Holding

Reinstatement does not automatically entitle the employee to full back wages, and justice is served by directing payment of an additional compensation of Rs 35,000 rather than ordering full back wages.

Summary

The employee, a Lab Assistant employed since 1973, was terminated in 1978 after disciplinary proceedings. He later filed a representation under Regulation 21 of the U.P. Intermediate Education Act, 1921, which was dismissed, and a writ petition in the High Court that ordered a lump‑sum compensation of Rs 30,000, noting his lack of aptitude for service. The High Court later dismissed his review and, after a special leave petition, a Division Bench reinstated him, granted retiral benefits and ordered an additional compensation of Rs 35,000. The employee had superannuated and the question before the Supreme Court was whether he was entitled to back wages for the period of termination. The Court held that reinstatement does not automatically confer full back wages and, considering the employee’s lack of aptitude and the long lapse of time, it was appropriate to award only the additional compensation of Rs 35,000. The appeal was allowed, directing the payment of the extra compensation with interest if delayed.

Issues considered

Whether an employee reinstated after a long period of termination is entitled to full back wages.
Whether the compensation awarded by the High Court should be enhanced in view of the employee's lack of aptitude and the passage of time.
Who is liable to pay the compensation and interest under the High Court's directions.

Legislation cited

U.P. Intermediate Education Act, 1921s. Chapter III, Regulation 21

Subjects

service terminationreinstatementback wagescompensationaptitude for serviceU.P. Intermediate Education ActRegulation 21civil appeal

Judgment

RAM ASH RAY SINGH AND ANR. A

RAM BUX SINGH AND ORS.

FEBRUARY 11. 2003

[SHIVARAJ V. PATIL AND ARIJ!T PASAY AT, JJ.] B

Service Law: UP. Intermediate Education Act, 1921; ·Chapter Ill,
Regulation 21: Termination of service of a Lab Assistant-Appeal and
representation rejected by azuhority--High Court in 1vrit proceedings directed C
payment of compensation and observed that employee had no aptitude for
service-Al/01ving the en1p/oyee 's appeal, Division bench directed his
reinstaternent and granted all retiral benefits-On appeal, Held: In vietti of
set/led position in law and earlier finding of High Court about lack ofaptitude
for service and absence C?f sincerity towards work by the employee, ends of
justice 1vould be served by pay111ent of compensation only-Directions issued D

Services of Respondent No.I, a Lab Assistant (employee), were
terminated by the Principal of the School after conducting disciplinary
proceedings. Appeal against the termination order was dismissed by the
management. The employee filed representation belatedly which was
rejected by the authority. Writ Petition filed by him was disposed of by E
the High Court directing payment of compensation, as it noticed that the
employee had no aptitude for service. Aggrieved, the employee filed review
petition as well as SLP. Dismissing the review petition, High Court directed
compliance of its earlier direction and also directed payment of interest
on the compensation amount. The SLP was dismissed as the special appeal F
before High Court was pending. In the meanwhile, employee reached the
age of superannuation. Division Bench of the High Court allowed the
special appeal; directed reinstatement of the employee and 'grant of retiral
benefits. Hence the present appeal.

Allowing the appeal, the Court G

HELD: I.I. When fixing the back wages several factors need to be
noted. It is a well-settled position in law that on reinstatement there is no
automatic entitlement to full back wages.

1029 H
1030 SUPREME COURT REPORTS 12003] I S.C.R.

A Hindustan Tin Works Pvt. Ltd v. The Employees of.1\1/s. Hindu.l'llm Tin
lt'orks Pvt. Ltd and Ors., If 97912 SCC 80 and P.G.!. oll\1edical Education
and Research. Chandigarh v. Raj Kumar. 120011 2 SCC 54, relied on.
11032-D-EI

1.2. In the instant case, there was no clrnllengc to the order of
.B termination for six years. Some time was lost because the State and its
functionaries on the one hand and the appellant on the other differed on
the issue as to who was liable to make the payment in terms of the first ).--
direction of the High Court. It cannot also be lost sight of that the High
Court while fixing certain sum to be paid in terms of its earlier order
C recorded a finding about lack of aptitude of the employee and the
likelihood of absence in sincerity of work. Taking all these aspects into
consideration, ends of justice would be best served if the appellants are
directed to pay a sum of Rs. 35,000. as compensation in addition to what
has already been paid. (1033-E-F] +
D CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5688 of2000.

From the Judgment and Order dated 28.10.1999 in SA 42/99 of the
High Court of Judicature at Allahabad.

T.N. Singh, S.N. Singh and V.K. Singh for the Appellants.
E
Respondent No. I in-person, Alka Agrawal and Ajay K. Agrawal for
the Respondent Nos. 2 and 3.

The Judgment of the Court was delivered by

F ARIJIT PASAYA T, J. In this appeal challenge is to judgment of the
Division Bench of the Allahabad High Court. The dispute relates to entitlement .
of service and retiral benefits· of respondent No. I (hereinafter referred to as
'the employee').

Factual background in a nutshell is as follows:
G
Respondent No. I-employee was employed as Lab. Assistant, a class IV
post, on 1.2.1973. On 8.11.1977 a show-cause notice was served on him
detailing eight charges. By order dated 11.2.1978, his services were terminated
by the then Principal holding that the charges were fully proved. Against the +
order of termination an appeal was preferred which was dismissed by the
H Committee of Management. After about 6 years the employee filed a
R.A. SINGl-I v. R.B. SJNGl-I fARIJIT PASAYAT. !.] ] 031

representation before the prescribed authority under Regulation 21 of Chapter A

~
Ill framed under the U.P. Intermediate Education Act, 1921. The same was
~ dismissed by the District Inspector of Schools. A writ petition was filed by
the e:nployee \Vhich was registered "s Civil Misc. Writ Petition No. 13159 of
1984. By order dated 18.9.1991, the writ petition was disposed of directing
payment of lump-sum amount of Rs. 30,000. While making order the High
Court, inter alia, noted· that the employee had no aptitude for service, and if B
reinstated after such a long time, the peaceful atmosphere of the institution
_.. may be spoiled. The amount was directed to be paid within three months.
•
Employee filed a review petition in the High Court with a prayer to
revie\v the aforesaid order, on several grounds and also pointing out that the
amount was not paid. Against the judgment of the High Court, an appeal was
c
filed before the Division Bench by the employee. The High Court dismissed
the review petition filed by the employee holding that the case for review
was not 1nade out. While dis1nissing the application for review it was noted
that since the payment had not been made as directed, the employee was
entitled to receive interest@12% per month till payment was made. It appears D
that there was a difference in perception of the authorities as to who was
required to make the payment. The employee filed an application bringing it
to the notice of the High Court that its orders have not been complied with.
Application was filed by the Management of the present appellant No.I-
-" Principal of the Institution, for a direction to the State and the District Inspector
E
of Schools to make the payment. The High Court disposed of both the
applications directing District Inspector of Schools and the State to 1nake the
payment within a period of three months in the light of order dated 18.9.1991
modified by the order in the review application dated 3.2.1993. A contempt
petition was filed by the employee alleging non-compliance of the order. The
employee superannuated on 26.1.1995. On 20.9.1995 a sum of Rs. 30,000 F
along with Rs. 2450 towards interest, was paid. It is to be noted in the order
"' dated 3.2.1993 the rate of interest was indicated to be Rs. 12% per month,
which was later on corrected by order dated l 5.5. l 996 to read as "per annum".
Direction was also given to pay the correct amount within a month. On
3.6.1996 a further sum of Rs. 9870 was paid as the balance amount of G
interest. Against the order passed by the High Court, the employee filed
special leave petition before this Court [S.L.P. (C) No. 24287 of 1996]. On
6.12.1996 a notice was issued in the Special leave petition on the limited
question as to why the amount of compensation should not be enhanced.
However, the Special leave petition was dismissed as the special appeal before
the High (ourt was pending. The Division Bench allowed the special appeal H
1032 SUPREME COURT REPORTS [2003] I S.C.R.

A filed by the employee by directing reinstatement by the impugned judgment.
It was noted that after five years also payment of the sum of Rs. 30,000 was
not made even though that was passed on consent. The said judgment of the
Division Bench is under challenge.

At this juncture it wou Id be appropriate to note that by order dated
B 26.9.2000, the Special ·Leave Petition was admitted only on the question of
back wages. As an interim measure direction was given to pay a sum of Rs.
35,000 in addition to the amount of Rs. 30,000 as fixed originally by the >---
High Court. Direction was also given to grant arrears of pension and retiral
benefits.

c It is not in dispute that said benefits have been worked out and necessary
payments are being made. The only question, therefore, which survives
consideration, relates to claim of back wages in view of the limited notice
issued. According to the appellant the back wages from 4.1.1978 to 31.1.1995
would be Rs. 1,79,484 and interest@ 12% would be Rs. 24,993. Out of the
D said amount Rs. 65,000 (Rs. 30,000 + Rs. 35,000) along with interest of Rs. /
12,320 has been paid.

When fixing the back wages several factors need to be noted. It is a
well-settled position in law that on reinstatement there is no automatic
entitlement to full back wages. In Hindustan Tin Works Pvt. Ltd v. The
E Employees of Mis. Hindustan Tin Works Pvt. Ltd. and Ors., [ 1979] 2 SCC 80,
a three-judge Bench of this Cou11 laid down:

"In the very nature of things there cannot be a straight-jacket
formula for awarding relief of back wages. All relevant considerations
will enter the verdict. More or less, it would be a motion addressed
F to the discretion of the Tribunal. Full back wages would be the nonnal
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 circumstances. But the
discretion must be exercised in a judicial and judicious manner. The
G 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 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,
H 179)".
R.A. SINGH v. R.B. SINGH [AR!JIT PASAYAT, I.] 1033

In P.G.l. a/Medical Education and Research, Chandigarh v. Raj Kumar, A
[2001] 2 SCC 54. 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 B
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 affect." C
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 D
is statutory sanction to direct payment of back wages in its entirety."
[See: Hindustan Motors ltd v. Tapan Kumar Bhattacharya and Anr.,
(2002) AIR sew 3008.

In the case at hand, there was no challenge to the order of termination
for six years, as indicated above. Some time was lost because the State and
E
its functionaries on the one hand and the appellant on the other differed on
the issue as to who was liable to make the payment in terms of the first
direction of the High Court. It cannot also be lost sight of that the High Court
while fixing a sum of Rs. 30,000 to be paid in terms of its order dated
18.9.1991 recorded a finding about Jack of aptitude of the employee and the
likelihood of absence in sincerity of work. Taking all these aspects into F
consideration, ends of justice would be best served if the appellants are
directed to pay a sum of Rs. 35,000 in addition to what has already paid,
within a period of four weeks from today. In case the payment is not made
within the stipulated time, it shall carry interest @ 18% per annum from
today till the amount is actually paid which shall, in any event, be not later G
than four months from today.

The appeal is allowed to the extent indicated.

S.K.S. Appeal allowed.