Holding

When an employee is illegally terminated, reinstatement must be accompanied by full backwages unless the employer can prove the employee was gainfully employed during the period of termination.

Summary

The appellant, a qualified Chartered Accountant, was appointed Manager (Finance) and later Deputy Chief (Finance) at Manganese Ore (India) Ltd. He was suspended and subsequently dismissed following a series of show-cause notices after reporting late to work due to his father's death. The High Court reinstated him but denied backwages, reasoning that he had earned income during the period of termination. The Supreme Court examined the legal principles governing backwages, emphasizing that wrongful termination ordinarily warrants reinstatement with backwages unless the employer proves the employee was gainfully employed during the interim. Relying on precedents such as Deepali Gundu Surwase and others, the Court held that the burden of proving gainful employment lies on the employer and that denial of backwages was unjustified. Consequently, the Court modified the impugned order, directing the respondent to pay Rs.80 lakhs as backwages, and allowed the appeal in part.

Issues considered

The appellant is entitled to backwages in addition to reinstatement after wrongful termination.
Who bears the burden of proof to show whether the employee was gainfully employed during the period of termination?
Whether the High Court erred in denying backwages despite finding no valid ground for termination.

Legislation cited

Constitution of Indias. Article 12, s. Article 136, s. Article 226
Contempt of Courts Act, 1971
Indian Evidence Act, 1872s. 106
Industrial Disputes Act, 1947s. 11-A

Subjects

reinstatementbackwageswrongful terminationburden of proofindustrial disputeslabour lawSection 106 Evidence ActArticle 12 ConstitutionSection 11-A Industrial Disputes Act

Judgment

592 [2021]
SUPREME COURT 9 S.C.R. 592
REPORTS [2021] 9 S.C.R.

A PRADEEP S/O RAJKUMAR JAIN
v.
MANGANESE ORE (INDIA) LIMITED & ORS.
(Civil Appeal No. 7607 of 2021)
B DECEMBER 10, 2021
[K.M. JOSEPH AND
PAMIDIGHANTAM SRI NARASIMHA, JJ.]
Labour Laws – Reinstatement – Backwages – On facts, by
the impugned order, the High Court ordered reinstatement of
C appellant (who was earlier terminated from service) but denied him
the benefit of backwages – Denial of backwages to appellant – If
justified – Held: When the question arises as to whether the
backwages is to be given and as to what is to be the extent of
backwages, these are matters which will depend on the facts of the
D case – In a case where it is found that the employee was not at all at
fault and yet, he was visited with illegal termination or termination
which is actually activised by malice, it may be unfair to deny him
the fruits of the employment which he would have enjoyed but for
the illegal / malafide termination – The effort of the Court must be
to then to restore the status quo in the manner which is appropriate
E in the facts of each case – The nature of the charges, the exact
reason for the termination as evaluated and, of course, the question
as to whether the employee was gainfully employed would be matters
which will enter into the consideration by the Court – In the present
case, the appellant does not deny that he was indeed earning some
F amount during the period he was out of employment – However,
there was hardly any worthwhile reason for the respondent to
terminate the services – The impugned order of High Court itself
shows that there was no basis for termination of the services of the
appellant – When the appellant was qualified and particularly, when
the appellant also has a case that all this was done for the reason
G that he had taken up certain issues relating to the manner in which
the affairs of the respondent was being run, the High Court was in
error in not making appropriate order relating to backwages.
Deepali Gundu Surwase v. Kranti Junior Adhyapak
Mahavidyalaya (D.Ed.) & Ors. (2013) 10 SCC 324: [
H 2013] 9 SCR 1 – relied on.
592
PRADEEP S/O RAJKUMAR JAIN v. MANGANESE ORE 593
(INDIA) LIMITED & ORS.

Talwara Cooperative Credit and Service Society Ltd. v. A
Sushil Kumar (2008) 9 SCC 486: [2008] 14 SCR 53;
Rajasthan State Road Transport Corporation, Jaipur
v. Phool Chand (Dead) Through Legal Representatives
(2018) 18 SCC 299 : [2018] 11 SCR 448; Manager
R.B.I. Bangalore v. S. Mani & Ors. (2005) 05 SCC 100
B
: [2005] 2 SCR 797; Municipal Council Sujanpur v.
Surinder Kumar (2006) 5 SCC 173 : [2006] 1 Suppl.
SCR 914 and Shambhu Nath Goyal v. Bank of Baroda
and Others (1983) 4 SCC 491: [1984] 1 SCR 85 –
referred to.
Case Law Reference C

[2013] 9 SCR 1 relied on Para 6
[2008] 14 SCR 53 referred to Para 7
[2018] 11 SCR 448 referred to Para 7
D
[2005] 2 SCR 797 referred to Para 9
[2006] 1 Suppl. SCR 914 referred to Para 10
[1984] 1 SCR 85 referred to Para 10
CIVIL APPELLATE JURISDICTION : Civil Appeal No.7607
of 2021. E

From the Judgment and Order dated 04.04.2017 of the High Court
of Judicature at Bombay, Nagpur Bench in Writ Petition No.1780 of
2009.
Mehul M. Gupta, R. P. Gupta, Advs. for the Appellant. F
Devashish Bharuka, Ms. Sarvshree, Justine George, Manas Syal,
Advs. for the Respondents.
The Order of the Court was passed by
K. M. JOSEPH, J.
G
(1) Leave granted.
(2) The appellant is a qualified Chartered Accountant. He was
appointed as Manager (Finance) by order dated 22.10.1997. Thereafter,
he was posted in 2005 at the Balaghat Mines as the Deputy Chief
(Finance). In certain circumstances, which were on account of the death H
594 SUPREME COURT REPORTS [2021] 9 S.C.R.

A of his father, he had to report late for work on three days. He was
served with a show cause and it was followed up by yet another show
cause. It was replied to. He came to be suspended on 05.10.2007. He
was served with a charge memo on 27.10.2007. Thereafter, he was
dismissed on 12.08.2008. The appeal carried by him was dismissed. He
filed a writ petition. The writ petition filed was partly allowed by the
B
Division Bench and this has resulted in the present appeal.
(3) The controversy lies in a very narrow compass. While the
Division Bench has ordered reinstatement of the appellant, the Court
has denied him the benefit of backwages. In other words, this Court is
called upon to decide whether there is justification to deny backwages
C to the appellant.
(4) We have heard learned counsel for the appellant and learned
counsel for the respondent.
(5) The respondent is, undoubtedly, State under Article 12 of the
D Constitution. The contention of the appellant is that the appellant as a
Chartered Accountant has been victimised. There was no justification
at all in law, or in facts in launching the disciplinary proceedings against
the appellant and it has been so held by the High Court as well in the
impugned order. The High Court, however, has proceeded to take the
view that the appellant is not entitled to backwages. The reason given is
E as follows ‘specially when the appellant has not worked during the said
period’.
(6) Learned counsel for the respondent would oppose the appeal
by pointing out that the burden lay with the employee, if the appellant
wished to show that he had not worked during the period that he was
F kept out of the employment. The appellant’s counsel joins issue with this
proposition. He points out that judgments of this Court establish the
principle that all that is required is that the workman/appellant must plead
that he had not worked during the period when he was kept out of
employment by illegal termination. In this regard, the appellant drew
G support from a large body of case law. In particular, he drew our attention
to the judgment of this Court in Deepali Gundu Surwase v. Kranti
Junior Adhyapak Mahavidyalaya (D.Ed.) & Ors. (2013) 10 SCC
324. The Bench of two learned Judges in the said case has, after reviewing
of case law which included survey of two earlier three Judges Benches
of this Court, concluded as follows:
H
PRADEEP S/O RAJKUMAR JAIN v. MANGANESE ORE 595
(INDIA) LIMITED & ORS. [K. M. JOSEPH, J.]

“38. The propositions which can be culled out from the A
aforementioned judgments are:
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 B
may take into consideration the length of service of the employee/
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 C
terminated and who is desirous of getting back wages is required
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 D
lead cogent evidence to prove that the employee/workman was
gainfully employed and was getting wages equal to the wages he/
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 E
fact than to prove a negative fact. Therefore, once the employee
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. F
38.4. The cases in which the Labour Court/Industrial Tribunal
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 G
was disproportionate to the misconduct found proved, then it will
have the discretion not to award full back wages. However, if the
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
596 SUPREME COURT REPORTS [2021] 9 S.C.R.

A 38.5. The cases in which the competent court or tribunal finds
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
C that in the cases of wrongful/illegal termination of service, the
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
E delay in the disposal of cases. For this the litigants cannot be
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
F bear in mind that in most of these cases, the employer is in an
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
G course suggested in Hindustan Tin Works (P) Ltd. v. Employees
[(1979) 2 SCC 80 : 1979 SCC (L&S) 53] .
38.7. The observation made in J.K. Synthetics Ltd. v. K.P.
Agrawal [(2007) 2 SCC 433 : (2007) 1 SCC (L&S) 651] that on
reinstatement the employee/workman cannot claim continuity of
H
PRADEEP S/O RAJKUMAR JAIN v. MANGANESE ORE 597
(INDIA) LIMITED & ORS. [K. M. JOSEPH, J.]

service as of right is contrary to the ratio of the judgments of A
three-Judge Benches [Hindustan Tin Works (P) Ltd. v.
Employees, (1979) 2 SCC 80 : 1979 SCC (L&S) 53] , [Surendra
Kumar Verma v. Central Govt. Industrial Tribunal-cum-Labour
Court, (1980) 4 SCC 443 : 1981 SCC (L&S) 16] referred to
hereinabove and cannot be treated as good law. This part of the
B
judgment is also against the very concept of reinstatement of an
employee/workman.
“42. In the result, the appeal is allowed, the impugned order [Kranti
Junior Adhyapak Mahavidyalaya v. State of Maharashtra,
(2012) 1 Mah LJ 370] is set aside and the order passed by the
Tribunal is restored. The management shall pay full back wages C
to the appellant within four months from the date of receipt of
copy of this order failing which it shall have to pay interest at the
rate of 9% per annum from the date of the appellant’s suspension
till the date of actual reinstatement. It is also made clear that in
the event of non-compliance with this order, the management shall D
make itself liable to be punished under the Contempt of Courts
Act, 1971.”
(7) Learned counsel for the respondent, on the other hand, sought
support from another line of decisions which represent the later view
adopted by this Court in Talwara Cooperative Credit and Service E
Society Ltd. v. Sushil Kumar (2008) 9 SCC 486. He also sought support
from the judgment in Rajasthan State Road Transport Corporation,
Jaipur v. Phool Chand (Dead) Through Legal Representatives (2018)
18 SCC 299.
(8) Learned counsel for the appellant on being faced with this line F
of decisions, would, in the first place, point out that this Court in Talwara
Cooperative Credit and Service Society Ltd. (supra) has adverted to
Section 106 of the Evidence Act and therefore, the burden lay on the
employee for which reference was made to an earlier judgment and he
would point out that, in fact, in the earlier judgment, there is no reference
to Section 106 of the Evidence Act. G
(9) We notice that it is true that in Talwara Cooperative Credit
and Service Society Ltd. (supra), this Court has held inter alia:
“13. This Court in a large number of cases noticed the paradigm
shift in the matter of burden of proof as regards gainful employment
H
598 SUPREME COURT REPORTS [2021] 9 S.C.R.

A on the part of the employer holding that having regard to the
provisions contained in Section 106 of the Evidence Act, the burden
would be on the workman. The burden, however, is a negative
one. If only the same is discharged by the workman, the onus of
proof would shift on to the employer to show that the employee
concerned was in fact gainfully employed. In Surinder Kumar
B
[(2006) 5 SCC 173 : 2006 SCC (L&S) 967] , this Court held :
(SCC p. 177, paras 12-14)
“12. The Labour Court and the High Court also proceeded
wrongly on the premise that the burden of proof to establish non-
completion of 240 days of work within a period of twelve months
C preceding the termination, was on the management. The burden
was on the workman. (See U.P. State Brassware Corpn. Ltd. v.
Uday Narain Pandey [(2006) 1 SCC 479 : 2006 SCC (L&S)
250 : JT (2005) 10 SC 344] and State of M.P. v. Arjunlal Rajak
[(2006) 2 SCC 711 : 2006 SCC (L&S) 429].)
D 13. Equally well settled is the principle that the burden of proof,
having regard to the principles analogous to Section 106 of the
Evidence Act that he was not gainfully employed, was on the
workman. (See RBI v. S. Mani [(2005) 5 SCC 100 : 2005 SCC
(L&S) 609].)
E 14. It is also a trite law that only because some documents have
not been produced by the management, an adverse inference
would not be drawn against the management. (See S. Mani
[(2005) 5 SCC 100 : 2005 SCC (L&S) 609].)””
In fact, the said judgment has made reference to the judgment
F reported in Manager R.B.I. Bangalore v. S. Mani & Ors. (2005) 05
SCC 100 for what is stated in para 13.
(10) We do not find, in fact, any reference to Section 106 of the
Evidence Act being made in Manager R.B.I. Bangalore (supra). It is
true, however, that in the judgment reported in Municipal Council
G Sujanpur v. Surinder Kumar (2006) 5 SCC 173, there is a reference
made to Section 106 of the Evidence Act and in the manner in which it
is stated in paragraph 13 it is quoted also in Talwara Cooperative Credit
and Service Society Ltd. (supra).
There is an earlier judgment of this Court rendered by a Bench of
H three learned Judges which is reported in Shambhu Nath Goyal v. Bank
PRADEEP S/O RAJKUMAR JAIN v. MANGANESE ORE 599
(INDIA) LIMITED & ORS. [K. M. JOSEPH, J.]

of Baroda and Others (1983) 4 SCC 491 which has dealt with the A
issue in the following words:
“……………………………………………………………
…………………………………………………………………………
The management is thus seen to have been taking steps
periodically to see that the dispute is not disposed of at an early B
date one way or the other. The blame for not framing an issue on
the question whether or not the workman was gainfully employed
in the intervening period cannot be laid on the Tribunal alone. It
was equally the duty of the management to have got that issue
framed by the Tribunal and adduce the necessary evidence unless C
the object was to rake up that question at some later stage to the
disadvantage of the workman as in fact it has been done. The
management appears to have come forward with the grievance
for the first time only in the High Court. There is no material on
record to show that the workman was gainfully employed
anywhere. The management has not furnished any particulars in D
this regard even before this Court after such a long lapse of time.
The workman could have been asked to furnish the necessary
information at the earliest stage. The management has not resorted
to that course. The workman was not expected to prove the
negative. In these circumstances, we do not think that it would be E
in the interest of justice to prolong any further the agony of the
workman whose power to endure the suffering of being out of
employment for such a long time and to oppose the management
Bank, a nationalised undertaking with all the money power at its
disposal in this prolonged litigation is very limited by allowing the
Bank to have the advantage belatedly sought in the application F
dated February 8, 1979 in an industrial dispute which arose so
early as in 1965.
……… ……………… …………… ……………… ………
…………………………………………………………………………”
G
It is, undoubtedly, true when the question arises as to whether the
backwages is to be given and as to what is to be the extent of backwages,
these are matters which will depend on the facts of the case as noted in
Deepali Gundu Surwase (supra). In a case where it is found that the
employee was not at all at fault and yet, he was visited with illegal
H
600 SUPREME COURT REPORTS [2021] 9 S.C.R.

A termination or termination which is actually activised by malice, it may
be unfair to deny him the fruits of the employment which he would have
enjoyed but for the illegal / malafide termination. The effort of the Court
must be to then to restore the status quo in the manner which is
appropriate in the facts of each case. The nature of the charges, the
exact reason for the termination as evaluated and, of course, the question
B
as to whether the employee was gainfully employed would be matters
which will enter into the consideration by the Court.
(11) As far as the present case is concerned, the reason given by
the High Court in the impugned order for denying backwages clearly
does not appeal to us. According to the appellant, the appellant has indeed
C stated that he was not working. The case of the respondent is that he
was a Chartered Accountant and that he was indeed earning. The learned
counsel for the appellant does not deny that the appelant was indeed
earning some amount from doing accountancy related work and he had
filed returns under the Income Tax Act. This means as things stand
D before us, it is a case where the appellant must be treated as not having
been without any income at all during the period. He was earning. We
have also, however, noticed that there was hardly any worthwhile reason
for the respondent to terminate the services. The impugned order itself
shows that there was no basis for termination of the services of the
appellant. When the appellant was qualified and particularly, when the
E appellant also has a case that all this was done for the reason that he had
taken up certain issues relating to the manner in which the affairs of the
respondent was being run, we would think that the High Court was in
error in not making appropriate order relating to backwages.
(12) As regards the quantum of backwages, there are conflicting
F claims. According to the respondent, if what is described as performance
allowance is not added, 100 per cent of the backwages which the appellant
would be entitled to would be in the region of about Rs.66 lakhs. The
appellant’s claim is for over Rs.3 crores. However, he would, after getting
instructions from his client state that the appellant may be given a sum
G of Rs.1.5 crores. He, particularly, points out that this is without taking
into consideration the benefits of notional promotion.
We are not delving more into this issue as it is stated that litigation
relating to right to notational promotion is pending consideration before
the High Court.
H
PRADEEP S/O RAJKUMAR JAIN v. MANGANESE ORE 601
(INDIA) LIMITED & ORS. [K. M. JOSEPH, J.]

(13) On a conspectus of all facts and circumstances, we are of A
the view that the interest of justice would be sufficiently served if we
direct the appellant be paid a total sum of Rs.80 lakhs as the backwages
for the entire period for which the termination operated. Accordingly,
the appeal is partly allowed. The impugned order is modified and we
direct the respondent to pay a sum of Rs.80 lakhs to the appellant within
B
a period of six weeks from today.
No orders as to costs.

Bibhuti Bhushan Bose Appeal partly allowed.

C

D

E

F

G

H