Holding

Reinstatement without back wages does not, by itself, confer continuity of service for the purpose of awarding notional increments; such increments are payable only if the award specifically directs them.

Summary

The Supreme Court considered two appeals arising from Labour Court awards that reinstated conductors of the Andhra Pradesh State Road Transport Corporation without back wages. The key questions were whether such reinstatement implied continuity of service and whether the employees were entitled to notional increments for the period they were out of service. Relying on its earlier decision in A.P.S.R.T.C. v. S. Narsagoud, the Court held that in the absence of a specific direction granting consequential benefits, reinstatement without back wages does not entitle the employee to notional increments. Consequently, the Court set aside the orders granting such increments and allowed the corporation’s appeal while dismissing the workman’s appeal. The parties were each to bear their own costs.

Issues considered

Does an award of reinstatement without back wages imply continuity of service for the purpose of granting notional increments?
Are notional increments payable for the period of absence when the award does not expressly provide for such consequential benefits?

Subjects

Labour LawIndustrial DisputeReinstatementNotional IncrementContinuity of ServiceAward of Labour Court

Judgment

_,..._"
A
ANDHRA PRADESH STATE ROAD TRANSPORT
CORPORATION AND ORS.
v.
ABDUL KAREEM

B AUGUST 2, 2005

[ARIJIT PASA YAT AND H.K. SEMA, JJ.]

Labour Law:
c
Termination ofservices ofa conductor-Industrial dispute-Labour Court
gave an award directing his reinstatement in the service without back wages-
Notional increment not allowed by the employer-Challenge to-Allowed by
High Court-On appeal, Held: Principle of law on the issue of notional
increment is no more res integra-ln absence of specific dire~tions that the
D employee would be entitled to all the consequential benefits, i~ would be
incongruous to suggest that the employee even though held guilty and remained
absent from duty for a long time, could continue to earn increments though .
not entitled to back wages for the period of absence-Thus, Courts below
erred in law in allowing the benefit of notional increment tr the employee.
E
The questions which arose for determination in these appeals were
as to whether Award of Labour Court reinstating an employee without
back wages would imply continuity of service and as to whether notional
increments were to be given to the employee for the period for which h~
was not in service.
F
Allowing Civil Appeal No. 7799 of 2003 and dismissing Civil Appeal
No.37 of 2005, the Court

HELD: The principle of law on point are no more res integra. In the
G instant case, the Labour Court specifically directed that the reinstatement
would be without back wages. There is no specific direction that the
employee would be entitled to all the consequential benefits. Therefore,
in the absence of specific direction in that regard, merely because an
employee has been directed to be reinstated without back wages, he could

918
H
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ANDHM PRADESH STATE ROAD TPT. CORPN. v. ABDUL KAREEM [SEMA, J.] 919
......
;
\ •
claim a benefit of increments notionally earned during the period when A
).
he was not on duty or during the period when he was out of service. It
would be incongruous to suggest that an employee, having been held guilty
and remained absent from duty for a long time, continue to earn
increments though there is no payment of wages for the period of absence.
Thus, both the Single Judge and Division Bench had erred in law in
allowing the benefit of increments notionally to the employee during the B
period when he was out of se1·vice. (922-D, G, H; 923-A-B]

A.P.S.R.T.C. and Anr. v. S. Narsagoud, (2003] 2 SCC 212, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7797 of2003.
c
From the Judgment and Order dated 31.10.2002 of the Anrlhra Pradesh
High Court in W.A.No. 1209 of 2002.

WITH

C.A. No. 37 of 2005. D

R. Santhan Krishnan, Ms. K. Radha Rani and D. Mahesh Babu, for the
Appellant in C.A.No. 7797/2003 and Respondent in C.A.No. 37 of 2005.

P.S. Narasimha, Ananga Bhattacharyya and Avijeet Lala for Mis. P.S.N.
& Co. for the Respondent in C.A. No. 7797/03 and Appellant in C.A.No. 37 E
of 2005.

The Judgment of the Court was delivered by

H.K. SEMA, J. These two appeals arise out of a common question of
Jaw and fact and they are being disposed of by this common judgment. F

Civil Appeal No. 7797 of 2003 is preferred by the Andhra Pradesh
State Road Transport Corporation (A.P.S.R.T.C.) and Civil Appeal No. 37 of
2005 is preferred by the workman - D. ~hanker.

In Civil Appeal No. 7797 of 2003, preferred by the A.P.S.R.T.C., the G
facts are as follows: -

The respondent was appointed as Retainer Conductor under the
~ appellant-Corporation in the year 1970. He was subsequently removed from
the service in 1971. However, he was again appointed as Conductor on
H
920 SUPREME COURT REPORTS [2005] SUPP. I S.C.R.

A 12.06. 1972. He secured a subsequent appointment without disclosing that he
worked as a Conductor earlier under the department. When it came to the
knowledge of the appellant that the workman had worked as a Conductor at
Karimnagar Depot earlier and was removed from the service, a proceeding
was initiated against him and he was removed from service on 01.05. 1975.
Respondent raised an Industrial Dispute before the Labour Couri assailing
B the order of his removal from service. It may be noted that the dispute was
raised at a belated stage in the year 1988. The Labour Court by an Award
dated 28.12.1992 came to the conclusion that the dismissal of the respondent
from service cannot be sustained and the Court directed the respondent be
reinstated into service without back wages. It may be noted that the workman
C did not challenge the order of the Labour Court directing to reinstate him into
service without back wages. Pursuant to the order of the Labour Court, the
workman was reinstated on 28.05. 1993. Thereafter, the appellant passed an
order dated 17.05.2000 stating that the respondent would not be eligible for
notional increments from the date of his removal from service. Being
aggrieved, respondent preferred Writ Petition before the High Court of Andhra
D Pradesh assailing the order dated 17.05.2000. In the said Writ Petition the
respondent inter alia prayed for granting of notional increments for the period
from 01.05.1975 to 10.06.1993. Learned Single Judge, following the earlier
decision of the Division Bench of High Court in A.P.S.R. TC. v. P. Nage!$.hwar
Rao, (2001) 4 ALD 568, directed the Corporation that the pay of the respondent
E should be fixed by taking into consideration the notional increments. Aggrieved
thereby, the appellant preferred a Writ Appeal No. 1209 of 2002 without any
result. Hence the present petition.

In Civil Appeal No. 37 of 2005 preferred by the workman D. Shanker,
the facts are as follows: -
F
The workman joined the Corporation as a Conductor in 1972 and on
I 6.03.1972 a disciplinary proceeding was initiated against him for not having
collected an alleged amount of Rs. 1.20 paisa between two stages. Pursuant
to the proceeding initiated against him he was removed from service on
24.08.1972. He raised an Industrial Dispute before the Labour Court and the
G Labour Court by its Award dated 24.11.1992 held that dismissal of the
workman is disproportionate to the gravity of offence/charge and directed the
reinstatement of the workman into service by maintaining continuity of service
but without back wages. Petitioner was reinstated on 08.06. 1993 as a fresh
appointee without any increment in his salary. The representation of the
H petitioner was rejected by the Corporation. Thereafter, he filed a Writ Petition,
ANDHRA PRADESH STA TE ROAD TPT. CORPN. v. ABDUL KAREEM [SEMA, J) 921

which was allowed by the Learned Single Judge on 6.11.2002 holding that A
he is entitled for grant of notional increments. Aggrieved thereby, the
Corporation filed Writ Appeal before the Division Bench which was allowed
by the order dated 07.08.2003 on the ground that the point of law is well
settled by the judgment of this Court.

The question that revolves around for determination is, whether Labour B
Court's Award of reinstatement without back wages would imply continuity
of service and whether noti<;mal increments are to be given to the employee
for the period for which he was not in service, in absence of specific direction
in that regard?

At this stage, we may notice the operative portion of the Award of the c
Labour Court in Para 4 of its Award, which reads as under:

".... the dismissal of the petitioner from service cannot be sustained
and he has to be reinstated but without back wages. "

We have heard learned counsel for the parties. D
It is contended by the counsel for the appellant that it is a well established
principle in Labour Industrial Law that upon setting aside an order of
termination, the workman is reinstated as if the contract of employment
originally entered into had been continued. The counsel further contended
that in such cases the terms and conditions of the contract which was obtained E
when the workman was in the employment of the employer prior to his
wrongful dismissal which has been set aside continue to govern the
relationships between the parties and the workman continues to be in the
employment of the employer in the terms and conditions of the contract.
According to counsel denial of consequential relief is in exception, unless F
such denial was being specifically spelt-out, otherwise, the natural and
consequential relief must follow. Counsel would further contend that in the
given facts, this would be competent enough to mould the relief as the
· workman was reinstated after more than a decade.

In our considered opinion, the argument advanced by the counsel is not G
tenable in law in the view taken by this Court in the recent decision. In the
case of A.P. S.R.T.C. and Anr. - Appellants v. S. Narsagoud - Respondent,
[2003] 2 SCC 212, this Court had occasion to deal with the identical
controversy and succinctly crystallized the point of law. In that case the
respondent was a Conductor in the employment of appellant - A.P.S.R. T. C.
H
922 SUPREME COURT REPORTS [2005] SUPP. 1 S.C.R.

A He remained absent from duty between 05.06.1982 and 08.08.1982 and again
between 13.10.1992 and 01.11.1992. A departmental inquiry was initiated
against him on the charges of unauthorized absence which ended in the
punishment of removal from service and a dispute was raised before the
Labour Court. The Labour Court upheld the departmental enquiry and the
findings arrived thereat, but the respondent was directed to be reinstated with
B continuity of service but without back-wages. The Learned Single Judge, on
being approached by the respondent, directed the appellant to fix the wages
payable to him on his reinstatement by taking into account the increments
that he would have earned had he been in service during the period of
absence from du.ty. This finding of the Learned Single Judge wa~ affirmed
C in an appeal by the Division Bench. This Court allowed the appealipreferred
by the A.P.S.R.T.C.

The principle of law on point are no more res integra. This Court in
S. Narsagoud (supra) succinctly crystallized principle of law in Paragraph 9 ·
of the judgment on Page SCC 215:
D
"We find merit in the submission so made. There is a difference
between· an order ofreinstatement accompanied by a simple direction
for continuity of service and a direction where reinstatement is
accompanied by a specific direction that the employee shall be entitled
to all the consequential benefits, which necessarily flow from
E reinstatement or accompanied by a specific direction that the employee
shall be entitled to the benefit of the increments earned during the
period of absence. ·Jn our opinion, the employee after having been
held guilty of unauthorized absence from duty cannot claim the benefit
of increments notionally earned during the period of unauthorized
absence in the absence of a specific direction in that regard and
F
merely because he has been directed to be reinstated with the benefit -
of continuity in service. "

Reverting to the facts of the case at hand, as already noticed, the Labour
Court specifically directed that the reinstatement would be without back wages.
G There is no specific direction that the employee would be entitled to all the
consequential benefits. Therefore, in the absence of specific direction in that
regard, merely because an employee has been directed to be reinstated without
back wages, he could claim a benefit of increments notionally earned during
the period when he was not on duty or during the period when he was out
of service. It would be incongruous to suggest that an employee, having been
H
ANDHRA PRADESH STATE ROAD TPT. CORPN. v. ABDUL KAREEM [SEMA, J.] ' 923
held guilty and remained absent from duty for a long time, continues to earn A
increments though there is no payment of wages for the period of absence.

In view of what has been stated above, both the Learned Single Judge
and Division Bench had erred in law in allowing the benefit of increments
notionally to the employee during the period when he was out of service.
Both the orders in C.A. No. 7797 of 2003 are set aside. B
The net result is Civil Appeal No. 7797 of 2003 preferred by A. P.S.R. T. C.
and Ors. is allowed and Civil Appeal No. 37 of2005 preferred by D. Shanker
is dismissed. Parties are asked to bear their own costs.

S.K.S. C.A. No. 7799/2003 allowed C
CA. No. 37/2005 dismissed.