Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6767 OF 2013

(Arising out of SLP (C) No.6778 of 2012)

Deepali Gundu Surwase …Appellant

versus

Kranti Junior Adhyapak Mahavidyalaya (D.Ed.) and others…Respondents

J U D G M E N T

G.S. SINGHVI, J.

1.Leave granted.

2. 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.

3.The appellant was appointed as a teacher in Nandanvan Vidya Mandir

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Page 2 (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’).

4.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

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Page 3 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.

5.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.

(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.”

5.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

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Page 4 proceedings. The Inquiry Committee conducted ex parte proceedings and the

management terminated the appellant’s service vide order dated 15.6.2007.

6.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.

7.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.

8.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 62. 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

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Page 5 which is used to revengeful against this appellant. It seems that

attitude towards this appellant 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

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Page 6 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. 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

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Page 7 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

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Page 8 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.

5)The appellant will be entitled to withdraw the above

amounts from this Tribunal immediately after it is deposited.”

9.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

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Page 9 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 Committee who threw the principles

of natural justice in the air. It would be a travesty of justice, in

these circumstances, to allow the petitioner-Management 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

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Page 10 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.”

10.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-cum-Labour 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

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Page 11 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.

11.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

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Page 12 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.

12.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

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Page 13 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.

13.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 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

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Page 14 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.

14.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;

9. 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

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Page 15 10. 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

11. 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 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;

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Page 16 (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.

16.Rules.

(1)The State Government may, by notification in the

Official Gazette, make rules for carrying out the purposes of

this Act.

(2)In particular and without prejudice to the generality of

the foregoing power, such rules may provide for all or any of

the following matters, namely :-

(a) to (c) xxxx xx xx

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Page 17 (d)the other conditions of service of such employees

including leave, superannuation, re-employment and

promotions;

(e)the duties of such employees and Code of Conduct and

disciplinary matters;

(f)the manner of conducting enquiries;

(g)xx xx xx xx

(2A) to (4) xx xx xx ”

15.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 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.

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Page 18 (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.

34. 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

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Page 19 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 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.

35. 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

19

Page 20 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.”

16.The word “reinstatement” has not been defined in the Act and the Rules.

As per Shorter Oxford English Dictionary, Vol.II, 3

rd

Edition, the word

“reinstate” means to reinstall or re-establish (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, 2

nd

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, 6

th

Edition, “reinstatement” 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

20

Page 21 object or person had been removed.’

17.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. 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

21

Page 22 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.

18.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

22

Page 23 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 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

23

Page 24 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.

19.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

24

Page 25 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 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)

20.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

25

Page 26 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. 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

26

Page 27 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.”

21.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:

27

Page 28 “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)

22.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

28

Page 29 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.

23.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.

24.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

29

Page 30 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.

25.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-cum-Labour 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:

“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

30

Page 31 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.”

26.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.”

27.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.

28. In Depot Manager, Andhra Pradesh State Road Transport Corporation v. P.

Jayaram Reddy (supra), this Court noted that the services of the respondent were

31

Page 32 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.

29.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:

32

Page 33 “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.”

30. 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

33

Page 34 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.

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 self-

employment. 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

34

Page 35 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.”

31. 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.”

32.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

35

Page 36 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 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

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Page 37 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 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

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Page 38 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.”

33.The propositions which can be culled out from the aforementioned

judgments are:

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Page 39 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 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.

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Page 40 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

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Page 41 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 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.

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Page 42 34.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.

35.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 non-employment 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

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Page 43 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.

36.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.

37.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.

38.It is also made clear that in the event of non-compliance of this order, the

management shall make itself liable to be punished under the Contempt of Courts

Act, 1971.

…………………………..J.

(G.S. SINGHVI)

…………….…………….J.

(V. GOPALA GOWDA)

New Delhi;

August 12, 2013.

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