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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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(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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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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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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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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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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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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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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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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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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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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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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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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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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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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(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)        xx xx xx xx

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(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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(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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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  

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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,  3rd 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,  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 re-establish, to place again in a  

former state, condition, or office? To restore to a state or position from which the  

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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  

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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  

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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  

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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  

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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  

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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  

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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:

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“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  

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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  

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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  

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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  

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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:

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“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  

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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  

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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  

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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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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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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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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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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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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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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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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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