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REPORTABLE  

IN THE SUPREME COURT OF INDIA  CIVIL APPELLATE JURISDICTION  

Civil Appeal No  6188 of 2019  (Arising out of SLP(C) No 8112 of 2019)  

Jayantibhai Raojibhai Patel                       …Appellant         

Versus       

Municipal Council, Narkhed & Ors.                       …Respondents      

J U D G M E N T      

Dr Dhananjaya Y Chandrachud, J  

1 The appellant was appointed on 1 July 1986 as a Headmaster of the Nagar  

Parishad High School conducted by the Municipal Council of Narkhed in the District  

of Nagpur. On 5 February 1994, a notice to show cause was issued to him, levelling  

an allegation of misappropriation of Rs 5,000. After the appellant submitted a reply  

on 6 February 1994, the first respondent appointed a former Deputy Education  

Officer, Shri Marathe as an inquiry officer. A charge-sheet was issued to the  

appellant on 8 June 1994.  The inquiry officer submitted a report on 25 July 1994,  

holding that the appellant was not guilty of the misconduct he was charged with.  

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2 On 27 August 1994, the first respondent resolved to appoint another inquiry  

officer to conduct an inquiry into the charges against the appellant. A former Chief  

Officer, Shri Sontakke was appointed as an inquiry officer.  The appellant objected  

to the convening of a second inquiry by his letter dated 24 September 1994.  The  

new inquiry officer issued a notice to show cause to the appellant on 26 September  

1994. The appellant objected to the appointment. In the meantime, on 10 October  

1994 the first respondent called upon the appellant to show cause what action  

should be taken pursuant to the report of the first inquiry officer.  On 8 November  

1994, the first respondent inferred that the report of Shri Marathe was not  

acceptable to the appellant and proceeded with the inquiry under Shri Sontakke.    

   3  The new inquiry officer submitted his report on 20 April 1995, holding the  

appellant guilty of misappropriation of funds and defalcation.  On the basis of the  

report of the inquiry officer, a notice to show cause was issued to the appellant to  

which he submitted his reply. The first respondent then passed a resolution  

removing the appellant.  This was followed by an order of removal dated 29 June  

1996. The appeal filed by the appellant before the Regional Director, Municipal  

Administration, Nagpur Division under Section 79 (6) of the Municipal Councils,  

Nagar Panchayats and Industrial Townships Act 1965 was dismissed on 31 August  

1996.    

 4 The appellant instituted a writ petition before the High Court to challenge his  

removal. The High Court, by its judgment and order dated 12 August 2014 quashed

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the order of removal. The appellant had already attained the age of superannuation.  

The High Court held that no back-wages should be paid to the appellant for the  

period for which he had not rendered service. However,  the High Court directed the  

disbursement of retiral benefits to the appellant, treating him to be in service with  

continuity of service until the date of superannuation.    

5 The submission which has been urged on behalf of the appellant in support of  

the appeal is that once the High Court found that the appellant had wrongfully been  

removed from service, the general principle that back-wages must follow a  

determination in regard to the illegality of termination should be applied.  This was  

sought to be supported by relying upon the decisions of this Court in Hindustan Tin  

Works (P) Ltd v Employees (“Hindustan Tin Works”) 1   and  Deepali Gundu  

Surwase v Kranti Junior Adhyapak Mahavidyalaya (“Deepali Surwase”) 2 .   

 6 After notice was issued in these proceedings, a counter affidavit has been  

filed on behalf of the first respondent.  It has been submitted that pursuant to the  

order of the High Court, retiral benefits amounting to Rs 27 lakhs have been paid to  

the appellant in July 2015 after deduction of tax.  Moreover, the appellant is drawing  

a pension of Rs 31,500 per month.  The first respondent submitted that within two  

years of the removal, it had taken necessary steps to reinstate the appellant but the  

order could not be implemented as a result of a stay granted by the District  

Collector.  The first respondent submitted that the appellant ought not to be granted  

                                                 1  (1979) 2 SCC 80  

2  (2013) 10 SCC 324

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back-wages for the period for which he has not worked, particularly having regard to  

the fact that it is a „Class-C‟ municipality with a limited income.    

The rival submissions now fall for our consideration.  

 7 The High Court has held that the action of the Municipal Council in  

proceeding with a de novo inquiry was vitiated since no reasons were recorded by  

the Municipal Council. The High Court held that even if a de novo inquiry was  

permissible under the rules, no reason was furnished for discarding the report of the  

first inquiry officer and convening a fresh enquiry.  Moreover, the appellant had  

objected to the appointment of Shri Sontakke as an inquiry officer since he was an  

ex-officer of the Municipal Council who was occupying quarters allotted to him at the  

material time.  Hence, the High Court held that the removal was illegal. However, the  

High Court denied back-wages for the period between the date of dismissal and the  

date on which the appellant attained the age of superannuation.  The appellant has  

been granted his retiral dues on the basis of continuity of service.  The judgment of  

the High Court has not been challenged by the Municipal Council.    

 8 The view of the High Court that a fresh appointment of an inquiry officer could  

not have been made without recording reasons why the disciplinary authority  

disagreed with the enquiry report is correct. This is borne out by the decision of this  

Court in CSHA University v BD Goyal 3 , where a three judge Bench of this Court  

observed:  

                                                 3  (2010) 15 SCC 776

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“7. It is no doubt true that the punishing authority or any  

higher authority could have disagreed with the finding of the  

enquiring officer, but in such a case the authority concerned  

is duty-bound to record reasons in writing and not on ipse  

dixit can alter the finding of an enquiring officer.  The order of  

the Vice-Chancellor, which was produced before us does not  

satisfy the requirements of law in the matter of differing with  

the findings of an enquiring officer..”  

9  Several judgments of this Court have laid down the principles pertaining to the  

grant of back wages. In Hindustan Tin Works, a three-judge Bench of this Court  

adjudicated on the criterion for grant of back-wages where a termination has been  

held to be illegal. The appellant in that case was a private limited company with an  

industrial unit. The Labour Court held that the retrenchment of employees by the  

appellant was not bona fide and awarded full back wages to the employees, which  

was challenged before the Supreme Court. This Court made the following  

observations:  

 “9. 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

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throughout the protracted litigation is itself such an  

awesome factor that he may not survive to see the day  

when relief is granted. More so in our system where the  

law's proverbial delay has become stupefying. If after  

such a protracted time and energy consuming litigation  

during which period the workman just sustains himself,  

ultimately he is to be told that though he will be  

reinstated, he will be denied the back wages which would  

be due to him, the workman would be subjected to a sort  

of penalty for no fault of his and it is wholly undeserved.  

Ordinarily, therefore, a workman whose service has been  

illegally terminated would be entitled to full back wages  

except to the extent he was gainfully employed during  

the enforced idleness. That is the normal rule. Any other  

view would be a premium on the unwarranted litigative  

activity of the employer. If the employer terminates the  

service illegally and the termination is motivated as in  

this case viz. to resist the workmen's demand for revision  

of wages, the termination may well amount to unfair  

labour practice. In such circumstances reinstatement  

being the normal rule, it should be followed with full back  

wages…”  

                                                                 (Emphasis supplied)  

The Court further clarified that while the payment of full back wages would be the  

normal rule, there can be a departure from it where necessary circumstances have  

been established:   

“11. In the very nature of things there cannot be a straight-

jacket formula for awarding relief of back wages. All relevant  

considerations will enter the verdict. More or less, it would be  

a motion addressed to the discretion of the Tribunal. Full back  

wages would be the normal rule and the party objecting to it  

must establish the circumstances necessitating departure. At  

that stage the Tribunal will exercise its discretion keeping in  

view all the relevant circumstances. But the discretion must  

be exercised in a judicial and judicious manner. The reason  

for exercising discretion must be cogent and convincing and  

must appear on the face of the record. When it is said that  

something is to be done within the discretion of the authority,  

that something is to be done according to the Rules of reason  

and justice, according to law and not humour. It is not to be

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arbitrary, vague and fanciful but legal and regular  

(see Susannah Sharp v. Wakefield [(1891) AC 173, 179] ).”       

Taking note of the financial problems of the appellant company, the Court granted  

compensation to the extent of 75% of back wages. The principle laid down in  

Hindustan Tin Works has been followed by other decisions of this Court. 4    

 10 In Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-

Labour Court5, the termination of the services of the appellants was held to be in  

contravention of Section 25-F of the Industrial Disputes Act by the Labour Court, but the  

appellants were denied the payment of back wages. In appeal, a three-judge bench of  

this Court observed:  

“6… Plain common-sense dictates that the removal of an  

order terminating the services of workmen must ordinarily  

lead to the reinstatement of the services of the workmen. It is  

as if the order has never been, and so it must ordinarily lead  

to back wages too. But there may be exceptional  

circumstances which make it impossible or wholly inequitable  

vis-à-vis the employer and workmen to direct reinstatement  

with full back wages. For instance, the industry might have  

closed down or might be in severe financial doldrums; the  

workmen concerned might have secured better or other  

employment elsewhere and so on. In such situations, there is  

a vestige of discretion left in the court to make appropriate  

consequential orders. The court may deny the relief of  

reinstatement where reinstatement is impossible because the  

industry has closed down. The court may deny the relief of  

award of full back wages where that would place an  

impossible burden on the employer. In such and other  

exceptional cases the court may mould the relief, but  

ordinarily the relief to be awarded must be reinstatement with  

full back wages. That relief must be awarded where no  

                                                 4  P.G.I. of Medical Education & Research v. Raj Kumar, (2001) 2 SCC 54; Indian Rly. Construction Co. Ltd. v. Ajay  

Kumar, (2003) 4 SCC 579 ; Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya, (2013) 10 SCC 324   5  (1980) 4 SCC 443

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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.”  

     11 In Deepali Surwase, the appellant had been employed as a teacher in a  

primary school run by a trust. The services of the appellant had been terminated by  

the management of the school pursuant to an ex-parte inquiry proceeding. The  

School Tribunal quashed the termination of the appellant‟s services and issued a  

direction for the grant of full back wages. In appeal, the High Court affirmed the view  

of the Tribunal that the termination was illegal, but set aside the direction for grant of  

back wages. In appeal, a two-judge Bench of this Court laid down the following  

principles:  

“22. 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…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. The  

denial of back wages to an employee, who has suffered  

due to an illegal act of the employer would amount to  

indirectly punishing the employee concerned and

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rewarding the employer by relieving him of the obligation  

to pay back wages including the emolument.”  

                                                              (Emphasis supplied)  

The Court laid down the following principles to govern the payment of back wages:  

“38.1. In cases of wrongful termination of service,  

reinstatement with continuity of service and back wages is the  

normal rule.  

38.2. 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.  

38.3. 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  

averment 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.  

38.4. 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

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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.  

38.5. 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  

victimising the employee or workman, then the court or  

tribunal concerned 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 keep in view that in the cases of  

wrongful/illegal termination of service, the wrongdoer is the  

employer and the sufferer is the employee/workman and there  

is no justification to give a premium to the employer of his  

wrongdoings by relieving him of the burden to pay to the  

employee/workman his dues in the form of full back wages.  

38.6. In a number of cases, the superior courts have  

interfered with the award of the primary adjudicatory authority  

on the premise that finalisation 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 (P)  

Ltd. v. Employees [Hindustan Tin Works (P)  

Ltd. v. Employees, (1979) 2 SCC 80 : 1979 SCC (L&S) 53] .”  

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12 In the present case the first inquiry resulted in a report which came to the  

conclusion that the charge of misconduct was not substantiated. Upon finding that  

the convening of a fresh inquiry without recording reasons was contrary to law, the  

High Court would have ordinarily granted liberty to the Municipal Council to take a  

fresh decision after due notice to the appellant.  Such a course of action was,  

however, rendered impracticable by supervening events. The writ petition instituted  

by the appellant before the High Court in 1996 remained pending for nearly eighteen  

years. The appellant had been removed from service on 29 June 1996.  Considering  

the lapse of time, reopening  the proceedings would not be expedient in the interest  

of justice particularly when the appellant had, in the meantime, attained the age of  

superannuation in 2005.  Relegating the appellant to a protracted course of action  

by restoring the proceedings before the disciplinary authority would also not be fair  

and proper after a lapse of nearly fourteen years since his retirement.    

13 Having due regard to the principles which have been enunciated in Deepali  

Surwase by this Court, the High Court was not, in our view, justified in denying the  

back-wages to the appellant altogether. Bearing in mind the circumstances which  

have been noted above, a lumpsum compensation should be directed to be paid.    

14 The ends of justice would be met by directing that the appellant be paid an  

amount quantified at Rs 5 lakhs in full and final settlement of his claim for back-

wages for the period between the date of the order of removal and the date on which  

he attained the age of superannuation.  This payment to the appellant shall be made

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in addition to the retiral benefits to which he is entitled in terms of the order of the  

High Court.  The payment of Rs 5 lakhs shall be made within a period of two months  

from the date of receipt of a certified copy of this order.   

 15 The appeal is accordingly disposed of.  There shall be no order as to costs.      

   ……...……..…...…...….....………........J.                                                                       [Dr Dhananjaya Y Chandrachud]  

………....…..…....…........…….…........J.                                 [Indira Banerjee]   

  New Delhi;   August 21, 2019.