JAYANTIBHAI RAOJIBHAI PATELversusMUNICIPAL COUNCIL, NARKHED & ORS.

                          [2019] 11 S.C.R. 483                           483


               JAYANTIBHAI RAOJIBHAI PATEL                               A
                                  v.
          MUNICIPAL COUNCIL, NARKHED & ORS.
                   (Civil Appeal No. 6188 of 2019)
                         AUGUST 21, 2019                                 B
        [DR. DHANANJAYA Y CHANDRACHUD AND
                    INDIRA BANERJEE, JJ.]
       Service law: Termination of service – Payment of back
wages – On facts, enquiry conducted against appellant-headmaster         C
for alleged misappropriation of funds and appellant found not guilty
– However, second enquiry conducted, despite appellant’s objection
and appellant found guilty and terminated from services – In writ
petition, the High Court set aside the termination order, however
held that since the appellant had attained superannuation, he would
                                                                         D
not be paid back wages for the period he did not render services –
On appeal, held: If the employer wants to deny back wages to the
employee or contest his entitlement to get consequential benefits,
then it is for him/her to specifically plead and prove that during the
intervening period the employee was gainfully employed and was
getting the same emoluments – Denial of back wages to an employee,       E
who has suffered due to an illegal act of the employer would amount
to indirectly punishing the employee concerned and rewarding the
employer by relieving him of the obligation to pay back wages
including the emolument – Thus, the High Court was not justified in
denying the back-wages to the appellant – Appellant be paid Rs 5
                                                                         F
lakhs in full and final settlement of his claim for back-wages.
      Disposing of the appeal, the Court
       HELD: 1.1 In the instant case, the first inquiry resulted in
a report which came to the conclusion that the charge of
misconduct was not substantiated. Upon finding that the convening        G
of a fresh inquiry without recording reasons was contrary to law,
the High Court would have ordinarily granted liberty to the
Municipal Council to take a fresh decision after due notice to the
appellant. Such a course of action was, however, rendered

                                                                         H
                                 483
484            SUPREME COURT REPORTS                     [2019] 11 S.C.R.


A     impracticable by supervening events. The writ petition instituted
      by the appellant before the High Court in 1996 remained pending
      for nearly eighteen years. The appellant had been removed from
      service on 29 June 1996. Considering the lapse of time, reopening
      the proceedings would not be expedient in the interest of justice
      particularly when the appellant had, in the meantime, attained
B
      the age of superannuation in 2005. Relegating the appellant to a
      protracted course of action by restoring the proceedings before
      the disciplinary authority would also not be fair and proper after a
      lapse of nearly fourteen years since his retirement. [Para 12]
      [483-H; 494-A-C]
C           1.2 Having due regard to the principles enunciated in
      Deepali Surwase’s case by this Court that if the employer wants
      to deny back wages to the employee or contest his entitlement
      to get consequential benefits, then it is for him/her to specifically
      plead and prove that during the intervening period the employee
D     was gainfully employed and was getting the same emoluments.
      The denial of back wages to an employee, who has suffered due
      to an illegal act of the employer would amount to indirectly
      punishing the employee concerned and rewarding the employer
      by relieving him of the obligation to pay back wages including
      the emolument, the High Court was not, justified in denying the
E     back-wages to the appellant altogether. Bearing in mind the
      circumstances, a lumpsum compensation should be directed to
      be paid. [Para 1, 13] [491-E-G; 494-D]
            Deepali Gundu Surwase v Kranti Junior Adhyapak
            Mahavidyalaya (2013) 10 SCC 324 : [2013] 9 SCR 1
F           - relied on.
             1.3 The ends of justice would be met by directing that the
      appellant be paid an amount quantified at Rs 5 lakhs in full and
      final settlement of his claim for back-wages for the period between
      the date of the order of removal and the date on which he attained
G     the age of superannuation. This would be in addition to the retiral
      benefits to which he is entitled in terms of the order of the High
      Court. [Para 14] [494-E]
            Hindustan Tin Works (P) Ltd v. Employees (1979) 2 SCC
            80 : [1979] 1 SCR 563 ; CSHA University v. BD Goyal
H
JAYANTIBHAI RAOJIBHAI PATEL v. MUNICIPAL COUNCIL,                           485
                   NARKHED

      (2010) 15 SCC 776 ; Surendra Kumar Verma v. Central                   A
      Government Industrial Tribunal-cum-Labour Court
      (1980) 4 SCC 443 : [1981] 1 SCR 789 ; P.G.I. of
      Medical Education & Research v. Raj Kumar (2001) 2
      SCC 54 : [2000] 4 Suppl. SCR 350 ; Indian Rly.
      Construction Co. Ltd. v. Ajay Kumar (2003) 4 SCC
                                                                            B
      579 : [2003] 2 SCR 387 – referred to.
                        Case Law Reference
[1979] 1 SCR 563                 referred to               Para 5
(2010) 15 SCC 776                referred to               Para 8
                                                                            C
[2000] 4 Suppl. SCR 350          referred to               Para 9
[2003] 2 SCR 387                 referred to               Para 9
[2013] 9 SCR 1                   referred to               Para 9
[1981] 1 SCR 789                 referred to               Para 10
                                                                            D
[2013] 9 SCR 1                   relied on                 Para 13
      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6188
of 2019.
      From the Judgment and Order dated 19.01.2017 of the High Court
of Judicature at Bombay, Nagpur Bench, Nagpur in Second Appeal              E
No. 487 of 2015.
     Kishore Lambat and Sachin Pahwa for M/s. Lambat and
Associates, Advs. for the Appellant.
     Prashant R. Dahat, Atul B. Dakh, Hemant Bhangale,                      F
Venkateswara Rao Anumolu, Shirish K. Deshpande and Nishant
Ramakantrao Katneshwarkar, Advs. for the Respondents.
      The Judgment of the Court was delivered by
      DR. DHANANJAYA Y CHANDRACHUD, J.
       1. The appellant was appointed on 1 July 1986 as a Headmaster        G
of the Nagar Parishad High School conducted by the Municipal Council
of Narkhed in the District of Nagpur. On 5 February 1994, a notice to
show cause was issued to him, levelling an allegation of misappropriation
of Rs 5,000. After the appellant submitted a reply on 6 February 1994,
                                                                            H
486            SUPREME COURT REPORTS                          [2019] 11 S.C.R.


A     the first respondent appointed a former Deputy Education Officer, Shri
      Marathe as an inquiry officer. A charge-sheet was issued to the appellant
      on 8 June 1994. The inquiry officer submitted a report on 25 July 1994,
      holding that the appellant was not guilty of the misconduct he was charged
      with.
B           2. On 27 August 1994, the first respondent resolved to appoint
      another inquiry officer to conduct an inquiry into the charges against the
      appellant. A former Chief Officer, Shri Sontakke was appointed as an
      inquiry officer. The appellant objected to the convening of a second
      inquiry by his letter dated 24 September 1994. The new inquiry officer
      issued a notice to show cause to the appellant on 26 September 1994.
C     The appellant objected to the appointment. In the meantime, on 10
      October 1994 the first respondent called upon the appellant to show
      cause what action should be taken pursuant to the report of the first
      inquiry officer. On 8 November 1994, the first respondent inferred that
      the report of Shri Marathe was not acceptable to the appellant and
D     proceeded with the inquiry under Shri Sontakke.
            3. The new inquiry officer submitted his report on 20 April 1995,
      holding the appellant guilty of misappropriation of funds and defalcation.
      On the basis of the report of the inquiry officer, a notice to show cause
      was issued to the appellant to which he submitted his reply. The first
E     respondent then passed a resolution removing the appellant. This was
      followed by an order of removal dated 29 June 1996. The appeal filed by
      the appellant before the Regional Director, Municipal Administration,
      Nagpur Division under Section 79 (6) of the Municipal Councils, Nagar
      Panchayats and Industrial Townships Act 1965 was dismissed on 31
      August 1996.
F
             4. The appellant instituted a writ petition before the High Court to
      challenge his removal. The High Court, by its judgment and order dated
      12 August 2014 quashed the order of removal. The appellant had already
      attained the age of superannuation. The High Court held that no back-
      wages should be paid to the appellant for the period for which he had not
G     rendered service. However, the High Court directed the disbursement
      of retiral benefits to the appellant, treating him to be in service with
      continuity of service until the date of superannuation.
            5. The submission which has been urged on behalf of the appellant
      in support of the appeal is that once the High Court found that the
H     appellant had wrongfully been removed from service, the general principle
    JAYANTIBHAI RAOJIBHAI PATEL v. MUNICIPAL COUNCIL,                         487
      NARKHED [DR. DHANANJAYA Y CHANDRACHUD, J.]

that back-wages must follow a determination in regard to the illegality of    A
termination should be applied. This was sought to be supported by relying
upon the decisions of this Court in Hindustan Tin Works (P) Ltd v
Employees (“Hindustan Tin Works”) 1 and Deepali Gundu
Surwase v Kranti Junior Adhyapak Mahavidyalaya (“Deepali
Surwase”)2.
                                                                              B
       6. After notice was issued in these proceedings, a counter affidavit
has been filed on behalf of the first respondent. It has been submitted
that pursuant to the order of the High Court, retiral benefits amounting
to Rs 27 lakhs have been paid to the appellant in July 2015 after deduction
of tax. Moreover, the appellant is drawing a pension of Rs 31,500 per
month. The first respondent submitted that within two years of the            C
removal, it had taken necessary steps to reinstate the appellant but the
order could not be implemented as a result of a stay granted by the
District Collector. The first respondent submitted that the appellant ought
not to be granted back-wages for the period for which he has not worked,
particularly having regard to the fact that it is a ‘Class-C’ municipality    D
with a limited income.
The rival submissions now fall for our consideration.
       7. The High Court has held that the action of the Municipal Council
in proceeding with a de novo inquiry was vitiated since no reasons were
recorded by the Municipal Council. The High Court held that even if a         E
de novo inquiry was permissible under the rules, no reason was furnished
for discarding the report of the first inquiry officer and convening a
fresh enquiry. Moreover, the appellant had objected to the appointment
of Shri Sontakke as an inquiry officer since he was an ex-officer of the
Municipal Council who was occupying quarters allotted to him at the           F
material time. Hence, the High Court held that the removal was illegal.
However, the High Court denied back-wages for the period between
the date of dismissal and the date on which the appellant attained the
age of superannuation. The appellant has been granted his retiral dues
on the basis of continuity of service. The judgment of the High Court
has not been challenged by the Municipal Council.                             G
      8. The view of the High Court that a fresh appointment of an
inquiry officer could not have been made without recording reasons why

1
    (1979) 2 SCC 80
2
    (2013) 10 SCC 324                                                         H
488               SUPREME COURT REPORTS                        [2019] 11 S.C.R.


A     the disciplinary authority disagreed with the enquiry report is correct.
      This is borne out by the decision of this Court in CSHA University v
      BD Goyal3, where a three judge Bench of this Court observed:
               “7. It is no doubt true that the punishing authority or any higher
               authority could have disagreed with the finding of the enquiring
B              officer, but in such a case the authority concerned is duty-bound
               to record reasons in writing and not on ipse dixit can alter the
               finding of an enquiring officer. The order of the Vice-Chancellor,
               which was produced before us does not satisfy the requirements
               of law in the matter of differing with the findings of an enquiring
               officer..”
C
             9. Several judgments of this Court have laid down the principles
      pertaining to the grant of back wages. In Hindustan Tin Works, a
      three-judge Bench of this Court adjudicated on the criterion for grant of
      back-wages where a termination has been held to be illegal. The appellant
      in that case was a private limited company with an industrial unit. The
D     Labour Court held that the retrenchment of employees by the appellant
      was not bona fide and awarded full back wages to the employees, which
      was challenged before the Supreme Court. This Court made the following
      observations:
               “9. It is no more open to debate that in the field of industrial
E              jurisprudence a declaration can be given that the termination of
               service is bad and the workman continues to be in service. The
               spectre of common law doctrine that contract of personal service
               cannot be specifically enforced or the doctrine of mitigation of
               damages does not haunt in this branch of law. The relief of
F              reinstatement with continuity of service can be granted where
               termination of service is found to be invalid. It would mean that
               the employer has taken away illegally the right to work of the
               workman contrary to the relevant law or in breach of contract
               and simultaneously deprived the workman of his earnings. If thus
               the employer is found to be in the wrong as a result of which the
G              workman is directed to be reinstated, the employer could not shirk
               his responsibility of paying the wages which the workman has
               been deprived of by the illegal or invalid action of the employer.
               Speaking realistically, where termination of service is
               questioned as invalid or illegal and the workman has to go
      3
H         (2010) 15 SCC 776
JAYANTIBHAI RAOJIBHAI PATEL v. MUNICIPAL COUNCIL,                              489
  NARKHED [DR. DHANANJAYA Y CHANDRACHUD, J.]

      through the gamut of litigation, his capacity to sustain                 A
      himself throughout the protracted litigation is itself such
      an awesome factor that he may not survive to see the day
      when relief is granted. More so in our system where the
      law’s proverbial delay has become stupefying. If after such
      a protracted time and energy consuming litigation during
                                                                               B
      which period the workman just sustains himself, ultimately
      he is to be told that though he will be reinstated, he will be
      denied the back wages which would be due to him, the
      workman would be subjected to a sort of penalty for no
      fault of his and it is wholly undeserved. Ordinarily, therefore,
      a workman whose service has been illegally terminated                    C
      would be entitled to full back wages except to the extent
      he was gainfully employed during the enforced idleness.
      That is the normal rule. Any other view would be a premium
      on the unwarranted litigative activity of the employer. If
      the employer terminates the service illegally and the
                                                                               D
      termination is motivated as in this case viz. to resist the
      workmen’s demand for revision of wages, the termination
      may well amount to unfair labour practice. In such
      circumstances reinstatement being the normal rule, it
      should be followed with full back wages…”
                                                      (Emphasis supplied)      E

      The Court further clarified that while the payment of full back
wages would be the normal rule, there can be a departure from it where
necessary circumstances have been established:
      “11. In the very nature of things there cannot be a straight-jacket      F
      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   G
      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      H
490              SUPREME COURT REPORTS                              [2019] 11 S.C.R.


A            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
             (see Susannah Sharp v. Wakefield [(1891) AC 173, 179] ).”
             Taking note of the financial problems of the appellant company,
      the Court granted compensation to the extent of 75% of back wages.
B     The principle laid down in Hindustan Tin Works has been followed by
      other decisions of this Court.4
             10. In Surendra Kumar Verma v. Central Government
      Industrial Tribunal-cum-Labour Court5, the termination of the
      services of the appellants was held to be in contravention of Section 25-
C     F of the Industrial Disputes Act by the Labour Court, but the appellants
      were denied the payment of back wages. In appeal, a three-judge bench
      of this Court observed:
             “6… Plain common-sense dictates that the removal of an order
             terminating the services of workmen must ordinarily lead to the
D            reinstatement of the services of the workmen. It is as if the order
             has never been, and so it must ordinarily lead to back wages too.
             But there may be exceptional circumstances which make it
             impossible or wholly inequitable vis-à-vis the employer and
             workmen to direct reinstatement with full back wages. For
             instance, the industry might have closed down or might be in severe
E            financial doldrums; the workmen concerned might have secured
             better or other employment elsewhere and so on. In such situations,
             there is a vestige of discretion left in the court to make appropriate
             consequential orders. The court may deny the relief of
             reinstatement where reinstatement is impossible because the
F            industry has closed down. The court may deny the relief of award
             of full back wages where that would place an impossible burden
             on the employer. In such and other exceptional cases the court
             may mould the relief, but ordinarily the relief to be awarded must
             be reinstatement with full back wages. That relief must be awarded
             where no special impediment in the way of awarding the relief is
G            clearly shown. True, occasional hardship may be caused to an
             employer but we must remember that, more often than not,
      4
        P.G.I. of Medical Education & Research v. Raj Kumar, (2001) 2 SCC 54; Indian Rly.
      Construction Co. Ltd. v. Ajay Kumar, (2003) 4 SCC 579 ; Deepali Gundu Surwase v.
      Kranti Junior Adhyapak Mahavidyalaya, (2013) 10 SCC 324
      5
H       (1980) 4 SCC 443
JAYANTIBHAI RAOJIBHAI PATEL v. MUNICIPAL COUNCIL,                               491
  NARKHED [DR. DHANANJAYA Y CHANDRACHUD, J.]

      comparatively far greater hardship is certain to be caused to the         A
      workmen if the relief is denied than to the employer if the relief is
      granted.”
       11. In Deepali Surwase, the appellant had been employed as a
teacher in a primary school run by a trust. The services of the appellant
had been terminated by the management of the school pursuant to an              B
ex-parte inquiry proceeding. The School Tribunal quashed the termination
of the appellant’s services and issued a direction for the grant of full
back wages. In appeal, the High Court affirmed the view of the Tribunal
that the termination was illegal, but set aside the direction for grant of
back wages. In appeal, a two-judge Bench of this Court laid down the
following principles:                                                           C

      “22. The very idea of restoring an employee to the position which
      he held before dismissal or removal or termination of service
      implies that the employee will be put in the same position in which
      he would have been but for the illegal action taken by the employer.
      The injury suffered by a person, who is dismissed or removed or           D
      is otherwise terminated from service cannot easily be measured
      in terms of money…The reinstatement of such an employee, which
      is preceded by a finding of the competent judicial/quasi-judicial
      body or court that the action taken by the employer is ultra vires
      the relevant statutory provisions or the principles of natural justice,   E
      entitles the employee to claim full back wages. If the employer
      wants to deny back wages to the employee or contest his
      entitlement to get consequential benefits, then it is for him/
      her to specifically plead and prove that during the
      intervening period the employee was gainfully employed
      and was getting the same emoluments. The denial of back                   F
      wages to an employee, who has suffered due to an illegal
      act of the employer would amount to indirectly punishing
      the employee concerned and rewarding the employer by
      relieving him of the obligation to pay back wages including
      the emolument.”                                                           G
                                                    (Emphasis supplied)
      The Court laid down the following principles to govern the payment
of back wages:

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492      SUPREME COURT REPORTS                           [2019] 11 S.C.R.


A     “38.1. In cases of wrongful termination of service, reinstatement
      with continuity of service and back wages is the normal rule.
      38.2. The aforesaid rule is subject to the rider that while deciding
      the issue of back wages, the adjudicating authority or the court
      may take into consideration the length of service of the employee/
B     workman, the nature of misconduct, if any, found proved against
      the employee/workman, the financial condition of the employer
      and similar other factors.
      38.3. Ordinarily, an employee or workman whose services are
      terminated and who is desirous of getting back wages is required
C     to either plead or at least make a statement before the adjudicating
      authority or the court of first instance that he/she was not gainfully
      employed or was employed on lesser wages. If the employer wants
      to avoid payment of full back wages, then it has to plead and also
      lead cogent evidence to prove that the employee/workman was
      gainfully employed and was getting wages equal to the wages he/
D     she was drawing prior to the termination of service. This is so
      because it is settled law that the burden of proof of the existence
      of a particular fact lies on the person who makes a positive
      averment about its existence. It is always easier to prove a positive
      fact than to prove a negative fact. Therefore, once the employee
E     shows that he was not employed, the onus lies on the employer to
      specifically plead and prove that the employee was gainfully
      employed and was getting the same or substantially similar
      emoluments.
      38.4. The cases in which the Labour Court/Industrial Tribunal
F     exercises power under Section 11-A of the Industrial Disputes
      Act, 1947 and finds that even though the enquiry held against the
      employee/workman is consistent with the rules of natural justice
      and/or certified standing orders, if any, but holds that the punishment
      was disproportionate to the misconduct found proved, then it will
      have the discretion not to award full back wages. However, if the
G     Labour Court/Industrial Tribunal finds that the employee or
      workman is not at all guilty of any misconduct or that the employer
      had foisted a false charge, then there will be ample justification
      for award of full back wages.

H
JAYANTIBHAI RAOJIBHAI PATEL v. MUNICIPAL COUNCIL,                                493
  NARKHED [DR. DHANANJAYA Y CHANDRACHUD, J.]

      38.5. The cases in which the competent court or tribunal finds             A
      that the employer has acted in gross violation of the statutory
      provisions and/or the principles of natural justice or is guilty of
      victimising the employee or workman, then the court or tribunal
      concerned will be fully justified in directing payment of full back
      wages. In such cases, the superior courts should not exercise
                                                                                 B
      power under Article 226 or 136 of the Constitution and interfere
      with the award passed by the Labour Court, etc. merely because
      there is a possibility of forming a different opinion on the entitlement
      of the employee/workman to get full back wages or the employer’s
      obligation to pay the same. The courts must always keep in view
      that in the cases of wrongful/illegal termination of service, the          C
      wrongdoer is the employer and the sufferer is the employee/
      workman and there is no justification to give a premium to the
      employer of his wrongdoings by relieving him of the burden to
      pay to the employee/workman his dues in the form of full back
      wages.
                                                                                 D
      38.6. In a number of cases, the superior courts have interfered
      with the award of the primary adjudicatory authority on the premise
      that finalisation of litigation has taken long time ignoring that in
      majority of cases the parties are not responsible for such delays.
      Lack of infrastructure and manpower is the principal cause for
      delay in the disposal of cases. For this the litigants cannot be           E
      blamed or penalised. It would amount to grave injustice to an
      employee or workman if he is denied back wages simply because
      there is long lapse of time between the termination of his service
      and finality given to the order of reinstatement. The courts should
      bear in mind that in most of these cases, the employer is in an            F
      advantageous position vis-à-vis the employee or workman. He
      can avail the services of best legal brain for prolonging the agony
      of the sufferer i.e. the employee or workman, who can ill-afford
      the luxury of spending money on a lawyer with certain amount of
      fame. Therefore, in such cases it would be prudent to adopt the
      course suggested in Hindustan Tin Works (P)                                G

      Ltd. v. Employees [Hindustan Tin Works (P) Ltd. v. Employees,
      (1979) 2 SCC 80 : 1979 SCC (L&S) 53] .”
     12. In the present case the first inquiry resulted in a report which
came to the conclusion that the charge of misconduct was not                     H
494                SUPREME COURT REPORTS                       [2019] 11 S.C.R.


A     substantiated. Upon finding that the convening of a fresh inquiry without
      recording reasons was contrary to law, the High Court would have
      ordinarily granted liberty to the Municipal Council to take a fresh decision
      after due notice to the appellant. Such a course of action was, however,
      rendered impracticable by supervening events. The writ petition instituted
      by the appellant before the High Court in 1996 remained pending for
B
      nearly eighteen years. The appellant had been removed from service on
      29 June 1996. Considering the lapse of time, reopening the proceedings
      would not be expedient in the interest of justice particularly when the
      appellant had, in the meantime, attained the age of superannuation in
      2005. Relegating the appellant to a protracted course of action by restoring
C     the proceedings before the disciplinary authority would also not be fair
      and proper after a lapse of nearly fourteen years since his retirement.
             13. Having due regard to the principles which have been enunciated
      in Deepali Surwase by this Court, the High Court was not, in our view,
      justified in denying the back-wages to the appellant altogether. Bearing
D     in mind the circumstances which have been noted above, a lumpsum
      compensation should be directed to be paid.
             14. The ends of justice would be met by directing that the appellant
      be paid an amount quantified at Rs 5 lakhs in full and final settlement of
      his claim for back-wages for the period between the date of the order of
E     removal and the date on which he attained the age of superannuation.
      This payment to the appellant shall be made in addition to the retiral
      benefits to which he is entitled in terms of the order of the High Court.
      The payment of Rs 5 lakhs shall be made within a period of two months
      from the date of receipt of a certified copy of this order.

F           15. The appeal is accordingly disposed of. There shall be no
      order as to costs.


      Nidhi Jain                                                 Appeal disposed of.


G




H