Peoples Co-operative Bank Ltd. vs Rameshwar Prasad Varma

Agarwala, J.—This is an application by the defendant and is directed against an order of the Small Cause Court decreeing the plaintiff''s suit after his case had been remanded by this Court for a fresh consideration. The plaintiff was an employee of the Peoples'' Co-operative Bank Ltd., Patna. On 7th November 1935, he was suspended by the Secretary of the Bank on account of his having been suspected of irregularity in the discharge of his duties. By a resolution of the Board of Directors passed on 25th May 1936, the plaintiff was dismissed. At a subsequent meeting of the board an, application by the plaintiff for arrears of salary was considered on 9th February 1937. It was then resolved that the plaintiff''s services should be taken to have been dispensed with from 8th November 1935. The Court below held that as the plaintiff''s contract of service was not terminated until 25th May 1936, he is entitled to his salary up to that date although he was under suspension from 7th November 1935. The learned Small Cause Court Judge has pointed out that the defendant bank has not proved that it was a term of the plaintiff''s contract that the bank should be entitled to withhold his salary for any period that he might be under suspension. It was contended on behalf of the bank that the fundamental rules govern the terms of service of the bank''s employees and that under those rules the bank was entitled to suspend the plaintiff and to withhold his salary during the period of suspension. The learned Small Cause Court Judge held that it has not been proved in this case that the plaintiff''s contract of service incorporates the fundamental rules, and it may be observed that if those rules do apply in the plaintiff''s case he was entitled during the period of suspension to a subsistence grant (see Rule 53). No such grant was made to the plaintiff.

It has been contended that in the circumstances that have happened the plaintiff was in fact dismissed on 7th November 1935. It is manifest, however, that although the bank might have definitely dismissed the plaintiff on that date they did not do so. What was actually done was to suspend the plaintiff. It was not till 25th May 1936 that he was definitely dismissed, and in no view of the facts can it be held as a matter of law that that dismissal should operate from the beginning of the period of suspension. The facts of this case are more favourable to the employee than the facts in Warburton v. Taff Valley Railway Co 1902 18 T.L.R. 420. The facts of that case were that by a rule of the defendant Bailway Company the company reserved the right to punish any servant, by immediate dismissal, fine, or suspension from duty, for certain offences, and they also reserved the right to deduct from the pay of their servants, and retain, the sums which might be imposed as fines, and to withhold their wages during the period of their suspension or absence from duty for any cause. The company suspended one of their servants for two weeks under the rule, and at the expiry of the two weeks they dismissed him. In a suit by the servant for his wages for the two weeks during which he was under suspension, it was held that he was entitled to recover. The learned Chief Justice, delivering the judgment, said that it had been contended that under the rule in question the company could suspend the man and then dismiss him without paying him wages for the period of suspension. In his opinion, that was not so. He thought that the plaintiff was in the company''s service during suspenion, and when he was dismissed there was no rule empowering them to withhold his wages. Darling and Channell, JJ. concurred in this view. This case is an authority for the proposition that even when an employer is entitled to suspend an employee and withhold his wages during the period of suspension, the employee is entitled to wages during the period of suspension if he is dismissed at the end of that period. In Hanley v. Pease and Partners, Ltd (1915) 1 K.B. 698, the facts were that the employer, after suspending the workman for one day reinstated him. In a suit by the employee for recovery of his wage for the day be was under suspension, Lush, J. observed that, on breach of duty by a servant, "the contract has become a voidable contract. The master can determine it if he pleases. Assuming that there has been a breach on the part of the servant entitling the master to dismiss him, he may, if he pleases, terminate the contract, but he is not bound to do it, and if he chooses not to exercise that right but to treat the contract as a continuing contract notwithstanding the misconduct of breach of duty of the servant, then the contract is for all purposes a continuing contract subject to the master''s right in that case to claim damages against the servant for his breach of contract."

This case is an authority for the proposition that suspension of an employee does not amount to dismissal or termination of the contract of service and that until the contract of service is terminated the employee is entitled to his wages even though he is under suspension. The case in Wallwork v. Fielding 1922.2 K.B. 66, at first sight appears to raise a difficulty in the way of the plaintiff. That was a case in which a Watch Committee, in exercise of statutory powers, had suspended a constable for an offence against discipline. The constable was not dismissed, and sued to recover his pay for the period during which he was under suspension. It was contended on behalf of the constable that the statutory power to suspend did not import the power to withhold pay during the period of suspension. In answer to the argument the Master of the Bolls said:

I should have thought that power to suspend the operation of a contract necessarily suspended its whole operation including not only the performance of duty but also the right to pay during the period of suspension.

The case in Hanley v. Pease and Partners, Ltd 1915.1 K.B. 698, was distinguished on the ground that in that case there was no power of suspension but only power of dismissal. In the present case also, it not having been proved that the Bank had the power to suspend, it cannot be held that it had power to withhold the plaintiff''s salary during the period of suspension. The Court below has allowed the plaintiff interest on the arrears of salary at 6 per cent, from 8th January 1937. There was no agreement by the defendant to pay interest on the arrears of salary, but the learned Small Cause Court Judge appears to have considered that the plaintiff had made a formal demand for payment of his salary and interest on 8th January 1937, and, therefore, he was entitled under the Interest Act to recaover interest from that date. The demand to which the learned Judge referred did not, however, make any claim on behalf of interest. To this extent the decree of the Court below must be varied.

The plaintiff will have a decree for Rs. 328-4-3 on aocount of his salary for the period of suit and interest on that sum from the date of the institution of the suit until payment, at 6 per cent, per annum; but he will not have interest for any period prior to the institution of the suit. As the defendant has substantially failed he will pay the costs of the present application; hearing fee two gold mohurs.

Dhavle, J.

J agree.