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1984 Supreme(Kar) 156
Karnataka High Court
Judges : G.N.Sabhahit,S.A.Rajasekaramurthy
E.S.C. - Appellant
Versus
MANAGEMENT OF KIRLOSKAR SYSTEMS LTD. - Respondent
M. F. A. 2473 Of 1981
Decided On : 07/27/1984
Subsistence allowance during suspension does not amount to wages as defined in the Employees' State Insurance Act.
Headnote:
Employees' State Insurance Corporation - Subsistence Allowance - Employees' State Insurance Act - S. 75(1), S. 39, First Schedule - The court discussed the definition of 'wages' under S. 2(22) of the Employees' State Insurance Act and ruled that subsistence allowance during suspension does not amount to wages. The court referred to relevant case law and held that the allowance is not remuneration for services rendered, therefore not subject to contribution.
Fact of the Case:
The Employees' State Insurance Corporation demanded contribution for subsistence allowance of a suspended employee. The Employees' Insurance Court ruled in favor of the employer, stating that the allowance did not amount to wages. The Corporation appealed the decision.
Finding of the Court:
The court found that the subsistence allowance during suspension did not constitute wages as defined in the Employees' State Insurance Act.
Issues: Whether subsistence allowance is considered wages under the Employees' State Insurance Act.
Ratio Decidendi: The court analyzed the definition of 'wages' under the Act and concluded that the allowance did not qualify as remuneration for services rendered.
Final Decision: The appeal was dismissed, and the Employees' State Insurance Corporation was not entitled to contribution on the subsistence allowance.
( 1 ) THE Employees' State Insurance Corporation demanded contribution with regard to the subsistence allowance of the employee, who was under suspension. That was challenged before the Employees' Insurance Court, Bangalore, by making an application under S. 75 (1) of the employees' State Insurance Act.
( 2 ) THE Employees' State Insurance Corporation resisted the petition. According to the employees' State Insurance Corporation, any amount paid to the Employee, during the subsistence of the relationship of master and servant would constitute wages. The Employees' Insurance Court raised the following issues as arising for its consideration :
(1) Whether the subsistence allowance is wages as defined in the E. S.. Act ? (2) What order ? the Employees' Insurance Court, after considering the facts and arguments addressed before it, came to the conclusion that the subsistence allowance paid to an employee during the period of suspension would not amount to wages and, in that view, the application made by the employer was allowed and the demand of contribution was set aside. Aggrieved by the said order, the Employees' State Insurance Corporation has instituted the present appeal before this Court.
( 3 ) THE learned counsel, Sri M. Papanna, appearing for the appellants, strenuously urged before us that any amount paid to the employee by the employer, when the relationship of master and servant subsists, would amount to wages and, as such, the employer would be liable for contribution under S. 39 read with the First Schedule to the Employees' State Insurance Act. He invited our attention to a decision of the Supreme Court in the case of R. P. Kapur v. Union of india AIR1964 SC 787 , (1966 )II LLJ164 SC , [1964 ]5 SCR431. In that case, the Supreme Court has ruled in para 10 of its judgment, inter alia, thus :
"the general law on the subject of suspension has been laid down by this Court in two cases, namely, Management of Hotel Imperial v. Hotel Workers Union, [1959-II L. L. J. 544] and T. Cajee v. U. Jormanik Siem [1961-I L. L. J. 652]. These two cases lay down that it is well settled that under the ordinary law of master and servant the power to suspend the servant without pay could not be implied as a term in an ordinary contract of service between the master and the servant but must arise either from an express term in the contract itself or a statutory provision governing such contract. It was further held that an order of interim suspension could be passed against an employee while inquiry was pending into his conduct even though there was no specific provision to that effect in his terms of appointment or in the rules. But in such a case he would be entitled to his remuneration for the period of his interim suspension if there is no statute or rule existing under which it could be withheld. "
The rule thus is on the point whether the servant can be suspended and if so what should be his allowance during that period. The learned counsel invited our attention to another ruling of the Supreme Court in the case of balvantrai Ratilal Patel v. State of Maharashtra, [1968 (17) F. L. R. 445]. It is laid down therein, inter alia, thus :
"it is now well settled that the power to suspend, in the sense of a right to forbid a servant to work, is not an implied term in an ordinary contract between master and servant, and that such a power can only be the creature either of a statute governing the contract, or of an express term in the contract itself. Ordinarily, therefore, the absence of such power either as an express term in the contract or in the rules framed under some statute would mean that the master would have no power to suspend a workman and even if he does so in the sense that he forbids the employee to work, he will have to pay wages during the period of suspension. "
It is thus clear that in this ruling also what is ruled by the Supreme Court is that unless there is express provision in the contract or in any statut
