employee claim full salary.

• Welfare Consideration: The Court observed that while the Management can afford to wait for the disposal of the application, it would be impossible for an employee who survives only on his salary to sustain himself for an indefinite period.

• Therefore, the Management must pay the subsistence allowance to the employee so that he may sustain himself until the application under Section 33(1) is finally disposed of.

The judgment essentially confirms that the power to suspend pending a Section 33 proceeding (a limited managerial prerogative) comes with the mandatory obligation to pay subsistence allowance (a necessary employee safeguard).