JAYANTIBHAI RAOJIBHAI PATEL versus MUNICIPAL COUNCIL, NARKHED & ORS. on 21 August 2019

1. The appellant was appointed on 1 July 1986 as a Headmasterof the Nagar Parishad High School conducted by the Municipal Councilof Narkhed in the District of Nagpur. On 5 February 1994, a notice toshow cause was issued to him, levelling an allegation of misappropriationof Rs 5,000. After the appellant submitted a reply on 6 February 1994, A

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Athe first respondent appointed a former Deputy Education Officer, ShriMarathe as an inquiry officer. A charge-sheet was issued to the appellanton 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 chargedwith.

B2. On 27 August 1994, the first respondent resolved to appointanother inquiry officer to conduct an inquiry into the charges against theappellant. A former Chief Officer, Shri Sontakke was appointed as aninquiry officer. The appellant objected to the convening of a secondinquiry by his letter dated 24 September 1994. The new inquiry officerissued a notice to show cause to the appellant on 26 September 1994.CThe appellant objected to the appointment. In the meantime, on 10October 1994 the first respondent called upon the appellant to showcause what action should be taken pursuant to the report of the firstinquiry officer. On 8 November 1994, the first respondent inferred thatthe report of Shri Marathe was not acceptable to the appellant andDproceeded 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 causewas issued to the appellant to which he submitted his reply. The firstErespondent then passed a resolution removing the appellant. This wasfollowed by an order of removal dated 29 June 1996. The appeal filed bythe appellant before the Regional Director, Municipal Administration,Nagpur Division under Section 79 (6) of the Municipal Councils, NagarPanchayats and Industrial Townships Act 1965 was dismissed on 31August 1996.F

4. The appellant instituted a writ petition before the High Court tochallenge his removal. The High Court, by its judgment and order dated12 August 2014 quashed the order of removal. The appellant had alreadyattained 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 notGrendered service. However, the High Court directed the disbursementof retiral benefits to the appellant, treating him to be in service withcontinuity of service until the date of superannuation.

5. The submission which has been urged on behalf of the appellantin support of the appeal is that once the High Court found that theHappellant had wrongfully been removed from service, the general principle that back-wages must follow a determination in regard to the illegality oftermination should be applied. This was sought to be supported by relyingupon the decisions of this Court in Hindustan Tin Works (P) Ltd vEmployees (“Hindustan Tin Works”)[1] and Deepali GunduSurwase v Kranti Junior Adhyapak Mahavidyalaya (“DeepaliSurwase”)[2].

6. After notice was issued in these proceedings, a counter affidavithas been filed on behalf of the first respondent. It has been submittedthat pursuant to the order of the High Court, retiral benefits amountingto Rs 27 lakhs have been paid to the appellant in July 2015 after deductionof tax. Moreover, the appellant is drawing a pension of Rs 31,500 permonth. The first respondent submitted that within two years of theremoval, it had taken necessary steps to reinstate the appellant but theorder could not be implemented as a result of a stay granted by theDistrict Collector. The first respondent submitted that the appellant oughtnot to be granted back-wages for the period for which he has not worked,particularly having regard to the fact that it is a ‘Class-C’ municipalitywith a limited income.

The rival submissions now fall for our consideration.

7. The High Court has held that the action of the Municipal Councilin proceeding with a de novo inquiry was vitiated since no reasons wererecorded by the Municipal Council. The High Court held that even if ade novo inquiry was permissible under the rules, no reason was furnishedfor discarding the report of the first inquiry officer and convening afresh enquiry. Moreover, the appellant had objected to the appointmentof Shri Sontakke as an inquiry officer since he was an ex-officer of theMunicipal Council who was occupying quarters allotted to him at thematerial time. Hence, the High Court held that the removal was illegal.However, the High Court denied back-wages for the period betweenthe date of dismissal and the date on which the appellant attained theage of superannuation. The appellant has been granted his retiral dueson the basis of continuity of service. The judgment of the High Courthas not been challenged by the Municipal Council.

8. The view of the High Court that a fresh appointment of aninquiry officer could not have been made without recording reasons why 1 (1979) 2 SCC 80

2 (2013) 10 SCC 324

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Athe disciplinary authority disagreed with the enquiry report is correct.This is borne out by the decision of this Court in CSHA University vBD Goyal[3], where a three judge Bench of this Court observed:

“7. It is no doubt true that the punishing authority or any higherauthority could have disagreed with the finding of the enquiringBofficer, but in such a case the authority concerned is duty-boundto record reasons in writing and not on ipse dixit can alter thefinding of an enquiring officer. The order of the Vice-Chancellor,which was produced before us does not satisfy the requirementsof law in the matter of differing with the findings of an enquiringofficer..”C

9. Several judgments of this Court have laid down the principlespertaining to the grant of back wages. In Hindustan Tin Works, athree-judge Bench of this Court adjudicated on the criterion for grant ofback-wages where a termination has been held to be illegal. The appellantin that case was a private limited company with an industrial unit. TheDLabour Court held that the retrenchment of employees by the appellantwas not bona fide and awarded full back wages to the employees, whichwas challenged before the Supreme Court. This Court made the followingobservations:

“9. It is no more open to debate that in the field of industrialEjurisprudence a declaration can be given that the termination ofservice is bad and the workman continues to be in service. Thespectre of common law doctrine that contract of personal servicecannot be specifically enforced or the doctrine of mitigation ofdamages does not haunt in this branch of law. The relief ofFreinstatement with continuity of service can be granted wheretermination of service is found to be invalid. It would mean thatthe employer has taken away illegally the right to work of theworkman contrary to the relevant law or in breach of contractand simultaneously deprived the workman of his earnings. If thusthe employer is found to be in the wrong as a result of which theGworkman is directed to be reinstated, the employer could not shirkhis responsibility of paying the wages which the workman hasbeen deprived of by the illegal or invalid action of the employer.Speaking realistically, where termination of service isquestioned as invalid or illegal and the workman has to go H3 (2010) 15 SCC 776

JAYANTIBHAI RAOJIBHAI PATEL v. MUNICIPAL COUNCIL,NARKHED [DR. DHANANJAYA Y CHANDRACHUD, J.]

through the gamut of litigation, his capacity to sustainhimself throughout the protracted litigation is itself suchan awesome factor that he may not survive to see the daywhen relief is granted. More so in our system where thelaw’s proverbial delay has become stupefying. If after sucha protracted time and energy consuming litigation duringwhich period the workman just sustains himself, ultimatelyhe is to be told that though he will be reinstated, he will bedenied the back wages which would be due to him, theworkman would be subjected to a sort of penalty for nofault of his and it is wholly undeserved. Ordinarily, therefore,a workman whose service has been illegally terminatedwould be entitled to full back wages except to the extenthe was gainfully employed during the enforced idleness.That is the normal rule. Any other view would be a premiumon the unwarranted litigative activity of the employer. Ifthe employer terminates the service illegally and thetermination is motivated as in this case viz. to resist theworkmen’s demand for revision of wages, the terminationmay well amount to unfair labour practice. In suchcircumstances reinstatement being the normal rule, itshould be followed with full back wages…”

(Emphasis supplied)

The Court further clarified that while the payment of full backwages would be the normal rule, there can be a departure from it wherenecessary circumstances have been established:

“11. In the very nature of things there cannot be a straight-jacketformula for awarding relief of back wages. All relevantconsiderations will enter the verdict. More or less, it would be amotion addressed to the discretion of the Tribunal. Full back wageswould be the normal rule and the party objecting to it must establishthe circumstances necessitating departure. At that stage theTribunal will exercise its discretion keeping in view all the relevantcircumstances. But the discretion must be exercised in a judicialand judicious manner. The reason for exercising discretion mustbe cogent and convincing and must appear on the face of therecord. When it is said that something is to be done within thediscretion of the authority, that something is to be done according

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Ato 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(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.BThe principle laid down in Hindustan Tin Works has been followed byother decisions of this Court.[4]

10. In Surendra Kumar Verma v. Central GovernmentIndustrial Tribunal-cum-Labour Court[5], the termination of theservices of the appellants was held to be in contravention of Section 25-CF of the Industrial Disputes Act by the Labour Court, but the appellantswere denied the payment of back wages. In appeal, a three-judge benchof this Court observed:

“6… Plain common-sense dictates that the removal of an orderterminating the services of workmen must ordinarily lead to thereinstatement of the services of the workmen. It is as if the orderDhas never been, and so it must ordinarily lead to back wages too.But there may be exceptional circumstances which make itimpossible or wholly inequitable vis-à-vis the employer andworkmen to direct reinstatement with full back wages. Forinstance, the industry might have closed down or might be in severeEfinancial doldrums; the workmen concerned might have securedbetter or other employment elsewhere and so on. In such situations,there is a vestige of discretion left in the court to make appropriateconsequential orders. The court may deny the relief ofreinstatement where reinstatement is impossible because theFindustry has closed down. The court may deny the relief of awardof full back wages where that would place an impossible burdenon the employer. In such and other exceptional cases the courtmay mould the relief, but ordinarily the relief to be awarded mustbe reinstatement with full back wages. That relief must be awardedwhere no special impediment in the way of awarding the relief isGclearly shown. True, occasional hardship may be caused to anemployer but we must remember that, more often than not, D

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 324H5 (1980) 4 SCC 443

comparatively far greater hardship is certain to be caused to theworkmen if the relief is denied than to the employer if the relief isgranted.”

11. In Deepali Surwase, the appellant had been employed as ateacher in a primary school run by a trust. The services of the appellanthad been terminated by the management of the school pursuant to anex-parte inquiry proceeding. The School Tribunal quashed the terminationof the appellant’s services and issued a direction for the grant of fullback wages. In appeal, the High Court affirmed the view of the Tribunalthat the termination was illegal, but set aside the direction for grant ofback wages. In appeal, a two-judge Bench of this Court laid down thefollowing principles:

“22. The very idea of restoring an employee to the position whichhe held before dismissal or removal or termination of serviceimplies that the employee will be put in the same position in whichhe would have been but for the illegal action taken by the employer.The injury suffered by a person, who is dismissed or removed oris otherwise terminated from service cannot easily be measuredin terms of money…The reinstatement of such an employee, whichis preceded by a finding of the competent judicial/quasi-judicialbody or court that the action taken by the employer is ultra viresthe relevant statutory provisions or the principles of natural justice,entitles the employee to claim full back wages. If the employerwants to deny back wages to the employee or contest hisentitlement to get consequential benefits, then it is for him/her to specifically plead and prove that during theintervening period the employee was gainfully employedand was getting the same emoluments. The denial of backwages to an employee, who has suffered due to an illegalact of the employer would amount to indirectly punishingthe employee concerned and rewarding the employer byrelieving him of the obligation to pay back wages includingthe emolument.”

(Emphasis supplied)

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

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“38.1. In cases of wrongful termination of service, reinstatementwith continuity of service and back wages is the normal rule.

38.2. The aforesaid rule is subject to the rider that while decidingthe issue of back wages, the adjudicating authority or the courtmay take into consideration the length of service of the employee/workman, the nature of misconduct, if any, found proved againstthe employee/workman, the financial condition of the employerand similar other factors.

38.3. Ordinarily, an employee or workman whose services areterminated and who is desirous of getting back wages is requiredto either plead or at least make a statement before the adjudicatingauthority or the court of first instance that he/she was not gainfullyemployed or was employed on lesser wages. If the employer wantsto avoid payment of full back wages, then it has to plead and alsolead cogent evidence to prove that the employee/workman wasgainfully employed and was getting wages equal to the wages he/she was drawing prior to the termination of service. This is sobecause it is settled law that the burden of proof of the existenceof a particular fact lies on the person who makes a positiveaverment about its existence. It is always easier to prove a positivefact than to prove a negative fact. Therefore, once the employeeshows that he was not employed, the onus lies on the employer tospecifically plead and prove that the employee was gainfullyemployed and was getting the same or substantially similaremoluments.

38.4. The cases in which the Labour Court/Industrial Tribunalexercises power under Section 11-A of the Industrial DisputesAct, 1947 and finds that even though the enquiry held against theemployee/workman is consistent with the rules of natural justiceand/or certified standing orders, if any, but holds that the punishmentwas disproportionate to the misconduct found proved, then it willhave the discretion not to award full back wages. However, if theLabour Court/Industrial Tribunal finds that the employee orworkman is not at all guilty of any misconduct or that the employerhad foisted a false charge, then there will be ample justificationfor award of full back wages.

JAYANTIBHAI RAOJIBHAI PATEL v. MUNICIPAL COUNCIL,NARKHED [DR. DHANANJAYA Y CHANDRACHUD, J.]

38.5. The cases in which the competent court or tribunal findsthat the employer has acted in gross violation of the statutoryprovisions and/or the principles of natural justice or is guilty ofvictimising the employee or workman, then the court or tribunalconcerned will be fully justified in directing payment of full backwages. In such cases, the superior courts should not exercisepower under Article 226 or 136 of the Constitution and interferewith the award passed by the Labour Court, etc. merely becausethere is a possibility of forming a different opinion on the entitlementof the employee/workman to get full back wages or the employer’sobligation to pay the same. The courts must always keep in viewthat in the cases of wrongful/illegal termination of service, thewrongdoer is the employer and the sufferer is the employee/workman and there is no justification to give a premium to theemployer of his wrongdoings by relieving him of the burden topay to the employee/workman his dues in the form of full backwages.

38.6. In a number of cases, the superior courts have interferedwith the award of the primary adjudicatory authority on the premisethat finalisation of litigation has taken long time ignoring that inmajority of cases the parties are not responsible for such delays.Lack of infrastructure and manpower is the principal cause fordelay in the disposal of cases. For this the litigants cannot beblamed or penalised. It would amount to grave injustice to anemployee or workman if he is denied back wages simply becausethere is long lapse of time between the termination of his serviceand finality given to the order of reinstatement. The courts shouldbear in mind that in most of these cases, the employer is in anadvantageous position vis-à-vis the employee or workman. Hecan avail the services of best legal brain for prolonging the agonyof the sufferer i.e. the employee or workman, who can ill-affordthe luxury of spending money on a lawyer with certain amount offame. Therefore, in such cases it would be prudent to adopt thecourse 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] .”

12. In the present case the first inquiry resulted in a report whichcame to the conclusion that the charge of misconduct was not A

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Asubstantiated. Upon finding that the convening of a fresh inquiry withoutrecording reasons was contrary to law, the High Court would haveordinarily granted liberty to the Municipal Council to take a fresh decisionafter due notice to the appellant. Such a course of action was, however,rendered impracticable by supervening events. The writ petition institutedby the appellant before the High Court in 1996 remained pending forBnearly eighteen years. The appellant had been removed from service on29 June 1996. Considering the lapse of time, reopening the proceedingswould not be expedient in the interest of justice particularly when theappellant had, in the meantime, attained the age of superannuation in2005. Relegating the appellant to a protracted course of action by restoringCthe proceedings before the disciplinary authority would also not be fairand proper after a lapse of nearly fourteen years since his retirement.

13. Having due regard to the principles which have been enunciatedin Deepali Surwase by this Court, the High Court was not, in our view,justified in denying the back-wages to the appellant altogether. BearingDin mind the circumstances which have been noted above, a lumpsumcompensation should be directed to be paid.

14. The ends of justice would be met by directing that the appellantbe paid an amount quantified at Rs 5 lakhs in full and final settlement ofhis claim for back-wages for the period between the date of the order ofEremoval and the date on which he attained the age of superannuation.This payment to the appellant shall be made in addition to the retiralbenefits 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 monthsfrom the date of receipt of a certified copy of this order.

F15. The appeal is accordingly disposed of. There shall be noorder as to costs.

Nidhi Jain

Appeal disposed of.

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