V. Ramaswami, J.
1. The petitioner is a Society registered under the Tamilnadu Co-operative Societies Act. During an inspection under Section 66(1) of the said Act, it came to light that certain stocks of the society were misappropriated through falsification of accounts by one Kalidas, a godown clerk, with the connivance of the second respondent who was, at that time, the manager of the office. The Deputy Registrar, in the inspection report, stated that there is a prima facie case for launching prosecution against both the godown clerk and the second respondent. It appears, subsequently the godown clerk resigned his job. The Deputy Registrar had also launched a complaint with the police for investigation in the matter. The Registrar, to whom a report was sent by the Deputy Registrar, considered that the continuance in office of the second respondent as manager of the petitioner-society would be deterimental to the interests of the society and, therefore, in exercise of his powers under Section 70 of the Act, directed the special officer, who had been appointed superseding the committee to place the second respondent under suspension with immediate effect until further orders. On receipt of this direction, the special officer, by his resolution, dated 14th October, 1972 placed the second respondent under suspension with effect from that date until further orders as required under Section 70 (2) of the Act. During the period of suspension, the second respondent was paid subsistence allowance at the rate provided in Bye-law 13(1)(c) of the Special Bye-laws relating to service conditions of the employees of the petitioner-society. The second respondent filed an application before the Labour Court, Madurai, under Section 33C(2) of the Industrial Disputes Act, 1947, contending that he was entitled to be paid full salary during the period of suspension and praying to compute the money value of the benefit for the period from 14-10-1972 to 31-3-1973. Overruling the objections of the petitioners herein the Labour Court, by an order, dated 3rd April, 1974, held, that the second respondent was entitled to be paid full salary for the period of suspension and accordingly held that he was entitled to be paid a sum of Rs. 1,628-81 P., less the subsistence allowance paid. It is to quash this order of the Labour Court, the petitioner has filed this petition under Article 226 of the Constitution of India.
2. The learned Counsel for the petitioner submitted that since the suspension in this case was in exercise of a statutory power under Section 70 of the Act, the second respondent was not entitled to be paid any salary at all, not even a subsistence allowance, during the period of suspension. He further contended that even if the second respondent was entitled to claim any payment under the bye-laws, that only obliges the society to pay a subsistence allowance during the period of suspension and not the full salary. The question as to what would be the amount that should be paid to an employee during the period of suspension had come up for consideration before the Supreme Court in a number of cases. In the earliest decision in Hotel Imperial v. Hotel Workers' Union : (1959)IILLJ544SC , after discussing the various decisions and the law on the subject, the Supreme Court observed:
Where there is a power to suspend either in the contract of employment or in the statute or the rules framed thereunder, the suspension has the effect of temporarily suspending the relationship of master and servant with the consequence that the servant is not bound to render service and the master is not bound to pay.
In the next case considered by the Supreme Court in Balvantrai Ratilal Patel v. State of Maharashtra : (1968)IILLJ700SC , after reiterating the principle enunciated) in Hotel Imperial v. Hotel Workers' Union, (supra), their Lordships further observed:
It is equally well-settled 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 appointment or in the rules, but in such a case, the employee would be entitled to his remuneration for the period of suspension if there is no statute or rule under which it would be withheld...
If there is no express term relating to the payment during such suspension and if there is no statutory provision in any enactment or rule, the employee is entitled to his full remuneration for the period of his interim suspension. On the other hand, if there is a term 'in this respect in the contract of employment or if there is a provision in the statute or the rules framed thereunder, providing for the scale of payment during suspension, the payment will be made in accordance therewith.
In this decision the Supreme Court also held that these principles would apply with equal force even to a case where the Government was the employer; the view expressed in these two decisions was again reiterated in the decisions in V.P. Gindronia v. State of Madhya Pradesh : (1970)IILLJ143SC . It could be seen from these decisions that in the case of suspension pending an enquiry, if the power of suspension is to be traced to a statutory provision or rule or , a provision in the contract of employment, than, unless there is an express provision obliging the employer to pay either the full salary or at such rate of subsistence allowance as they may choose, the employer would not be bound to pay any amount at all for the period of suspension. If, on the other hand, the suspension pending enquiry is to be referred to the inherent power of the competent authority to suspend pending such enquiry, then, unless there is a statutory power or rule or the contract of employment providing for payment of a lesser amount than the full salary, the employer would be bound to pay the full salary, The learned Counsel for the second respondent argued that, on principle, there could be no distinction between a suspension in exercise of its inherent power by a competent authority and a suspension in exercise of a statutory power or rule or contract of employment, for, on both these occasions the employee is not required to work and the employer is not getting any benefit and that therefore, if the employee would be entitled to be paid full salary in a case where the suspension was by a competent authority in exercise of its inherent power as such authority, he could not also be deprived of such full salary even in a case where the suspension was made in exercise of a statutory power or rule. The Supreme Court has pointed out that in a case where the suspension was in exercise of a statutory power, or rule or the contract of employment, the suspension amounted to a suspension of the relationship of employer and employee itself, but such a consequence would not follow in a case where the power of suspension was inferred by reason of the person being competent to take disciplinary proceedings. In other words, the inherent power of the competent authority is not extended to a power of suspension the relationship of employer and employee itself. Therefore, the distinction pointed out by the Supreme Court in the above decisions cited clearly enables the suspending authority not to pay the salary or subsistence allowance in cases where the power is exercised under a statute or a rule or contract of employment, unless that statute or rule or contract itself provided for payment of full salary or subsistence allowance. The learned Counsel for the second respondent also tried to distinguish the Supreme Court's decisions on the ground that the law enunciated should be related to suspension as substantive punishment and not suspension pending enquiry. But, an analysis of the facts in every one of these cases, shows that all these cases related to suspension pending enquiry, and not as a substantive punishment after enquiry. In this case, the petitioner had paid the second respondent subsistence allowance as provided under Bye-law 13(1)(c) of the Special Bye-laws above referred to. Though the learned Counsel for the petitioner contended that since the power is exercised in this case under Section 70 of the Act and that section did not oblige the petitioner to pay even any subsistence allowance, I am of opinion that the direction or obligation to pay a subsistence allowance during the period of suspension pending an enquiry under Bye-law 13(l)(c) would equally apply to a case of suspension under Section 70. In fact, when it was pointed out that the subsistence allowance referred to in Bye-law 13(1)(c) related to the period of suspension pending a disciplinary action as contemplated under Bye-law 13(1)(c), the learned Counsel for the petitioner argued that the later portion of Clause (c) of Bye-law 13 is to be de-linked from the earlier portion and to be read as an independent provision. Bye-law 13(1)(c) reads as follows :
Notwithstanding anything contained in these special Bye-laws, the President shall be competent to place any member of the establishment under suspension from service, pending enquiry into grave charges where such suspension is necessary in the interests of the Society, He may, at his discretion, sanction to the employee suspended, a subsistence allowance at a rate not exceeding 1/4 th of his substantive pay during the period of his suspension. No employee shall in any case be kept under suspension for a period exceeding three months at a time.
The first part of this Bye-law deals with the power of the competent authority to place a member of the establishment under suspension from service pending an enquiry into grave charges, and the later portion deals with the discretion given to the competent authority to pay a subsistence allowance at the rate not exceeding one-fourth of the substantive pay of the employee, during the period of his suspension. I think the learned Counsel for the petitioner is well-founded in his contention that these two parts of the provision will have to be read independently and as providing separate and independent Powers. This is more so for the reason that the Supreme Court and this Court, in a number of cases, have held that a competent authority has an inherent power to suspend an employee pending an enquiry into charges of misconduct. If that is so, the discretion to pay subsistence allowance during the period of suspension will have to be read as an independent power or obligation to pay. Though this power is given as a discretion, the discretion part of it relates only to the quantum and not for a total rejection of the subsistence allowance itself. Even such discretion, I have no doubt, will have to be exercised in a reasonable manner and not arbitrarily or capriciously. Therefore, the second respondent would be entitled to be paid only a subsistence allowance as provided under Bye-law 13(1)(c) in a case where he was suspended under Section 70 of the Act. The Labour Court was, therefore, wrong in directing the petitioner-society to pay anything in excess of the subsistence allowance. The writ petition is, therefore, allowed. The order of the Labour Court is set aside and the rule nisi is made absolute. But, there will be no order as to costs.