IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4220 OF 2015
(Arising Out of SLP (C) No.31909 of 2013)
K.S. RAVINDRAN ....APPELLANT
VERSUS
BRANCH MANAGER, NEW INDIA
ASSURANCE CO. LTD. ...RESPONDENT
J U D G M E N T
V. GOPALA GOWDA, J.
Delay condoned. Leave granted.
2. The appellant has questioned the correctness of the judgment and order
dated 20.11.2012 passed in W.A. No.514 of 2011 by the learned Division
Bench of the High Court of Madras, wherein, the learned Division Bench
partly allowed the writ appeal of the respondent and upheld the judgment of
the learned single Judge of the High Court to the extent of reinstatement
with continuity of service but set aside the order with regard to 25% back-
wages and the ‘punishment of termination’ was also modified into stoppage
of increment for a period of 3 years with cumulative effect.
The relevant facts are briefly stated to appreciate the rival legal
contentions urged on behalf of the parties in this appeal:
The appellant- K. S. Ravindran, was appointed as an Inspector on
probation with the respondent-New India Assurance Co. Ltd. (for short ‘the
respondent-Company’) w.e.f. 31.12.1983. The services of the appellant as
Inspector Grade-I was confirmed w.e.f. 1.1.1985 by the respondent-Company
vide its order dated 12.01.1985. The appointment of the appellant was
governed by the Development Staff Scheme, 1976 and also by General
Insurance (Conduct, Discipline and Appeal) Rules, 1975, which deal with the
service conditions of the employees working in General Insurance Company of
India and its subsidiaries. According to the Development Staff Scheme, the
appellant is supposed to complete the target set forth for him for each
year of performance and also within the permissible cost as mentioned in
the Scheme. In 1991, due to the appellant’s personal problems in his
marital life, he was on leave, due to which he was chargesheeted on
1.4.1991 for his unauthorised absence and also because his business
performance had allegedly been very poor since 1985. An enquiry was
conducted against the appellant and based on the findings of the Enquiry
Officer on 16.12.1991, the appellant was issued a warning to mend himself
and make progress in the business of the respondent-Company. However, the
appellant was unable to achieve the premium targets for years 1991-92 and
1992-93 and therefore, he was issued with notice of termination dated
10.05.1993 on the ground that he had failed to conform to the stipulated
cost limit and therefore, his services were liable for termination. The
appellant was given 30 days notice for preparing an appeal against the
order of termination. The appellant appealed against his order of
termination before the Senior Divisional Manager of the respondent-Company
on 30.6.1993, explaining the efforts taken by him to ensure business from
various customers and assuring to the Senior Divisional Manager that he has
conformed to the stipulated cost limit. On 09.06.1993 the appellant also
appealed before the Appeals Committee explaining his stand against the
order of termination. However, by order dated 30.7.1993, the order of
termination dated 10.5.1993 was confirmed by the Appeals Committee holding
that the appellant was terminated from the date of receipt of the order of
termination i.e. from 17.08.1993.
The appellant raised an industrial dispute before the Conciliation Officer
challenging the order of termination, the conciliation proceedings ended in
failure and the report in this regard was submitted to the State Government
of Tamil Nadu for its consideration, which has referred the points of
dispute to the Central Government Industrial Tribunal-cum-Labour Court,
Chennai (for short ‘the Labour Court’). The Labour Court registered the
said reference in I.D. No.12 of 1995, renumbered as I.D. No.385 of 2001.
The appellant filed claim petition challenging the order of termination
inter alia contending that no enquiry was conducted in respect of the order
of termination dated 10.5.1993 and that the termination of services of the
appellant on 17.8.1993 is in violation of the Service Rules and principles
of natural justice and that the same is unjustified and therefore, prayed
to set aside the same and pass and award of reinstatement with all
consequential benefits.
The respondent-Company resisted the petition by contending that the
appellant was governed by the Development Staff Scheme, 1976 and also by
the General Insurance (Conduct, Discipline and Appeal) Rules, 1975, which
deal with service conditions of the employees and that the appellant failed
to achieve the expected premiums for the relevant years and also failed to
conform with the stipulated cost limit during the years 1991-92 and 1992-
93. Further, it was contended on behalf of the respondent-Company that not
achieving the target, expected cost limit as per the Scheme and non-
performance on his behalf was admitted by the appellant himself. It was
further averred that the service conditions empower the management to
terminate the services of employees by one month notice and therefore, the
decision of the management cannot be challenged by the appellant.
The Labour Court, examined W1 to W12 from the appellant’s side and M1 to
M4 from the respondent-Company’s side. Further, on referring to Clause 9,
Schedule-A (duties and functions of the appellant) attached to the
appointment order, the Labour Court held that the appellant has been given
appointment in the respondent-Company wherein, the appellant agreed to
conform to the stipulated cost limit and in spite of warning issued to the
appellant, he has not shown progress in developing the insurance business
and that the appellant was terminated from service in accordance with the
terms and conditions mentioned in his appointment order. In so far as
contention of the appellant that no enquiry was conducted before the order
of termination, the Labour Court held that the enquiry against the
appellant was conducted and he was given sufficient opportunity to put
forth his defence and that the enquiry officer found that the charges
leveled against the appellant had been proved and there was no violation of
the principles of natural justice. The Labour Court passed an award holding
that the action of the management in terminating the services of the
appellant is justified and did not suffer from any illegality.
The said award was challenged by the appellant in Writ Petition No.6849 of
2002, wherein the learned single Judge held that the order of termination
is not in consonance with the Scheme as nothing has been brought on record
to show the reduction of emoluments for 3 consecutive years, rather the
order of termination is on the ground that the appellant failed to achieve
the target fixed on him for the particular year. It was further held by the
learned single Judge that the order of termination was passed by way of
punishment without following the principles of natural justice or
conducting any enquiry into the allegations made against the appellant
before passing the order of termination against him. Further, it was held
by the learned single Judge that the termination of services of a confirmed
employee without holding an enquiry is violative of Article 14 of the
Constitution of India. The learned single Judge allowed the petition and
directed the respondent-Company to reinstate the appellant in his post with
25% back-wages.
The said order of the learned single judge was challenged by the
respondent-Company by filing Writ Appeal No.514 of 2011 inter-alia
contending that the learned single Judge ought to have seen that consequent
to the appellant being unable to achieve the target fixed on him in
acquiring premium as required under the said Scheme, the order of
termination was passed against him and therefore, justified that the same
did not warrant further domestic enquiry as the mandatory provision of
collecting the premium has not been complied with by the appellant. The
Division Bench of the High Court held that the order of reinstatement
passed by the disciplinary authority is modified into one of “stoppage of
increment for a period of three years with cumulative effect” and the
direction of the learned single Judge to pay 25% back-wages to the
appellant was set aside and the appeal was partly allowed. Hence, the
present appeal.
It is contended by the learned counsel on behalf of the appellant that the
learned Division Bench of the High Court erred in denying back-wages to the
appellant as quantified by the learned single Judge and further failed to
appreciate that the order passed by the learned single Judge was judicious,
just and in consonance with the judgments of this Court inasmuch as it
directed the reinstatement with 25% back-wages of the appellant whose
services had been wrongly terminated by the respondent-Company without
holding an enquiry and the same was not in conformity with the principles
of natural justice. In support of the said contention the learned counsel
placed reliance on the decision of this Court in the case of Mohan Lal v.
Bharat Electronics Ltd.[1] and Hindustan Tin Works v. Employees[2].
It was further contended by the learned counsel that the Division Bench
of the High Court erred in overlooking the context of this particular case
and vicissitudes of long drawn litigation thereof and also the fact that
the appellant was not employed elsewhere during this long interregnum and
he is entitled to back-wages as laid down by this Court in the case of
Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya[3].
On the other hand, the learned counsel on behalf of the respondent-
Company contended that consequent to the failure of the appellant to
conform to the stipulated cost limit and only after affording opportunity
to the appellant, his services were terminated and therefore, giving one
more opportunity by way of domestic enquiry was not required in the case on
hand. Attention was drawn to the report of the Enquiry Officer dated
16.12.1991 inter alia contending that in the said enquiry the second charge
against the appellant was “poor business” performance by him since 1985 and
that the learned single Judge ought to have seen that in the earlier
domestic enquiry, the appellant was given a warning after his guilt had
been proved for his absence and not achieving the target of his business.
Therefore, there is no question of violation of principles of natural
justice.
Further, it is contended by the learned counsel on behalf of the
respondent-Company that the duty is cast on the employee to prove that he
was not gainfully employed from the date of termination since the appellant
has not adduced any evidence to prove the same and therefore, he is not
entitled to any back wages. In support of the said contention reliance was
placed on the decisions of this Court in the case of Rajasthan SRTC v.
Shyam Behari Lal Gupta[4], Nagar Panchayat Kharkhauda v. Yogendra Singh[5]
and R.B.I. v. Gopi Nath Sharma[6] wherein the legal position as regards to
the payment of back-wages on reinstatement has been well settled by this
Court.
We have heard the rival legal contentions urged on behalf of the parties in
support of the respective claim and counter claim.
In our considered view, after examining the facts, circumstances and
evidence on record, it is clear that the order of termination against the
appellant on the ground that he failed to achieve the target fixed on him
by the respondent-Company for the particular year is erroneous. The learned
single Judge of the High Court in this regard duly noted that there was no
record brought before the Court to show that there was a reduction of
emoluments for three consecutive years due to non-performance of work by
the appellant. It was also rightly held by the learned single Judge that
neither the respondent-Company nor the Labour Court, have taken into
consideration the recommendation of the Branch Manager of the respondent-
Company and the explanation given by the appellant in his representation
challenging the order of termination passed against him.
In view of the above, the learned single Judge has rightly appreciated the
facts and circumstances of the case on hand and passed an order dated
1.2.2011 quashing the award of the Labour Court and directed the respondent-
Company to reinstate the appellant with all consequential benefits.
Further, the learned single Judge, keeping in view that the appellant was
terminated in the year 1993, directed the respondent-Company to pay 25%
back-wages to the appellant.
The learned Division Bench has erred in modifying the order passed by the
learned single Judge into one of stoppage of increment for a period of
three years with cumulative effect and set aside the direction of the
learned single Judge directing the respondent-Company to pay 25% back-wages
to the appellant. The learned Division Bench failed to appreciate that the
order passed by the learned single Judge was judicious, just and in
consonance with the judgments of this Court in so far as awarding
reinstatement and direction to pay 25% back-wages to the appellant whose
services had been terminated illegally by the respondent-Company. The
learned Division Bench erred in setting aside the award of payment of 25%
back-wages to the appellant as passed by the learned single Judge which is
contrary to the well established principle of law with regard to award of
back-wages, when it is found that the order of termination is illegal.
Therefore, the learned Division Bench has failed to follow the legal
principles laid down by this Court in the case of Mohan Lal v. Bharat
Electronics Ltd. (supra) wherein it was held thus:
“17. But there is a catena of decisions which rule that where the
termination is illegal especially where there is an ineffective order of
retrenchment, there is neither termination nor cessation of service and a
declaration follows that the workman concerned continues to be in service
with all consequential benefits. No case is made out for departure from
this normally accepted approach of the Courts in the field of social
justice and we do not propose to depart in the case.”
16. After considering the facts, circumstances and evidence on record, we
are of the view that the appellant is entitled for reinstatement with back-
wages and other consequential benefits as per the principles laid down by
this Court in the case of Deepali Gundu Surwase v. Kranti Junior Adhyapak
Mahavidyalaya[7] , wherein it was held as under:-
“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 is otherwise terminated from service
cannot easily be measured in terms of money. With the passing of an order
which has the effect of severing the employer employee relationship, the
latter's source of income gets dried up. Not only the concerned employee,
but his entire family suffers grave adversities. They are deprived of the
source of sustenance. The children are deprived of nutritious food and all
opportunities of education and advancement in life. At times, the family
has to borrow from the relatives and other acquaintance to avoid
starvation. These sufferings continue till the competent adjudicatory forum
decides on the legality of the action taken by the employer. 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, 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. Denial
of back wages to an employee, who has suffered due to an illegal act of the
employer would amount to indirectly punishing the concerned employee and
rewarding the employer by relieving him of the obligation to pay back wages
including the emoluments.
17. For the foregoing reasons, the impugned judgment and order of the
Division Bench of the High Court is set aside. The appeal is allowed and
having regard to the facts and circumstances of this case, the respondent-
Company is directed to reinstate the appellant in his post and pay him 50%
back-wages from the date of termination till the date of reinstatement by
calculating the same on the basis of revision of pay scales of the
appellant and other consequential monetary benefits and pay the same to him
within six weeks from the date of receipt of the copy of this Judgment,
failing which the back-wages shall be paid with an interest at the rate of
9% per annum after the expiry of the said six weeks. There shall be no
order as to costs.
…………………………………………………………J.
[V.GOPALA GOWDA]
…………………………………………………………J.
[C. NAGAPPAN]
New Delhi,
May 6, 2015
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[1] (1981) 3 SCC 225
[2] (1979) 2 SCC 80
[3] (2002) 6 SCC 41
[4] (2005) 7 SCC 406
[5] (2005) 13 SCC 428
[6] (2006) 6 SCC 221
[7] (2013) 10 SCC 324