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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPEALLATE JURISDICTION

CIVIL APPEAL NO. 4980 OF 2014 (Arising out of SLP (C) No. 15357 of 2013)

TAPASH KUMAR PAUL                              ....  Petitioner(s)

                VERSUS

BSNL & ANR.                                    ....  Respondent(s)

O R D E R  

Leave granted.  

This appeal has been preferred by the appellant who  

succeeded in getting an order of reinstatement in his favour by  

the  Central  Government  Industrial  Tribunal  at  Calcutta  in  

Reference No. 27 of 1997 dated 13th May, 2002, by which the order  

of reinstatement was passed in his favour.  However, the Tribunal  

declined to grant back wages to the appellant except Rs.20,000/-  

to be paid by the respondent as compensation towards back wages.  

This Award was passed by the Tribunal since the Management had  

failed  to  produce  relevant  documents  to  disclose  the  actual  

number  of  days  for  which  appellant  has  worked  and  so  his  

termination was held to be in violation of Section 25F of the  

Industrial Disputes Act, 1947.   

The  respondent-Management  of  the  BSNL,  however,  

appealed against the Award passed by the Tribunal by way of a  

Writ Petition in the High Court before the Single Judge whereby  

the learned Single Judge affirmed the Award passed by the

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Tribunal and dismissed the writ petition filed by the respondent-

Management.  The respondent was not satisfied with the order  

passed by the Single Judge and refused to give effect to the  

Award  in favour of the appellant and preferred a further appeal  

before the Division Bench.   

The Division Bench, however, was pleased to allow the  

appeal  by  setting  aside  the  Award  passed  in  favour  of  the  

appellant and in lieu of reinstatement, passed an order directing  

that the amount of Rs.20,000/- be paid by way of compensation to  

the appellant which in any case had been passed by the Tribunal  

as  compensation  towards  back  wages.   Thus,  in  effect,  the  

compensation which has been ordered to be paid was legally due to  

the appellant towards back wages and the High Court set aside the  

entire  Award  passed  by  the  Tribunal  which  in  effect  can  be  

construed  that  no  amount  was  paid  by  way  of  compensation.  

Although the High Court recorded that Rs.20,000/- be paid by way  

of compensation, as aforesaid,  the same was towards back wages  

as per the Award passed by the Tribunal.   

It is no doubt true that a Court may pass an order  

substituting an order of reinstatement by awarding compensation  

but the same has to be based on justifiable grounds viz. (I)  

where  the  industry  is  closed;  (ii)  where  the  employee  has  

superannuated  or  going  to  retire  shortly  and  no  period   of  

service is left to his credit; (iii) where the workman has been  

rendered  incapacitated  to  discharge  the  duties  and  cannot  be  

reinstated and / or (iv) when he has lost confidence of the

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Management to discharge duties.  What is sought to be emphasised  

is that there may be appropriate case on facts which may justify  

substituting the order of reinstatement by award of compensation,  

but  that  has  to  be  supported  by  some  legal  and  justifiable  

reasons  indicating  why  the  order  of  reinstatement  should  be  

allowed to be substituted by award of compensation.   

In the instant matter, we are not satisfied that the  

appellant's case falls in to any of the categories referred to  

hereinbefore  which  would  justify  compensation  in  lieu  of  

reinstatement.  We thus find no justification for the High Court  

so as to interfere with the Award passed by the Tribunal which  

was affirmed even by the Single Judge, but the Division Bench  

thought it appropriate to set aside the order of reinstatement  

without  specifying  any  reasons  whatsoever,  as  to  why  it  

substituted with compensation of a meagre amount of Rs.20,000/-  

to the appellant.   

In view of this we set aside the judgment and order  

of the High Court and restore the Award of the Tribunal and the  

order of the Single Judge affirming the same.   

The appeal accordingly is allowed but without cost.

...........................J. (GYAN SUDHA MISRA)            

NEW DELHI; JANUARY 28, 2014

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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPEALLATE JURISDICTION

   CIVIL APPEAL NO. 4980 OF 2014 (Arising out of SLP (C) No. 15357 of 2013)

TAPASH KUMAR PAUL               ....  APPELLANT

                VERSUS

BSNL & ANR.                     ....  RESPONDENTS

O R D E R  

V. Gopala Gowda, J. (Concurring)

1. While  concurring  with  the  finding  and  reasons  recorded by my sister Justice Gyan Sudha Misra in allowing  

the Civil Appeal by setting aside the impugned judgment of  

the High Court of Calcutta and restoring the award of the  

Labour  Court  with  consequential  benefits  of  awarding  

backwages,  I  am  giving  my  additional  reasons  after  

distinguishing decisions of this Court upon which reliance  

has been placed by the learned senior counsel appearing on  

behalf of the appellant.  

2. The learned counsel on behalf of the respondent has  

relied upon the decision of this Court in the case of  

Senior  Superintendent  Telegraph  (Traffic),  Bhopal  v.

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Santosh Kumar Seal and Others1  to contend that in the last  

few years it has been consistently held by this Court that  

relief  by  way  of  reinstatement  with  back  wages  is  not  

automatic  even  if  the  termination  of  employee  has  been  

found  illegal  or  is  in  contravention  to  the  prescribed  

procedure. The learned counsel has further relied upon the  

Santosh Kumar Seal’s judgment (supra) which hold as under:

“10. In a recent judgment authored by one of us  (R.M. Lodha, J.) in Jagbir Singh v. Haryana State  Agriculture  Mktg.  Board  &  Anr.2,  the  aforesaid  decisions were noticed and it was stated:

7. It is true that the earlier view of  this Court articulated in many decisions  reflected the legal position that if the  termination of an employee was found to  be illegal, the relief of reinstatement  with  full  back  wages  would  ordinarily  follow.  However,  in  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  relief by way 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  in  contravention  of  the  prescribed  procedure.  Compensation  instead of reinstatement has been held to  meet the ends of justice.

* * * 14. 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  

1  (2010) 6 SCC 773 2  (2009) 15 SCC 327

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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.”

The  learned  senior  counsel  has  further  relied  upon  the  

decision  of  this  Court  in  Civil  Appeal  No.107  of  2014  

titled BSNL & Ors. Vs. Kailash Narayan Sharma to hold that  

reinstatement  may  not  be  a  natural  consequence  of  

termination  of  service  of  a  work  in  contravention  to  

Section 25 F of the ID Act. The relevant para reads as  

under:

“The  decisions  of  this  Court  referred  to  above, in no uncertain terms hold that in  case of termination in violation of Section  25-F  of  the  I.D.  Act,  relief  of  reinstatement  may  not  be  the  natural  consequence.  It will depend upon the facts  and circumstances of each case.   It is not  automatic.  In the facts of a given case,  instead  of  reinstatement,  monetary  compensation can be granted.   The cases in  hand clearly fall within the ratio of the  decisions  of  this  Court,  referred  to  above.”

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3. However, it is pertinent to mention that the recent  

decision  of  this  Court  in  the  case  of  Deepali  Gundu  

Surwase v. Kranti Junior Adhyapak Mahavidyalaya (D.Ed) and  

Ors.3 took a contrary view. The Court in this case, opined  

as under:

“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. 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  employee concerned, 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. The  

3   (2013) 10 SCC 324

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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 rewarding the employer by relieving  him of the obligation to pay back wages including  the emoluments.

23. A somewhat similar issue was considered by a  three-Judge Bench in Hindustan Tin Works (P) Ltd.  v. Employees of M/s Hindustan Tin Works Pvt. Ltd.  & Ors.4 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  utilisation  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  

4  (1979) 2 SCC 80

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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  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

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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  straitjacket  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

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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 abovenoted 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.

24. Another three-Judge Bench considered the same  issue in Surendra Kumar Verma & Ors. v. Central  Government Industrial Tribunal-cum-Labour Court,  New Delhi & Anr.5 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  

5  (1980) 4 SCC 443

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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  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)

Therefore, in the light of the decision of this Court in  

Deepali Gundu’s case (supra) which has correctly relied  

upon  higher  bench  decisions  of  this  Court  in  Surendra  

Kumar Verma’s case (supra) and  Hindustan Tin Works Pvt.  Ltd.  (supra),  I  am  of  the  opinion that  the  appellant  

herein is entitled to reinstatement with full back wages  

since in the absence of full back wages, the employee will  

be distressed and will suffer punishment for no fault of  

his own.  

4. The Division Bench of the High Court has gravely  

erred in law that the Tribunal and learned single Judge  

found that the order of the termination is bad in law for

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non-compliance with the above statutory provisions of the  

ID Act and therefore, following the normal Rule of Award  

of reinstatement is awarded but erroneously denied full  

back wages in the absence of proof of gainful employment  

of appellant-workman.

5. For the foregoing additional reasons, the impugned  

judgment and order of the Division Bench is set aside and  

the Award of the Tribunal and the order of the learned  

single  Judge  are  restored.  The  appeal  is  accordingly  

allowed, but without costs.  

      ...........................J.

 (V. GOPALA GOWDA)      

New Delhi,  January 28, 2014

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IN THE SUPREME COURT OF INDIA CIVIL APPEALLATE JURISDICTION

   CIVIL APPEAL NO. 4980 OF 2014 (Arising out of SLP (C) No. 15357 of 2013)

TAPASH KUMAR PAUL               ....  APPELLANT

                VERSUS

BSNL & ANR.                     ....  RESPONDENTS

O R D E R  

Leave granted.  

In view of the two orders giving separate  

reasons, though concurring, the appeal is allowed.  

........................J. [GYAN SUDHA MISRA]         

........................J. [V. GOPALA GOWDA]          

   NEW DELHI;  JANUARY 28, 2014