J.K.Synthetics Ltd. Vs. K.P.Agrawal & Anr.  Insc 77 (1 February 2007)
B. P. Singh & R. V. Raveendran
This appeal by special leave is against the judgment dated 28.7.2003 of the Allahabad
High Court rejecting Civil Misc. W.P. No.10713/83 filed by the appellant
challenging the award dated 8.3.1983 and subsequent modification order dated
29.6.1983 of Labour Court II, Kanpur.
Brief facts necessary for disposal of
this appeal are as under :
respondent was working as an Assistant in the appellant company. He was issued
three charge-sheets dated 5.2.1977, 17.2.1977 and 24.2.1977 (amended on
1.3.1977). First respondent filed his objections/explanation in respect of each
charge-sheet. An inquiry was held into the charges. Accepting the report of the
Inquiry Officer, which held that the charges were proved, the employer imposed
the punishment of dismissal on the first respondent, by order dated 6.4.1977.
proceedidngs initiated in respect of such dismissal, failed. Consequently, the
State Government referred the following dispute to the Labour Court for
"Whether the termination of the services of its workman Shri Kashi
Prasad (s/o Shri Lala Shyam Lal), Assistant, Accounts Department by the Employers
from 6.4.1977 is proper, and/or legal ? If not, for what benefits/compensation
the workman is entitled to and any other, with details."
By order dated
20.12.1980, the Labour Court held that the inquiry was not fair and proper, and
permitted parties to adduce evidence. The Labour Court made its award dated
8.3.1983. The Labour Court held that the charge of insubordination and
disorderly behaviour in the first charge-sheet, was not proved. The charge under
the second charge-sheet, that the first respondent made false (indecent)
allegations against his superior officer, and thereby violated office
discipline, was held to be proved. In regard to the charge under the third
charge-sheet, the Labour Court found that the employee had admitted that he had
not prepared the annual accounts correctly, but gave the employee the 'benefit
of doubt' by holding that the mistakes in the accounts might not have been
committed knowingly or deliberately, and therefore, may not amount to habitual
negligence or carelessness. Thus in effect, the findings in regard to three
charges were (i) not proved, (ii) proved, and (iii) entitled to benefit of
doubt. On the said findings, it made an award dated 8.3.1983, the operative part
of which reads thus :
"The concerned workman has been working in the company for four years
and there was no such complaint against him in the past, hence instead of the
punishment of termination of service as a result of Ex. E-2 (dated 17.2.1977)
being proved against him, I deem it proper that the increments of two years of
the concerned workman should be stopped as punishment."
The said award was published on 27.4.1983 and became enforceable from
first respondent filed an application under section 6(6) of the U.P. Industrial
Disputes Act, 1947 ('Act' for short) seeking corrections of the award, stating
that the workman was entitled to reinstatement with continuity of service and
full back-wages from 6.4.1977.
The appellant resisted the said application contending inter alia that
the Labour Court became functus officio after publication of the award on
27.4.1983 and therefore, it could not amend the award;
the prayer amounted to seeking review
of the award, and there was no jurisdiction or power to grant such relief; and
the first respondent was not entitled to the relief of
back-wages, as the Labour Court had held that a misconduct was proved.
The Labour Court
by order dated 29.6.1983 allowed the application under section 6(6) and added
the following paragraph at the end of the Award, on the ground that it had been
omitted due to an accidental slip :
"Hence, it is my decision in this case that the termination of services
of Mr. Kashi Prasad Agarwal, Assistant, Accounts Department from 6.4.77 by his
employer will not be justified but instead, his two annual increments which
were admissible to him after the date of his termination, i.e. 6.4.77, be
stopped. In view of the punishment of stoppage of two annual increments, the
employer shall pay the full wages of the period under unemployment i.e. 6.4.77
to the date of reinstatement in which the amount which was paid to the workman
as interim relief or any other mode, shall be adjusted."
[emphasis supplied] 2.6) Appellant challenged the said award and the amendment
thereto in C.M.W.P. No.10714/83. A learned Single Judge of the High Court vide
order dated 28.7.2003 dismissed the petition holding as follows :
"From a perusal of the award of the labour court, it is apparent that
the tenor of the order is that the workman could not be punished by resorting
to termination. The spirit of the order also shows that in fact the labour
court had in mind to grant back-wages to the workman, but by omission, the
aforesaid mistake has crept in. The contention of the learned counsel for the
petitioner cannot be accepted and in my opinion, there was an omission which
could be corrected under section 6(6). Though a plea has been made that the
court becomes functus officio after tendering the award, in my view, this
argument has only to be stated to be rejected.
Section 6(6) gives power to the labour court for making corrections in an
Referring to the submission of learned counsel for the employee that he had
not been reinstated in spite of refusal of stay, the learned Single Judge
observed thus :
"Learned counsel for the respondent workman has submitted that in spite
of the aforesaid fact till date the petitioner has not reinstated the workman
and, therefore, even equity is against him. A petitioner, who willfully violates
lawful orders is not entitled to equitable discretion under Article 226 of the
Constitution of India."
The said order of the learned Single
Judge, is challenged in this appeal by special leave. On the contentions urged,
the following questions arise for consideration :
Whether a provision enabling a court to correct any clerical or
arithmetical mistake, or error in the order arising from any accidental slip or
omission, empowers the Labour Court to grant a relief of back- wages, which was
not granted in the original award.
When the punishment of dismissal is
substituted by a lesser punishment (stoppage of increments for two years), and
consequently, the employee is directed to be reinstated, whether the employee is
entitled to back-wages from the date of termination to date of reinstatement.
Whether on the facts and circumstances, the Labour Court was justified
in interfering with the punishment of dismissal.
If the employer was otherwise
entitled to relief, whether it could be denied on the ground that it had failed
to reinstate the employee, in spite of the non-stay of the direction for
Re : Question (i)
Section 6(6) of the Act provides that a Labour Court may either on its
own motion or on the application of any party to the dispute, correct any
clerical or arithmetic mistakes in the award or errors arising therein from any
accidental slip or omission. The question is whether in exercise of such power,
the Labour Court could have awarded back-wages, even though the original award
was silent on that issue.
While considering the scope of a similar provision (Rule 83 of the Orissa
Sales Tax Rules), this Court in Master Construction Co. (P) Ltd., vs.
State of Orissa [1966 (3) SCR 99], observed thus :
"An arithmetical mistake is a mistake of calculation; a clerical
mistake is a mistake in writing or typing. An error arising out of or occurring
from an accidental slip or omission is an error due to a careless mistake or
omission unintentionally made. The accidental slip or omission is an accidental
slip or omission made by the court. The obvious instance is a slip or omission
to embody in the order something which the court in fact ordered to be done.
This is sometimes described as a decretal order not being in accordance with
the judgment. But the slip or omission may be attributed to the Judge himself.
He may say something or omit to say something which he did not intend to say or
omit. This is described as a slip or omission in the judgment itself. The cause
for such a slip or omission may be the Judge's inadvertence or the advocate's
mistake. But, however wide the said expressions are construed, they cannot
countenance a re-argument on merits on questions of fact or law, or permit a
party to raise new arguments which he has not advanced at the first
Section 6(6) itself was considered in Tulsipur Sugar Company Ltd., vs.
State of U.P. [1970 (1) SCR 35]. In that case, two questions were referred to Labour
fitment of certain workmen in a new
the date from
which such fitment should have effect. The Labour Court made an award holding
that the workmen should be fitted into certain grades and directed the employer
to do so within one month after the award became enforceable. But it omitted to
fix the date from which such fitment should be effected. The employer fitted
the workmen in the new grades prospectively.
The employees-Union applied under section 6(6) of the Act to amend the award
on the ground that it had omitted to answer the second question referred to it.
The Labour Court allowed the application and amended the award and directed the
employer to place the workmen in their respective grades from 1.1.1960. The
said amendment to the award was challenged on the ground that it was not a
consequence of any clerical or arithmetic error or accidental slip/omission. It
was also contended that power under section 6(6) can only be exercised before
the date on which the award became enforceable and not thereafter. This Court negatived
the said contentions.
This Court held that the reference comprised two questions, the first
relating to fitment, and the second relating to the date from which such
fitment was to have effect; that the award as originally made answered the first
question but did not decide the second question; that as the reference was in
respect of two questions, the Labour Court was bound to answer the second
question also; and the failure to do so was an error in the award due to an
accidental slip or omission and that could be corrected under section 6(6).
This Court also held that section 6(6) does not lay down expressly any time
limit within which the correctional jurisdiction could be exercised and,
therefore, was not barred by limitation.
Section 6(6) again came up for consideration in U.P. SRTC vs. Imtiaz Hussain
[2006 (1) SCC 380] which related to the removal of a conductor after he had
been found guilty of a charge in domestic inquiry. An industrial dispute was
raised questioning the legality of the order of removal. The Labour Court held
that the inquiry was not fair and proper and therefore, the removal was bad.
The Labour Court ordered reinstatement but held that the employee was not
entitled to any back wages, as his name was not found in the list of permanent
conductors. An application was filed under section 6(6) of the Act contending
that the conclusion of the labour court that he was not in the permanent list
was not correct. The Labour Court allowed the application and modified the
award. It issued certain directions about payment of salary, allowances etc.,
from the date of termination till reinstatement with continuity of service,
though his name was not in the waiting list. This Court held that such
amendment or modification of the award was impermissible in exercise of power
under section 6(6). This Court observed :
"Section 6(6) of the U.P. Industrial
Disputes Act, 1947 is similar to section 152 CPC. The settled position of
law is that after the passing of the judgment, decree or order, the same
becomes final subject to any further avenues of remedies provided in respect of
the same and the very Court or the tribunal cannot, on mere change of view, is
not entitled to vary the terms of the judgments, decrees and orders earlier
passed except by means of review, if statutorily provided specifically therefor
and subject to the conditions or limitations provided therein. The powers under
Section 152 CPC are neither to be equated with the power of review nor can be
said to be akin to review or even said to clothe the Court concerned under the
guise of invoking after the result of the judgment earlier rendered, in its
entirety or any portion or part of it."
8. A careful reading of section 6(6) and the two decisions shows that the
two decisions considered two different situations. In Tulsipur Sugar Company,
this Court found that the reference to the Labour Court consisted of two parts.
The award answered only the first part and had omitted to answer the second
(consequential) part. While modifying the award on an application under section
6(6), the Labour Court neither upset nor altered any of the findings recorded
in its original award, but only answered the second part of the reference,
which had earlier been omitted. Therefore, this Court held that such correction
was permissible. On the other hand in Imtiaz Hussain, the Labour Court, in its
award had specifically refused back-wages to the employee on the ground that
his name was not in the list of permanent employees. But on an application
under section 6(6), it re-examined the issue and held that though his name was
not in the list of permanent employees, he was entitled to payment of salary
and allowances from the date of termination till the date of reinstatement with
continuity of service.
In Tulsipur Sugar Company, there was a correction of an omission which fell
within section 6(6). In Imtiaz Hussain, there was a review of the original
order which of course, was impermissible. We may now summarize the scope of
section 6(6) of the Act thus :
If there is an arithmetical or
clerical or typographical error in the order, it can be corrected.
Where the court had said something
which it did not intend to say or omitted something which it intended to say, by
reason of any accidental slip/omission on the part of the court, such
inadvertent mistake can be corrected.
The power cannot be exercised where
the matter involves rehearing on merits, or reconsideration of questions of fact
or law, or consideration of fresh material, or new arguments which were not
advanced when the original order was made. Nor can the power be exercised to
change the reasoning and conclusions.
In this case, the reference to Labour Court consisted of two parts -
whether the termination of the workmen was proper and legal, and if the answer
was in the negative, then the benefits or compensation to which the workmen was
entitled. The award originally made, answered the first part in the negative,
but did not answer the consequential second part of the reference. In fact the
award ended rather abruptly. On an application being made under section 6(6),
the Labour Court recorded that it had accidentally omitted to answer the second
part of the reference and rectified the omission by adding a paragraph. This
case, therefore, squarely falls under Tulsipur Sugar (supra). We are of the
view that the Labour Court had the power to amend the award.
But whether such modification was
warranted, is a different question.
The next question, therefore, is whether the facts and circumstances warrant
grant of back-wages, assuming that the punishment imposed was excessive.
Re : Question (ii)
Learned counsel for the employee
relied on several decisions of this Court to contend that where the order of
dismissal or removal is set aside and the employee is directed to be reinstated,
full back-wages should follow as a matter of course. Reliance is placed on the
decisions of this Court in Hindustan Tin Works Pvt. Ltd., vs. Employees of
Hindustan Tin Works Pvt.
Ltd. [1979 (2) SCC 80], Surendra Kumar Verma vs. Central Government
Industrial Tribunal-cum-Labour Court, New Delhi [1981 (1) SCR 789], and Mohan
Lal vs. Bharat Electronics Ltd., [1981 (3) SCC 225].
Hindustan Tin Works Pvt. Ltd (supra),
related to retrenchment of some workmen on the ground that the employer was
suffering mounting losses.
The labour court held that the real reason for retrenchment was the
annoyance felt by the management when the employees refused to agree to its
terms. Consequently, it directed the reinstatement with full back wages.
That was challenged by the employer. This Court granted leave to appeal,
only in regard to the question of back-wages, as it did not consider it
necessary to interfere with the direction for reinstatement. Ultimately, while
reducing the back-wages to 75%, this Court observed as follows :
"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
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 workman'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.
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."
Surendra Kumar Verma (supra) related to retrenchment of several workmen
in violation of section 25-F of the Industrial Disputes Act, 1947 ('ID Act' for
short). This Court held that when the order of termination is set aside as
being invalid and inoperative, it must ordinarily lead to reinstatement as if
the order of termination was never made and that would necessarily lead to
back-wages too. This Court, however, observed that there may be exceptional
circumstances which may make it impossible or wholly inequitable vis-`-vis
employer and workmen to direct reinstatement with full back-wages as for
example, when the industry might have closed down or might be in severe
financial doldrums or where the concerned employee might have secured other
employment elsewhere and in such situations, the court has the discretion to
deny full back-wages. In the concurring judgment Pathak J. (as he then was),
held as follows :
"Ordinarily, a workman who has been retrenched in contravention of the
law is entitled to reinstatement with full back wages and that principle yields
only where the justice of the case in the light of the particular facts
indicates the desirability of a different relief. It has not been shown to us
on behalf of the respondent why the ordinary rule should not be applied."
Mohan Lal (supra) also related to retrenchment not in consonance with
section 25-F of ID Act. This Court held :
"As pre-condition for a valid retrenchment has not been satisfied the
termination of service is ab initio void, invalid and inoperative. He must,
therefore, be deemed to be in continuous service.. If the termination of
service is ab initio void and inoperative, there is no question of granting
reinstatement because there is no cessation of service and a mere declaration
follows that he continues to be in service with all consequential benefits.
Undoubtedly, in some decisions of this Court such as Ruby General Insurance Co.
Ltd., vs. Chopra (P.P) [1969 (3) SCC 653] and Hindustan Steels Ltd., vs. A. K.
Roy [1969 (3) SCC 513], it was held that the court before granting
reinstatement must weigh all the facts and exercise discretion properly whether
to grant reinstatement or to award compensation. 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 this case."
But the manner in which 'back-wages' is viewed, has undergone a
significant change in the last two decades. They are no longer considered to be
an automatic or natural consequence of reinstatement. We may refer to the
latest of a series of decisions on this question. In U.P. State Brassware Corpn.
Ltd. vs Udai Narain Pandey [2006 (1) SCC 479], this Court following Allahabad Jal
Sansthan vs. Daya Shankar Rai [2005 (5) SCC 124], and Kendriya Vidyalaya Sangathan
vs. S. C. Sharma [2005 (2) SCC 363] held as follows :
"A person is not entitled to get something only because it would be
lawful to do so. If that principle is applied, the functions of an Industrial
Court shall lose much of their significance."
"although direction to pay full back wages on a declaration that the
order of termination was invalid used to be the usual result, but now, with the
passage of time, a pragmatic view of the matter is being taken by the courts
realizing that an industry may not be compelled to pay to the workman for the
period during which he apparently contributed little or nothing at all to it
and/or for a period that was spent unproductively as a result whereof the
employer would be compelled to go back to a situation which prevailed many
years ago, namely, when the workman was retrenched... The changes (were)
brought about by the subsequent decisions of the Supreme Court, probably having
regard to the changes in the policy decisions of the Government in the wake of
prevailing market economy, globalization, privatization and outsourcing, is
No precise formula can be laid down as to under what circumstances payment
of entire back wages should be allowed. Indisputably, it depends upon the facts
and circumstances of each case. It would, however, not be correct to contend
that it is automatic. It should not be granted mechanically only because on
technical grounds or otherwise an order of termination is found to be in
contravention of the provisions of section 6- N of the U.P. Industrial Disputes
Act.. While granting relief, application of mind on the part of the Industrial
Court is imperative.
Payment of full back wages cannot therefore be the natural consequence.
In General Manager, Haryana Roadways vs. Rudhan Singh [2005 (5) SCC 591],
this Court observed :
"There is no rule of thumb that in every case where the Industrial Tribuanl
gives a finding that the termination of service was in violation of Section
25-F of the Act, entire back wages should be awarded. A host of factors like
the manner and method of selection and appointment i.e. whether after proper
advertisement of the vacancy or inviting applications from the employment
exchange, nature of appointment, namely, whether ad hoc, short term, daily
wage, temporary or permanent in character, any special qualification required
for the job and the like should be weighed and balanced in taking a decision
regarding award of back wages. One of the important factors, which has to be
taken into consideration, is the length of service, which the workman had
rendered with the employer. If the workman has rendered a considerable period
of service and his services are wrongfully terminated, he may be awarded full
or partial back wages keeping in view the fact that at his age and the
qualification possessed by him he may not be in a position to get another
employment. However, where the total length of service rendered by a workman is
very small, the award of back wages for the complete period i.e. from the date
of termination till the date of the award, which our experience shows is often
quite large, would be wholly inappropriate. Another important factor, which
requires to be taken into consideration is the nature of employment.
A regular service of permanent character cannot be compared to short or
intermittent daily-wage employment though it may be for 240 days in a calendar
There has also been a noticeable shift in placing the burden of proof in
regard to back wages. In Kendriya Vidyalaya Sangathan (supra), this Court held
"..When the question of determining the entitlement of a person to back
wages is concerned, the employee has to show that he was not gainfully
employed. The initial burden is on him. After and if he places materials in
that regard, the employer can bring on record materials to rebut the claim.
In the instant case, the respondent had neither pleaded nor placed any
material in that regard."
In U.P. State Brassware Corpn. Ltd. (supra), this Court observed :
"It is not in dispute that the respondent did not raise any plea in his
written statement that he was not gainfully employed during the said period. It
is now well settled by various decisions of this Court that although earlier
this Court insisted that it was for the employer to raise the aforementioned
plea but having regard to the provisions of section 106 of the Evidence Act or
the provisions analogous thereto, such a plea should be raised by the
There is also a misconception that whenever reinstatement is directed,
'continuity of service' and 'consequential benefits' should follow, as a matter
of course. The disastrous effect of granting several promotions as a
'consequential benefit' to a person who has not worked for 10 to 15 years and
who does not have the benefit of necessary experience for discharging the
higher duties and functions of promotional posts, is seldom visualized while
granting consequential benefits automatically. Whenever courts or Tribunals
direct reinstatement, they should apply their judicial mind to the facts and
circumstances to decide whether 'continuity of service' and/or 'consequential
benefits' should also be directed. We may in this behalf refer to the decisions
of this Court in A.P.S.R.T.C. v. S. Narasa Goud [2003 (2) SCC 212],
A.P.S.R.T.C. v. Abdul Kareem [2005 (6) SCC 36] and R.S.R.T.C.
v. Shyam Bihari Lal Gupta [2005 (7) SCC 406].
Coming back to back-wages, even if the court finds it necessary to award
back-wages, the question will be whether back-wages should be awarded fully or
only partially (and if so the percentage). That depends upon the facts and
circumstances of each case. Any income received by the employee during the
relevant period on account of alternative employment or business is a relevant
factor to be taken note of while awarding back- wages, in addition to the
several factors mentioned in Rudhan Singh (supra) and Udai Narain Pandey
(supra). Therefore, it is necessary for the employee to plead that he was not
gainfully employed from the date of his termination.
While an employee cannot be asked to prove the negative, he has to at least
assert on oath that he was neither employed nor engaged in any gainful business
or venture and that he did not have any income. Then the burden will shift to
the employer. But there is, however, no obligation on the terminated employee
to search for or secure alternative employment. Be that as it may.
But the cases referred to above,
where back-wages were awarded, related to termination/retrenchment which were
held to be illegal and invalid for non-compliance with statutory requirements or
related to cases where the court found that the termination was motivated or
amounted to victimization.
The decisions relating to back wages payable on illegal retrenchment or
termination may have no application to the case like the present one, where the
termination (dismissal or removal or compulsory retirement) is by way of
punishment for misconduct in a departmental inquiry, and the court confirms the
finding regarding misconduct, but only interferes with the punishment being of
the view that it is excessive, and awards a lesser punishment, resulting in the
reinstatement of employee. Where the power under Article 226 or section 11A of
the Industrial Disputes Act (or any other similar provision) is exercised by
any Court to interfere with the punishment on the ground that it is excessive
and the employee deserves a lesser punishment, and a consequential direction is
issued for reinstatement, the court is not holding that the employer was in the
wrong or that the dismissal was illegal and invalid. The court is merely
exercising its discretion to award a lesser punishment. Till such power is
exercised, the dismissal is valid and in force. When the punishment is reduced
by a court as being excessive, there can be either a direction for
reinstatement or a direction for a nominal lump sum compensation. And if
reinstatement is directed, it can be effective either prospectively from the
date of such substitution of punishment (in which event, there is no continuity
of service) or retrospectively, from the date on which the penalty of termination
was imposed (in which event, there can be a consequential direction relating to
continuity of service). What requires to be noted in cases where finding of
misconduct is affirmed and only the punishment is interfered with (as
contrasted from cases where termination is held to be illegal or void) is that
there is no automatic reinstatement; and if reinstatement is directed, it is
not automatically with retrospective effect from the date of termination.
Therefore, where reinstatement is a consequence of imposition of a lesser
punishment, neither back-wages nor continuity of service nor consequential
benefits, follow as a natural or necessary consequence of such reinstatement.
In cases where the misconduct is held to be proved, and reinstatement is itself
a consequential benefit arising from imposition of a lesser punishment, award
of back wages for the period when the employee has not worked, may amount to
rewarding the delinquent employee and punishing the employer for taking action
for the misconduct committed by the employee. That should be avoided.
Similarly, in such cases, even where continuity of service is directed, it
should only be for purposes of pensionary/retirement benefits, and not for
other benefits like increments, promotions etc.
But there are two exceptions. The
first is where the court sets aside the termination as a consequence of employee
being exonerated or being found not guilty of the misconduct. Second is where
the court reaches a conclusion that the inquiry was held in respect of a
frivolous issue or petty misconduct, as a camouflage to get rid of the employee
or victimize him, and the disproportionately excessive punishment is a result of
such scheme or intention. In such cases, the principles relating to back-wages
etc. will be the same as those applied in the cases of an illegal termination.
In this case, the Labour Court found that a charge against the employee
in respect of a serious misconduct was proved. It, however, felt that the
punishment of dismissal was not warranted and therefore, imposed a lesser
punishment of withholding the two annual increments. In such circumstances,
award of back wages was neither automatic nor consequential. In fact, back
wages was not warranted at all.
Re : Question (iii)
This takes us to the next question as to whether the Labour Court was
justified at all in interfering with the punishment of dismissal. The Labour
Court held that one serious charge was proved, another charge was not proved
and in regard to the third charge gave 'benefit of doubt' to the employee. The Labour
Court also relied on the decisions of this Court in Rama Kant Misra vs. State
of U.P. [AIR 1982 SC 952], wherein it was held that the punishment of dismissal
was excessive where the employee was found to have uttered indecent words and
used abusive language and substituted it by the lesser punishment of stoppage
of two annual increments.
The said decision depended on its special facts and may not apply to this
case. The recent trend in regard to scope of interference with punishment in
matters involving discipline at the workplace has been different. We may refer
to some of the recent decisions.
In Hombe Gowda Educational Trust v. State of Karnataka [2006 (1) SCC
430], this Court stressed the need to give importance to discipline at the
workplace. This Court observed :
"This Court has come a long way from its earlier viewpoints. The recent
trend in the decisions of this Court seek to strike a balance between the
earlier approach to the industrial relation wherein only the interest of the
workmen was sought to be protected with the avowed object of fast industrial
growth of the country. In several decisions of this Court it has been noticed
how discipline at the workplace/industrial undertakings received a setback. In
view of the change in economic policy of the country, it may not now be proper
to allow the employees to break the discipline with impunity."
In Mahindra and Mahindra Ltd. vs. N. B. Narawade [2005 (3) SCC 134],
this Court considered a case where a workman used abusive and filthy language
against his superior officer, in the presence of his subordinates. He was
terminated after conducting an inquiry. Labour Court found the punishment to be
excessive and in exercise of power under section 11A of the ID Act, imposed a
lesser punishment. This Court held that the misconduct cannot be termed to be
an indiscipline calling for lesser punishment than termination. A similar view
was taken in Orissa Cement vs.
Adikand Sahu [1960 (1) LLJ 518] and New Shorrock Mills vs. Mahesh Bhai T Rao
[1996 (6) SCC 590].
In U.P. SRTC vs. Subhash Chandra Sharma [2000 (3) SCC 324], this Court
held that the punishment of removal, for abusing and threatening another
employee, was not shockingly disproportionate to the gravity of the offence. In
that case also, only one among three charges was established and the Labour
Court had interfered with the punishment, which was upheld by the High Court.
Reversing such decision, this Court held :
"The Labour Court, while upholding the third charge against the
respondent nevertheless interfered with the order of the appellant removing the
respondent, from the service. The charge against the respondent was that he, in
drunken state, along with a conductor went to the Assistant Cashier in the cash
room of the appellant and demanded money from the Assistant Cashier. When the
Assistant Cashier refused, the respondent abused him and threatened to assault
him. It was certainly a serious charge of misconduct against the respondent. In
such circumstances, the Labour Court was not justified in interfering with the
order of removal of respondent from the service when the charge against him
stood proved. Rather we find that the discretion exercised by the Labour Court
in the circumstances of the present case was capricious and arbitrary and
certainly not justified. It could not be said that the punishment awarded to
the respondent was in any way "shockingly disproportionate" to the
nature of the charge found proved against him. In our opinion, the High Court
failed to exercise its jurisdiction under Article 226 of the Constitution and
did not correct the erroneous order of the Labour Court which, if allowed to
stand, would certainly result in miscarriage of justice."
In Bharat Forge Co. Ltd., vs. Uttam Manohar Nakate [2005 (2) SCC 489],
M.P. Electricity Board vs. Jagdish Chandra Sharma [2005 (3) SCC 401], and
Regional Manager, Rajasthan State Road Corporation vs.
Ghanshayam Sharma [2002 (1) LLJ 234], this Court held that power under section
11A of ID Act (or under similar provisions) cannot be used to interfere with
the quantum of punishment, on irrational or extraneous factors, or on
compassionate grounds. This Court also observed that though section 11A gives
the jurisdiction and power to the labour court to interfere with the quantum of
punishment, the discretion has to be used judiciously and not capriciously.
This Court observed that harsh punishment wholly disproportionate the charge
should be the criterion for interference.
In this case, we have already found that the charge established against
the employee was a serious one. The Labour Court did not record a finding that
the punishment was harsh or disproportionately excessive. It interfered with
the punishment only on the ground that the employee had worked for four years
without giving room for any such complaint. It ignored the seriousness of the
misconduct. That was not warranted. The consistent view of this Court is that
in the absence of a finding that the punishment was shockingly disproportionate
to the gravity of the charge established, the Labour Court should not interfere
with the punishment. We, therefore, hold that the punishment of dismissal did
not call for interference.
Re : Question (iv)
It is true that when the employer challenged the award of the labour
court and sought stay of the award, the High Court only stayed the order dated
29.6.1983 in regard to the back-wages but did not stay the award dated
08.3.1983 directing reinstatement; and that if he had been reinstated in 1983,
he would have served till 31.3.1991 when he attained the age of superannuation.
The learned counsel for the employee made a submission before the High Court at
the final hearing that in spite of the award directing reinstatement not being
stayed, he was not reinstated. On the said submission, the High Court held that
the employer had wilfully violated the lawful order and was not entitled to
exercise of equitable discretion under Article 226/227. Firstly, the assumption
that there was a lawful order or that there was wilful violation thereof is not
sound. Further, the employer was not given an opportunity to explain why the
employee was not reinstated. In fact, the contention of employer is that the
first respondent did not report back to service, even though it was ready to
reinstate him subject to final decision. Be that as it may. The mere fact that
the first respondent was not reinstated in pursuance of the award of the Labour
Court cannot result in dismissal of the writ petition challenging the award.
In view of the above, we allow this appeal, set aside the order dated
28.7.2003 of the High Court as also the award dated 08.3.1983 (as modified on
29.6.1983) of the Labour Court and uphold the punishment of dismissal imposed
upon the first Respondent. Parties to bear their respective costs.
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