Unchallenged evidence of unemployment justifies award of back wages where termination is held illegal.

The respondent was employed as a part-time peon by the petitioners starting March 20, 1993, earning Rs. 600 per month.

His services were terminated on March 20, 1996, allegedly without complying with Section 25F of the Industrial Disputes Act, 1947.

The Labour Court, Nadiad, in Reference (LCN) No. 135 of 1998, passed an award on February 22, 2011, ordering reinstatement with 20% back wages and continuity of service.

While the petition was pending, the respondent was reinstated on April 9, 2013, and subsequently reached the age of superannuation on June 30, 2023.

The State challenged the award primarily regarding the grant of back wages.

1. Whether the challenge against the order of reinstatement survived given the respondent's reinstatement and subsequent retirement during the pendency of the petition.

2. Whether the Labour Court was justified in awarding 20% back wages in the absence of specific evidence regarding the respondent's lack of gainful employment.

The court considered the mandatory requirements of Section 25F of the Industrial Disputes Act, 1947, regarding conditions precedent to the retrenchment of workmen.

It applied the principle of "adverse inference" under the Indian Evidence Act, noting that when a party fails to cross-examine a witness or produce evidence, the opponent's testimony is presumed accepted.

Regarding back wages, the court acknowledged the settled legal position that back wages are not automatic even if termination is illegal, and the employee generally bears the initial burden to plead non-employment.

The Court noted that since the employee had already been reinstated and had reached superannuation, the issue of reinstatement was now purely academic.

On the contested issue of 20% back wages, the Court found that the petitioners (the State) remained inactive during the Labour Court proceedings, failing to file a written statement (according to the award) or cross-examine the respondent.

Because the respondent's testimony regarding his unemployment remained unchallenged and the State produced no evidence of gainful activity, the Court drew an adverse inference against the State.

The Court reasoned that the petitioners’ total lack of participation in the lower tribunal proceedings justified the award of limited (20%) back wages as the termination was clearly illegal.

The Court directed the petitioners to comply with the award within six weeks; failure to do so would trigger a 5% per annum interest penalty from the date of termination until the date of superannuation.

Rule discharged.