Holding

The Tribunal had jurisdiction as the institute is a private school under the Act; the terminations were void for lack of notice, and back wages should be limited to 25% of salary from termination to reinstatement.

Summary

The appellant, Secretary of Akola Taluka Education Society, runs a vocational training institute that saw a sharp decline in student enrolment. It terminated the services of several teachers without giving the three‑month notice required under Rule 26 of the Maharashtra Employees of Private Schools (Conditions of Service) Rules, 1981. The School Tribunal held that the institute qualified as a "private school" under the Maharashtra Employees of Private Schools (Conditions of Service) Regulation Act, 1977, declared the terminations void, and awarded the teachers full back wages. On appeal, the Supreme Court examined (i) whether the institute fell within the definition of a private school and thus the Tribunal had jurisdiction, (ii) whether the termination without notice was lawful, and (iii) whether full back wages could be awarded despite the institute’s financial distress. The Court affirmed the Tribunal’s jurisdiction, held the terminations illegal, but curtailed the back‑wage award to 25% of salary from the date of termination to reinstatement, directing full salary only for periods before termination and after reinstatement. The appeal was partly allowed.

Issues considered

Whether the vocational training institute is covered by the definition of "private school" under the Maharashtra Employees of Private Schools (Conditions of Service) Regulation Act, 1977, thereby conferring jurisdiction on the School Tribunal.
Whether termination of permanent teachers without the three‑month notice prescribed in Rule 26(2)(ii) of the 1981 Rules is valid.
Whether the Tribunal was justified in awarding full back wages to the teachers in view of the institute’s financial condition.
Whether the appellant could raise the jurisdictional fact for the first time before the Supreme Court.

Legislation cited

Maharashtra Employees of Private Schools (Conditions of Service) Regulation Act, 1977s. Section 2(20), s. Section 2(21), s. Section 2(24)
Maharashtra Employees of Private Schools (Conditions of Service) Rules, 1981s. Rule 26(2)(ii)

Subjects

private schooltermination of serviceback wageslabour lawjurisdictionMaharashtra Employees of Private Schools Actvocational training institutenotice periodfinancial conditiontribunalreinstatement

Judgment

SECRETARY,AKOLATALUKAEDUCATIONSOCIETY ANDANR A
v.
SHIVAn AND ORS.

APRIL 5, 2007

{S. B. SINHA AND MARKANDEY KA TJU, JJ.] B
-;

Maharashtra employees of Private Schools (Conditions of Service)
Rules, 1981-Rule 26(2)(ii)-Termination without notice-Employees not
given three months notice-Order of termination bad in /aw-Labour law- C
Maharashtra Employees ofPrivate Schools (Conditions ofService) Regulation
Act, 1977.

Labour laws-Back wages-Termination of employees-Tribunal found
order of termination malafide and allowed full back wages-Challenge
,,.. against-Held: Tribunal ought not to have granted full back wages-Tribunal 'D
failed to take into account the financial condition of employer-Jn peculiar
facts and circumstances, interest of justice would be met if grant of back
wages is confined to 25% from date of termination till their reinstatement.

Appeal-Fresh plea-Plea that institute in question was not recognized E
one and Tribunal did not have jurisdiction to entertain the case, raised for
the first time before this Court-Held, not entertainable.

Appellant No. 1 has been imparting vocational training to the students
admitted in their training institute, in different disciplines like Draftsman
Civil, Electrician, Wireman, Welder and Fitter etc. The strength of the F
students in the aforementioned disciplines allegedly began to go down from
year to year. The services of respondents-Employees/teachers were terminated
on the plea that school had to be closed down. The respondents filed appeal
before the School Tribunal. The jurisdiction of the Tribunal to entertain the
said appeals was questioned on the ground that the institute in question was G
not a school within the meaning of the provisions of the Maharashtra
Employees of Private Schools (Conditions of Service) Regulation Act, 1977.
The Tribunal held that the institute was school within the meaning of the
provisions of the said Act and that the plea of the appellant that the institute
had to be closed down being incorrect, the orders of termination were ma/a
fide. Appellant unsuccessfully filed writ petition before High Court. Hence H
949
950 SUPREME COURT REPORTS [2007) 4 S.C.R.

A the present appeal.
Appellant contended that the Institute is not covered by the definition of
the 'private school' within the meaning of the provisions of the said Act, as it
was not recognized by the authorities under. the said Act; the Tribunal merely
proceeded on the basis that the school, in fact, was not closed down, but having
B failed to take into consideration the charts filed before it, from which, it would
appear that the number of students had gone down in different disciplines;
and that the Tribunal wrongly allowed full back wages to the teachers without
taking into consideration the financial conditions of the appellant

C Partly allowing the appeal, the Court

HELD 1.1. The question as to whether the provisions of the said Act
were applicable in the case of Appellant school although raised a question of
jurisdiction, it was necessary for the appellant to plead the jurisdictional fact
in relation thereto. [Para 15) (956-G]
D ·-
1.2. It is true that in the light of the interpretation clause contained in·
the Maharashtra Employees of Private Schools (Conditions of Service)
Regulation Act, 1977, a 'private school' was-required to be recognized by the
authorities specified therein. The Tribunal had found that it was recognized
E by the Ceritral Government. The State also in its counter affidavit contended
that it is recognized by the State. Appellant did not raise a contention before
the Tribunal that the institute in question was not recognized by the.
authorities specified under sub-section (21) of s~2 of the Act. The said
content.ion was required to be specifically raised so as to enable the
respondents to meet the same. As the jurisdictional fact required for
F determining the jurisdiction of the Tribunal had not been stated by the
appellant, such a contention cannot be allowed to be raised now for the first
time. {Para.16] {956-H; 957-A-B)

2.1. There cannot be any doubt whatsoever that ifthe 'institute' comes·
within the description of 'school' in terms of the provisions of the said Act,
G . .
before terminating the services of the respondents, it was obligatory on their
part to satisfy the conditions precedent therefor. [Para 17] [957-C]

2.2. Rule 26 of the Maharashtra employees of Private Schools
(Conditions of Service) Rules, 1981 provides that a permanent employee riiay
H be retrenched by the management after giving him three months' notice on
one or more ground specified therein. Stoppage of imparting coaching in
SECRETARY, AKOLA TALUKA EDUCATION SOCIETY v. SHIVAJI 95 J
respect of some courses of studies was one of them. Admittedly, the A
respondents had not been given three months notice. The order of termination
was, therefore, bad in law. (Para 18) (957-D)

. 3.1. In view of the provisions contained in sub-clause (ii) of clause (2) ~f
Rule 26, it was not necessary to obtain prior approval of the Education Officer,
as a technical or a vocational school does not come within the purview thereof. B
· The contention raised by the appellants before the Tribunal that the institute
was required to be closed down was found to be factually incorrect and on that
ground the decision of the Tribunal to the effect that the termination of services
of the respondents were bad in law cannot be said to be suffering from any
error of law apparent on the face of the record. (Para 19) (957-F) C·
3.2 It is now well-settled that back wages should not granted'
automatically. The Tribunal however, ought not to have granted full back
wages. Full back wages should not be granted only because it would be lawful ·
to do so. Before such an order is passed, a judicial or quasi-judicial authority' D
must consider all aspects of the matter. Appellant has produced facts to show·
decline in strength of the students in different disciplines. The same has not ·
been disputed. In some disciplines the strength of the students has considerably '
gone down. The school is an unaided one. It, therefore, must meet its financial
1
need from the fees realiud from the students. It was a relevant consideration.
The Tribunal failed to take the said fact into consideration. The financial· · E
condition of the school has not been denied or disputed. In the peculiar facts
and circumstances of this case, interest of justice shall be met if grant of
back wages is confined to 25% only from the date of termination of the
respondents till their reinstatement.
(Paras 21 and 23) (957-G-H; 958-B; G, H) F

U.P. State Brassware Corporation Ltd. and Anr. v. Uday Narain Pandey,
(2006) 1 SCC 479; A. P. SRTC and Anr. v. B. S. David Paul, (2006) 2 SCC
282; Banshi Dhar v. State ofRajasthan and Anr., (2006) 11SCAL~199 and
U.P. SRTC v. Mutthu Singh, (2006) 7 SCC 180, relied on.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1816of2007.

From the Final Judgment and Order dated 23.01.2006 of the High Court
of Judicature of Bombay, Bench at Aurangabad in Writ Petitions Nos. 1143
to 1149, 1269, 1270 and 1336 of2005.
H
--+'
\

952 SUPREME COURT REPORTS (2007) 4 S.C.R.

A Shekhar Naphade Sr. Adv., Uday B. Dube and Kuldip Singh for the
,._
--
Appellants.

Vinayak Dixit Sr. Adv., Shivaji M. Jadhav, Himanshu Gupta, Brij Kishor
Sah, Rahul Joshi and S.S. Shinde (for V.N. Raghupathy) for the Respondents.

B The Judgment. of the Court
.
was delivered by

S.B. SINHA, J. I. Leave granted.

2: The State of Maharashtra enacted 'The Maharashtra Employees of
Private Schools (Conditions of Service) Regulation Act, 1977 (for short, 'the
c Act') to regulate recruitment and conditions of service of employees in certain
private schools. It came into force with effect from 20.03.1978. 'Private School'
has been defined in Section 2(20) of the Act to mean :

"Private School", means a recognized school established or
administered by a Management other than the Government or a local
D
authority."

3. The terms 'recognized' and 'school' have been defined in Section ,,_
2(21) and 2(24) respectively in the following terms :

"2(21 ).- "Recognized" means recognized by the Director, the Divisional
E
Board or the State Board, or by any officer author~zed by him or by
any of such Boards;"

"2(24).- "School", means a primary school, secondary school, higher
secondary school, junior college of education or any other institution
F by whatever name called including technical, vocational or art
institution or part of any such school, college or institution, which
imparts general, technical, vocational, art or, as the case may be, ...
special education or training in any faculty or discipline or subject
below the degree level;"

G 4. Appellant No. I herein runs a training institute. It imparts vocational
training to the students admitted therein in different disciplines e.g. Draftsman
Civil, Electrician, Wireman, Welder and Fitter etc. The strength of the students
in the aforementioned disciplines allegedly began to go down from year to _;
-\ ,

H
SECRETARY, AKOLA TALUKA EDUCATION SOCIETY v. SHIVAJI [S.B. SINHA, J .] 953

year. So much so, no student took admission in the courses of 'Draftsman A
Civil' or 'Welder'. The relevant portion of the chart showing details of
admissions in the aforementioned disciplines reads as under :
"Sr. Academic Draftsman Civil Electrician Wireman Welder Fitter
No. Year I

Sanctio. Actual
ned admi-
Sanctio- Actual Sanctio Actual
ned addmi- ned admi ..
Sanctio Actual
ned admi..
Sanctio--
ned
Actual '
ad mi-
B
strength ssion strength ssion strength ssion strength ssion strength ssion

14 August 16 08 16 18 16 18 16 18 24 29...
1998
15 August 16 09 16 18 16 09 16 18 2A 19
1999 c
16 August 16 07 16 17 16 07 16 12 24 14
2000
17 August 16 00 16 09 16 06 16 05 2A 11 I

2001
18 August 16 00 16 01 16 05 16 00 24 02 D
2002

5. Similarly, in the certificate courses of six months and one year also,
there had been a steady decline, as would appear from the following charts:

"Details of Admission for Certificate Courses of six months E

Sr. Academic Electric Motor & Armetcher Electronic Assembly &
No. Year Winding Trouble shooting
Sanctioned Actual Sanctioned Actual
Strength Admission Strength Admission
F
1. Jan. 1999 20 13 25 10
2. Jul. 1999 20 16 25 05

3. Jan. 2000 20 05 25 06
4. Jul. 2000 20 15 25 07
5. Jan. 2001 20 08 25 - G
6. Jul. 2001 20 06 25 -
7. Jan. 2002 20 - 25 -
8. Jul. 2002 20 - 25 -
H
954 SUPREME COURT REPORTS [2007) 4 S.C.R.

A Details of Admission for Certificate Courses of one year ,..
Sr. Academic Tailoring & Cutting Lathe Machine Computer Operation
No. Year Operator (Part-time)

Sanctioned Actual Sanctioned Actual Sanctioned Actual
.. Strength Admission Strength Admission Strength Admission
B l. Jul. 1998 40 34 25 17 20
2. Jul. 1999 40 24 25 09 20 -
3. Jul. 2000 40 26 25 05 20 -.-
4. Jul. 2001 40 32 25 06 20 -
c 5. Jul.-2002 40 - 25 - 20

6. Respondent No. I herein was appointed on a temporary basis. The
services of the private respondents were purported to have been temporanly
terminated as allegedly a decision had been taken to close down the institute
.with effect from 12.08.2002, contending that the said purported orders of
-
D termination were violative of the Act and the Rules framed thereunder.

7. Appeats·thereagainst were filed by the aggrieved employees/teachers
before the School Tribunal, Pllne Region. The jurisdiction of the tribunal to
entertain the said appeals was questioned on the ground that the institute in
question was not a school within the meaning of the provisions of the said
E Act. The Tribunal, however, in its judgment held : (i) As the appellan:t was
duly recognized by the Central Government permanently without grant-in-aid,
it was a school within the meaning of the provisions of the said Act; (ii) Inter
a/ia, on ·the premise that the services of all the staff and teachers were not
terminated, the plea of the appellant that the institute had to be closed down
F .being incorrect, the orders of termination were ma/a fide;
8. The Tribunal furthermore took note of the fact that during pendency
of the said appeals, some new teachers had been appointed.

9. The writ petition preferred by the appellant thereagainst has been
G dismissed by reason of the impugned judgment.
IO. Mr. Shekhar Naphade, the learned Senior Counsel appearing on
behalf of the appellants, would urge :

(i) The institute is not covered by the definition of the 'private school'
within the meaning of the provisions of the said Act, as it was not recognized
H by the authorities under the said Act.
+
SECRETARY, A KOLA TALUKA EDUCATION SOCIETY v. SHIVAJI [S.B. SINHA, J.] 955

(iI) The Tribunal in its judgment merely proceeded on the basis that the A
. school, in fact, was not closed down, but having failed to take into
consideration the charts filed before it; from which, it would appear that the
number of students had gone down in different disciplines, and thus, the
impugned judgment cannot be sustained.

(iii) The Tribunal wrongly allowed full back wages to the teachers B
without taking into consideration the financial condition of the appellant.

11. Our attention, in this behalf, has also been drawn to the following
statements made in the Rejoinder to the Counter Affidavit of Respondent
Nos. 1 to 3 before this Court:

"I say that the details of the number of students currently studying C
in the Institute and the fees collected from them are as follows :
Students studying in 2nd 47 x Rs.6,000 (Fees collected Rs.2,82,000/-
year of ITI from every student)

Students studying in lst 72 x Rs.8,000/- (Fees Rs. 5, 76,000/-
collected from every
D
year of ITI
student)

Students studying in 7 x 2,000 (Fees collected Rs.14,000/-
certificate course from every student)

Total Rs.8, 72,000/- E
I say that the details regarding the expenses incurred by the
Petitioner on the salary and other miscellaneous expenses are as
follows:
1. Towards salary of Rs. 65,200/- per month x Rs.7,80,400/-
staff at current rate 12 months per annum F
of consolidated pay

2 Expenses for raw Rs.2,400 x 126 (No. of Rs.3,02,400/-
material per student students)
per year Rs. 2400

3. Misc. Expenses Rs.2,00,000/- G
(Telephone bill,
electricity bill,
stationery, travel
expenses, repairs, etc.

Total Rs.l 2.82.800/- H
956 SUPREME COURT REPORTS [2007] 4 S.C.R.

A Considering the above mentioned two tables, it becomes clear
that the Petitioner is facing a deficit of Rs.4,10,800/- in the current
academic year..The Petitioner if is directed to pay 100% back wages
to the Respondents employees, it would create a burden of more than
Rs. 40 lacs. The Petitioner is not in a position to pay back wages and
the said direction would affect the poor students, who are studying
B in the Institute and the efforts of the Management to re-establish the
Institute would be thwarted. It is respectfully submitted that the
institute is being run by reducing the tuition fees so as to attract the
higher number of students. As stated earlier the fees charged from the
students have dwindled from Rs.20,000/- per annum in the year 1998
C to Rs.6,000/- to 8,000/- at present."

12. It was furthermore submitted that the institute having been set up
in a tribal area, it is unlikely that many students would take admission in the
said institute in future.

D 13. Mr. Vinayak Dixit, the learned Senior Counsel appearing on behalf
of the respondents; on the other hand, supported the impugned judgment
contending that the plea taken by the appellant that the school was required
to be closed down was an act of ma/a fide on the part of the appellants. The
learned counsel would contend that in terms of Rule 26 of the Maharashtra
E Employees of Private Schools (Conditions of Service) Rules, 1981, as the
appellant was bound to give three months' notice and was furthermore required
to obtain prior approval of the competent authority specified therein; and as
the mandatory conditions for retrenching th~ services of the respondents had
not been complied with, the orders of termination were void ab initio.

F 14. It was submitted that the appellant had not paid any salary to the
teachers for the last 23 months, although they had been reinstated in terms
of this Court's order dated 19.08.2006. It was also submitted that even after
their reinstatement, they are being paid salary only on a consolidated basis.

G 15. The question as to whether the provisions of the said Act were
applicable in the case of Appellant school although raised a question of
jurisdiction, in our opinion, it was necessary for the appellant to plead the
jurisdictional fact in relation thereto.

16. It is true that in the light of the interpretation clause contained in
H
SECRETARY. AKO LA TALUKA EDUCATION SOCIETY~- SHIVAll [S.B. SINHA. l.] 957

the said Act, a 'private school' was required to be recognized by the authorities A
specified therein. The Tribunal had found that it was recognized by the
Central Government. The State also in its counter affidavit contended that it
is recognized by the State. Appellant herein did not raise a contention before
the Tribunal that the i~stitute in question was not recognized by the authorities
specified under sub-section (21) of Section 2 of the Act. The said contention
was required to be specifically raised so as to enable the respondents herein B
to meet the same. As the jurisdictional fact required for determining the
jurisdiction of the Tribunal had not been stated by the appellants, we are of
the opinion that such a contention cannot be allowed to be raised before us
for the first time.

17. There cannot be any doubt whatsoever that ifthe 'institute' comes
c
within the description of 'school' in terms of the provisions of the said Act,
before terminating the services of the respondents, it was obligatory on their
part to satisfy the conditions p_recedent therefor,

18. R~le 26 of the Rules provides that a permanent employee may be D
_retrenched by the management after giving him three months' notice on one
~ or more grounds specified therein. Stoppage of impart1. coaching in respect
of some courses of studies was one of them. Admitted I , the respondents had
not been given three months' notice. The order of termination was, therefore,
bad in law.
E
19. We may, however, state that in view oftheprovisions contained in
sub-clause (ii) of clause (2) of Rule 26, it was not necessary to obtain prior
approval of the Education Officer, as a technical or a vocational school does
not come within the purview thereof. There cannot furthermore be any doubt
• whatsoever that the contention raised by the appellants before the Tribunal
F
that the institute was required to be closed down was found to be factually
-; incorrect and on that ground the decision of the Tribunal to the effect that
the termination of services of the respondents were bad in law cannot be said
to be suffering from any e.rror of law apparent on the face of the records.

20. The Tribunal, however, in our opinion ought not to have granted full G
back wages. Full back wages, as is well-known, should not be directed to be
granted only because it would be lawful to do so. Before such an order is
passed, a judicial or a quasi-judicial authority" must consider all aspects of the
;
matter. Appellant herein has produced facts tci show decline in strength of
the students· in different disciplines. The same has not been disputed. We
-- H

/~
958 SUPREME COURT REPORTS (2007) 4 S.C.R.

A have noticed hereinbefore that in some disciplines the strength of the students
has considerably gone down. The school is an unaided one. It, therefore,
must meet its financial need from the fees realized from the students. It was
a relevant consideration. The Tribunal, in our opinion, failed to take the said
fact into consideration. The financial condition of the school, as noticed
B supra, has also not been. denied or disputed.

21. It is now well-settled by a larg~ number of decisions of this Court
that back wages should not granted automatically. Jn U.P. State Brassware
Corporation Ltd. and Anr. v. Uday Narain Pandey, [2006] I SCC 479, this
Court observed :
c "22. No precise formula can be laid down as to under what
circumstances payment of entire back wages should be allowed.
Indisputably, it depends upon the facts and circumstances of each
case. It ·would, however, not be correct to contend that it is automatic.
It should not be granted mechanically only because on. technical
D grounds or otherwise an order of termination is found to be in
contravention of the provisions of Section 6-N of the U.P. Industrial
Disputes Act."

[See also Banshi Dhar v. State ofRajasthan & Anr., (2006) 11 SCALE
199 Para 11]
E
22. Jn U.P. SRTCv. MutthuSingh, [2006] 7 SCC 180], this Court opined:

" ...But we are fully satisfied that in the facts and circumstances of the
case, back wages should not have been awarded to the respondent-
workman. In several cases, this Court has held t.iat payment of back
F wages is a discretionary power which has to be exercised by a court/
tribunal keeping in view the facts in their entirety and neither straight
jacket formula can be evolved nor a rule of universal application can
be laid down in such cases."

[See also A.P. SRTC ar.d Anr. v. E.S. David Paul - [2006] 2 SCC 282]
G
23. We, therefore, are of the opinion that in the peculiar facts and
circumstances of this case, interest of ju•tice shall be met if grant of back
wages is confined to 25% only from the date of termination of the respondents·
till their reinstatement. It is, however, made clear that the respondents shall
be entitled to recei-:e entire salary for the period they had wo!1<ed prior to their
H
SECRETARY, AKOLA TALUKA EDUCATION SOCIETY v. SHIVAJI [S.B. SINHA, J ] 959

termination as also post reinstatement. A
24. The appeal is allowed to the aforementioned extent with the
aforementioned directions. However, in the facts and circumstances of the
case, there shall be no order as to costs.

D.G. Appeal partly allowed. B

-
...