Back Wages To Dismissed Employee Not An Automatic Relief: SC Explains How Employee Can Discharge His "Burden Of Proof"
The Apex Court was hearing a Civil Appeal of the Maharashtra State Road Transport Corporation (MSRTC) against the Bombay High Court's Judgment.
The Supreme Court held that, ordering back wages to be paid to a dismissed employee is not an automatic relief and explained how an employee can discharge his "burden of proof".
The Court held thus in a Civil Appeal preferred by the Maharashtra State Road Transport Corporation (MSRTC) against the Judgment of the Bombay High Court, allowing a Review Petition.
The two-Judge Bench comprising Justice Dipankar Datta and Justice Sandeep Mehta observed, “… it can safely be concluded that ordering back wages to be paid to a dismissed employee - upon his dismissal being set aside by a court of law – is not an automatic relief; grant of full or partial back wages has to be preceded by a minor fact-finding exercise by the industrial adjudicator/court seized of the proceedings. Such exercise would require the relevant industrial court or the jurisdictional high court or even this Court to ascertain whether in the interregnum, that is, between the dates of termination and proposed reinstatement, the employee has been gainfully employed.”
The Bench added that if the employee admits of any gainful employment and gives particulars of the employment together with details of the emoluments received, or, if the employee asserts by pleading that he was not gainfully employed but the employer pleads and proves otherwise to the satisfaction of the Court, the quantum of back wages that ought to be awarded on reinstatement is in the realm of discretion of the Court.
The Court explained that after the employee pleads his non-employment and if the employer asserts that the employee was gainfully employed between the dates of termination and proposed reinstatement, the onus of proof would shift to the employer to prove such assertion having regard to the cardinal principle that "he who asserts must prove".
"Law, though, seems to be well settled that if the employer by reason of its illegal act deprives any of its employees from discharging his work and the termination is ultimately held to be bad in law, such employee has a legitimate and valid claim to be restored with all that he would have received but for being illegally kept away from work", it said.
AOR Mayuri Raghuvanshi represented the Appellant while AOR Rajiv Shankar Dvivedi represented the Respondent.
Facts of the Case
The Respondent was appointed by the Appellant-Corporation (MSRTC) as a bus driver in 1988 and the incident which formed the genesis of the proceedings occurred in 1996. A lorry coming from the opposite direction collided with a bus of MSRTC, driven by the Respondent, resulting in a fatal accident. Two passengers travelling on the bus succumbed to their injuries while several others (around ten), suffered injuries. The monetary loss to the MSRTC arising from the accident was calculated at Rs. 45,000/-. Consequently, disciplinary action followed against the Respondent and upon an inquiry, the Divisional Traffic Officer (DTO) dismissed the Respondent from service of the Corporation in 1997. Being aggrieved by his dismissal, the Respondent preferred a Departmental Appeal which proved abortive.
The Union of which the Respondent was a member, thereafter, raised an industrial dispute. A reference was made by the Deputy Commissioner of Labour and the Labour Court held that the inquiry conducted was fair, and the Respondent was not entitled to reinstatement in service. Resultantly, the Respondent filed a Writ Petition before the High Court and the Single Judge dismissed the same. While the reference and then the Writ Petition was pending, proceedings for compensation were initiated by the family members of the deceased and injured victims of the road accident under the Motor Vehicles Act, 1988 (MVA) before the Motor Accidents Claims Tribunal (MACT). On becoming aware of such proceedings before MACT, the Respondent applied for review before the High Court and the same succeeded. Hence, the MSRTC approached the Apex Court.
Reasoning
The Supreme Court in view of the facts and circumstances of the case, noted, “It is discernible from certain precedents, duly noticed in Deepali Gundu Surwase (supra), that the courts are loath to award back wages for the period when no work has been performed by such an employee. Such a view is no doubt debatable, having regard to the ratio decidendi in Hindustan Tin Works (P) Ltd. (supra), Surendra Kumar Verma (supra) and Deepali Gundu Surwase (supra). Though the latter decision was cited before the coordinate bench when it decided Phool Chand (supra), any thoughtful discussion appears to be absent.”
The Court reiterated that whether or not an employee has been gainfully employed is within his special knowledge and having regard to Section 106 of the Evidence Act, 1872, the burden of proof is on him.
“What is required of an employee in such a case? He has to plead in his statement of claim or any subsequent pleading before the industrial tribunal/labour court that he has not been gainfully employed and that the award of reinstatement may also grant him back wages. If the employee pleads that he was not gainfully employed, he cannot possibly prove such negative fact by adducing positive evidence. In the absence of any contra-material on record, his version has to be accepted”, it added.
The Court further referred to Section 17-B of the Industrial Disputes Act, 1947, which confers a right on an employee to seek “full wages last drawn” from the employer while the challenge of the employer to an award directing reinstatement in a higher court remains pending.
“There too, what is required is a statement on affidavit regarding non-employment and with such statement on record, the ball is in the court of the employer to satisfy the court why relief under such section ought not to be granted by invoking the proviso to the section. We see no reason why a similar approach may not be adopted”, it remarked.
The Court took note of the principle that although the employee was willing to perform work, it was the employer who did not accept work from him and, therefore, if the employer’s action is held to be illegal and bad, such employer cannot escape from suffering the consequences.
The Court emphasised that while grant of full back wages is the normal rule, an exceptional case with sufficient proof has to be set up by the employer to escape the burden of bearing back wages.
“We hasten to add that the courts may be confronted with cases where grant of lumpsum compensation, instead of reinstatement with back wages, could be the more appropriate remedy. The courts may, in such cases, providing justification for its approach direct such lumpsum compensation to be paid keeping in mind the interest of the employee as well as the employer”, it also elucidated.
The Court said that, since the exact quantum of wages earned by the Respondent is not available and at the same time it is clear as crystal that the Corporation succeeded in its attempt to get rid of Respondent by indulging in the misadventure of suppressio veri and suggestio falsi, interest of justice would be sufficiently served if, in modification of the Order of the Single Judge awarding 100% back wages, Respondent is awarded 75% of the back wages from the date of his termination till the date of his superannuation.
“It is ordered that Mahadeo is entitled to 75% of the back wages from the date of his termination till the date of his superannuation. This would be apart from Mahadeo being entitled to full terminal benefits, along with interest @ 6% per annum, had he never been dismissed from service. It is ordered accordingly”, it directed.
Accordingly, the Apex Court disposed of the Appeal.
Cause Title- Maharashtra State Road Transport Corporation v. Mahadeo Krishna Naik (Neutral Citation: 2025 INSC 218)
Appearance:
Appellant: AOR Mayuri Raghuvanshi, Advocates Vyom Raghuvanshi, Akanksha Rathore, and Kinjal Sharma.
Respondent: AOR Rajiv Shankar Dvivedi, Advocates Pravin Waman Satale, and Rishabh Jain.
