Full Judgment Text
REPORTABLE
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.
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?
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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
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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,
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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
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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
1
Narain Pandey , 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.”
8. In the case of J.K. Synthetics Ltd. Vs. K.P. Agrawal
2
and Another , 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. 480 d - 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
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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)
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“ 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
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search for or secure alternative employment. Be that
as it may.”
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9. In J.K. Synthetics Ltd. , the Court extensively
1
considered U.P. State Brassware Corporation and G.M. Haryana
3
Roadways vs . Rudhan Singh . 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
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Municipal corporation, Baroda 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.
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Haryana state Agriculture Marketing Board & Anr. 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.
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M. Nagangouda , 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)
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New Delhi
August 7, 2009.
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