K.S. RAVINDRAN Vs BRANCH MANAGR,NEW INDIA ASSURANCE CO LTD
Bench: V. GOPALA GOWDA,C. NAGAPPAN
Case number: C.A. No.-004220-004220 / 2015
Diary number: 18946 / 2013
Advocates: GAUTAM NARAYAN Vs
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NON-REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4220 OF 2015 (Arising Out of SLP (C) No.31909 of 2013)
K.S. RAVINDRAN ....APPELLANT VERSUS BRANCH MANAGER, NEW INDIA ASSURANCE CO. LTD. ...RESPONDENT
J U D G M E N T
V. GOPALA GOWDA, J.
Delay condoned. Leave granted.
2. The appellant has questioned the correctness of the judgment and order dated 20.11.2012 passed in
W.A. No.514 of 2011 by the learned Division Bench of
the High Court of Madras, wherein, the learned
Division Bench partly allowed the writ appeal of the
respondent and upheld the judgment of the learned
single Judge of the High Court to the extent of
reinstatement with continuity of service but set
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aside the order with regard to 25% back-wages and
the ‘punishment of termination’ was also modified
into stoppage of increment for a period of 3 years
with cumulative effect.
3. The relevant facts are briefly stated to
appreciate the rival legal contentions urged on
behalf of the parties in this appeal:
The appellant- K. S. Ravindran, was appointed as
an Inspector on probation with the respondent-New
India Assurance Co. Ltd. (for short ‘the
respondent-Company’) w.e.f. 31.12.1983. The services
of the appellant as Inspector Grade-I was confirmed
w.e.f. 1.1.1985 by the respondent-Company vide its
order dated 12.01.1985. The appointment of the
appellant was governed by the Development Staff
Scheme, 1976 and also by General Insurance (Conduct,
Discipline and Appeal) Rules, 1975, which deal with
the service conditions of the employees working in
General Insurance Company of India and its
subsidiaries. According to the Development Staff
Scheme, the appellant is supposed to complete the
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target set forth for him for each year of
performance and also within the permissible cost as
mentioned in the Scheme. In 1991, due to the
appellant’s personal problems in his marital life,
he was on leave, due to which he was chargesheeted
on 1.4.1991 for his unauthorised absence and also
because his business performance had allegedly been
very poor since 1985. An enquiry was conducted
against the appellant and based on the findings of
the Enquiry Officer on 16.12.1991, the appellant was
issued a warning to mend himself and make progress
in the business of the respondent-Company. However,
the appellant was unable to achieve the premium
targets for years 1991-92 and 1992-93 and therefore,
he was issued with notice of termination dated
10.05.1993 on the ground that he had failed to
conform to the stipulated cost limit and therefore,
his services were liable for termination. The
appellant was given 30 days notice for preparing an
appeal against the order of termination. The
appellant appealed against his order of termination
before the Senior Divisional Manager of the
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respondent-Company on 30.6.1993, explaining the
efforts taken by him to ensure business from various
customers and assuring to the Senior Divisional
Manager that he has conformed to the stipulated cost
limit. On 09.06.1993 the appellant also appealed
before the Appeals Committee explaining his stand
against the order of termination. However, by order
dated 30.7.1993, the order of termination dated
10.5.1993 was confirmed by the Appeals Committee
holding that the appellant was terminated from the
date of receipt of the order of termination i.e.
from 17.08.1993.
4. The appellant raised an industrial dispute
before the Conciliation Officer challenging the
order of termination, the conciliation proceedings
ended in failure and the report in this regard was
submitted to the State Government of Tamil Nadu for
its consideration, which has referred the points of
dispute to the Central Government Industrial
Tribunal-cum-Labour Court, Chennai (for short ‘the
Labour Court’). The Labour Court registered the said
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reference in I.D. No.12 of 1995, renumbered as I.D.
No.385 of 2001. The appellant filed claim petition
challenging the order of termination inter alia
contending that no enquiry was conducted in respect
of the order of termination dated 10.5.1993 and that
the termination of services of the appellant on
17.8.1993 is in violation of the Service Rules and
principles of natural justice and that the same is
unjustified and therefore, prayed to set aside the
same and pass and award of reinstatement with all
consequential benefits.
5. The respondent-Company resisted the petition
by contending that the appellant was governed by
the Development Staff Scheme, 1976 and also by the
General Insurance (Conduct, Discipline and Appeal)
Rules, 1975, which deal with service conditions of
the employees and that the appellant failed to
achieve the expected premiums for the relevant
years and also failed to conform with the
stipulated cost limit during the years 1991-92 and
1992-93. Further, it was contended on behalf of the
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respondent-Company that not achieving the target,
expected cost limit as per the Scheme and
non-performance on his behalf was admitted by the
appellant himself. It was further averred that the
service conditions empower the management to
terminate the services of employees by one month
notice and therefore, the decision of the
management cannot be challenged by the appellant.
6. The Labour Court, examined W1 to W12 from the
appellant’s side and M1 to M4 from the
respondent-Company’s side. Further, on referring to
Clause 9, Schedule-A (duties and functions of the
appellant) attached to the appointment order, the
Labour Court held that the appellant has been given
appointment in the respondent-Company wherein, the
appellant agreed to conform to the stipulated cost
limit and in spite of warning issued to the
appellant, he has not shown progress in developing
the insurance business and that the appellant was
terminated from service in accordance with the
terms and conditions mentioned in his appointment
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order. In so far as contention of the appellant
that no enquiry was conducted before the order of
termination, the Labour Court held that the enquiry
against the appellant was conducted and he was
given sufficient opportunity to put forth his
defence and that the enquiry officer found that the
charges leveled against the appellant had been
proved and there was no violation of the principles
of natural justice. The Labour Court passed an
award holding that the action of the management in
terminating the services of the appellant is
justified and did not suffer from any illegality.
7. The said award was challenged by the appellant
in Writ Petition No.6849 of 2002, wherein the
learned single Judge held that the order of
termination is not in consonance with the Scheme as
nothing has been brought on record to show the
reduction of emoluments for 3 consecutive years,
rather the order of termination is on the ground
that the appellant failed to achieve the target
fixed on him for the particular year. It was further
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held by the learned single Judge that the order of
termination was passed by way of punishment without
following the principles of natural justice or
conducting any enquiry into the allegations made
against the appellant before passing the order of
termination against him. Further, it was held by the
learned single Judge that the termination of
services of a confirmed employee without holding an
enquiry is violative of Article 14 of the
Constitution of India. The learned single Judge
allowed the petition and directed the
respondent-Company to reinstate the appellant in his
post with 25% back-wages.
8. The said order of the learned single judge was
challenged by the respondent-Company by filing Writ
Appeal No.514 of 2011 inter-alia contending that the
learned single Judge ought to have seen that
consequent to the appellant being unable to achieve
the target fixed on him in acquiring premium as
required under the said Scheme, the order of
termination was passed against him and therefore,
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justified that the same did not warrant further
domestic enquiry as the mandatory provision of
collecting the premium has not been complied with by
the appellant. The Division Bench of the High Court
held that the order of reinstatement passed by the
disciplinary authority is modified into one of
“stoppage of increment for a period of three years
with cumulative effect” and the direction of the
learned single Judge to pay 25% back-wages to the
appellant was set aside and the appeal was partly
allowed. Hence, the present appeal.
9. It is contended by the learned counsel on
behalf of the appellant that the learned Division
Bench of the High Court erred in denying back-wages
to the appellant as quantified by the learned
single Judge and further failed to appreciate that
the order passed by the learned single Judge was
judicious, just and in consonance with the
judgments of this Court inasmuch as it directed the
reinstatement with 25% back-wages of the appellant
whose services had been wrongly terminated by the
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respondent-Company without holding an enquiry and
the same was not in conformity with the principles
of natural justice. In support of the said
contention the learned counsel placed reliance on
the decision of this Court in the case of Mohan Lal
v. Bharat Electronics Ltd.1 and Hindustan Tin Works
v. Employees2.
10. It was further contended by the learned
counsel that the Division Bench of the High Court
erred in overlooking the context of this particular
case and vicissitudes of long drawn litigation
thereof and also the fact that the appellant was
not employed elsewhere during this long interregnum
and he is entitled to back-wages as laid down by
this Court in the case of Hindustan Motors Ltd. v.
Tapan Kumar Bhattacharya3.
11. On the other hand, the learned counsel on
behalf of the respondent-Company contended that
consequent to the failure of the appellant to
conform to the stipulated cost limit and only after 1 (1981) 3 SCC 225 2 (1979) 2 SCC 80 3 (2002) 6 SCC 41
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affording opportunity to the appellant, his
services were terminated and therefore, giving one
more opportunity by way of domestic enquiry was not
required in the case on hand. Attention was drawn
to the report of the Enquiry Officer dated
16.12.1991 inter alia contending that in the said
enquiry the second charge against the appellant was
“poor business” performance by him since 1985 and
that the learned single Judge ought to have seen
that in the earlier domestic enquiry, the appellant
was given a warning after his guilt had been proved
for his absence and not achieving the target of his
business. Therefore, there is no question of
violation of principles of natural justice.
12. Further, it is contended by the learned
counsel on behalf of the respondent-Company that
the duty is cast on the employee to prove that he
was not gainfully employed from the date of
termination since the appellant has not adduced any
evidence to prove the same and therefore, he is not
entitled to any back wages. In support of the said
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contention reliance was placed on the decisions of
this Court in the case of Rajasthan SRTC v. Shyam
Behari Lal Gupta4, Nagar Panchayat Kharkhauda v.
Yogendra Singh5 and R.B.I. v. Gopi Nath Sharma6
wherein the legal position as regards to the
payment of back-wages on reinstatement has been
well settled by this Court.
13. We have heard the rival legal contentions urged on behalf of the parties in support of the
respective claim and counter claim.
In our considered view, after examining the
facts, circumstances and evidence on record, it is
clear that the order of termination against the
appellant on the ground that he failed to achieve
the target fixed on him by the respondent-Company
for the particular year is erroneous. The learned
single Judge of the High Court in this regard duly
noted that there was no record brought before the
Court to show that there was a reduction of
emoluments for three consecutive years due to 4 (2005) 7 SCC 406 5 (2005) 13 SCC 428 6 (2006) 6 SCC 221
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non-performance of work by the appellant. It was
also rightly held by the learned single Judge that
neither the respondent-Company nor the Labour
Court, have taken into consideration the
recommendation of the Branch Manager of the
respondent-Company and the explanation given by the
appellant in his representation challenging the
order of termination passed against him.
14. In view of the above, the learned single Judge has rightly appreciated the facts and
circumstances of the case on hand and passed an
order dated 1.2.2011 quashing the award of the
Labour Court and directed the respondent-Company
to reinstate the appellant with all consequential
benefits. Further, the learned single Judge,
keeping in view that the appellant was terminated
in the year 1993, directed the respondent-Company
to pay 25% back-wages to the appellant.
15. The learned Division Bench has erred in
modifying the order passed by the learned single
Judge into one of stoppage of increment for a
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period of three years with cumulative effect and
set aside the direction of the learned single
Judge directing the respondent-Company to pay 25%
back-wages to the appellant. The learned Division
Bench failed to appreciate that the order passed
by the learned single Judge was judicious, just
and in consonance with the judgments of this Court
in so far as awarding reinstatement and direction
to pay 25% back-wages to the appellant whose
services had been terminated illegally by the
respondent-Company. The learned Division Bench
erred in setting aside the award of payment of 25%
back-wages to the appellant as passed by the
learned single Judge which is contrary to the well
established principle of law with regard to award
of back-wages, when it is found that the order of
termination is illegal. Therefore, the learned
Division Bench has failed to follow the legal
principles laid down by this Court in the case of
Mohan Lal v. Bharat Electronics Ltd. (supra)
wherein it was held thus:
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“17. But there is a catena of decisions which rule that where the termination is illegal especially where there is an ineffective order of retrenchment, there is neither termination nor cessation of service and a declaration follows that the workman concerned continues to be in service with all consequential benefits. No case is made out for departure from this normally accepted approach of the Courts in the field of social justice and we do not propose to depart in the case.”
16. After considering the facts, circumstances and evidence on record, we are of the view that the
appellant is entitled for reinstatement with back-
wages and other consequential benefits as per the
principles laid down by this Court in the case of
Deepali Gundu Surwase v. Kranti Junior Adhyapak
Mahavidyalaya7 , wherein it was held as under:-
“22. The very idea of restoring an em- ployee to the position which he held before dismissal or removal or termi- nation of service implies that the em- ployee will be put in the same posi- tion 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
7 (2013) 10 SCC 324
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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 ad- vancement in life. At times, the fam- ily has to borrow from the relatives and other acquaintance to avoid star- vation. These sufferings continue till the competent adjudicatory forum de- cides on the legality of the action taken by the employer. The reinstate- ment 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 natu- ral justice, entitles the employee to claim full back wages. If the employer wants to deny back wages to the em- ployee or contest his entitlement to get consequential benefits, then it is for him/her to specifically plead and prove that during the intervening pe- riod the employee was gainfully em- ployed and was getting the same emolu- ments. Denial of back wages to an em- ployee, who has suffered due to an il- legal 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.
17. For the foregoing reasons, the impugned
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judgment and order of the Division Bench of the
High Court is set aside. The appeal is allowed and
having regard to the facts and circumstances of
this case, the respondent-Company is directed to
reinstate the appellant in his post and pay him
50% back-wages from the date of termination till
the date of reinstatement by calculating the same
on the basis of revision of pay scales of the
appellant and other consequential monetary
benefits and pay the same to him within six weeks
from the date of receipt of the copy of this
Judgment, failing which the back-wages shall be
paid with an interest at the rate of 9% per annum
after the expiry of the said six weeks. There
shall be no order as to costs.
…………………………………………………………J. [V.GOPALA GOWDA]
…………………………………………………………J. [C. NAGAPPAN] New Delhi, May 6, 2015
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