What Supreme Court held on payment of Back Wages in case of wrongful termination
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What Supreme Court held on payment of Back Wages in case of wrongful termination

Shruti Mahajan

The Supreme Court reaffirmed the law that payment of full back wages for the period for which no service has been rendered would be the normal rule in case of wrongful termination of service.

A Bench of Justices DY Chandrachud and Indira Banerjee awarded a Headmaster lump sum amount of Rs. 5 lakh as back wages for the period between the date of the order of his removal and the date on which he attained the age of superannuation.

The appellant, in this case, was appointed as a Headmaster in 1986 of a Nagar Parishad High School. In 1994, a showcase notice was issued to him levelling allegations of misappropriation of funds to the tune of Rs 5,000. An inquiry officer was appointed to look into the matter whose report concluded no misappropriation and found the appellant not guilty of misconduct.

Subsequently, a second inquiry officer was appointed to probe the matter though his appointment was objected to by the appellant. The second inquiry officer found the appellant guilty of misappropriation of funds and the appellant was terminated from service in July 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

The appellant then filed a Writ petition before the Bombay High Court challenging his removal.

The High Court held the removal to be illegal and added that the action of the Municipal Council to proceed with the second inquiry was vitiated given that no reasons were recorded to buttress the non-acceptance of the first inquiry report. Even the objection to second inquiry committee raised by the appellant was taken note of by the High Court.

It, therefore, quashed the order of termination of services. However, since the appellant had attained the age of superannuation by then, the High Court ordered retiral benefits to be paid to the appellant but held that no back wages could be paid for the period for which he did not render any services.

The question before the Supreme Court was whether back wages could be allowed for the period for which the appellant was not in service.

The Court adverted to the principles laid down in a catena of judgments on this issue.

In Hindustan Tin Works case, a three-judge Bench of the Supreme Court had held that if the employer terminates the service illegally and the termination is motivated, the termination may amount to unfair labour practice. In such circumstances, reinstatement being the normal rule, it should be followed with full back wages.

Similar rulings were rendered in Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-Labour Court and Deepali Gundu Surwase v Kranti Junior Adhyapak Mahavidyalaya.

Having due regard to the principles enunciated in Deepali Surwase, the Supreme Court held that the High Court was not justified in denying the back-wages to the appellant altogether.

Considering the lapse of time, the Court held that 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. Further, 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.

Hence, the Supreme Court ordered that a lump sum amount quantified at Rs. 5 lakh be paid 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 the age of superannuation.

This payment shall be in addition to the retiral benefits to which he is entitled in terms of the order of the High Court.

[Read Judgment]

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