Metropolitan
Transport Corpn. Vs. V. Venkatesan [2009] INSC 1413 (7 August 2009)
Judgment
IN THE
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 5167 OF
2009 (Arising out of SLP) No. 17185/2008) Metropolitan Transport Corporation
...Appellant Versus V.Venkatesan ...Respondent JUDGEMENT R.M. Lodha, J.
1.
Leave granted.
2.
The question that falls for determination in this appeal by
special leave is: is the respondent entitled to claim full back wages for the
period from December 12, 1996 the date on which he was removed from service
till the date of his reinstatement on June 15, 2004 although he was enrolled as
an advocate on December 12, 2000 and thereby gainfully employed? 1
3.
Facts are these, briefly put. V. Venkatesan, respondent, was
initially employed as conductor on May 7, 1980 by Pallavan Transport
Corporation. On formation of Metropolitan Transport Corporation (for short,
"Corporation"), the appellant, became its employee. The respondent
was promoted as Junior Assistant and subsequently as an Assistant by the
Corporation. The respondent seems to have acquired Law degree and he was
selected for the post of Superintendent (Legal) as trainee. But during the
training period his performance was not found satisfactory and he was reverted
back to the post of Assistant. On January 31, 1995, the respondent was
transferred to Poonamallee Depot but he did not join his duties there and
remained absent for about three months without any prior sanction of leave or
intimation. The case of the Corporation is that on March 28, 1995, a memo of
charge was issued to the respondent to which he filed his written response but
as his reply was not found satisfactory and a domestic inquiry was instituted
to inquire into his misconduct.
The
respondent did not attend the domestic inquiry despite repeated letters and
notices including a notice published in 2 local newspaper. Ultimately, by an
order dated December 12, 1986, the Corporation removed the respondent from its
service.
4.
The respondent filed a complaint before the Industrial Tribunal,
Chennai under Section 33(2)(b) of the Industrial Disputes Act, 1947 (for short,
"ID Act") alleging the contravention of the provisions of Section 33A
of the ID Act in removing him from service although the Industrial Dispute No. 62/82
concerning the entire transport workers was pending before the Industrial
Tribunal, Chennai. The complaint was opposed by the Corporation on diverse
pleas. The Industrial Tribunal by its order dated July 11, 2003 held the order
of removal void and inoperative as the Corporation did not apply for approval.
The Industrial Tribunal also declared that the complainant is deemed to have
continued in service and he was entitled to all benefits available. The
Corporation challenged the order dated July 11, 2003 passed by the Industrial
Tribunal before the High Court. By an interim order, initially, the High Court
granted stay of the order dated July 11, 3 2003 subject to the Corporation
depositing the entire backwages as awarded by Industrial Tribunal and
compliance of the provisions of Section 17B of the ID Act. The Corporation
instead of paying last drawn wages to the respondent, reinstated him on June
15, 2004 without prejudice to the pending writ petition. The said writ petition
came to be dismissed on August 30, 2006 and, thus, the order dated July 11,
2003 passed by the Industrial Tribunal attained finality.
5.
Since the backwages for the period from December 12, 1996 until
June 15, 2004 was not paid by the Corporation, the respondent approached the
concerned Labour Court under Section 33C(2) of the ID Act claiming a sum of Rs.
8,08,698/- as the sum due and payable by the Corporation. The Corporation
contested the application under Section 33C(2).
After
hearing the parties, the Labour Court allowed the claim of the respondent to
the extent of Rs. 6,54,766/- towards full back wages vide its order dated
December 22, 2006. The Corporation challenged the said order by filing a writ
petition before the Madras High Court; the principal ground being that having
been enrolled as an advocate on December 12, 2000, the respondent was gainfully
employed and not entitled to back 4 wages. The respondent also filed a writ
petition before the High Court seeking enforcement of the order dated December
22, 2006. The Corporation failed in its writ petition while in the writ
petition filed by the respondent, the learned single Judge directed the Labour
Department to take necessary steps in recovering the due sum from the
Corporation. The Corporation challenged the order of the learned single Judge
whereby its writ petition came to be dismissed, by filing a writ appeal which
came to be dismissed on June 24, 2008 giving rise to the present appeal by
special leave.
6.
In the backdrop of the aforenoticed facts, we now examine the
question set out above.
7.
In U.P. State Brassware Corporation vs. Uday Narain Pandey1, this
Court on consideration of a question whether the direction to pay back wages
consequent upon declaration that a workman has been retrenched in violation of
the provisions of Section 6N of the U.P. Industrial Disputes Act, 1947 (equivalent to Section 25F of the ID Act, 1947) as a
rule was proper exercise made the following observations:
1 (2006)1
SCC 479 5 "41. The Industrial Courts while adjudicating on disputes
between the management and the workmen, therefore, must take such decisions
which would be in consonance with the purpose the law seeks to achieve. When
justice is the buzzword in the matter of adjudication under the Industrial Disputes
Act, it would be wholly improper on the part of the
superior courts to make them apply the cold letter of the statutes to act
mechanically. Rendition of justice would bring within its purview giving a
person what is due to him and not what can be given to him in law.
42. 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.
43. The
changes brought about by the subsequent decisions of this Court, probably
having regard to the changes in the policy decisions of the Government in the
wake of prevailing market economy, globalisation, privatisation and
outsourcing, is evident.
44.
......
45. The
Court, therefore, emphasised that while granting relief, application of mind on
the part of the Industrial Court is imperative. Payment of full back wages,
therefore, cannot be the natural consequence."
and
Another2, while dealing with the question whether an employee is entitled to
back wages from the date of termination to the date of reinstatement when the
punishment of dismissal is substituted by a lesser punishment (stoppage of
increments for two years), this Court held:
"15.
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.
2 (2007)
2 SCC 433 6 We may refer to the latest of a series of decisions on this
question. In U.P. State Brassware Corpn. Ltd. v. Uday Narain Pandey (2006)1 SCC
479, this Court following Allahabad Jal Sansthan v. Daya Shankar Rai (2005) 5
SCC 124 and Kendriya Vidyalaya Sangathan v. S.C. Sharma (2005) 2 SCC 363 held
as follows: (Uday Narain Pandey case, SCC p. 480d-g) "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 court realising 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 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,
globalisation, privatisation and outsourcing, is evident.
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 be the natural consequence."
In G.M.,
Haryana Roadways v. Rudhan Singh (2005) 5 SCC 591 this Court observed: (SCC
p.596, para 8)
8.
There is no rule of thumb that in every case where the Industrial
Tribunal gives a finding that the termination of service was in violation of
Section 25-F 7 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 year."
16. There
has also been a noticeable shift in placing the burden of proof in regard to
back wages.
In
Kendriya Vidyalaya Sangathan this Court held:
(SCC
p.366, para 16) "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. this Court observed: (SCC p. 495, para 61) 8
"61. 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 workman."
17. 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 visualised 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. SRTC v. S. Narsagoud (2003) 2 SCC 212, A.P. SRTC v. Abdul Kareem
(2005) 6 SCC 36 and Rajasthan SRTC v. Shyam Bihari Lal Gupta (2005) 7 SCC 406.
18.
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 and Uday Narain Pandey. 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 9 search for or secure alternative
employment. Be that as it may."
9.
In J.K. Synthetics Ltd.2, the Court extensively considered U.P.
State Brassware Corporation1 and G.M. Haryana Roadways vs. Rudhan Singh3.
Pertinently, it has been held that 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
several other factors.
10.
The learned Senior Counsel for the respondent although did not
dispute that the respondent was enrolled as an advocate on December 12, 2000
and continued to be so until the date of his reinstatement but he submitted
that the respondent had no earnings from the profession and, therefore, no
amount should be deducted from the back wages. In this regard he relied on a
decision of this court in the case of S.M. Saiyad vs.Baroda Municipal
corporation, Baroda4 wherein this Court observed:
"6.
Appellant enrolled himself as an advocate after taking requisite educational
qualification on January 20, 1972. It was pointed out to us that the appellant
admitted that he was earning Rs 150 p.m. since he started his legal practice.
It was therefore, urged that 3 (2005) 5 SCC 591 4 1984 (Supp) SCC 378 10 no
back wages for the period January 20, 1972 to October 26, 1976 should be
awarded. We are not impressed. Undoubtedly the respondent will be entitled to
deduct the amount which the appellant was admittedly earning from the back
wages payable to him. The question is from what date deduction at the rate of
Rs 150 p.m. should be permitted.
7.
Appellant contended and in our opinion rightly that deduction at the rate of Rs
150 p.m. should not commence from the very day he was enrolled as an advocate
because it is common knowledge that no one earns from the first day and
therefore a reasonable period must be set apart from finding a footing in the
profession. The contention deserves consideration. The appellant himself has
been rather loose in his statement. It would be reasonable to hold that he must
have at least started earning at the rate of Rs 150 p.m. as stated by him after
the lapse of one year from the date he was enrolled as an advocate."
11.
First, it may be noticed that in seventees and eighties, direction
for reinstatement and payment of full back wages on dismissal order having been
found invalid would ordinarily follow as a matter of course. But there is change
in legal approach now. We recently observed in Jagbir Singh vs.
Haryana
state Agriculture Marketing Board & Anr.5 that 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 the relief of reinstatement with back-wages is
not automatic and may be wholly inappropriate in a given fact situation even 5
JT 2009 (9) SC 396 11 though the termination of an employee is held to be in
contravention to the prescribed procedure.
12.
Secondly, and more importantly, in view of the fact that
respondent was enrolled as an advocate on December 12, 2000 and continued to be
so until the date of his reinstatement (June 15, 2004), in our thoughtful
consideration, he cannot be held to be entitled to full back wages. That the
income received by the respondent while pursuing legal profession has to be
treated as income from gainful employment does not admit of any doubt. In the
case of North East Karnataka Road Transport Corporation vs. M. Nagangouda6,
this Court held, that "gainful employment" would also include
self-employment. We respectfully agree.
13.
It is difficult to accept the submission of the learned senior
counsel for the respondent that he had no professional earnings as an advocate
and except conducting his own case, the respondent did not appear in any other
case. The fact that he resigned from service after 2-3 years of reinstatement
and re- engaged himself in legal profession leads us to assume that he had some
practice in law after he took sanad on December 12, 2000 until June 15, 2004,
otherwise he would not have resigned from 6 (2007) 10 SCC 765 12 the settled
job and resumed profession of glorious uncertainties. In this view of the
matter, reasonable deduction needs to be made while determining the back wages
to which respondent may be entitled. Taking overall facts and circumstances of
the case and all other aspects including the aspect that he was enrolled as an
advocate from December 12, 2000 to June 15, 2004, in our considered view,
demand of justice would be met if the respondent is awarded back wages in the
sum of Rs. 4 lacs instead of Rs. 6,54,766/-. We order accordingly.
14.
The appeal is, therefore, allowed to the aforesaid extent. The
impugned judgments of the division bench as well as the learned single Judge
stand modified accordingly. Time of eight weeks is granted to the Corporation
to make payment of Rs. 4 lacs to the respondent, if not paid so far, failing
which it shall carry simple interest @ 6 per cent per annum from June 15, 2004
until the date of payment. The parties will bear their own costs.
........................J (Tarun Chatterjee)
.......................J (R. M. Lodha)
New Delhi
August 7, 2009.
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