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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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