2003 JTR(SC) 610
2003 8 AIC 8 ; 2003 AIR(SC) 2657 ; 2003 AIR(SCW) 3380 ; 2003 3 AllCJ 2017 ; 2003 3 AllMR(SC) 1139 ; 2003 5 ALT(SC) 94 ; 2003 4 AWC 2595 ; 2003 2 CalLJ(SC) 550 ; 2003 3 CTC 702 ; 2003 103 FJR 362 ; 2003 98 FLR 595 ; 2003 3 JCR(SC) 175 ; 2003 2 JKJ(SC) 670 ; 2003 5 JT 542 ; 2003 3 LLJ 244 ; 2003 3 LLN 772 ; 2003 3 MPHT 321 ; 2003 3 MPLJ 534 ; 2003 5 Scale 259 ; 2003 6 SCC 141 ; 2003 SCC(L&S) 833 ; 2003 SCR 535 ; 2003 3 SCT 625 ; 2003 4 SLR 749 ; 2003 UD 232 ; 2003 2 UPLBEC 1881 ; 2003 2 WBLR 313 ; 2003 KHC 1470 ; 2003 4 Supreme 510
2003(4) Supreme 510
SUPREME COURT OF INDIA
(From Madhya Pradesh High Court)
Doraiswamy Raju & Arijit Pasayat, JJ.
M.P. State Electricity Board -Appellant
versus
Smt. Jarina Bee -Respondent
Civil Appeal No. 4601 of 2003
(Arising out of SLP (C) No. 3092 of 2003)
Decided on 15-7-2003
Counsel for the Parties :
For the Appellant : Satish K. Agnihotri, Advocate.
For the Respondent : B.S. Banthia, Advocate.
IMPORTANT POINT
When order of dismissal is set aside, award of full back wages is not the natural consequence.
Act Referred :LABOUR LAW : .
(A) The principles of natural justice and statutory provisions governing service tenure and disciplinary proceedings under labour law frame this appeal, where the setting aside of an order of dismissal triggers considerations regarding the automaticity or discretion involved in awarding back wages. The adjudicating authorities evaluated the consequences of a finding that the departmental inquiry was not conducted in accordance with the principles of natural justice and assessed the correctness of directing full back wages as an inevitable outcome of such a setting aside, drawing upon precedents that outline the discretionary yet fact-sensitive nature of back wage awards under statutory frameworks.
(B) Key legal principles include that the award of back wages is not an automatic or inevitable consequence when an order of dismissal is set aside, the High Court does not have unlimited factual discretion to override the findings of lower tribunals without reasoned recording, and the payment of back wages must be determined based on the facts and circumstances of each case, with statutory authorization for full or partial awards.
Facts of the case:
An employee was dismissed on allegations of theft and found guilty by a departmental inquiry, but the dismissal was set aside by a Labour Court on grounds of violation of natural justice without awarding back wages. The Industrial Court reversed this and held that full back wages were payable automatically upon setting aside of dismissal, a view upheld by the High Court, until the employee passed away during the pendency of the appeal.
Findings of Court:
The High Court erred in holding that full back wages were the natural consequence of setting aside the dismissal, as back wage awards require a factual assessment and cannot be decided by broad inference; however, considering the defective dismissal process and the employee's demise, a discretionary award of a specific sum is appropriate to achieve justice.
Issues:
Whether the award of full back wages necessarily follows as a matter of law when an order of dismissal is set aside, and whether the High Court overstepped its factual authority in so holding.
Ratio Decidendi:
Back wage awards are discretionary and must be assessed in the facts of each case, not awarded automatically upon setting aside of dismissal; a discretionary sum can be awarded posthumously to serve the ends of justice when the dismissal is found procedurally flawed.
Result:
The appeal is allowed in part, setting aside the High Court's direction for full back wages and substituting a discretionary award of a specific sum, with costs made easy.
(A) The principles of natural justice and statutory provisions governing service tenure and disciplinary proceedings under labour law frame this appeal, where the setting aside of an order of dismissal triggers considerations regarding the automaticity or discretion involved in awarding back wages. The adjudicating authorities evaluated the consequences of a finding that the departmental inquiry was not conducted in accordance with the principles of natural justice and assessed the correctness of directing full back wages as an inevitable outcome of such a setting aside, drawing upon precedents that outline the discretionary yet fact-sensitive nature of back wage awards under statutory frameworks.
(B) Key legal principles include that the award of back wages is not an automatic or inevitable consequence when an order of dismissal is set aside, the High Court does not have unlimited factual discretion to override the findings of lower tribunals without reasoned recording, and the payment of back wages must be determined based on the facts and circumstances of each case, with statutory authorization for full or partial awards.
Facts of the case:
An employee was dismissed on allegations of theft and found guilty by a departmental inquiry, but the dismissal was set aside by a Labour Court on grounds of violation of natural justice without awarding back wages. The Industrial Court reversed this and held that full back wages were payable automatically upon setting aside of dismissal, a view upheld by the High Court, until the employee passed away during the pendency of the appeal.
Findings of Court:
The High Court erred in holding that full back wages were the natural consequence of setting aside the dismissal, as back wage awards require a factual assessment and cannot be decided by broad inference; however, considering the defective dismissal process and the employee's demise, a discretionary award of a specific sum is appropriate to achieve justice.
Issues:
Whether the award of full back wages necessarily follows as a matter of law when an order of dismissal is set aside, and whether the High Court overstepped its factual authority in so holding.
Ratio Decidendi:
Back wage awards are discretionary and must be assessed in the facts of each case, not awarded automatically upon setting aside of dismissal; a discretionary sum can be awarded posthumously to serve the ends of justice when the dismissal is found procedurally flawed.
Result:
The appeal is allowed in part, setting aside the High Court's direction for full back wages and substituting a discretionary award of a specific sum, with costs made easy.
JUDGMENT
Arijit Pasayat, J.-Leave granted.
2. The primal issue involved in this appeal is whether award of full back wages is the natural consequence when an order of dismissal is set aside. The High Court of Madhya Pradesh at Jabalpur held it to be so, and that is why the Madhya Pradesh State Electricity Board (hereinafter referred to as the Board ) filed this appeal.
3. Factual background which is almost undisputed is as follows :-
One Habib Khan (hereinafter referred to as the employee ) husband of respondent Smt. Jarina Bee, was employed as a Line Attendant, Grade-II in the Board. On the allegation that he was responsible for theft of large quantity of aluminum wire, criminal case was lodged and departmental proceedings were initiated. In the departmental inquiry he was found guilty and was removed from service on 20.1.1996. Such removal was challenged by him before the Labour Court-I, Bhopal. The said Court held that since departmental inquiry was not conducted in accordance with the principles of natural justice, the dismissal was bad. Direction was given for reinstatement of employee by granting opportunity to the Board to prove his misconduct. While directing reinstatement, it was held that he was not entitled to any back wages. Both the Board and the employee preferred appeals before the Industrial Court, Bench at Bhopal. By order dated 11.2.2002, the Industrial Court allowed the appeal filed by the employee, while dismissing the one filed by the Board. It was held that when an order of dismissal was set aside, entitlement for full back wages was automatic.
4. During the pendency of the matter before the Industrial Court the employee breathed his last. Therefore, the direction for re-instatement has become infructuous.
5. The Board challenged the order of the Industrial Court before the High Court which by the impugned judgment dated 8th October, 2002 held that when a charge was not established at all and the order of removal is set aside award of back wages was the natural consequence.
6. Shri S.K. Agnihorti, learned counsel appearing for the Board, submitted that the Industrial Court as well as the High Court fell in grave error by holding that the award of back wages was the natural consequence in all cases where the order of removal was set aside. Mr. B.S. Banthia, learned counsel appearing for the respondent (widow of the employee) submitted that the High Court was justified in its conclusion considering the fact that the order of dismissal was without sanctity in law. Alternatively, it was submitted that full back wages are to be paid, considering the nature of the allegations and findings recorded by the Labour Court, Industrial Court and the High Court and the directions cannot be faulted on the facts of the case.
7. In P.G.I. of Medical Education and Research, Chandigarh v. Raj Kumar (JT 2001(1) SC 336), this Court found fault with the High Court in setting aside the award of the Labour Court which restricted the back wages to 60% and directing payment of full back wages. It was observed thus :
"The labour court being the final court of facts came to a conclusion that payment of 60% wages would comply with the requirement of law. The finding of perversity or being erroneous or not in accordance with law shall have to be recorded with reasons in order to assail the finding of the Tribunal or the labour Court. It is not for the High Court to go into the factual aspects of the matter and there is an existing limitation on the High Court to that effect."
Again at paragraph 12, this Court observed:
"Payment of back wages having a discretionary element involved in it has to be dealt with, in the facts and circumstances of each case and no straight-jacket formula can be evolved, though, however, there is statutory sanction to direct payment of back wages in its entirety."
The position was reiterated in Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya and Another (2002 AIR SCW 3008) and Indian Railway Construction Co. Ltd. v. Ajay Kumar (JT 2003(2) SC 295).
Applying the legal principles, the inevitable conclusion is that the High Court committed an error in holding that the award of full back wages was the natural consequence.
8. That brings us to the alternate submission of the learned counsel for the respondent. Considering the background of the case and the fact that the order of dismissal was found to be defective as the principles of natural justice were not properly followed, and an opportunity was granted to the Board to proceed in accordance with law, and the fact that the employee has expired in the meantime, we feel the payment of Rs. 85,000/- towards back wages would meet the ends of justice. The payment is to be made within a period of 8 weeks from today. If any amount has been paid pursuant to the directions given by the Industrial Court and/or the High Court, the same shall be adjusted from the aforesaid sum. If any payment has been made in excess of the amount, the Board shall be entitled to refund thereof.
9. The appeal is allowed to the extent indicated above. Costs made easy.
Appeal allowed accordingly.
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