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G.S. SINGHVI, J. – The question which arises for consideration in this appeal filed against
order dated 28.9.2011 passed by the learned Single Judge of the Bombay High Court,
Aurangabad Bench is whether the appellant is entitled to wages for the period during which
she was forcibly kept out of service by the management of the school.
- The appellant was appointed as a teacher in Nandanvan Vidya Mandir (Primary School)
run by a trust established and controlled by Bagade family. The grant in aid given by the State
Government, which included rent for the building was received by Bagade family because the
premises belonged to one of its members, namely, Shri Dulichand. In 2005, the Municipal
Corporation of Aurangabad raised a tax bill of Rs.79,974/- by treating the property as
commercial. Thereupon, the Headmistress of the school, who was also President of the Trust,
addressed a letter to all the employees including the appellant requiring them to contribute a
sum of Rs.1500/- per month towards the tax liability. The appellant refused to comply with
the dictate of the Headmistress. Annoyed by this, the management issued as many as 25
memos to the appellant and then placed her under suspension vide letter dated 14.11.2006.
She submitted reply to each and every memorandum and denied the allegations. Education
Officer (Primary) Zilla Parishad, Aurangabad did not approve the appellant’s suspension.
However, the letter of suspension was not revoked. She was not even paid subsistence
allowance in terms of the Maharashtra Employees of Private Schools (Conditions of Service)
Rules, 1981 (for short, ‘the Rules’) framed under Section 16 of the Maharashtra Employees of
Private Schools (Conditions of Service) Regulation Act, 1977 (for short, ‘the Act’). - Writ Petition No.8404 of 2006 filed by the appellant questioning her suspension was
disposed of by the Division Bench of the Bombay High Court vide order dated 21.3.2007 and
it was declared that the appellant will be deemed to have rejoined her duties from 14.3.2007
and entitled to consequential benefits in terms of Rule 37(2)(f) of the Rules and that the
payment of arrears shall be the liability of the management. Paragraphs 4 and 5 of that order
read as under:
“4. Considering the order we intend passing it is not necessary for us to deal with the rival
contentions of the parties. That will be for the Inquiry Committee to decide. In view of the
apprehensions expressed regarding the inquiry being dragged on unnecessarily, it is necessary
to safeguard the interests of the petitioner as well. - In the circumstances, Rule is made absolute in the following terms.
i) The Inquiry Committee shall conclude the proceedings and pass a final order on or before
31.5.2007.
ii) The petitioner shall be at liberty to have her case represented by Smt.Sulbha Panditrao
Munde.
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iii) The petitioner/her representative shall appear, in the first instance, before the Inquiry
Committee at 11 a.m. on 26.3.2007 and, thereafter, as directed by the Inquiry Committee.
iv) The petitioner is entitled to the benefit of Rule 37 (2)
(f) of Maharashtra Employees of Private Schools (Conditions of Service) Rules, 1981, as
specified in paragraph 11 of the order and judgment of the Division Bench in the case of
Hamid Khan Nayyar s/o Habib Khan v. Education Officer, Amravati and others (supra). The
petitioner shall be deemed to have rejoined the duties from 14.3.2007 and entitled to
consequential benefits that would flow out of Rule 37 (2)
(f). The payment of arrears shall be the liability of the management.” - In the meanwhile, the management issued notice dated 28.12.2006 for holding an inquiry
against the appellant under Rules 36 and 37 of the Rules. The appellant nominated Smt.
Sulbha Panditrao Munde to appear before the Inquiry Committee, but Smt. Munde was not
allowed to participate in the inquiry proceedings. The Inquiry Committee conducted ex parte
proceedings and the management terminated the appellant’s service vide order dated
15.6.2007. - The appellant challenged the aforesaid order under Section 9 of the Act. In the appeal filed
by her on 25.6.2007, the appellant pleaded that the action taken by the management was
arbitrary and violative of the principles of natural justice. She further pleaded that the sole
object of the inquiry was to teach her a lesson for refusing to comply with the illegal demand
of the management. - The management contested the appeal and pleaded that the action taken by it was legal and
justified because the appellant had been found guilty of misconduct. It was further pleaded
that the inquiry was held in consonance with the relevant rules and the principles of natural
justice. - By an order dated 20.6.2009, the Presiding Officer of the School Tribunal, Aurangabad
Division (for short, ‘the Tribunal’) allowed the appeal and quashed the termination of the
appellant’s service. He also directed the management to pay full back wages to the appellant.
The Tribunal considered the appellant’s plea that she had not been given reasonable
opportunity of hearing and observed:
“Now let us test for what purpose and for what subject inquiry was initiated in what manner
inquiry was conducted, which witnesses have been examined and how injury was conclude. I
have already demonstrate above that starting point against this appellant is calling upon staff
members collection of fund for payment for tax dues page 54 of appeal memo. All the staff
members have objected this joining hands together page 58 of appeal. Fact finding committee
have submitted its report Exhibit - Report of Education Officer (Primary) in regard to the proposal of appointment of
Administrator page 71. If we see issuance of memo by Head Mistress, I observe that language
which is used to revengeful against this appellant. It seems that attitude towards this appellant
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was of indecent and I also observed that behaviour of the appellant have also instigated Head
Mistress for the same. Language is of law standard use in the letter by imputing defamed
language and humiliation to the appellant.
If we see memos, we can find that some memos are of silly count i.e. late for 3 minutes page
95, query about the examination page 93 to which appellant have replied that when no
examinations were held where is the question of getting inquiry by the parents page 96. In
regard to the memo, in regard to the black dress on 15.08.2005 and 06.12.2005 and about
issuance of show cause notice for issuing false affidavit page 143.
We can find attitude of this Head Master towards appellant. Three minute late is very silly
ground query about examination which was not at all held, wearing of black dress during
course of argument there was argument on photograph, however, no such photograph is
submitted on record. In this regard during course of argument, it was brought to my notice
that on 15.08.2005 this appellant have wore black colour blouse, however, she had wore white
sari on her person. First thing is that there is no such rule about so called colour that it is
bogus colour or this colour is being used for protesting or otherwise. How and why Head
Mistress and Management have made issue of this black colour blouse I cannot understand. I
have gone through the whole record but I do not find any circular issued by Head Mistress by
which all the staff members have been called upon to come in dress for this function. So in
the absence of such circular, how it can be an issue of inquiry.
Another aspect is that one of the staff Vijay Gedam have lodged appeal before this Tribunal in
favour of him, this appellant and one another staff teacher have swear affidavit. I do not find
how this issue can be a subject of inquiry that appellant have swear false affidavit. Is Head
Mistress having authority to say that this appellant have swear false affidavit. Here I find 5 to
6 staff members have supported this appellant, at the same time some teachers have also come
forward this Head Mistress. They were in dilemma to whom they may favour. So over all
attitude of this Head Mistress against this appellant is revengeful with ulterior motive to drag
this appellant in inquiry proceeding.
I gone through the statement recorded of the witnesses. I find that all the statements are
general in nature and it is repetition of statement of first witness Surajkumar Khobragade.
Nobody has made statement specifically with date and incident. The deposition is a general
statement which is already in memos which have been issue by the Head Mistress to the
appellant.
More important in this regard that no cross examination of witnesses by the appellant. In the
statement of witnesses, I do not find any endorsement that appellant was absent or appellant is
present, she declined to cross examine or otherwise. These statements have been concluded
that witnesses have stated before inquiry committee, that is all. If we read first statement of
first witnesses we can find carry forward of the statement for other witnesses by some minor
change in the statement.
One crucial aspect in regard to the proceeding is that this Head Mistress who had issued more
than 25 bulky memos against this appellant and on whose complaint or grievances this
inquiry was initiate, have not been examined by the inquiry committee. I am surprised that
why such a key witness is not examined. In reply this appellant have put her grievances
against Head Mistress. By taking advantage of this Chief Executive Officer of the inquiry i.e.
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Sonia Bagale called upon written explanation from Head Mistress to cover up complaint and
grievances of the appellant.
It is on 21.05.2007, page 777, 778 and 781 by this explanation again one issues have been
brought which were not subject matter of the chargesheet. So it is serious lacuna in this
inquiry proceeding that witnesses Head Mistress have not been examined.” The Tribunal then
adverted to the charges levelled against the appellant and held:
“It is also demonstrated in the course of argument that permission was not granted as per
letter dated 22.11.2006 of Education Officer. So naturally suspension of this appellant was in
question. It is another aspect that on persuasion appellant have been paid subsistence
allowance. However, remaining subsistence allowance till today is not paid to the appellant.
So it can be another ground for vitiating inquiry.
204(1)Mh. L.J. page 676 in case of Awdhesh Narayan K. Singh vs. Adarsh Vidya Mandir
Trust and another, (a) Maharashtra Employees of Private Schools (Conditions of Service)
Rules 1981, R.R. 35 and 33- Failure to obtain prior permission of Authority under Rule 33(1)
before suspending an employee does not affect the action of suspension pending inquiry- If
prior permission is obtained, Rule 35(3) is attracted and the suspended employee is entitled
for subsistence allowance under the scheme of payment through Cooperative Banks for a
period of four months after which period the payment is to be made by the Management. If an
employee is suspended without obtaining prior approval of the Education Authority, payment
of subsistence allowance for entire period has to be made by the Management. So if
considered all these aspects, we can find that appeal deserves to be allowed by quashing
inquiry held against appellant.” The Tribunal finally took cognizance of the fact that the
appellant was kept under suspension from 14.11.2006 and she was not gainfully employed
after the termination of her service and declared that she is entitled to full back wages. The
operative portion of the order passed by the Tribunal reads as under:
“1) Appeal is allowed.
2) The termination order dated 15.06.2007 issued by Respondent on the basis of inquiry
report is hereby quashed and set aside.
3) The appellant is hereby reinstated on her original post and Respondents are directed to
reinstate the appellant in her original post as Asst. Teacher Nandanvan Vidyamandir (Primary
School), Aurangabad with full back wages from the date of termination till date of
reinstatement.
4) The Respondent Nos.1 to 3 are hereby directed to deposit full back wages i.e. pay and
allowances of the appellant from the date of her termination till the date of her reinstatement
in the service, within 45 days in this Tribunal from the date of this order.
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5) The appellant will be entitled to withdraw the above amounts from this Tribunal
immediately after it is deposited.” - The management challenged the order of the Tribunal in Writ Petition No. 10032 of 2010.
The learned Single Judge examined the issues raised by the management in detail and
expressed his agreement with the Tribunal that the decision of the management to suspend the
appellant and to terminate her service were vitiated due to violation of the statutory provisions
and the principles of natural justice. While commenting upon the appellant’s suspension, the
learned Single Judge observed:
“It has also come on record that the appellant was suspended by suspension letter dated
14.11.2006. The appellant made representation to the Education Officer. The Education
Officer refused to approve suspension of the appellant as per his letter dated 22.11.2006.
From careful perusal of the material brought on record, I do not find that, there arose
extraordinary situation to suspend services of the appellant without taking prior approval of
the Education Officer, as contemplated under Rules. No doubt, the Management can suspend
services of an employee without prior approval of the Education Officer, but for that there
should be extraordinary situation. However, in the facts of this case, nothing is brought on
record to suggest that there was extraordinary situation existing so as to take emergent steps
to suspend services of the appellant without taking prior approval of the Education Officer
(Primary), Zilla Parishad, Aurangabad. It is also not in dispute that the Education Officer
declined to approve suspension of the appellant as per his letter dated 22.11.2006.
Therefore, taking into consideration facts involved in the present case, conclusion is reached
by the School Tribunal that the Management of the petitioner-school/Institution is dominated
by the members of Bagade family.” The learned Single Judge then considered the finding
recorded by the Tribunal that the Inquiry Committee was not validly constituted and
observed:
“In the present case, admittedly petitioners herein did not file any application or made prayer
for reconstituting the inquiry committee and to proceed further for inquiry by newly
reconstituted committee. On the contrary, from reading the reply filed by the petitioners
herein before the School Tribunal, it is abundantly clear that the petitioners went on justifying
constitution of the Committee and stating in the reply that no fault can be attributed with the
constitution of the Committee. Therefore, in absence of such prayer, the School Tribunal
proceeded further and dealt with all the charges which were levelled against the appellant i.e.
Respondent No.3 herein. Therefore, in my opinion, further adjudication by the Tribunal on
merits of the matter cannot be said to be beyond jurisdiction or powers of the School
Tribunal. In the facts of this case, as it is apparent from the findings recorded by the School
Tribunal, that as the case in hand is a case of victimization and petitioner Management as well
as the Inquiry Committee having joined hands against the delinquent right from the
beginning, no premium can be put over the action of the petitioner-Management and Inquiry
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Committee who threw the principles of natural justice in the air. It would be a travesty of
justice, in these circumstances, to allow the petitionerManagement to once again hold inquiry in such a extreme case.” However, the learned Single
Judge set aside the direction given by the School Tribunal for payment of back wages by
relying upon the judgments in J.K. Synthetics Ltd. v. K. P. Agrawal and another (2007) 2
SCC 433 and Zilla Parishad, Gadchiroli and another v. Prakash s/o Nagorao Thete and
another 2009 (4) Mh. L. J. 628. The observations made by the learned Single Judge on this
issue are extracted below:
“Bare perusal of above reproduced para 40 of the judgment of the School Tribunal would
make it abundantly clear that, the advocate for the appellant, in the course of arguments,
argued that the appellant was kept under suspension from 14.11.2006 till the appeal is finally
heard. It was argued that the appellant was not gainfully employed anywhere during the
period of suspension and termination and therefore, she is entitled to back wages from the
date of her suspension. The Tribunal has observed that no rebuttal argument by other side.
Therefore, it appears that, the School Tribunal has considered only oral submissions of the
Counsel appearing for the appellant, in the absence of any specific pleadings, prayers and
evidence for payment of back wages. There was no application or pleadings before the School
Tribunal on oath by the appellant stating that she was not gainfully employed from the date of
suspension till reinstatement. Therefore, in my considered opinion, finding recorded by the
Tribunal in clauses 3 to 5 of the operative order, in respect of payment of back wages, cannot
be sustained, in the light of law laid down by this Court and Honourable Supreme Court in
respect of payment of back wages.” - Learned counsel for the appellant relied upon the judgments of this Court in Hindustan
Tin Works Private Limited v. Employees of Hindustan Tin Works Private Limited (1979) 2
SCC 80, Surendra Kumar Verma v. Central Government Industrial Tribunal-cumLabour Court, New Delhi (1980) 4 SCC 443, Mohan Lal v. Management of Bharat
Electronics Limited (1981) 3 SCC 225, Workmen of Calcutta Dock Labour Board and
another v. Employers in relation to Calcutta Dock Labour Board and others (1974) 3 SCC 216
and argued that the impugned order is liable to be set aside because while the appellant had
pleaded that she was not gainfully employed, no evidence was produced by the management
to prove the contrary. Learned counsel submitted that the order passed by the Tribunal was in
consonance with the provisions of the Act and the Rules and the High Court committed
serious error by setting aside the direction given by the Tribunal to the management to pay
back wages to the appellant on the specious ground that she had not led evidence to prove her
non-employment during the period she was kept away from the job. He emphasized that in
view of the embargo contained in Rule 33(3), the appellant had not taken up any other
employment and argued that she could not have been deprived of full pay and allowances for
the entire period during which she was forcibly kept out of job.
207 - Learned counsel for the respondent supported the impugned order and argued that the
High Court did not commit any error by setting aside the direction given by the Tribunal for
payment of back wages to the appellant because she had neither pleaded nor any evidence
was produced that during the period of suspension and thereafter she was not employed
elsewhere. Learned counsel relied upon the judgments in M.P. State Electricity Board v.
Jarina Bee (2003) 6 SCC 141, Kendriya Vidyalaya Sangathan v. S.C. Sharma (2005) 2 SCC
363, U.P. State Brassware Corporation Ltd. v. Uday Narain Pandey (2006) 1 SCC 479, J. K.
Synthetics Ltd. v. K.P. Agrawal and another (supra), The Depot Manager, A.P.S.R.T.C. v. P.
Jayaram Reddy (2009) 2 SCC 681, Novartis India Ltd. v. State of West Bengal and
others (2009) 3 SCC 124, Metropolitan Transport Corporation v. V. Venkatesan (2009) 9
SCC 601 and Jagbir Singh v. Haryana State Agriculture Marketing Board and another (2009)
15 SCC 327 and argued that the rule of reinstatement with back wages propounded in 1960’s
and 70’s has been considerably diluted and the Courts/Tribunal cannot ordain payment of
back wages as a matter of course in each and every case of wrongful termination of service.
Learned counsel submitted that even if the Court/Tribunal finds that the termination,
dismissal or discharge of an employee is contrary to law or is vitiated due to violation of the
principles of natural justice, an order for payment of back wages cannot be issued unless the
employee concerned not only pleads, but also proves that he/she was not employed gainfully
during the intervening period. - We have considered the respective arguments. The Act was enacted by the legislature to
regulate the recruitment and conditions of service of employees in certain private schools in
the State and to instill a sense of security among such employees so that they may fearlessly
discharge their duties towards the pupil, the institution and the society. Another object of the
Act is to ensure that the employees become accountable to the management and contribute
their might for improving the standard of education. Section 2 of the Act contains definitions
of various words and terms appearing in other sections. Section 8 provides for constitution of
one or more Tribunals to be called “School Tribunal” and also defines the jurisdiction of each
Tribunal. Section 9(1) contains a non obstante clause and provides for an appeal by any
employee of a private school against his/her dismissal or removal from service or whose
services are otherwise terminated or who is reduced in rank. The employee, who is
superseded in the matter of promotion is also entitled to file an appeal. Section 10 enumerates
general powers and procedure of the Tribunal and Section 11 empowers the Tribunal to give
appropriate relief and direction. Section 12 also contains a non obstante clause and makes the
decision of the Tribunal final and binding on the employee and the management. Of course,
this is subject to the power of judicial review vested in the High Court and this Court. Section
16(1) empowers the State Government to make rules for carrying out the purposes of the Act.
Section 16(2) specifies the particular matters on which the State Government can make rules.
These include Code of Conduct and disciplinary matters and the manner of conducting
inquiries. - Rule 35 of the Rules empower the management to suspend an employee with the prior
approval of the competent authority. The exercise of this power is hedged with the condition
that the period of suspension shall not exceed four months without prior permission of the
208
concerned authority. The suspended employee is entitled to subsistence allowance under the
scheme of payment (Rule 34) through Co-operative Bank for a period of four months. If the
period of suspension exceeds four months, then subsistence allowance has to be paid by the
management. In case, the management suspends an employee without obtaining prior
approval of the competent authority, then it has to pay the subsistence allowance till the
completion of inquiry. A suspended employee can be denied subsistence allowance only in
the contingencies enumerated in clauses (3) and (4) of Rule 33, i.e., when he takes up private
employment or leaves headquarter without prior approval of the Chief Executive Officer. - For the sake of reference, Sections 2(7), 9, 10, 11 and 16 of the Act are reproduced below:
“2(7) “Employee,” means any member of the teaching and non teaching staff of a recognized
school and includes Shikshan Sevak; - Right of appeal to Tribunal to employees of a private school. (1) Notwithstanding anything
contained in any law or contract for the time being in force, any employee in a private
school,-
(a) who is dismissed or removed or whose services are otherwise terminated or who is
reduced in rank, by the order passed by the Management; or
(b) who is superseded by the Management while making an appointment to any post by
promotion;
and who is aggrieved, shall have a right to appeal and may appeal against any such order or
supersession to the Tribunal constituted under section 8.
Provided that, no such appeal shall lie to the Tribunal in any case where the matter has
already been decided by a Court of competent jurisdiction or is pending before such Court, on
the appointed date or where the order of dismissal, removal, otherwise termination of service
or reduction in rank was passed by the Management at any time before the 1st July, 1976.
(2) to (4) xxxx xxxx xxxx - General Powers and procedure of Tribunal.
(1) For the purpose of admission, hearing and disposal of appeals, the Tribunal shall have the
same powers as are vested in an Appellate Court under the Code of Civil Procedure, 1908,
and shall have the power to stay the operation of any order against which an appeal is made
on such conditions as it may think fit to impose and such other powers as are conferred on it
by or under this Act.
(2)The Presiding Officer of the Tribunal shall decide the procedure to be followed by the
Tribunal for the disposal of its business including the place or places at which and the hours
during which it shall hold its sitting.
(3) xxxx xxxx xxxx - Powers of Tribunal to give appropriate relief and direction.
(1) On receipt of an appeal, where the Tribunal, after giving reasonable opportunity to both
parties of being heard, is satisfied that the appeal does not pertain to any of the matters
specified in section 9 or is not maintainable by it, or there is no sufficient ground for
interfering with the order of the Management it may dismiss the appeal.
(2) Where the Tribunal, after giving reasonable opportunity to both parties of being heard,
decides in any appeal that the order of dismissal, removal, otherwise termination of service or
209
reduction in rank was in contravention of any law (including any rules made under this Act),
contract or conditions of service for the time being in force or was otherwise illegal or
improper, the Tribunal may set aside the order of the Management, partially or wholly, and
direct the Management,-
(a) to reinstate the employee on the same post or on a lower post as it may specify;
(b) to restore the employee to the rank which he held before reduction or to any lower rank as
it may specify;’
(c) to give arrears of emoluments to the employee for such period as it may specify;
(d) to award such lesser punishment as it may specify in lieu of dismissal, removal, otherwise
termination of service or reduction in rank, as the case may be;
(e) where it is decided not to reinstate the employee or in any other appropriate case, to give
to the employee twelve months’ salary (pay and allowances, if any) if he has been in the
services of the school for ten years or more and six months salary (pay and allowances, if any)
if he has been in service of the school for less then ten year, by way or compensation, regard
being had to loss of employment and possibility of getting or not getting suitable employment
thereunder, as it may specify; or
(f) to give such other relief to the employee and to observe such other conditions as it may
specify, having regard to the circumstances of the case.
(3) It shall be lawful for the Tribunal to recommend to State Government that any dues
directed by it to be paid to the employee, or in case of an order to reinstate the employee an
emoluments to be paid to the employee till he is reinstated, may be deducted from the grant
due and payable, or that may become due and payable in future, to the Management and be
paid to the employee directly.
(4) Any direction issued by the Tribunal under sub-section (2) shall be communicated to both
parties in writing and shall be complied by the Management within the period specified in the
direction, which shall not be less than thirty days from the date of its receipt by the
Management. - Rules.
(1) The State Government may, by notification in the Official Gazette, make rules for
carrying out the purposes of this Act.
(e) the duties of such employees and Code of Conduct and disciplinary matters;
(f) the manner of conducting enquiries; - Rules 33 (1) to (4), 34(1), (2) and 35, which have bearing on the decision of this appeal
read as under:
“33. Procedure for inflicting major penalties. (1) If an employee is alleged to be guilty of any
of the grounds specified in sub-rule (5) of rule 28 and if there is reason to believe that in the
event of the guilt being proved against him, he is likely to be reduced in rank or removed
from service, the Management shall first decide whether to hold an inquiry and also to place
the employees under suspension and if it decides to suspend the employee, it shall authorise
the Chief Executive Officer to do so after obtaining the permission of the Education Officer
or, in the case of the Junior College of Educational and Technical High Schools, of the
Deputy Director. Suspension shall not be ordered unless there is a prima facie case for his
removal or there is reason to believe that his continuance in active service is likely to cause
embarrassment or to hamper the investigation of the case. If the Management decides to
210
suspend the employee, such employee shall, subject to the provisions of sub-rule (5) stand
suspended with effect from the date of such orders.
(2) If the employee tenders resignation while under suspension and during the pendency of
the inquiry such resignation shall not be accepted.
(3) An employee under suspension shall not accept any private employment.
(4) The employee under suspension shall not leave the headquarters during the period of
suspension without the prior approval of the Chief Executive Officer. If such employee is the
Head and also the Chief Executive Officer, he shall obtain the necessary prior approval of the
President. - Payment of subsistence allowance.
(1) (a) A subsistence allowance at an amount equal to the leave salary which the employee
would have drawn if he had been on leave on half pay and in addition, Dearness allowance
based on such leave salary shall be payable to the employee under suspension.
(b) Where the period of suspension exceeds 4 months, the authority which made or is deemed
to have made the order of suspension shall be competent to vary the amount of subsistence
allowance for any period subsequent to the period of the first 4 months as follows, namely :-
(i) The amount of subsistence allowance may be increased by a suitable amount not exceeding
50 per cent of the subsistence allowance admissible during the period of first 4 months, if in
the opinion of the said authority, the period of suspension has been prolonged for reasons, to
be recorded in writing, not directly attributable to the employee.
(ii) The amount of subsistence allowance may be reduced by a suitable amount, not exceeding
50 per cent of the subsistence allowance admissible during the period of the first 4 months, if
in the opinion of the said authority the period of suspension has been prolonged due to
reasons, to be recorded in writing directly attributable to the employee.
(iii) The rate of Dearness allowance shall be based on the increased or on the Decreased
amount of subsistence allowance, as the case may be, admissible under sub-clauses (i) and
(ii).
(2) Other compensatory allowances, if any, of which the employee was in receipt on the date
of suspension shall also be payable to the employee under suspension to such extent and
subject to such conditions as the authority suspending the employee may direct:
Provided that the employee shall not be entitled to the compensatory allowances unless the
said authority is satisfied that the employee continues to meet the expenditure for which such
allowances are granted:
Provided further that, when an employee is convicted by a competent court and sentenced to
imprisonment, the subsistence allowance shall be reduced to a nominal amount of rupee one
per month with effect from the date of such conviction and he shall continue to draw the same
till the date of his removal or reinstatement by the competent authority :
Provided also that, if an employee is acquitted by the appellate court and no further appeal or
a revision application to a higher court is preferred and pending, he shall draw the subsistence
allowance at the normal rate from the date of acquittal by the appellate court till the
termination of the inquiry if any, initiated under these rules :
Provided also that, in cases falling under sub-rules (1) and (2) above, where the management
refuses to pay or fails to start and continue payment of subsistence allowance and other
compensatory allowances, if any, to an employee under suspension, payment of the same
211
shall be made by the Education Officer or Deputy Director, as the case may be, who shall
deduct an equal amount from the non-salary grant that may be due and payable or may
become due and payable to the school. - Conditions of suspension.
(1) In cases where the Management desires to suspend an employee, he shall be suspended
only with the prior approval of the appropriate authority mentioned in rule 33.
(2) The period of suspension shall not exceed four months except with the prior permission of
such appropriate authority.
(3) In case where the employee is suspended with prior approval he shall be paid subsistence
allowance under the scheme of payment through Co-operative Banks for a period of four
months only and thereafter, the payment shall be made by the Management concerned.
(4) In case where the employee is suspended by the Management without obtaining prior
approval of the appropriate authority as aforesaid, the payment of subsistence allowance even
during the first four months of suspension and for further period thereafter till the completion
of inquiry shall be made by the Management itself.
(5) The subsistence allowance shall not be withheld except in cases of breach of provisions of
sub-rules (3) or (4) of rule
33.” - The word “reinstatement” has not been defined in the Act and the Rules. As per Shorter
Oxford English Dictionary, Vol.II, 3rd Edition, the word “reinstate” means to reinstall or reestablish (a person or thing in a place, station, condition, etc.); to restore to its proper or
original state; to reinstate afresh and the word “reinstatement” means the action of reinstating;
re-establishment. As per Law Lexicon, 2nd Edition, the word “reinstate” means to reinstall; to
re-establish; to place again in a former state, condition or office; to restore to a state or
position from which the object or person had been removed and the word “reinstatement”
means establishing in former condition, position or authority (as) reinstatement of a deposed
prince. As per Merriam Webster Dictionary, the word “reinstate” means to place again (as in
possession or in a former position), to restore to a previous effective state. As per Black’s
Law Dictionary, 6th Edition, “reinstatement” means ‘to reinstall, to reestablish, to place again in a former state, condition, or office? To restore to a state or position
from which the object or person had been removed.’ - The very idea of restoring an employee to the position which he held before dismissal or
removal or termination of service implies that the employee will be put in the same position
in which he would have been but for the illegal action taken by the employer. The injury
suffered by a person, who is dismissed or removed or is otherwise terminated from service
cannot easily be measured in terms of money. With the passing of an order which has the
effect of severing the employer employee relationship, the latter’s source of income gets dried
up. Not only the concerned employee, but his entire family suffers grave adversities. They are
deprived of the source of sustenance. The children are deprived of nutritious food and all
opportunities of education and advancement in life. At times, the family has to borrow from
the relatives and other acquaintance to avoid starvation. These sufferings continue till the
competent adjudicatory forum decides on the legality of the action taken by the employer.
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The reinstatement of such an employee, which is preceded by a finding of the competent
judicial/quasi judicial body or Court that the action taken by the employer is ultra vires the
relevant statutory provisions or the principles of natural justice, entitles the employee to claim
full back wages. If the employer wants to deny back wages to the employee or contest his
entitlement to get consequential benefits, then it is for him/her to specifically plead and prove
that during the intervening period the employee was gainfully employed and was getting the
same emoluments. Denial of back wages to an employee, who has suffered due to an illegal
act of the employer would amount to indirectly punishing the concerned employee and
rewarding the employer by relieving him of the obligation to pay back wages including the
emoluments. - A somewhat similar issue was considered by a three Judge Bench in Hindustan Tin Works
Pvt. Ltd. v. Employees of Hindustan Tin Works Pvt. Ltd. (supra) in the context of termination
of services of 56 employees by way of retrenchment due to alleged non-availability of the raw
material necessary for utilization of full installed capacity by the petitioner. The dispute raised
by the employees resulted in award of reinstatement with full back wages. This Court
examined the issue at length and held:
“It is no more open to debate that in the field of industrial jurisprudence a declaration can be
given that the termination of service is bad and the workman continues to be in service. The
spectre of common law doctrine that contract of personal service cannot be specifically
enforced or the doctrine of mitigation of damages does not haunt in this branch of law. The
relief of reinstatement with continuity of service can be granted where termination of service
is found to be invalid. It would mean that the employer has taken away illegally the right to
work of the workman contrary to the relevant law or in breach of contract and simultaneously
deprived the workman of his earnings. If thus the employer is found to be in the wrong as a
result of which the workman is directed to be reinstated, the employer could not shirk his
responsibility of paying the wages which the workman has been deprived of by the illegal or
invalid action of the employer. Speaking realistically, where termination of service is
questioned as invalid or illegal and the workman has to go through the gamut of litigation, his
capacity to sustain himself throughout the protracted litigation is itself such an awesome
factor that he may not survive to see the day when relief is granted. More so in our system
where the law’s proverbial delay has become stupefying. If after such a protracted time and
energy consuming litigation during which period the workman just sustains himself,
ultimately he is to be told that though he will be reinstated, he will be denied the back wages
which would be due to him, the workman would be subjected to a sort of penalty for no fault
of his and it is wholly undeserved. Ordinarily, therefore, a workman whose service has been
illegally terminated would be entitled to full back wages except to the extent he was gainfully
employed during the enforced idleness. That is the normal rule. Any other view would be a
premium on the unwarranted litigative activity of the employer. If the employer terminates the
service illegally and the termination is motivated as in this case viz. to resist the workmen’s
demand for revision of wages, the termination may well amount to unfair labour practice. In
such circumstances reinstatement being the normal rule, it should be followed with full back
wages. Articles 41 and 43 of the Constitution would assist us in reaching a just conclusion in
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this respect. By a suitable legislation, to wit, the U.P. Industrial Disputes Act, 1947, the State
has endeavoured to secure work to the workmen. In breach of the statutory obligation the
services were terminated and the termination is found to be invalid; the workmen though
willing to do the assigned work and earn their livelihood, were kept away therefrom. On top
of it they were forced to litigation up to the Apex Court now they are being told that
something less than full back wages should be awarded to them. If the services were not
terminated the workmen ordinarily would have continued to work and would have earned
their wages. When it was held that the termination of services was neither proper nor justified,
it would not only show that the workmen were always willing to serve but if they rendered
service they would legitimately be entitled to the wages for the same. If the workmen were
always ready to work but they were kept away therefrom on account of an invalid act of the
employer, there is no justification for not awarding them full back wages which were very
legitimately due to them.
In the very nature of things there cannot be a strait-jacket formula for awarding relief of back
wages. All relevant considerations will enter the verdict. More or less, it would be a motion
addressed to the discretion of the Tribunal. Full back wages would be the normal rule and the
party objecting to it must establish the circumstances necessitating departure. At that stage the
Tribunal will exercise its discretion keeping in view all the relevant circumstances. But the
discretion must be exercised in a judicial and judicious manner. The reason for exercising
discretion must be cogent and convincing and must appear on the face of the record. When it
is said that something is to be done within the discretion of the authority, that something is to
be done according to the Rules of reason and justice, according to law and not humour. It is
not to be arbitrary, vague and fanciful but legal and regular.” (emphasis supplied) After
enunciating the above-noted principles, this Court took cognizance of the appellant’s plea that
the company is suffering loss and, therefore, the workmen should make some sacrifice and
modified the award of full back wages by directing that the workmen shall be entitled to 75 %
of the back wages. - Another three Judge Bench considered the same issue in Surendra Kumar Verma v.
Central Government Industrial Tribunal-cum-Labour Court, New Delhi (supra) and observed:
“Plain common sense dictates that the removal of an order terminating the services of
workmen must ordinarily lead to the reinstatement of the services of the workmen. It is as if
the order has never been, and so it must ordinarily lead to back wages too. But there may be
exceptional circumstances which make it impossible or wholly inequitable vis-à-vis the
employer and workmen to direct reinstatement with full back wages. For instance, the
industry might have closed down or might be in severe financial doldrums; the workmen
concerned might have secured better or other employment elsewhere and so on. In such
situations, there is a vestige of discretion left in the court to make appropriate consequential
orders. The court may deny the relief of reinstatement where reinstatement is impossible
because the industry has closed down. The court may deny the relief of award of full back
wages where that would place an impossible burden on the employer. In such and other
exceptional cases the court may mould the relief, but, ordinarily the relief to be awarded must
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be reinstatement with full back wages. That relief must be awarded where no special
impediment in the way of awarding the relief is clearly shown. True, occasional hardship may
be caused to an employer but we must remember that, more often than not, comparatively far
greater hardship is certain to be caused to the workmen if the relief is denied than to the
employer if the relief is granted.” (emphasis supplied) - The principle laid down in Hindustan Tin Works Private Limited v. Employees of
Hindustan Tin Works Private Limited (supra) was reiterated in P.G.I. of Medical Education &
Research, Chandigarh v. Raj Kumar (2001) 2 SCC 54. That case makes an interesting
reading. The respondent had worked as helper for 11 months and 18 days. The termination of
his service was declared by Labour Court, Chandigarh as retrenchment and was invalidated
on the ground of non-compliance of Section 25-F of the Industrial Disputes Act, 1947. As a
corollary, the Labour Court held that the respondent was entitled to reinstatement with
continuity of service. However, only 60% back wages were awarded. The learned Single
Judge of the Punjab and Haryana High Court did not find any error apparent in the award of
the Labour Court but ordered payment of full back wages. The two Judge Bench of this Court
noted the guiding principle laid down in the case of Hindustan Tin Works Private Limited and
observed:
“While it is true that in the event of failure in compliance with Section 25-F read with Section
25(b) of the Industrial Disputes Act, 1947 in the normal course of events the Tribunal is
supposed to award the back wages in its entirety but the discretion is left with the Tribunal in
the matter of grant of back wages and it is this discretion, which in Hindustan Tin Works (P)
Ltd. case this Court has stated must be exercised in a judicial and judicious manner depending
upon the facts and circumstances of each case. While, however, recording the guiding
principle for the grant of relief of back wages this Court in Hindustan case, itself reduced the
back wages to 75%, the reason being the contextual facts and circumstances of the case under
consideration.
The Labour Court being the final court of facts came to a conclusion that payment of 60%
wages would comply with the requirement of law. The finding of perversity or being
erroneous or not in accordance with law shall have to be recorded with reasons in order to
assail the finding of the Tribunal or the Labour Court. It is not for the High Court to go into
the factual aspects of the matter and there is an existing limitation on the High Court to that
effect. In the event, however the finding of fact is based on any misappreciation of evidence,
that would be deemed to be an error of law which can be corrected by a writ of certiorari. The
law is well settled to the effect that finding of the Labour Court cannot be challenged in a
proceeding in a writ of certiorari on the ground that the relevant and material evidence
adduced before the Labour Court was insufficient or inadequate though, however, perversity
of the order would warrant intervention of the High Court. The observation, as above, stands
well settled since the decision of this Court in Syed Yakoob v. K.S. Radhakrishnan AIR 1964
SC 477.
Payment of back wages having a discretionary element involved in it has to be dealt with, in
the facts and circumstances of each case and no straight-jacket formula can be evolved,
though, however, there is statutory sanction to direct payment of back wages in its entirety.
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As regards the decision of this Court in Hindustan Tin Works (P) Ltd. be it noted that though
broad guidelines, as regards payment of back wages, have been laid down by this Court but
having regard to the peculiar facts of the matter, this Court directed payment of 75% back
wages only.
The issue as raised in the matter of back wages has been dealt with by the Labour Court in the
manner as above having regard to the facts and circumstances of the matter in the issue, upon
exercise of its discretion and obviously in a manner which cannot but be judicious in nature.
In the event, however, the High Court’s interference is sought for, there exists an obligation
on the part of the High Court to record in the judgment, the reasoning before however
denouncing a judgment of an inferior Tribunal, in the absence of which, the judgment in our
view cannot stand the scrutiny of otherwise being reasonable. There ought to be available in
the judgment itself a finding about the perversity or the erroneous approach of the Labour
Court and it is only upon recording therewith the High Court has the authority to interfere.
Unfortunately, the High Court did not feel it expedient to record any reason far less any
appreciable reason before denouncing the judgment.” - The aforesaid judgment became a benchmark for almost all the subsequent judgments. In
Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya (2002) 6 SCC 41, the Fifth Industrial
Tribunal, West Bengal had found that the finding of guilty recorded in the departmental
inquiry was not based on any cogent and reliable evidence and passed an award for
reinstatement of the workman with other benefits. The learned Single Judge allowed the writ
petition filed by the employer and quashed the award of the Industrial Tribunal. The Division
Bench of the High Court reversed the order of the learned Single Judge. This Court issued
notice to the respondent limited to the question of back wages. After taking cognizance of the
judgments in Hindustan Tin Works Private Limited v. Employees of Hindustan Tin Works
Private Limited (supra) and P.G.I. of Medical Education & Research, Chandigarh v. Raj
Kumar (supra), the Court observed:
“As already noted, there was no application of mind to the question of back wages by the
Labour Court. There was no pleading or evidence whatsoever on the aspect whether the
respondent was employed elsewhere during this long interregnum. Instead of remitting the
matter to the Labour Court or the High Court for fresh consideration at this distance of time,
we feel that the issue relating to payment of back wages should be settled finally. On
consideration of the entire matter in the light of the observations referred to supra in the
matter of awarding back wages, we are of the view that in the context of the facts of this
particular case including the vicissitudes of long-drawn litigation, it will serve the ends of
justice if the respondent is paid 50% of the back wages till the date of reinstatement. The
amount already paid as wages or subsistence allowance during the pendency of the various
proceedings shall be deducted from the back wages now directed to be paid. The appellant
will calculate the amount of back wages as directed herein and pay the same to the respondent
within three months, failing which the amount will carry interest at the rate of 9% per annum.
The award of the Labour Court which has been confirmed by the Division Bench of the High
Court stands modified to this extent. The appeal is disposed of on the above terms. There will
be no order as to costs.” (emphasis supplied)
216 - In Indian Railway Construction Co. Ltd. v. Ajay Kumar (2003) 4 SCC 579, this Court was
called upon to consider whether the services of the respondent could be terminated by
dispensing with the requirement of inquiry enshrined in Indian Railway Construction Co. Ltd.
(Conduct, Discipline and Appeal) Rules, 1981 read with Article 311(2) of the Constitution.
The learned Single Judge of the Delhi High Court held that there was no legal justification to
dispense with the inquiry and ordered reinstatement of the workman with back wages. The
Division Bench upheld the order of the learned Single Judge. The two Judge Bench of this
Court referred to the judgments in Hindustan Tin Works Private Limited v. Employees of
Hindustan Tin Works Private Limited (supra) and P.G.I. of Medical Education & Research,
Chandigarh v. Raj Kumar (supra) and held that payment of Rs.15 lakhs in full and final
settlement of all claims of the employee will serve the ends of justice. - In M.P. State Electricity Board v. Jarina Bee (Smt.) (supra), the two Judge Bench referred
to P.G.I. of Medical Education & Research, Chandigarh v. Raj Kumar (supra) and held that it
is always incumbent upon the Labour Court to decide the question relating to quantum of
back wages by considering the evidence produced by the parties. - In Kendriya Vidyalaya Sangathan v. S. C. Sharma (supra), the Court found that the
services of the respondent had been terminated under Rule 19(ii) of the Central Civil Services
(Classification, Control and Appeal) Rules, 1965 on the charge that he was absconding from
duty. The Central Administrative Tribunal held that no material was available with the
disciplinary authority which could justify invoking of Rule 19(ii) and the order of dismissal
could not have been passed without holding regular inquiry in accordance with the procedure
prescribed under the Rules. The Division Bench of the Punjab and Haryana High Court did
not accept the appellants’ contention that invoking of Rule 19(ii) was justified merely because
the respondent did not respond to the notices issued to him and did not offer any explanation
for his willful absence from duty for more than two years. The High Court agreed with the
Tribunal and dismissed the writ petition. The High Court further held that even though the
respondent- employee had not pleaded or produced any evidence that after dismissal from
service, he was not gainfully employed, back wages cannot be denied to him. This Court
relied upon some of the earlier judgments and held that in view of the respondent’s failure to
discharge the initial burden to show that he was not gainfully employed, there was ample
justification to deny him back wages, more so because he had absconded from duty for a long
period of two years. - In General Manager, Haryana Roadways v. Rudhan Singh (2005) 5 SCC 591, the three
Judge Bench considered the question whether back wages should be awarded to the workman
in each and every case of illegal retrenchment. The factual matrix of that case was that after
finding the termination of the respondent’s service as illegal, the Industrial Tribunal- cumLabour Court awarded 50% back wages. The writ petition filed by the appellant was
dismissed by the Punjab and Haryana High Court. This Court set aside award of 50% back
wages on the ground that the workman had raised the dispute after a gap of 2 years and 6
months and the Government had made reference after 8 months. The Court then proceeded to
observe:
217
“There is no rule of thumb that in every case where the Industrial Tribunal gives a finding that
the termination of service was in violation of Section 25-F of the Act, entire back wages
should be awarded. A host of factors like the manner and method of selection and
appointment i.e. whether after proper advertisement of the vacancy or inviting applications
from the employment exchange, nature of appointment, namely, whether ad hoc, short term,
daily wage, temporary or permanent in character, any special qualification required for the job
and the like should be weighed and balanced in taking a decision regarding award of back
wages. One of the important factors, which has to be taken into consideration, is the length of
service, which the workman had rendered with the employer. If the workman has rendered a
considerable period of service and his services are wrongfully terminated, he may be awarded
full or partial back wages keeping in view the fact that at his age and the qualification
possessed by him he may not be in a position to get another employment. However, where the
total length of service rendered by a workman is very small, the award of back wages for the
complete period i.e. from the date of termination till the date of the award, which our
experience shows is often quite large, would be wholly inappropriate. Another important
factor, which requires to be taken into consideration is the nature of employment. A regular
service of permanent character cannot be compared to short or intermittent daily-wage
employment though it may be for 240 days in a calendar year.” - In U.P. State Brassware Corporation Ltd. v. Uday Narain Pandey (supra), the two Judge
Bench observed:
“No precise formula can be laid down as to under what circumstances payment of entire back
wages should be allowed. Indisputably, it depends upon the facts and circumstances of each
case. It would, however, not be correct to contend that it is automatic. It should not be granted
mechanically only because on technical grounds or otherwise an order of termination is found
to be in contravention of the provisions of Section 6-N of the U.P. Industrial Disputes Act.” - The Court also reiterated the rule that the workman is required to plead and prima facie
prove that he was not gainfully employed during the intervening period. - In Depot Manager, Andhra Pradesh State Road Transport Corporation v. P. Jayaram
Reddy (supra), this Court noted that the services of the respondent were terminated because
while seeking fresh appointment, he had suppressed the facts relating to earlier termination on
the charges of grave misconduct. The Labour Court did not find any fault with the procedure
adopted by the employer but opined that dismissal was very harsh, disproportionate and
unjustified and accordingly exercised power under Section11-A of the Industrial Disputes
Act, 1947 for ordering reinstatement with back wages. This Court referred to the judgments
in P.G.I. of Medical Education & Research, Chandigarh v. Raj Kumar (supra) and J.K.
Synthetics Ltd. v. K. P. Agrawal (supra) and held that the Labour Court was not justified in
awarding back wages.
218 - In Novartis India Limited v. State of West Bengal (supra), the services of the workman
were terminated on the charge of not joining the place of transfer. The Labour Court quashed
the termination of services on the ground of violation of the rules of natural justice and passed
an award of reinstatement of the workman with back wages. The learned Single Judge of the
High Court dismissed the writ petition filed by the appellant but the letters patent appeal was
allowed by the Division Bench on the ground that the State of West Bengal was not the
appropriate Government for making the reference. The special leave petition filed by the
workman was allowed by this Court and the Division Bench of the High Court was asked to
decide the letters patent appeal on merits. In the second round, the Division Bench dismissed
the appeal. This Court referred to shift in the approach regarding payment of back wages and
observed:
“There can, however, be no doubt whatsoever that there has been a shift in the approach of
this Court in regard to payment of back wages. Back wages cannot be granted almost
automatically upon setting aside an order of termination inter alia on the premise that the
burden to show that the workman was gainfully employed during interregnum period was on
the employer. This Court, in a number of decisions opined that grant of back wages is not
automatic. The burden of proof that he remained unemployed would be on the workmen
keeping in view the provisions contained in Section 106 of the Evidence Act, 1872. This
Court in the matter of grant of back wages has laid down certain guidelines stating that
therefor several factors are required to be considered including the nature of appointment; the
mode of recruitment; the length of service; and whether the appointment was in consonance
with Articles 14 and 16 of the Constitution of India in cases of public employment, etc. It is
also trite that for the purpose of grant of back wages, conduct of the workman concerned also
plays a vital role. Each decision, as regards grant of back wages or the quantum thereof,
would, therefore, depend on the fact of each case. Back wages are ordinarily to be granted,
keeping in view the principles of grant of damages in mind. It cannot be claimed as a matter
of right.” - In Metropolitan Transport Corporation v. V. Venkatesan (supra), the Court noted that
after termination of service from the post of conductor, the respondent had acquired Law
degree and started practice as an advocate. The Industrial Tribunal declared the termination of
the respondent’s service by way of removal as void and inoperative on the ground that the
Corporation had not applied for approval under Section 33(2)(b) of the Industrial Disputes
Act. At one stage, the High Court stayed the order of the Industrial Tribunal but finally
dismissed the writ petition. The workman filed application under Section 33-C(2) of the
Industrial Disputes Act claiming full back wages. The Labour Court allowed the claim of the
respondent to the extent of Rs.6,54,766/-. The writ petition filed against the order of the
Labour Court was dismissed by the learned Single Judge and the appeal was dismissed by the
Division Bench. This Court referred to the earlier precedents and observed:
“First, it may be noticed that in the seventies and eighties, the directions for reinstatement and
the payment of full back wages on dismissal order having been found invalid would
ordinarily follow as a matter of course. But there is change in the legal approach now.
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We recently observed in Jagbir Singh v. Haryana State Agriculture Mktg. Board that in the
recent past there has been a shift in the legal position and in a long line of cases, this Court
has consistently taken the view that the relief of reinstatement with back wages is not
automatic and may be wholly inappropriate in a given fact situation even though the
termination of an employee is held to be in contravention of the prescribed procedure.
Secondly, and more importantly, in view of the fact that the respondent was enrolled as an
advocate on 12-12-2000 and continued to be so until the date of his reinstatement (15-6-
2004), in our thoughtful consideration, he cannot be held to be entitled to full back wages.
That the income received by the respondent while pursuing legal profession has to be treated
as income from gainful employment does not admit of any doubt. In North-East Karnataka
RTC v. M. Nagangouda this Court held that “gainful employment” would also include selfemployment. We respectfully agree.
It is difficult to accept the submission of the learned Senior Counsel for the respondent that he
had no professional earnings as an advocate and except conducting his own case, the
respondent did not appear in any other case. The fact that he resigned from service after 2-3
years of reinstatement and re- engaged himself in legal profession leads us to assume that he
had some practice in law after he took sanad on 12-12-2000 until 15-6-2004, otherwise he
would not have resigned from the settled job and resumed profession of glorious
uncertainties.” - In Jagbir Singh v. Haryana State Agriculture Marketing Board (supra), this Court noted
that as on the date of retrenchment, respondent No.1 had worked for less than 11 months and
held:
“It would be, thus, seen that by a catena of decisions in recent time, this Court has clearly laid
down that an order of retrenchment passed in violation of Section 25-F although may be set
aside but an award of reinstatement should not, however, be automatically passed. The award
of reinstatement with full back wages in a case where the workman has completed 240 days
of work in a year preceding the date of termination, particularly, daily wagers has not been
found to be proper by this Court and instead compensation has been awarded. This Court has
distinguished between a daily wager who does not hold a post and a permanent employee.
Therefore, the view of the High Court that the Labour Court erred in granting reinstatement
and back wages in the facts and circumstances of the present case cannot be said to suffer
from any legal flaw. However, in our view, the High Court erred in not awarding
compensation to the appellant while upsetting the award of reinstatement and back wages.” - We may now deal with the judgment in J.K. Synthetics Ltd. v. K.P. Agrawal and
another (supra) in detail. The facts of that case were that the respondent was dismissed from
service on the basis of inquiry conducted by the competent authority. The Labour Court held
that the inquiry was not fair and proper and permitted the parties to adduce evidence on the
charges levelled against the respondent. After considering the evidence, the Labour Court
gave benefit of doubt to the respondent and substituted the punishment of dismissal from
service with that of stoppage of increments for two years. On an application filed by the
respondent, the Labour Court held that the respondent was entitled to reinstatement with full
220
back wages for the period of unemployment. The learned Single Judge dismissed the writ
petition and the Division Bench declined to interfere by observing that the employer had
willfully violated the order of the Labour Court. On an application made by the respondent
under Section 6(6) of the U.P. Industrial Disputes Act, 1947, the Labour Court amended the
award. This Court upheld the power of the Labour Court to amend the award but did not
approve the award of full back wages. After noticing several precedents to which reference
has been made hereinabove, the two Judge Bench observed:
“There is also a misconception that whenever reinstatement is directed, “continuity of
service” and “consequential benefits” should follow, as a matter of course. The disastrous
effect of granting several promotions as a “consequential benefit” to a person who has not
worked for 10 to 15 years and who does not have the benefit of necessary experience for
discharging the higher duties and functions of promotional posts, is seldom visualised while
granting consequential benefits automatically. Whenever courts or tribunals direct
reinstatement, they should apply their judicial mind to the facts and circumstances to decide
whether “continuity of service” and/or “consequential benefits” should also be directed.
Coming back to back wages, even if the court finds it necessary to award back wages, the
question will be whether back wages should be awarded fully or only partially (and if so the
percentage). That depends upon the facts and circumstances of each case. Any income
received by the employee during the relevant period on account of alternative employment or
business is a relevant factor to be taken note of while awarding back wages, in addition to the
several factors mentioned in Rudhan Singh and Uday Narain Pandey. Therefore, it is
necessary for the employee to plead that he was not gainfully employed from the date of his
termination. While an employee cannot be asked to prove the negative, he has to at least
assert on oath that he was neither employed nor engaged in any gainful business or venture
and that he did not have any income. Then the burden will shift to the employer. But there is,
however, no obligation on the terminated employee to search for or secure alternative
employment. Be that as it may.
But the cases referred to above, where back wages were awarded, related to
termination/retrenchment which were held to be illegal and invalid for non-compliance with
statutory requirements or related to cases where the Court found that the termination was
motivated or amounted to victimisation. The decisions relating to back wages payable on
illegal retrenchment or termination may have no application to the case like the present one,
where the termination (dismissal or removal or compulsory retirement) is by way of
punishment for misconduct in a departmental inquiry, and the court confirms the finding
regarding misconduct, but only interferes with the punishment being of the view that it is
excessive, and awards a lesser punishment, resulting in the reinstatement of employee. Where
the power under Article 226 or Section 11-A of the Industrial Disputes Act (or any other
similar provision) is exercised by any court to interfere with the punishment on the ground
that it is excessive and the employee deserves a lesser punishment, and a consequential
direction is issued for reinstatement, the court is not holding that the employer was in the
wrong or that the dismissal was illegal and invalid. The court is merely exercising its
discretion to award a lesser punishment. Till such power is exercised, the dismissal is valid
and in force. When the punishment is reduced by a court as being excessive, there can be
221
either a direction for reinstatement or a direction for a nominal lump sum compensation. And
if reinstatement is directed, it can be effective either prospectively from the date of such
substitution of punishment (in which event, there is no continuity of service) or
retrospectively, from the date on which the penalty of termination was imposed (in which
event, there can be a consequential direction relating to continuity of service). What requires
to be noted in cases where finding of misconduct is affirmed and only the punishment is
interfered with (as contrasted from cases where termination is held to be illegal or void) is that
there is no automatic reinstatement; and if reinstatement is directed, it is not automatically
with retrospective effect from the date of termination. Therefore, where reinstatement is a
consequence of imposition of a lesser punishment, neither back wages nor continuity of
service nor consequential benefits, follow as a natural or necessary consequence of such
reinstatement. In cases where the misconduct is held to be proved, and reinstatement is itself a
consequential benefit arising from imposition of a lesser punishment, award of back wages for
the period when the employee has not worked, may amount to rewarding the delinquent
employee and punishing the employer for taking action for the misconduct committed by the
employee. That should be avoided. Similarly, in such cases, even where continuity of service
is directed, it should only be for purposes of pensionary/retirement benefits, and not for other
benefits like increments, promotions, etc. But there are two exceptions. The first is where the
court sets aside the termination as a consequence of employee being exonerated or being
found not guilty of the misconduct. Second is where the court reaches a conclusion that the
inquiry was held in respect of a frivolous issue or petty misconduct, as a camouflage to get rid
of the employee or victimise him, and the disproportionately excessive punishment is a result
of such scheme or intention. In such cases, the principles relating to back wages, etc. will be
the same as those applied in the cases of an illegal termination.
In this case, the Labour Court found that a charge against the employee in respect of a serious
misconduct was proved. It, however, felt that the punishment of dismissal was not warranted
and therefore, imposed a lesser punishment of withholding the two annual increments. In such
circumstances, award of back wages was neither automatic nor consequential. In fact, back
wages was not warranted at all.” - The propositions which can be culled out from the aforementioned judgments are:
i) In cases of wrongful termination of service, reinstatement with continuity of service and
back wages is the normal rule.
ii) The aforesaid rule is subject to the rider that while deciding the issue of back wages, the
adjudicating authority or the Court may take into consideration the length of service of the
employee/workman, the nature of misconduct, if any, found proved against the
employee/workman, the financial condition of the employer and similar other factors.
iii) Ordinarily, an employee or workman whose services are terminated and who is desirous
of getting back wages is required to either plead or at least make a statement before the
adjudicating authority or the Court of first instance that he/she was not gainfully employed or
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was employed on lesser wages. If the employer wants to avoid payment of full back wages,
then it has to plead and also lead cogent evidence to prove that the employee/workman was
gainfully employed and was getting wages equal to the wages he/she was drawing prior to the
termination of service. This is so because it is settled law that the burden of proof of the
existence of a particular fact lies on the person who makes a positive averments about its
existence. It is always easier to prove a positive fact than to prove a negative fact. Therefore,
once the employee shows that he was not employed, the onus lies on the employer to
specifically plead and prove that the employee was gainfully employed and was getting the
same or substantially similar emoluments.
iv) The cases in which the Labour Court/Industrial Tribunal exercises power under Section
11-A of the Industrial Disputes Act, 1947 and finds that even though the enquiry held against
the employee/workman is consistent with the rules of natural justice and / or certified standing
orders, if any, but holds that the punishment was disproportionate to the misconduct found
proved, then it will have the discretion not to award full back wages. However, if the Labour
Court/Industrial Tribunal finds that the employee or workman is not at all guilty of any
misconduct or that the employer had foisted a false charge, then there will be ample
justification for award of full back wages.
v) The cases in which the competent Court or Tribunal finds that the employer has acted in
gross violation of the statutory provisions and/or the principles of natural justice or is guilty of
victimizing the employee or workman, then the concerned Court or Tribunal will be fully
justified in directing payment of full back wages. In such cases, the superior Courts should
not exercise power under Article 226 or 136 of the Constitution and interfere with the award
passed by the Labour Court, etc., merely because there is a possibility of forming a different
opinion on the entitlement of the employee/workman to get full back wages or the employer’s
obligation to pay the same. The Courts must always be kept in view that in the cases of
wrongful / illegal termination of service, the wrongdoer is the employer and sufferer is the
employee/workman and there is no justification to give premium to the employer of his
wrongdoings by relieving him of the burden to pay to the employee/workman his dues in the
form of full back wages.
vi) In a number of cases, the superior Courts have interfered with the award of the primary
adjudicatory authority on the premise that finalization of litigation has taken long time
ignoring that in majority of cases the parties are not responsible for such delays. Lack of
infrastructure and manpower is the principal cause for delay in the disposal of cases. For this
the litigants cannot be blamed or penalised. It would amount to grave injustice to an employee
or workman if he is denied back wages simply because there is long lapse of time between the
termination of his service and finality given to the order of reinstatement. The Courts should
bear in mind that in most of these cases, the employer is in an advantageous position vis-à-vis
the employee or workman. He can avail the services of best legal brain for prolonging the
agony of the sufferer, i.e., the employee or workman, who can ill afford the luxury of
spending money on a lawyer with certain amount of fame. Therefore, in such cases it would
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be prudent to adopt the course suggested in Hindustan Tin Works Private Limited v.
Employees of Hindustan Tin Works Private Limited (supra).
vii) The observation made in J.K. Synthetics Ltd. v. K.P. Agrawal (supra) that on
reinstatement the employee/workman cannot claim continuity of service as of right is contrary
to the ratio of the judgments of three Judge Benches referred to hereinabove and cannot be
treated as good law. This part of the judgment is also against the very concept of
reinstatement of an employee/workman. - Reverting to the case in hand, we find that the management’s decision to terminate the
appellant’s service was preceded by her suspension albeit without any rhyme or reason and
even though the Division Bench of the High Court declared that she will be deemed to have
rejoined her duty on 14.3.2007 and entitled to consequential benefits, the management neither
allowed her to join the duty nor paid wages. Rather, after making a show of holding inquiry,
the management terminated her service vide order dated 15.6.2007. The Tribunal found that
action of the management to be wholly arbitrary and vitiated due to violation of the rules of
natural justice. The Tribunal further found that the allegations levelled against the appellant
were frivolous. The Tribunal also took cognizance of the statement made on behalf of the
appellant that she was not gainfully employed anywhere and the fact that the management had
not controverted the same and ordered her reinstatement with full back wages. - The learned Single Judge agreed with the Tribunal that the action taken by the
management to terminate the appellant’s service was per se illegal but set aside the award of
back wages by making a cryptic observation that she had not proved the factum of nonemployment during the intervening period. While doing so, the learned Single Judge not only
overlooked the order passed by the Division Bench in Writ Petition No.8404/2006, but also
Rule 33 which prohibits an employee from taking employment elsewhere. Indeed, it was not
even the pleaded case of the management that during the period of suspension, the appellant
had left the Headquarter without prior approval of the Chief Executive Officer and thereby
disentitling her from getting subsistence allowance or that during the intervening period she
was gainfully employed elsewhere. - In view of the above discussion, we hold that the learned Single Judge of the High Court
committed grave error by interfering with the order passed by the Tribunal for payment of
back wages, ignoring that the charges levelled against the appellant were frivolous and the
inquiry was held in gross violation of the rules of natural justice. - In the result, the appeal is allowed, the impugned order is set aside and the order passed
by the Tribunal is restored. The management shall pay full back wages to the appellant within
four months from the date of receipt of copy of this order failing which it shall have to pay
interest at the rate of 9% per annum from the date of the appellant’s suspension till the date of
actual reinstatement
