Holding

The Supreme Court held that where the employee does not plead or prove that he remained unemployed during the period of termination, only half of the back wages, not the full amount, may be awarded.

Summary

The employee (Respondent No.1) was appointed on an ad‑hoc basis by Allahabad Jal Sansthan and terminated on 24 January 1987. He raised an industrial dispute and the Labour Court, in an ex‑parte award dated 11 April 2000, reinstated him with full back wages, holding the termination invalid under Section 6‑N of the U.P. Industrial Disputes Act, 1947. The employer challenged the award, and the Supreme Court was asked whether full back wages could be awarded when the employee had not pleaded or proved that he remained unemployed during the termination period. The Court held that there is no absolute rule; the Labour Court has discretion, and since the employee neither pleaded nor proved unemployment, only 50% of the back wages should be awarded. Consequently, the appeal was partly allowed, directing payment of half the back wages, with no order as to costs.

Issues considered

Whether an ex‑parte award reinstating an employee with full back wages is valid when the employee has not pleaded or proved unemployment during the period of termination.
Whether the Labour Court may exercise discretion to award full back wages or a reduced amount under Section 6‑N of the U.P. Industrial Disputes Act, 1947.
Whether the employee's failure to show mitigation of loss or alternative employment affects the quantum of back wages.

Legislation cited

U.P. Industrial Disputes Act, 1947s. 6-N

Subjects

reinstatementback wagesindustrial disputediscretionSection 6-Nex‑parte awardunemploymentmitigation of losslabour court

Judgment

ALLAHABAD JAL SANSTHAN A
v.
DAYA SHANK.AR RAI AND ANR.

MAY 3, 2005

[N. SANTOSH HEGDE AND S.B. SINHA, JJ.] B

labour laws :

Reinstatement of terminated employee-Award of full back wages-
Entitlement to-On facts, Labour Court passing ex-parte award reinstating C·
the terminated employee with full back wages-No evidence or plea that he
remained unemployed during the period of termination-Held: In the interest
of justice, he is entitled to 50% of the back wages only-U.P. Industrial
Disputes Act, 1947-Section 6-N.

The question which arose for consideration in the present appeal is
D
whether the Labour Court was right in passing an ex-parte award
reinstating the terminated employee with full back wages in the absence
of a plea or evidence that the employee remained unemployed during the
period of termination.
E,
Partly allowing the appeal, the Court

HELD : I. A law in absolute term cannot be laid down as to in which
cases, and under what circumstances, full back wages can be granted or
denied. The Labour Court and/or Industrial Tribunal before which
industrial dispute has been raised, would be entitled to grant the relief F
having regard to the facts and circumstances of each case. Respondent
No. I was appointed on an ad hoc basis; his services were terminated. He
had not raised any plea in the written statement that he had been sitting
idle or had not obtained any other employm'.!nt in the interregnum. Even
in his evidence, he did not say that he continued to remain unemployed. G

2. With the passage of time, it is realized that industry is being
compelled to pay the workman for a period during which he apparently
contributed little or nothing at all, for a period that was spent
unproductively, while the workman is being compelled to go back to a
1077 H
1078 SUPREME COURT REPORTS [2005] 3 S.C.R.

A situation which prevailed many years ago when he was dismissed. It is
necessary to develop a pragmatic approach to problems dogging industrial
relations. However, no just solution can be offered but the golden mean
may be arrived at. (1082-F-Gl

3. In view of the fact that the Respondent no.I had been reinstated
B in service and keeping in view the fact that he had not raised any plea or
adduced any evidence to the effect that he remained unemployed
throughout, the interest of justice would be sub-served if the Respondent
no.I is directed to be paid so•" of the back wages. (1082-F-G; 1083-Al
--
Ram Ashrey Singh Anr. v. Ram Bux Singh and Ors., (2003) 9 SCC 154;
C Management of Mis. Sonepat Cooperative Sugar Mills Ltd v. Ajit Singh,
(2005) 2 SCALE 151; Haryana State Coop. land Dev. Bank KNeelam, (2005)
2 SCALE 434 and Manager, R.B.l, Bangalore v. S. Mani and Ors., (2005)
3 SCALE 202, relied on.

D Hindustan Motors Ltd v. Tapan Kumar Bhattacharya and Anr., (2002)
6 SCC 41; MP. State Electricity Board v. Jarina Bee (Smt.), (2003( 6 SCC
141; Chief Conservator of Forests and Anr. v. Rahmat Ullah, (2003( 10 SCC
92; Workmen of Subong Tea Estate, represented by the Indian Tea Employees
Union v. Outgoing Management ofSubong Tea Estate and Anr., AIR (1967)
SC 420; Mis Hindustan Steel Ltd v. The Presiding Officer, labour Court,
E Orissa and Ors., (19761 4 SCC 222; Indian Railway Construction Co. Ltd v.
Ajay Kumar, JT (2003) 2 SC 295 and Nicks (India) Tools v. Ram Surat and
Anr., (2004) 8 SCC 222, referred to. '
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8924 of2003.

F From the Judgment and Order dated 2.7.2003 of the Allahabad High
Court in C.M.W.P. No. 6597 of 2001.

Rajesh for the Appellant.

Manoj Prasad and K.K. Srivastava for the Respondents.
G
The Judgment of the Court was delivered by

S.B. SINHA, J. Whether the Respondent was entitled to be granted full
back wages in the facts and circumstances of this case is the question involved
in this appeal which arises out of a judgment and order dated 2.7.2003 passed
H by the High Court of Allahabad in Civil Misc. Writ Petition No. 6597 of
ALLAHABAD JAL SANSTHAN v. DA YA SHANKAR RAI [S.B. SINHA, J.] I079 ·
2001. A
The basic fact of the matter is not much in dispute. The Respondent
herein was appointed purely on a temporary basis on or about 14.10.1985.
The appointment letter issued to the Respondent No. 1 stipulates that the said
appointment could be terminated at any time without any prior notice. The
services of the Respondent No. l and others were terminated by the State in B
terms of an office order dated 24.1.1987. An industrial dispute was raised by
the Respondent No. l herein. Before the Labour Court the Respondent No.
1 adduced evidence, but the Appellant did not. An ex parte award came to
be passed by the Labour Court on or about 11.4.2000 reinstating the
Respondent No. I with full back wages holding that the order of termination C
was invalid in law as although he had worked for more than 240 days in one
calendar year; the provisions of Section 6-N of the U.P. Industrial Disputes
Act, 1947 were not complied with. The writ petition filed by the Appellant
herein questioning the legality of the said award came to be dismissed by
reason of the impugned judgment.
D
In this appeal leave was granted confining to back wages only.

Mr. Rajesh, the learned counsel appearing on behalf of the Appellant,
would submit that although the award of the Labour Court was an ex parte
one, it was obligatory on its part to arrive at a finding that the Respondent
herein was not employed in any other concern. The learned counsel would E
submit that full back wages need not be granted by the Labour Court only
because it was lawful to do so, and such an order can be passed after taking
into consideration the entire facts and circumstances of the case. Strong
reliance, in this behalf, has been placed on Hindustan Motors Ltd v. Tapan
Kumar Bhattacharya and Anr., (2002] 6 SCC 41; MP. State Electricity Board
v. Jarina Bee (Smt.), (2003) 6 SCC 141 and Chief Conservator of Forests
F
and Anr. v. Rahmat Ullah, (2003) IO SCC 92.

Mr. Manoj Prasad, the learned counsel appearing on behalf of the
Respondent, on the other hand, would contend that the courts normally grant
full back wages, once it is held that the order of termination is illegal. Strong· G
reliance, in this behalf, has been placed on Workmen of Subong Tea Estate,
represented by thelndian Tea Eemployees Union v. Outgoing Management
ofSubong Tea Estate and Anr., AIR (l 967) SC 420, Mis Hindustan Steel Ltd
v. The Presiding Officer, Labour Court, Orissa and Ors., (1976) 4 SCC 222,
Indian Railway Construction Co. ltd v. Ajay Kumar, JT (2003) 2 SC 295
H
1080 SUPREME COURT REPORTS - (2005) 3 S.C.R.

A and Nicks (India) Tools v. Ram Surat and Anr., (2004] 8 SCC 222.
A law in absolute term cannot be laid down as to in which cases, and
under what circumstances, full back wages can be granted or denied. The
Labour Court and/or Industrial Tribunal before which industrial dispute has
been raised, would be entitled to .grant the relief having regard to the facts
B and circumstances of each case. For the said purpose, several factors are
required to be taken into consideration. It is not in dispute that the Respondent
No. I herein was appointed on an ad hoc basis; his services were terminated
on the ground of a policy decision, as far back as on 24.1.1987. The
Respondent No. I had filed a written statement wherein he had not raised any
C plea that he had been sitting idle or had not obtained any other employment
in the interregnum. The learned counsel for the Appellant, in our opinion, is
correct in submitting that a pleading to that effect in the written statement by
the workman was necessary. Not-only no such pleading was raised, -even in
his evidence, the workman did not say that he continued to remain unemployed.
In the instant case, the Respondent herein had been reinstated from 27.2.2001.
D
In Tapan Kumar Bhattacharya (supra), this Court noticed that there
was no pleading or evidence as to whether the Respondent therein was
employed elsewhere during the long interregnum, and in the fact situation
obtaining therein, the Appellant was directed to pay 50% of the back wages
till the date of reinstatement.
E
Yet again in Jarina Bee (supra), this Court observed that the award of
full back wages was not the natural consequence of an order of reinstatement. "

In Rahmat Ullah (supra), a Bench of this Court held that as the
Respondent therein was out of service since 1990 as an ordinary worker, he
F must have been working elsewhere to earn his livelihood; and there was no
material to show that he was not gainfully employed whereupon , a direction
to pay 50% of the back wages was made.

In Ram Ashrey Singh Anr. v. Ram Bux Singh and Ors., [2003] 9 SCC
G 154, questioning the order of termination after six year was considered to be
one of the factors for denying an order of reinstatement with back wages to
the workman. In the fact situation obtaining therein, it was held that ends of
justice would be sub-served if the Appellants therein were directed to pay a
sum of Rs. 35,000 by way of compensation in addition to what has already
been paid. [See also Management of Mis. Sonepat Cooperative Sugar Mills
H Ltd. v. Ajit Singh, (2005) 2 SCALE 151].
ALLAHABAD JAL SANSTHAN V. DA YA SHAN KAR RAI [S.B. SINHA, J.] l OS I
In Haryana State Coop. Land Dev. Bank v. Nee/am, (2005) 2 SCALE A
434], it was held :

"It is trite that the courts and tribunals having plenary jurisdiction
have discretionary power to grant an appropriate relief to the parties.
The aim and object of the Industrial Disputes Act may be to impart
social justice to the workman but the same by itself would not mean B
that irrespective of his conduct a workman would automatically b~
---- entitled to relief. The procedural laws like estoppel, waiver and
acquiescence are equally applicable to the industrial proceedings. A ·
person in certain situation may even be held to be bound by the
doctrine of Acceptance Sub silentio ..." C
-- [See also Manager, R.B.I., Bangalore v. S. Mani and Ors., (2005) 3
SCALE 202]

Let us now consider the decisions cited by the Id. Counsel for the
Respondent No. I.

In Workmen of Subong Tea Estate (supra), whereupon, strong reliance
has been placed by the learned counsel for the Respondents, no principle of
law has been laid down. The Court merely directed in the fact situation
obtaining therein to reinstate the workmen with full wages.

In Mis Hindustan Steel Ltd. (supra), this Court again did not lay down E
any law. A finding of fact was arrived at by the Labour Court that the
Respondents had no alternative employment which was not challenged. The
only ground ~ ;lich was urged before the High Court was that the Respondents
had not proved that they had tried to mitigate their losses during the period
of unemployment. The questions which have been raised herein had not been F
raised therein. The argument was confined only to mitigation of the losses.
This Court did not interfere with the discretionary jurisdiction of the High
Cour:t in interfering with the award.

In Indian Railway Construction Co. Ltd (supra), this Court merely
~~= G
"30. Question then would be how the conflicting interests can be
best balanced. By an interim order dated 5-5-2000 the appellant was
directed to reinstate the respondent subject to an interim payment of
Rs 3 lakhs towards the back wages. Direction for reinstatement does
not automatically entitle ari employee to full back wages. Jn Hindustan H
1082 SUPREME COURT REPORTS [2005] 3 S.C.R.

A Tin Works (P) Ltd v. Employees, a three-Judge Bench of this Court
laid down:

"11. In the very nature of things there cannot be a straitjacket
fonnula for awarding relief of back wages. All relevant considerations
will enter the verdict. More or less, it would be a motion addressed
B to the discretion of the Tribunal. Full back wages would be the nonnal
rule and the party objecting to it must establish the circumstances
necessitating departure. At that stage the Tribunal will exercise its
discretion keeping in view all the relevant circumstances. But the
discretion must be exercised in a judicial and judicious manner. The
reason for exercising discretion must be cogent and convincing and
c must appear on the face of the record. When it is said that something
is to be done within the discretion of the authority, that something is
-
to be done according to the rules of reason and justice, according to
law and not humour. It is not to be arbitrary, vague and fanciful but
legal and regular (see Susannah Sharp v. Wakefield 12, AC at p.
D 179).""

Ip Nicks (India) Tools (supra), this Court again in the fact situation
obtaining therein refused to interfere with· the discretionary jurisdiction
exercised by the High Court particularly having regard to the fact that it was
for the first time before the writ court, such plea was raised by way of
E additional evidence, which had been rejected.

We have referred to certain decisions of this Court to highlight that
earlier in the event of an order of dismissal being set aside, reinstatement
with full back wages was the usual result. But now with the passage of time,
it has come to be realized that industry is being compelled to pay the workman
F for a period during which he apparently contributed little or nothing at all,
for a period that was spent unproductively, while the workman is being
compelled to go back to a situation which prevailed many years ago when he
was dismissed. It is necessary for us to develop a pragmatic approach to
problems dogging industrial relations. However, no just solution can be offered
G but the golderi mean may be arrived at.

In view of the fact that the Respondent had been reinstated in service
and keeping in view the fact that he had not raised any plea or adduced any
evidence to the effect that he was remained unemployed throughout from
---
24.1.1987 to 27.2.2001, we are of the opinion that the interest of justice
H would be sub-served if the Respondent is directed to be paid 50% of the back
ALLAHABAD JAL SANSTHAN v. DAYA SHANKAR RAI [S.B. SINHA, J.] 1083
wages. A

For the reasons aforementioned, the appeal is allowed in part to the
extent mentioned her.einbefore. However, in the facts and circumstances of
the case there shall be no order as to costs.

D.G. Appeal partly allowed. B