SERVICE LAW PROJECT

SUBMITTED TO SUBMITTED BY
PRAVEEN MA’AM LAKSHAY GUPTA
ROLL NU - 18226
SECTION-B
 TOPIC

SUSBSISTENCE ALLOWANCE

AD HOC & REGULAR

EMPLOYEES

ER ROYAPPA CASE STUDY

 ACKNOWLEDGEMENT

I would like to convey my heartfelt gratitude towards

My Service Law teacher gave me this wonderful opportunity
to do this amazing project on the topic “subsistence allowance
and ad hoc employees, E.R. Royaapa Case”.
She always gave valuable suggestions and guidance for
completion of my project. She helped me to understand
and remember important details of the project.
Furthermore, she helped me and gave her guidance in
completing my project successfully.

​ ​ ​
 INDEX

S.NO TOPIC PAGE DATE

NO.
1. INTRODUCTION 5-6 20-03-25

2. 6-7 20-03-25
SUBSISTENCE ALLOWANCE

3. 7-8 20-03-25
MEANING

4. 8-9 20-03-25
NON PAYMENT OF
ALLOWANCE

5. 9-10 20-03-25
DIFFERENCE BETWEEN
EMPLOYEES

8. CASE LAW 12-13 20-03-25

9. CONCLUSION 14 20-03-25

10. BIBLIOGRAPHY 15 20-03-25

 INTRODUCTION
The Indian government has introduced multiple allowances and benefit programs to assist
employees financially during crises. The subsistence allowance is one such perk that
provides essential financial support to suspended employees. The Supreme Court and
High Court considered this allowance a workman’s right under Article 21 of the Indian
Constitution. Keep reading to learn about subsistence allowance meaning, calculation
process, and rules.1

Subsistence allowance, within the framework of service laws, is a fundamental provision

designed to protect employees who are suspended from their duties pending investigations or
inquiries. Its primary purpose is to alleviate the financial hardship that would otherwise befall
these individuals and their dependents during this period of uncertainty.

Recognizing the presumption of innocence until guilt is proven, it ensures that suspended
employees can maintain a basic standard of living. In India, for example, the legal basis for
subsistence allowance is embedded within labor laws like the Industrial Employment
(Standing Orders) Act, 1946, and the Central Civil Services (Classification, Control, and
Appeal) Rules 1965, which provide guidelines for its calculation and eligibility.

Typically, the allowance is determined as a percentage of the employee's regular wages,

varying potentially with the duration of suspension, and is intended to cover essential living
expenses. Conditions for receiving the allowance often include declarations of
non-employment elsewhere.2

The implementation of subsistence allowance aims to balance employer authority with

employee rights. It discourages prolonged, unjustified suspensions, promoting procedural
fairness. By providing a financial buffer, it allows employees to focus on defending
themselves without the added stress of immediate economic collapse. This mechanism
reinforces the principle of equitable treatment within the employment relationship, ensuring
that temporary administrative actions do not result in undue personal hardship.

1
https://cleartax.in/s/subsistence-allowance
2
https://gemini.google.com/app/1be7b70972c9ab0b
 MEANING OF SUBSISTENCE ALLOWANCE

An order of suspension does not put an end to the government service. The relationship of
master and servant between the parties subsists and it does not cease. Suspension merely
suspends the claim of salary by the servant.43 But, the Service Rules provide for the payment
of subsistence allowance to the employee.44 The provision for payment of subsistence
allowance is made to enable the employee to sustain himself till the finality of his case.45 It
is to ensure non-violation of the right to life of the employee available under Article 21 of
the Constitution.46 Sometimes subsistence allowance is provided for in the Rules themselves
and in other cases it is fixed by Government Instructions. Where the Rules are silent
regarding subsistence allowance, the employee is entitled to full remuneration as subsistence
allowance during the period of suspension.47 Subsistence allowance is not a bounty but it is a
right.48 It is well settled that no one can be kept under suspension without payment of
subsistence

allowance.

However, the Rules which provide for the payment of only a nominal subsistence allowance
of Rs. 1 has been held to be arbitrary and violative of Articles 14,16,21 and 311(2) of the
Constitution. The amount of subsistence allowance should be reviewed from time to time. In
case of prolongation of the inquiry, except when the employee is responsible for such
prolongation, the Rules provide for the payment of increased subsistence allowance.50

Fundamental Rule 53 provides for the review of the amount of subsistence allowance within
a period of 3 months from the date of suspension. An order made, after such review, reducing
the subsistence allowance or refusing increase in the amount, without giving the employee an
opportunity to offer an explanation is held to be bad in law.

In U.P. State Textile Corpn. Ltd. v. P.C. Chaturvedi3, that where the Service Rule required
that subsistence allowance was payable only when the employee presented himself everyday
at the place of work, the respondent not signing attendance register, even though specifically
required in order of suspension, disentitled him to claim the subsistence allowance. When the
employer, at various points of time, informed the respondent about the consequences of his
not signing the attendance register as stipulated in the order of suspension, the non-signing,

3
https://indiankanoon.org/doc/1327287/
the court ruled, could not be treated as inconsequential or bona fide lapse. Where an
employee suspended pending disciplinary proceeding, died before the completion of the
proceedings, the proceedings would terminate and abate. In such a case his family will be
entitled to full pay and allowance minus the subsistence allowance paid to him during
suspension, treating him as on duty for all purposes.

NON PAYMENT OF SUBSISTENCE ALLOWANCE

The jurisprudence surrounding subsistence allowance in service law underscores its pivotal
role in safeguarding the rights of suspended employees. It is established that the denial of
subsistence allowance, a payment intended for the maintenance of an employee during a
period of suspension, constitutes a serious legal transgression capable of vitiating disciplinary
proceedings. The Supreme Court, in its adjudicative pronouncements, has consistently held
that suspension does not terminate the employment relationship, and the non-provision of
subsistence allowance can render subsequent disciplinary actions legally untenable. The
precedent established in State of Bihar vs. Arbind4 exemplifies this principle, wherein the
court affirmed that the denial of subsistence allowance undermines the procedural integrity of
disciplinary actions.This judicial stance, corroborated by references to cases such as State of
Maharashtra v. Chandrabhan and Ghanshyam Dass v. State of M.P., reinforces the judiciary's
commitment to upholding the rights of suspended employees and ensuring procedural
fairness.

The Central Civil Services (CCS) Rules, 1965, delineate the legal framework governing
suspension and subsistence allowance. These rules stipulate that a suspended employee
possesses an entitlement to subsistence allowance, albeit at a reduced quantum relative to
their regular remuneration. The allowance's raison d'être is to provide a financial lifeline
during the suspension period, ensuring the employee's ability to meet basic necessities. The
non-provision of this allowance is construed as a substantive legal infirmity, often amounting
to a denial of a reasonable opportunity to defend oneself in disciplinary proceedings. Such
denial contravenes the principles of natural justice, which mandate fairness, impartiality, and
the right to a hearing. Ex-parte proceedings, where findings are rendered in the employee's
absence due to the denial of subsistence allowance, are particularly susceptible to judicial
review and potential invalidation.
4
https://indiankanoon.org/doc/1327287/
It is imperative to recognize that subsistence allowance is not a discretionary gratuity but a
vested right. The non-provision thereof constitutes an irregularity that can compromise the
integrity of the entire departmental inquiry. The notion that it can be employed as an absolute
measure to compel attendance is legally unsound, as it infringes upon the employee's
fundamental rights. The prejudice occasioned by the denial of subsistence allowance is a
critical determinant in assessing the legality of subsequent disciplinary actions. The impact of
such denial must be adjudicated on a case-by-case basis, considering the specific factual
matrix and legal implications. The decision in CEO vs. S.T. Ganesan5 serves as a salient
illustration of this principle, wherein the court set aside the employee’s removal from service
due to procedural irregularities, thereby emphasizing the necessity of strict adherence to due
process and established rules.

In summation, the timely and adequate provision of subsistence allowance is not a mere
procedural formality but a legal imperative. Its non-provision can engender substantial legal
repercussions, potentially invalidating disciplinary proceedings and contravening the
principles of natural justice. The CCS Rules, 1965, provide a regulatory framework to ensure
that suspended employees are treated equitably and receive the requisite financial support.
The judiciary, through its consistent application of legal principles in cases such as State of
Bihar vs. Arbind and CEO vs. S.T. Ganesan, reinforces the importance of upholding these
rights, thereby safeguarding the integrity of disciplinary proceedings and ensuring adherence
to the rule of law.

DIFFERENCE BETWEEN AD HOC AND REGULAR

EMPLOYEES

In service law, the distinction between ad hoc and regular employees is fundamental,
impacting their rights, privileges, and the security of their employment. Ad hoc employees
are typically appointed for a temporary or specific period, often to fill immediate vacancies or
to address short-term needs, without undergoing the rigorous selection process required for
regular appointments. Regular employees, conversely, are appointed through a prescribed
selection process, often involving competitive examinations and interviews, and are generally

5
https://indiankanoon.org/doc/1327287/
entitled to long-term employment with attendant benefits. This difference in appointment
methodology leads to a significant divergence in their legal standing.6

The primary distinction lies in the nature of their appointment and the security of tenure. Ad
hoc employees generally lack the protection afforded to regular employees, rendering them
vulnerable to termination without extensive procedural safeguards. They are often appointed
on a contractual basis, which explicitly defines the period of employment and the terms of
service. Regular employees, on the other hand, enjoy the security of tenure, meaning their
services cannot be terminated arbitrarily. They are typically governed by service rules and
regulations, which provide for a detailed procedure for termination, including the requirement
of a fair hearing and adherence to principles of natural justice.

Judicial pronouncements have consistently emphasized the importance of adhering to

procedural fairness in appointments. In State of Karnataka v. Uma Devi , the Supreme Court
addressed the issue of irregular appointments, including ad hoc appointments, and held that
such appointments, even if continued for a long period, do not confer a right to regularization.
The Court clarified that appointments must be made in accordance with the rules and
regulations, and any deviation from this principle would undermine the rule of law. This
judgment underscored the necessity of transparency and fairness in public employment,
discouraging the practice of ad hoc appointments as a means of bypassing established
recruitment procedures.7

However, the courts have also recognized that in certain exceptional circumstances, ad hoc
employees may be entitled to some protection. In Daily Rated Casual Labour v. Union of
India, the Supreme Court acknowledged the plight of daily-rated and casual laborers, who are
often engaged on an ad hoc basis, and directed the government to frame a scheme for their
regularization. This judgment highlighted the court's concern for the welfare of such
employees and its willingness to intervene to protect their rights.

The distinction between ad hoc and regular employees also extends to their entitlement to
benefits such as pension, gratuity, and other retirement benefits. Regular employees are
generally entitled to these benefits as per the service rules, whereas ad hoc employees are

https://www.pockethrms.com/hr-terms/ad-hoc/#:~:text=%E2%9E%94%20Temporary&They%20decide
d%20to%20go%20with,to%20resolve%20the%20issue%20temporarily.
7

https://www.drishtijudiciary.com/current-affairs/regular-recruitment-process#:~:text=An%20appointme
nt%20to%20qualify%20as,committee%20in%20terms%20of%20the
often excluded from such entitlements. This difference in benefits reflects the disparity in the
nature of their employment and the security of their tenure.

Moreover, the courts have consistently held that ad hoc appointments should not be used as a
backdoor entry into regular employment. In Secretary, State of Karnataka v. Umadevi8, the
Supreme Court explicitly stated that ad hoc appointments, even if continued for long periods,
do not confer a right to regularization. The Court emphasized that regularization can only be
granted in accordance with the rules and regulations, and any other approach would
undermine the principle of equality in public employment.

In essence, the legal framework governing ad hoc and regular employees aims to balance the
need for flexibility in public employment with the imperative of ensuring fairness and
transparency. While ad hoc appointments serve a legitimate purpose in addressing temporary
needs, they should not be used to circumvent the established recruitment procedures. The
courts have played a crucial role in clarifying the legal position of ad hoc employees,
emphasizing the importance of adherence to rules and regulations and protecting the rights of
all employees. The distinction between these two categories remains a cornerstone of service
law, ensuring that public employment is governed by principles of equality, fairness, and the
rule of law.

8
https://indiankanoon.org/doc/1327287/
 ER ROYAPPA CASE STUDY (1974)
E.P. Royappa v. State of Tamil Nadu & Anr. (1974) is a landmark judgment in Indian
administrative law, particularly concerning the concepts of arbitrariness and equality in state
action. This case significantly broadened the scope of Article 14 of the Indian Constitution,
which guarantees equality before the law and equal protection of the laws.9

FACTS:

E.P. Royappa, an Indian Administrative Service (IAS) officer, was serving as the Chief
Secretary of Tamil Nadu. He was abruptly transferred to a less significant post, the post of
Officer on Special Duty, allegedly without any valid reason.

Royappa contended that this transfer was arbitrary, discriminatory, and motivated by mala
fide intentions, particularly due to his strained relationship with the then Chief Minister of
Tamil Nadu, M. Karunanidhi. He argued that the transfer was not in the public interest and
violated his fundamental rights, including the right to equality under Article 14 of the
Constitution.

He challenged the transfer order, claiming it was an act of personal vendetta and a blatant
abuse of administrative power. He also alleged that the transfer was made without following
the established procedures and principles of natural justice.10

ISSUE:

The central issue before the Supreme Court was whether the transfer order was arbitrary and
discriminatory, thereby violating Article 14 of the Constitution. The Court had to determine:

1.​ Whether the transfer order was based on reasonable grounds or was motivated by
mala fide intentions.

2.​ Whether the concept of equality under Article 14 extended beyond mere formal
equality and included protection against arbitrariness.

3.​ Whether administrative actions were subject to judicial review for arbitrariness, even
in the absence of explicit statutory provisions.

9
https://legalfly.in/e-p-royappa-v-state-of-tamil-nadu-case-summary/
10
https://indiankanoon.org/doc/1327287/
JUDGEMENT:

The Supreme Court, in a significant ruling, held that the transfer order was indeed arbitrary
and violative of Article 14 of the Constitution. The Court expanded the interpretation of
Article 14, stating that equality and arbitrariness are antithetical concepts. It held that Article
14 strikes at arbitrariness in state action and ensures fairness and reasonableness. The Court
observed that:

1.​ "Equality and arbitrariness are sworn enemies; one belongs to the rule of law in a
republic while the other, to the whim and caprice of an absolute monarch."

2.​ The Court established that arbitrariness is a form of discrimination and, therefore,
falls within the purview of Article 14.

3.​ The Court emphasized that administrative actions, even those involving discretionary
powers, are subject to judicial review to ensure they are not arbitrary or unreasonable.

4.​ The Court found that the transfer order was not based on any rational or reasonable
grounds and appeared to be motivated by personal animosity.

This judgment significantly broadened the scope of judicial review of administrative actions,
holding that the courts could scrutinize executive decisions for arbitrariness and
unreasonableness. It established that Article 14 is not merely a guarantee against
discriminatory laws but also a safeguard against arbitrary administrative actions, ensuring
that state power is exercised fairly and reasonably. This case is a cornerstone in the
development of Indian administrative law, reinforcing the principles of fairness, equality, and
the rule of law.
 CONCLUSION

This series of conversations has traversed the intricate landscape of service law, focusing
particularly on the rights and protections afforded to employees, both during active service
and in the context of suspension or termination. We began by examining the critical issue of
subsistence allowance, a fundamental entitlement designed to ensure the basic survival of
suspended employees. The discussion highlighted the severe legal repercussions of its
non-payment, emphasizing that such denial can vitiate entire disciplinary proceedings and
violate the principles of natural justice. Landmark cases like State of Bihar vs. Arbind and
CEO vs. S.T. Ganesan underscored the judiciary's unwavering stance against arbitrary actions
and the necessity of adhering to established legal procedures. The Central Civil Services
(CCS) Rules, 1965, were identified as a crucial regulatory framework, ensuring fairness and
equity in the treatment of suspended employees.

We then delved into the distinct legal positions of ad hoc and regular employees, elucidating
the significant differences in their appointment procedures, tenure security, and entitlement to
benefits. Ad hoc appointments, while serving a legitimate purpose in addressing temporary
needs, were clearly distinguished from regular appointments, which are characterized by
rigorous selection processes and long-term security. The Supreme Court's pronouncements in
cases like State of Karnataka v. Uma Devi (3) emphasized the importance of adhering to
established rules and regulations, discouraging the use of ad hoc appointments as a means of
circumventing prescribed procedures. The judiciary's commitment to transparency and
fairness in public employment was evident, balancing the need for administrative flexibility
with the imperative of safeguarding the rights of all employees.

Finally, we explored the landmark judgment of E.P. Royappa v. State of Tamil Nadu & Anr.
(1974), a pivotal case that significantly expanded the scope of Article 14 of the Indian
Constitution. This case established that arbitrariness is antithetical to equality and that
administrative actions are subject to judicial review for reasonableness and fairness. The
Supreme Court's ruling underscored the principle that state power must be exercised
judiciously, ensuring that even discretionary actions are not arbitrary or discriminatory. This
judgment reinforced the judiciary's role in protecting citizens from arbitrary state actions and
upholding the rule of law.

Collectively, these discussions have illuminated the core tenets of service law, emphasizing
the judiciary's commitment to protecting the rights of employees and ensuring fairness and
transparency in administrative actions. The emphasis on procedural fairness, the protection
against arbitrary actions, and the recognition of fundamental rights are recurring themes,
reflecting the judiciary's role in upholding the rule of law. The cases discussed, along with the
statutory provisions, provide a comprehensive framework for understanding the legal
landscape of service law in India.
 BIBLIOGRAPHY

1.​ https://indiankanoon.org/doc/1327287/
2.​ https://legalfly.in/e-p-royappa-v-state-of-tamil-nadu-case-summary/
3.​ https://www.pockethrms.com/hr-terms/ad-hoc/#:~:text=%E2%9E%94%20Temporary
&They%20decided%20to%20go%20with,to%20resolve%20the%20issue%20tempora
rily.
4.​ https://www.drishtijudiciary.com/current-affairs/regular-recruitment-process#:~:text=
An%20appointment%20to%20qualify%20as,committee%20in%20terms%20of%20th
e
5.​ https://gemini.google.com/app/1be7b70972c9ab0b
6.​ https://cleartax.in/s/subsistence-allowance