Holding

An order of reinstatement alone does not confer entitlement to back wages; back wages must be specifically awarded and fall within Section 33-C(2) only when a pre‑existing right exists.

Summary

The Andhra Pradesh State Road Transport Corporation (AP SRTC) terminated certain employees who claimed they were its workers. The Labour Court held the termination illegal and ordered reinstatement, after which the employees sought back wages under Section 33-C(2) of the Industrial Disputes Act, 1947. The Labour Court, and subsequently the High Court, directed payment of back wages, prompting AP SRTC to appeal. The Supreme Court held that an order of reinstatement does not automatically confer a right to back wages; such wages can be awarded only if expressly directed or if a pre‑existing right exists under Section 33-C(2). Consequently, the Court set aside the back‑wages award and allowed the appeals without costs.

Issues considered

Whether an award of reinstatement under the Industrial Disputes Act, 1947, implicitly includes a right to claim back wages under Section 33-C(2).

Legislation cited

Industrial Disputes Act, 1947s. 10, s. 33-C(2)

Subjects

Industrial Disputes ActSection 33-C(2)back wagesreinstatementlabour lawemployee terminationSupreme Court

Judgment

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A.P.S.R.T.C. AND ANR. A
V.

B.S. DA YID PAUL

FEBRUARY I, 2006

[ARIJIT PASA YAT AND R.V. RAVEENDRAN, JJ.] B

Labour Laws:·

Industrial Disputes Act, 1947-Section 33-C(2)-Back wages-Claim
for-In view of award of reinstatement-Propriety of-Held: Award of c
reinstatement, itself does not confer right to claim back wages.

Respondents-employees of appellant-Corporation claimed before Labour
Court that their services were illegally terminated. Labour Court, holding
the termination bad, directed their reinstatement. After reinstatement,
respondents filed application seeking back wages in terms of Section
D
~
33-C (2) of Industrial Disputes Act, 1947. Labour Court directed payment of
back wages. The same was confirmed by High Court in Writ Application.
Hence the present appeals.

Allowing the appeals, the Court E
HELD: The orders of the Labour Court as affirmed by the High Court
are indefensible. Merely upon reinstatement, a workman would be not entitled,
~
under the terms of award, to all his arrears of pay and allowances, because
several factors will have to be considered to find out whether the workmar. is
entitled to back wages at all and to what extent. It cannot be presumed that F
the award of the Labour Court for grant of back wages is implied in the relief
of reinstatement or that the award of reinstatement itself conferred right for
claim of back wages. [1005-C; 1004-H; 1005-A-BI

A.P. SRTC and hir. v. S. Narsagoud. 1200312 SCC 212; A.P. State Road
Transport Corporation and Ors. v. Abdul Kareem, [20051 6 SCC 36; Rajasthan G
,...... State Road Transport Corporation .and Ors. v. Sl~vwn Bihari Lal Gupta, [2005[
'I 7 SCC 406; State Bank of India v. Ram Chandra Dubey and Ors., [2001 [ l
SCC 73 and State of U.P. and Anr. v. Brijpal Singh [2005[ 8 SCC 58, relied
on.

1001 H
1002 SUPREME COURT REPORTS [2006J I S.C.R.

A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2956 of2000.

From the Judgment and Order dated 1.7.1999 of the Andhra Pradesh
High Court in Writ Appeal No. 860/99.

WITH
B
C.A. No. 2957 of2000 and C.A. No. 2958 of2000.

G. Ramakrishna Prasad, K.P. Kylashanatha Pillai, Mohd. -Wasay Khan
and Abhijit Sengupta for the Appellants.

C T.N. Rao, A. Ramesh and D. Mahesh Babu for the Respondent.

The Judgment of the Court was delivered by

ARIJIT PASA.YAT, J. These appeals involve identical issues and are
therefore disposed of by this common judgment.
D Andhra Pradesh State Road Transport Corporation (in short the
'Corporation') calls in question legality of the judgrn~nts rendered by the
High Court holding that the respondent in each of !ht: appeals was entitled
to back wages.

E A brief reference to the factual position which is almost undisputed
would suffice:

Respondents who claimed to be employee of the appellant-Corporation
claimed before the Labour Court, Hyderabad (in short 'the Labour Court') that
their services were illegally terminated. Reference was made by the State
F Government under the Industrial Disputes Act, 1947 (in short the 'Act').

Appellant-Corporation took the stand that they were not its employees
and, in fact, were employees of independent contractors. The Labour Court
did not accept the stand and held that the termination was bad and the
concerned applicants were entitled for reinstatement. It is not in dispute that
G the appellant-Corporation has reinstated the respondents. Subsequently, the
respondents filed application before the Labour Court stating that they were
entitled to back wages for the period they were out of employment and they
were entitled to be paid back wages in terms of Section 33-C(2) of the Act. -
The Corporation resisted the claim on the ground that there was no
H
A.P.S.R.T.C. 1·. B.S. DAVID PAUL [PASAY AT . .I.] I003
direction for payment of back wages and, therefore, Section 33-C(2) had no A
application. The Labour Court did not accept the stand and directed payment
Such adjudication was challenged before the High Court which dismissed the
writ application.

Learned counsel for the appellant submitted that when the only direction
given by the Labour Court was reinstatement, there was no question of B
payment of any back wages and in any event Section 33-C(2) had no
application.

Learned counsel for the respondents on the other hand submitted that
when the reinstatement was directed, back wages were the natural consequence. C
The principle of law on point is no more res integra. This Court in A.P.
:IRTC and Anr. v. S. Narsagoud, (2003] 2 SCC 212 succinctly crystallized the
principle of law in Paragraph 9 of the judgment on Page 215 :

"We find merit in the submission so made. There is a difference
between an order of reinstatement accompanied by a simple direction D
for continuity of service and a direction where reinstatement is
accompanied by a specific direction that the employee shall be entitled
to all the consequential benefits, which necessarily flow from
reinstatement or accompanied by a specific direction that the employee
shall be entitled to the benefit of the increments earned during the E
period of absence. In our opinion, the employee after having been
held guilty of unauthorized absence from duty cannot claim the benefit
of increments notionally earned during the period of unauthorized
absence in the absence of a specific direction in that regard and
merely because he has been directed to be reinstated with the benefit
of continuity in service." F

The above position was re-iterated in A.P. State Road Transport
Corporation and Ors. v. Abdul Kareem, (2005] 6 SCC 36 and in Rajasthan
State Road Transport Corporation and Ors. v. Shyam Bihari Lal Gupta,
[2005J 7 sec 406.
G
In the case of State Bank of India v. Ram Chandra Dubey & Ors.,
(2001] 1 SCC 73, this Court held as under:

"7. When a reference is made to an Industrial Tribunal to adjudicate
the question not only as to whether the termination of a workman is
H
1004 SUPREME COURT REPORTS 120061 I S.C.R.

A justified or not but to grant appropriate relief. it would consist of ~
examination of the question whether the reinstatement should be with .j
full or partial back wages or none. Such a question is one of fact
depending upon the evidence to be produced before the Tribunal. If
after the termination of the employment, the workman is gainfully
employed elsewhere it is one of the factors to be considered in
B detennining whether or not reinstatement should be with full back
wages or with continuity of employment. Such questions can be
appropriately examined only in a reference. When a reference is made
under Section I0 of the Act, all incidental questions arising thereto
can be determined by the Tribunal and in this particular case, a
c specific question has been referred to the Tribunal as to the nature
of relief to be granted to the workmen.

8. The principles enunciated in the decisions referred by either side
can be summed up as follows:

Whenever a workman is entitled to receive from his employer any
D
money or any benefit which is capable of being computed in tenns of
money and which he is entitled to receive from his employer and is
denied of such benefit can approach Labour Court under Section 33-
C(2) of the Act. The benefit sought to be enforced under Section 33-
C(2) of the Act is necessarily a pre-existing benefit or one flowing
E from a pre-existing right. The difference between a pre-existing right
or'benefit on one hand and the right or benefit, which is considered
just and fair on the other hand is vital. The former falls within
jurisdiction of Labour Court exercising powers under Section 33-C(2)
of the Act while the latter does not. It cannot be spelt out from the ....
award in the present case that such a right or benefit has accrued to
F the workman as the specific question of the relief granted is confined
only to the reinstatement without stating 'lnything more as to the back
wages.

Hence that relief must be deemed to have been denied, for what is
claimed but not granted necessarily gets denied in judicial or quasi-
G
judicial proceeding. Further when a question arises as to the
adjudication of a claim for back wages all relevant circumstances
which will have to be gone into, are to be considered in a judicious
manner. Therefore, the appropriate forum wherein such question of
..,.
-
back wages could be decided is only in a proceeding to whom a
H reference under Section I0 of the Act is made. To state that merely
A.P.S.R.T.C. v. B.S. DAVID PAUL [PASA YAT, J.] I005
upon reinstatement, a workman would be entitled, under the terms of A
award, to all his arrears of pay and allowances would be incorrect
because several factors will have to be considered, as stated earlier,
to find out whether the workman is entitled to back wages at all and
to what extent. Therefore, we are of the view that the High Court
ought not to have presumed that the award of the Labour Court for
grant of back wages is implied in the relief of reinstatement or that the B
award of reinstatement itself conferred right for claim of back wages"

The position was recently reiterated by three-judge Bench in State of
U.P. and Anr. v. Brijpal Singh, [2005] 8 SCC 58.

The orders of the Labour Court as affirmed by the High Court are C
indefensible, deserve to be set aside, which we direct.

The appeals are allowed but without any order as to costs.

K.KT. Appeals allowed.

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