Supreme Court clarifies subsistence allowance during suspension when CBI investigates: Punjab National Bank vs. Bernard Lakra (2008)

Introduction

Date of the Judgment: September 18, 2008

Judges: Justice R.V. Raveendran and Justice Lokeshwar Singh Panta

When an employee is suspended pending investigation, how much subsistence allowance are they entitled to? The Supreme Court in Punjab National Bank & Anr. vs. Bernard Lakra addressed a dispute regarding the appropriate subsistence allowance for an employee of Punjab National Bank (PNB) who was suspended while facing investigation by the Central Bureau of Investigation (CBI). The core issue revolved around interpreting the Sastry Award, the Desai Award, and a subsequent Bipartite Settlement to determine whether the employee was entitled to full pay and allowances after a year of suspension.

Case Background

The respondent, Bernard Lakra, was working as an award staff member at Punjab National Bank (PNB). On March 5, 1993, the bank suspended him due to alleged irregularities related to his work as a Godown Keeper. Subsequently, on April 8, 1993, PNB issued a chargesheet against him. The bank then lodged a First Information Report (FIR) with the Central Bureau of Investigation (CBI) on June 23, 1993. The CBI investigated the matter and filed a chargesheet before the Special Court on September 30, 1993.

During his suspension, the bank paid Lakra one-third of his pay and allowances as subsistence allowance for the first three months. After this period, the allowance was increased to half of his pay and allowances. Lakra argued that since the delay in the inquiry was not attributable to him, he was entitled to full pay and allowances as subsistence allowance after one year of suspension, according to clause 5(a)(iii) of the Bipartite Settlement dated September 8, 1983.

The bank contended that clause 5(a) of the Bipartite Settlement applied only when the investigation was not entrusted to an outside agency like the CBI. PNB argued that Lakra’s case was governed by paragraph 557 of the Sastry Award (reiterated by paragraph 17.14 of the Desai Award), which entitled him to only half of his pay and allowances as subsistence allowance.

Timeline:

Course of Proceedings

Aggrieved by the bank’s decision regarding his subsistence allowance, Bernard Lakra approached the Orissa High Court for relief. The High Court, in its order dated January 14, 2002, allowed his writ petition. The court held that the Sastry Award and Desai Award were not applicable in this case. Instead, it ruled that clause (5) of the Bipartite Settlement was the governing provision, entitling Lakra to full pay and allowances as subsistence allowance.

Punjab National Bank challenged the High Court’s order by filing a special leave petition in the Supreme Court. The Supreme Court then admitted the matter for consideration.

Legal Framework

The Supreme Court considered the following legal provisions to determine the appropriate subsistence allowance for Bernard Lakra:

• 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 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.

Arguments

Arguments by the Bank:

• The bank argued that clause 5(a) of the Bipartite Settlement was not applicable because the investigation was entrusted to and taken up by the CBI, an outside agency.
• PNB contended that Lakra’s case was governed by paragraph 557 of the Sastry Award (reiterated by paragraph 17.14 of the Desai Award), which entitled him to only half of his pay and allowances as subsistence allowance.

Arguments by Bernard Lakra:

• Lakra contended that the enquiry initiated against him was not delayed for any reason attributable to him. Therefore, upon 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 September 8, 1983.
• Lakra’s counsel argued that since the order of suspension was passed in connection with a proposed departmental action and not with reference to an investigation by an outside agency, the subsistence allowance should be based on the premise that the enquiry was to be carried out departmentally. Even if the investigation was subsequently entrusted to an outside agency, the suspension would continue to be with reference to the departmental enquiry.
• He pointed out that the order of suspension was passed on March 5, 1993, pending proposed departmental action. When the matter was entrusted to the CBI, the order of suspension was not modified to reflect investigation by an outside agency but continued to be a suspension pending departmental action. Therefore, Lakra’s case would fall under the first part of clause (5) of the Bipartite Settlement.

Submissions Table

Issues Framed by the Supreme Court

The primary question before the Supreme Court was:

1. Whether the respondent was entitled to only half of pay and allowances as subsistence allowance even after one year.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The court considered the following authorities:

• Para 557 of Sastry Award: This award outlines the scale of suspension allowance to be granted. It specifies different rates for the first three months and subsequent months, depending on whether the enquiry is departmental or by an outside agency.
• Para 17.14 of Desai Award: This paragraph reiterates the provisions of Para 557 of the Sastry Award regarding suspension allowance.
• Clause 5 of Bipartite Settlement dated 8.9.1983: This settlement partially modifies the Sastry and Desai Awards, providing specific provisions for the payment of subsistence allowance to workmen under suspension. It differentiates between cases where the investigation is not entrusted to an outside agency and cases where it is.

Authority Treatment Table

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision in Punjab National Bank vs. Bernard Lakra was primarily influenced by the interpretation of the Sastry Award, Desai Award, and the Bipartite Settlement. The Court emphasized that when an outside agency like the CBI investigates and decides to prosecute an employee, the provisions of the Sastry and Desai Awards regarding subsistence allowance continue to apply. This means the employee is entitled to only half of their pay and allowances as subsistence allowance.

The Court’s reasoning was based on a combination of factual and legal considerations. The factual aspect involved the CBI’s investigation and decision to prosecute, while the legal aspect focused on interpreting the relevant awards and settlements. The legal considerations weighed more heavily in the Court’s decision.

The Supreme Court considered the argument that since the initial suspension was for a departmental action, the Bipartite Settlement should apply. However, the Court rejected this argument, stating that “What is relevant is whether the investigation or enquiry was handed over or taken up by an outside agency, at any stage.”

The Court also noted, “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, the Sastry Award continued to apply.

Ultimately, the Court concluded, “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.”

Key Takeaways

• When an employee is suspended and the investigation is conducted by an outside agency like the CBI, and that agency decides to prosecute the employee, the provisions of the Sastry and Desai Awards apply.
• In such cases, the employee is entitled to only half of their pay and allowances as subsistence allowance, even after one year of suspension.
• The Bipartite Settlement does not cover situations where an outside agency investigates and prosecutes the employee, so the Sastry and Desai Awards continue to govern.

Development of Law

The ratio decidendi of this case is that when an investigation is conducted by an outside agency like the CBI, and that agency decides to prosecute the employee, the provisions of the Sastry and Desai Awards regarding subsistence allowance continue to apply, entitling the employee to only half pay and allowances.

This clarifies that the Bipartite Settlement does not supersede the Sastry and Desai Awards in cases involving external investigations leading to prosecution, thus reinforcing the applicability of the older awards in specific circumstances.

Conclusion

In summary, the Supreme Court in Punjab National Bank vs. Bernard Lakra held that Bernard Lakra was entitled to only half of his pay and allowances as subsistence allowance during his suspension. The Court clarified that when an outside agency like the CBI investigates and decides to prosecute an employee, the provisions of the Sastry and Desai Awards continue to apply, overriding the general provisions of the Bipartite Settlement. This decision reaffirms the importance of considering the specific circumstances of an investigation when determining subsistence allowances for suspended employees.

Category

• Service Law
  • Suspension
  • Subsistence Allowance
  • Departmental Enquiry
  • CBI Investigation
• Industrial Disputes Act
  • Awards and Settlements
  • Sastry Award
  • Desai Award
  • Bipartite Settlement
• Service Law
  • Suspension
    • Subsistence Allowance

FAQ

1. What is subsistence allowance?

   Subsistence allowance is the payment made to an employee during the period of suspension, intended to cover their basic living expenses.

2. When is an employee entitled to full pay and allowances during suspension?

   According to the Bipartite Settlement, an employee is entitled to full pay and allowances after one year of suspension if the enquiry is not delayed due to reasons attributable to the employee. However, this does not apply if an outside agency like the CBI is investigating and decides to prosecute the employee.

3. What happens if an outside agency investigates and prosecutes an employee?

   If an outside agency like the CBI investigates and decides to prosecute the employee, the provisions of the Sastry and Desai Awards apply, and the employee is entitled to only half of their pay and allowances as subsistence allowance.

4. Does the Bipartite Settlement always supersede the Sastry and Desai Awards?

   No, the Bipartite Settlement does not always supersede the Sastry and Desai Awards. In cases where an outside agency investigates and prosecutes the employee, the Sastry and Desai Awards continue to govern the subsistence allowance.