M/S. Retu
Marbles Vs. Prabhakant Shukla [2009] INSC 1780 (3 December 2009)
Judgment
IN THE
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.635 OF 2007
M/S. REETU MARBLES .....APPELLANT(S) VERSUS
SURINDER
SINGH NIJJAR, J.
1.
This appeal is directed against the judgment and order dated
20.7.04 of the High Court of Judicature at Allahabad in Writ Petition
No.18641/03 and order dated 28.4.06 in Civil Miscellaneous Review Application
No.172974/04.
2.
Briefly stated the relevant facts are that the appellant is
carrying on business in marble and other allied products at Kanpur. The
respondent was engaged by the appellant as an 2 accountant. He served the
employer from 1.3.86 to 11.6.87, when his services were terminated. The respondent
raised an industrial dispute, which was referred by the State Government for
adjudication before the Labour Court. The employer as well as the employee
filed their written statements. Oral evidence was also presented on behalf of
the respondent as well as the employer.
3.
It was submitted on behalf of the respondent that he was being
paid a sum of Rs.1200/- per month as wages. He worked till 10th of June 1987.
He was not permitted to work from 11th June 1987 onwards. On behalf of the
employer it was stated that respondent was employed only as a part time
accountant. Therefore, the reference was not competent.
4.
Upon due appreciation of the evidence led by the parties, the
Labour Court concluded that the respondent was working in the organization of
the appellant on a salary of Rs.1,200/- per month as full time Accountant. It
further held that respondent was removed from service without any notice or
retrenchment compensation, which is clearly improper and illegal. Therefore,
the respondent was entitled to reinstatement 3 w.e.f. 12.6.87. With regard to
back wages, the Labour Court observed as follows:
"It
is to mention that plaintiff has not undertaken any work of the defendant
organization from the date of his removal from services, but he must have
worked somewhere to earn his livelihood.
Therefore,
there seems no justification in allowing the salary and other benefits for the
days he did not work.
Plaintiff
is not entitled to get the pay and allowances for the period he did not perform
any work. But from the date of this Judgment, plaintiff will be entitled to get
the pay and admissible allowances at the rate of Rs.1200/- per month from the
defendant.
5.
This award was rendered by the Labour Court on 27th of September
2002 i.e., more than 15 years after the services of the respondent were
terminated.
6.
It is the case of the appellant that the respondent was duly
reinstated in service after joining duty. He worked for 6 days and thereafter
never returned.
7.
Respondent, thereafter filed writ petition in the Allahabad High
Court seeking modification of the award. This writ petition was opposed by the
appellant. By the judgment and order dated 20th July 2004, the writ petition
has been allowed.
4 The
award of the Labour Court in so far as it declines to grant full back wages to
the petitioner, has been held to be illegal.
The award
has been modified and it has been held that the respondent shall be entitled to
full back wages from the date of termination till the date of reinstatement.
8.
Being aggrieved by the aforesaid judgment, the appellant filed a
review application which has been dismissed by the High Court with the
observation that the writ petition was decided on merits and if the applicant
is not satisfied with the judgment it is open for it to challenge the same in
the higher court of law. Aggrieved by the aforesaid two judgments the employer
is before us in appeal.
9.
We have heard the counsel for the appellant and the respondent in
person.
10.
Counsel for the appellant submits that the award of the Labour
Court had been duly implemented. The respondent was reinstated in service.
However six days after joining, he again abandoned the job. This absence from
duty was recorded in a letter sent to him, on 6.4.2003. His salary was sent by money
order on 20.4.2003. On 22.4.2003, the 5 respondent filed the Writ Petition. In
spite of the aforesaid factual position the High Court misdirected itself by
directing the appellant to pay full back wages to the respondent. The
respondent had failed to give any evidence before the Labour Court, that he
remained unemployed from the date his services were terminated. He was unable
to explain as to how in the absence of gainful employment, he had maintained
himself for the long gap of 15 years. Taking into consideration the entire fact
situation and on due appreciation of the evidence the Labour Court had
correctly declined to award any back wages. The aforesaid finding has been
reversed by the High Court without any legal justification. Learned counsel also
submitted that the entitlement to back wages is not automatic. In fact in the
writ petition, the respondent had only prayed for amendment of the award with
respect to two aspects. It was prayed that the respondent ought to be paid
wages as per the Minimum Wages Act and the period spent before the Conciliation
Board be added to the award for the purposes of granting monetary benefits.
According to the learned counsel the High Court has granted the relief of full
6 back wages without there being any factual basis for the same.
11.
Learned counsel has relied on a number of judgments of this Court
in support of the proposition that entitlement to back wages is not a natural
consequence when an order of termination is found to be in contravention of the
Industrial Disputes Act, 1947. The court has to examine the facts and
circumstances of each case.
12.
On the other hand the respondent submitted that the High Court has
correctly undone the injustice that had been done to him by the Labour Court.
The Labour Court came to the conclusion that he was a full time accountant with
the appellant. His services had been illegally terminated. He was entitled to
be reinstated. However, the Labour Court illegally declined to grant full back
wages on the ground that in order to survive for 15 years between the time of
date of termination and the award, he must have worked somewhere to earn his
livelihood.
13.
The only limited issue to be determined by us, in this appeal, is
whether the High court was justified in granting full 7 back wages to the
respondent in spite of the denial thereof by the Labour Court. In our opinion
the High Court erred in law in not examining the factual situation. The High
Court merely stated that it was not the case of the employer that the workman had
been gainfully employed elsewhere. Although it noticed the principle that the
payment of back wages having a discretionary element involved in it, has to be
dealt with in the circumstances of each case and no strait jacket formula can
be evolved, yet the award of the Labour Court was modified without any factual
basis.
14.
In the case of M/s. Hindustan Tin Works Pvt. Ltd. vs. The
Employees of M/s. Hindustan Tin Works Pvt. Ltd. and Ors. AIR 1979 SC 75, it has
been held as follows:
"Ordinarily,
therefore, a workman whose service has been illegally terminated would be
entitled to full backs except to the extent he was gainfully employed during
the enforced idleness. That is the normal rule."
15.
These observations were subsequently considered in the case of
Hindustan Motors Ltd. vs. Tapan Kumar 8 Bhattacharya and Anr. (2002) 6 SCC 41
and it was observed as follows:
"Under
Section 11-A as amended in 1971, the Industrial Tribunal is statutorily
mandated, while setting aside the order of discharge or dismissal and directing
reinstatement of the workman to consider the terms and conditions, subject to
which the relief should be granted or to give such other relief to the workman
including the award of any other punishment in lieu of the discharge or
dismissal, as the circumstances of the case may require. The section is couched
in wide and comprehensive terms. It vests a wide discretion in the Tribunal in
the matter of awarding proper punishment and also in the matter of the terms
and conditions on which reinstatement of the workman should be ordered. It
necessarily follows that the Tribunal is duty-bound to consider whether in the
circumstances of the case, back wages have to be awarded and if so, to what
extent.
From the
award passed by the Industrial Tribunal which has been confirmed by the
Division Bench of the High Court, it is clear that the order for payment of
full back wages to the workman was passed without any discussion and without
stating any reason. It appears that the Tribunal and the Division Bench had
proceeded on the footing that since the order of dismissal passed by the
management was set aside, the order of reinstatement with full back wages was
to follow as a matter of course.
9 In
Hindustan Tin Works (P) Ltd. v. Employees a three-Judge Bench of this Court
laid down: (SCC p. 86, para 11) "11. 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
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.
As
already noted, there was no application of mind to the question of back wages
by the Labour Court. There was no pleading or evidence whatsoever on t he
aspect whether the respondent was employed elsewhere during this long
interregnum."
16.
The aforesaid judgment was subsequently considered in the case of
UP State Brassware Corpn. Ltd. vs. Uday 10 Narain Pandey (2006) 1 SCC 479 it
was observed as follows:
"Before
adverting to the decisions relied upon by the learned counsel for the parties,
we may observe that 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 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.
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.
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, 11 globalization, privatization and
outsourcing, is evident."
17.
From the above observations it becomes apparent that payment of
full back wages upon an order of termination being declared illegal cannot be
granted mechanically. It does not automatically follow that reinstatement must
be accompanied by payment of full back wages even for the period when the
workman remained out of service and contributed little or nothing to the
industry.
18.
Again in the case of Haryana State Electricity Development
Corporation Ltd. vs. Mamni (2006) 9 SCC 434 this court reiterated the
principle. The principles laid down in UP State Brassware Corp. Ltd. (supra).
19.
Recently this Court again examined the issues with regard to
payment of full back wages in the case of P.V.K. Distillery Ltd. vs. Mahendra
Ram (2009) 5 SCC 705.
20.
After examining the relevant case law it has been held as follows:
12
"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 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.
In
Haryana Urban Development Authority v. Om Pal it is stated that: (SCC p. 745,
para 7) "7.... It is now also well settled that despite a wide
discretionary power conferred upon the Industrial Courts under Section 11-A of
the 1947 Act, the relief of reinstatement with full back wages should not be
granted automatically only because it would be lawful to do so. Grant of relief
would depend on the fact situation obtaining in each case. It will depend upon
several factors, one of which would be as to whether the recruitment was
effected in terms of the statutory provisions operating in the field, if
any."
In
deciding the question, as to whether the employee should be recompensed with
full back wages and other benefits until the date of reinstatement, the
tribunals and the courts have to be realistic albeit the ordinary rule of full
back wages on 13 reinstatement. (Western India Match Co. Ltd. v. Industrial
Tribunal)"
21.
Applying the aforesaid ratio of law we have examined the factual
situation in the present case. The services of the respondent were admittedly
terminated on 11.6.87. The Labour Court gave its award on 27.9.02. Therefore,
there is a gap of more than 15 years from the date of termination till the
award of reinstatement in service. Labour Court upon examination of the entire
issue concluded that the respondent would not be entitled to any back wages for
the period he did not work. A perusal of the award also shows that the
respondent did not place on the record of the Labour Court any material or
evidence to show that he was not gainfully employed during the long spell of 15
years when he was out of service of the appellant. In the writ petition the
respondent was mainly concerned with receiving wages in accordance with the
Minimum Wages Act and for inclusion of the period spent in Conciliation
Proceedings for the calculation of financial benefits. The High Court without
examining the factual situation, and placing reliance on the judgment in M/s. Hindustan
Tin Works Pvt. Ltd. vs. The Employees of M/s. Hindustan Tin Works Pvt. Ltd. and
ors. held that the normal rule of full back wages ought to be followed in this
case. We are of the considered opinion that such a conclusion could have been
reached by the High Court only after recording cogent reasons in support
thereof. Especially since the award of the Labour Court was being modified. The
Labour Court exercising its discretionary jurisdiction concluded that it was
not a fit case for the grant of back wages. In the case of P.V.K. Distillery
Ltd. (supra), it is observed as follows:
"The
issue as raised in the matter of back wages has been dealt with by the Labour
Court in the manner as above having regard to the facts and circumstances of
the matter in the issue, upon exercise of its discretion and obviously in a
manner which cannot but be judicious in nature. There exists an obligation on
the part of the High court to record in the judgment, the reasoning before
however denouncing a judgment of an inferior tribunal, in the absence of which,
the judgment in our view cannot stand the scrutiny of otherwise being
reasonable."
22.
In our opinion the High Court was unjustified in awarding full
back wages. We are also of the opinion that the Labour Court having found the
termination to be illegal was unjustified in not granting any back wages at
all.
23.
Keeping in view the facts and circumstances of this case we direct
that the respondent shall be paid 50 per cent of the back wages from the date
of termination of service till reinstatement.
24.
With the aforesaid observations the appeal is allowed.
The
respondent shall be paid 50 per cent of the back wages as directed within a
period of three months from today. There shall be no order as to costs.
........................................J (TARUN CHATTERJEE)
......................................
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