Supreme Court of India
M/S. REETU MARBLESversusPRABHAKANT SHUKLA
- Citation
- 2009 INSC 1279
- Decided
- 3 December 2009
- Disposal
- Appeal(s) allowed
- Bench
- TARUN CHATTERJEE
Holding
Payment of full back wages upon an order of termination being declared illegal cannot be granted mechanically; in the present case, only 50% of back wages is appropriate.
Summary
The respondent, an accountant employed by M/s Reetu Marbles, was terminated on 11 June 1987. The Labour Court held the termination illegal, ordered reinstatement but denied any back wages, noting the respondent failed to prove he was unemployed during the 15‑year gap before the award. The Allahabad High Court modified the award, granting the respondent full back wages. The Supreme Court examined whether the High Court was justified in doing so. It held that back wages cannot be awarded mechanically; the tribunal must consider the facts, including whether the workman earned a livelihood elsewhere. Accordingly, the Court set the back‑wage award at 50% of the amount claimed, rejecting the High Court’s full award. The appeal was allowed.
Issues considered
- Whether the High Court was justified in granting full back wages to the workman despite the Labour Court’s denial
Legislation cited
- Industrial Disputes Act, 1947s. 11-A, s. 6
- Minimum Wages Act
Subjects
back wagesillegal terminationreinstatementindustrial disputediscretionary reliefLabour CourtHigh CourtIndustrial Disputes Act
Judgment
[2009] 16 (ADDL.) S.C.R. 34
,i_
A M/S. REETU MARBLES
v.
PRABHAKANT SHUKLA ' ,.
(Civil Appeal No. 635 of 2007)
DECEMBER 03, 2009
B
[TARUN CHATIERJEE AND SURINDER SINGH
NIJJAR, JJ.) t"
Labour Laws:
c
Industrial Disputes Act, 1947:
Back wages - Termination of workman - Held by Labour
Court as illegal - Reinstatement after 15 years without back
wages - High Court granting full back wages - HELD:
D Payment of full back wages upon an order of termination being
..
declared illegal cannot be granted mechanically for the period
when the workman remained out of service and contributed
nothing to the institution - Workman did not place on record
of Labour Court any material to show that he was not gainfully
E employed during the long period of 15 years when he was out
of service of the employer - High Court was not justified in
awarding full back wages whereas Labour Court having found
the termination as illegal was not justified in not granting any
back wages at all - Workman would be paid 50% of back
F wages.
•
-
The respondent was in the service of the appellant
concern as an Accountant from 1.3.1986. His services
were terminated on 11.6.1987. The Labour Court by its
G award dated 27.9.2002 held the termination as improper
and illegal and reinstated the workman in the service but
without any back wages. The High Court in the writ
petition allowed the workman full back wages. It was the
case of the employer that after the reinstatement in
H 34
REETU MARBLES v. PRABHAKANT SHUKLA 35
).
compliance with the award of the Labour Court the A
workman worked only for 6 days and thereafter never
attended to his duties.
In the instant appeal filed by the workman, the
question for consideration before the Court was: whether
the High court was justified in granting full back wages B
to the workman inspite of the denial thereof by the
-+ Labour Court.
Allowing the appeal, the Court
c
HELL. 1.1. Payment of full back wages upon an order
of termination being declared illegal cannot be granted
mechanically. It does not automatically follow that
reinstatement must be accompanied by payment of full
back wages even for the period when the workman
D
remained out of service and contributed little or nothing
-I
to the industry. [Para 17) [43-E-F]
. P. V.K. Distillery Ltd. vs. Mahendra Ram (2009) 5 SCC
l
705; Mis. Hindustan Tin Works Pvt. Ltd. vs. The Employees
of Mis. Hindustan Tin Works Pvt. Ltd. and Ors. AIR 1979 SC E
75; Hindustan Motors Ltd. vs. Tapan Kumar Bhattacharya and
Anr. (2002) 6 SCC 41; UP State Brassware Corpn. Ltd. vs.
Uday Narain Pandey (2006) 1 SCC 479; and Haryana State
t Electricity Development Corporation Ltd. vs. Mamni (2006) 9
sec 434, relied on. F
1.2. There is a gap of more than 15 years from the
date of termination till the award of reinstatement in
service. The Labour Court upon examination of the entire
issue concluded that the respondent would not be
G
entitled to any back wages for the period he did not work.
The respondent did not place on the record of the Labour
Court any material or evidence to show that he was not
gainfully employed during the long spell of 15 years when
he was out of service of the appellant. In the writ petition
H
,.__
'
/
36 SUPREME COURT REPORTS (2009] 16 (ADDL.} S.C.R.
.>.
A the respondent was mainly concerned with receiving
wages in accordance with the Minimum Wages Act and
for inclusion of the period spent in Conciliation
Proceedings for the calculation of financial benefits. The
High Court without examining the factual situation, held
8 that the normal rule of full back wages ought to be
followed in the case. Such a conclusion could have been
reached by the High Court only after recording cogent
reasons in support thereof, especially since the award ~
of the Labour Court was being modified. The Labour
c Court exercising its discretionary jurisdiction concluded
that it was not a fit case for the grant of back wages. The
High Court erred in law in not examining the factual
situation. The High Court merely stated that it was not
the case of the employer that the workman had been
gainfully employed elsewhere. Although it noticed the
D principle that the payment of back wages having a
.-
discretionary element involved in it, has to be dealt with
in the circumstances of each case and no strait jacket
formula can be evolved, yet the award of the Labour
Court was modified without any factual basis. [Para 13
E and 21] [45-A-E; 40-E-G]
1.3. The High Court was not justified in awarding full
back wages. The Labour Court having found the
t
termination to be illegal was unjustified in not granting
F any back wages at all. Keeping in view the facts and
circumstances of the case, the respondent shall be paid
;
50 per cent of the back wages from the date of I-
termination of service till reinstatement. [Para 22 and 23]
[46-A-B]
G Case Law Reference:
AIR 1979 SC 75 relied on para 14
(2002) 6 sec 41 relied on para 15
H (2oos) 1 sec 479 relied on para 16
REETU MARBLES v. PRABHAKANT SHUKLA 37
(2006) 9 sec 434 relied on para 18 A
(2009) s sec 10s relied on para 19
CIVIL APP ELLATE J~RISDICTION : Civil Appeal No. 635
of 2007.
B
From the Judgment & Order dated 20.7.2004 of the High
Court of Judicature at Allahabad in C.W.P. No. 18641 of 2003.
lndu Malhotra, S.S. Ray, Rakhi Ray for the Appellant.
Prabhat Shukla Respondent-In-Person. c
The Judgment of the Court was delivered by
SURINDER SINGH NIJJAR, J. 1. This appeal is directed
against the judgment and order dated 20. 7.04 of the High Court
of Judicature at Allahabad in Writ Petition No.18641/03 and D
, order dated 28.4.06 in Civil Miscellaneous Review Application
No.172974/04.
2. Briefly stated the relevant facts are that the appellant is
carrying on business in marble and other allied products at E
Kanpur. The respondent was engaged by the appellant as an
accountant. He served the employer from 1.3.86 to 11.6.87,
when his services were terminated. The respondent raised an
+ industrial dispute, which was referred by the State Government
· for adjudication before the Labour Court. The employer as well F
as the employee filed their written statements. Oral evidence
was also presented on behalf of the respondent as well as the
employer.
3. It was submitted on behalf of the respondent that he was \,;J
,...
being paid a sum of Rs.1200/- per month as wages. He worked
till 10th of June 1987. He was not permitted to work from 11th
~
June 1987 onwards. On behalf of the employer it was stated
that respondent was employed only as a part time accountant.
Therefore, the reference was not competent.
H
38 SUPREME COURT REPORTS (2009] 16 (ADDL.) S.C.R.
A 4. Upon due appreciation of the evidence led by the
>-
parties, the Labour Court concluded that the respondent was
working in the organization of the appellant on a salary of
Rs.1,200/- per month as full time Accountant. It further held that
respondent was removed from service without any notice or
B retrenchment compensation, which is clearly improper and
illegal. Therefore, the respondent was entitled to reinstatement
w.e.f. 12.6.87. With regard to back wages, the Labour Court
observed as follows:
t
"It is to mention that plaintiff has not undertaken any work
c of the defendant organization from the date of his removal
from services, but he must have worked somewhere to
earn his livelihood. Therefore, there seems no justification
in allowing the salary and other benefits for the days he
did not work.
D
Plaintiff is not entitled to get the pay and allowances
for the period he did not perform any work. But from the r
date of this Judgment, plaintiff will be entitled to get the
pay and admissible allowances at the rate of Rs.1200/- per
E month from the defendant.
5. This award was rendered by the Labour Court on 27th
of September 2002 i.e., more than 15 years after the services
of the respondent were terminated.
F 6. It is the case of the appellant that the respondent was +
duly reinstated in service after joining duty. He worked for 6
days and thereafter never returned.
7. Respondent, thereafter filed writ petition in the
G Allahabad High Court seeking modification of the award. This
writ petition was opposed by the appellant. By the judgment and
order dated 20th July 2004, the writ petition has been allowed.
The award of the Labour Court in so far as it declines to grant {:
full back wages to the petitioner, has been held to be illegal.
The award has been modified and it has been held that the
H
REETU MARBLES v. PRABHAKANT SHUKLA 39
[SURINDER SINGH NIJJAR, J.]
respondent shall be entitled to full back wages from the date A
of termination till the date of reinstatement.
8. Being aggrieved by the aforesaid judgment, the
appellant filed a review application which has been dismissed
by the High Court with the observation that the writ petition was
8
decided on merits and if the applicant is not satisfied with the
judgment it is open for it to challenge the same in the higher
court of law. Aggrieved by the aforesaid two judgments the
employer is before us in appeal.
9. We have heard the counsel for the appellant and the · C
respondent in person.
10. Counsel for the appellant submits that the award of the
Labour Court had been duly implemented. The respondent was
reinstated in service. However six days after joining, he again o
abandoned the job. This absence from duty was recorded in a
~ letter sent to him, on 6.4.2003. His salary was sent by money
order on 20.4.2003. On 22.4.2003, the respondent filed the Writ
Petition. In spite of the aforesaid factual position the High Court
misdirected itself by directing the appellant to pay full back E
wages to the respondent. The respondent had failed to give any
evidence before the Labour Court, that he remained
unemployed from the date his services were terminated. He
was unable to explain as to how in the absence of gainful
~ employment, he had maintained himself for the long gap of 15
years. Taking into consideration the entire fact situation and on F
due appreciation of the evidence the Labour Court had correctly
declined to award any back wages. The aforesaid finding has
been reversed by the High Court without any legal justification.
Learned counsel also submitted that the entitlement to back
wages is not automatic. In fact in the writ petition, the respondent G
had only prayed for amendment of the award with respect to
) two aspects. It was prayed that the respondent ought to be paid
wages as per the Minimum Wages Act and the period spent
before the Conciliation Board be added to the award for the
purposes of granting monetary benefits. According to the H
40 SUPREME COURT REPORTS [2009] 16 (ADDL~ S.C.R.
).
A learned counsel the High Court has granted the relief of full back
wages without there being any factual basis for the same.
11. Learned counsel has relied on a number of judgments
of this Court in support of the proposition that entitlement to
bacr\ wages is not a natural consequence when an order of
B
termination is found to be in contravention of the Industrial
Disputes Act, 1947. The court has to examine the facts and
circumstances of each case.
12. On the other hand the respondent submitted that the
c High Court has correctly undone the injustice that had been
done to him by the Labour Court. The Labour Court came to
the conclusion that he was a full time accountant with the
appellant. His services had been illegally terminated. He was
entitled to be reinstated. However, the Labour Court illegally
D declined to grant full back wages on the ground that in order to
survive for 15 years between the time of date of termination and ,.
the award, he must have worked somewhere to eam his
livelihood.
13. The only limited issue to be determined by us, in this
E
appeal, is whether the High court was justified in granting full
back wages to the respondent in spite of the denial thereof by
the Labour Court. In our opinion the High Court erred in law in
not examining the factual situation. The High COJ,Jrt merely stated
that it was not the case of the employer that the workman had
F been gainfully employed elsewhere. Although it noticed tfie
principle that the payment of back wages having a discretionary
element involved in it, has to be dealt with in the circur.istances
of each case and no strait jacket formula can be evolved, yet
the award of the Labour Court was modified without any factual
G basis.
14. In the case of Mis. Hindustan Tin Works Pvt. Ltd.
vs. The Employees of Mis. Hindustan Tin Works Pvt. Ltd.
and Ors. AIR 1979 SC 75, it has been held as follows:
H
'
REETU MARBLES v. PRABHAKANT SHUKLA 41
[SURINDER SINGH NIJJAR, J.]
..!, "Ordinarily, therefore, a workman whose service has A
been illegally terminated would be entitled to full backs
except to the extent he was gainfully employed during the
enforced idleness. That is the normal rule."
15. These observations were subsequently considered in
B
the case of Hindustan Motors Ltd. vs. Tapan Kumar
Bhattacharya and Anr. (2002) 6 SCC 41 and it was observed
as follows:
"f.
"Under Section 11-A as amended in 1971, the Industrial
Tribunal is statutorily mandated, while setting aside the c
order of discharge or dismissal and directing reinstatement
of the workman to consider the terms and conditions,
subject to which the relief should be granted or to give such
other relief to the workman including the award of any
other punishment in lieu of the discharge or dismissal, as D
the circumstances of the case may require. The section
is couched in wide and comprehensive terms. It vests a
wide discretion in the Tribunal in the matter of awarding
p~pper punishment and also in the matter of the terms and
col\ditions on which reinstatement of the workman should E
be ordered. It necessarily follows that the Tribunal is duty-
bound to consider whether in the circumstances of the
case, back wages have to be awarded and if so, to what
extent.
From the award passed by the Industrial Tribunal F
which has been confirmed by the Division Bench of the
High Court, it is clear that the order for payment of full back
wages to the workman was passed without any discussion
and without stating any reason. It appears that the Tribunal
and the Division Bench had proceeded on the footing that G
since the order of dismissal passed by the management
was set aside, the order of reinstatement with full back
wages was to follow as a matter of course.
In Hindustan Tin Works (P) Ltd. v. Employees a three- H
42 SUPREME COURT REPORTS (2009] 16 (ADDL.) S.C.R
A Judge Bench of this Court laid down: (SCC p. 86, para
11)
"11. In the very nature of things there cannot be a
straitjacket formula for awarding relief of back wages. All
relevant considerations will enter the verdict. More or less,
B
it would be a motion addressed to the discretion of the
Tribunal. Full back wages would be the normal 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
c circumstances. But the discretion must be exercised in a
judicial and judicious manner. The reason for exercising
discretion must be cogent and convincing and 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
D 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.
As already noted, there was no application of mind
E to the question of back wages by the Labour Court. There
was no pleading or evidence whatsoever on the aspect
whether the respondent was employed elsewhere during
this long interregnum."
16. The aforesaid judgment was subsequently considered
F in the case of UP State Brassware Corpn. Ltd. vs. Uday Narain
Pandey (2006) 1 SCC 479 it was. observed as follows:
"Before ~dverting to the decisions relied upon by the
learned counsel for the psirties, we may observe that
G although direction to pay full back wages on a declaration
that the order of termination was invalid used to be the
usual result but now, with the passage of time, a pragmatic
view of the matter is being taken by the court realizing that
an industry may not be compelled to pay to the workman
H for the period during which he apparently contributed little
REETU MARBLES v. PRABHAKANT SHUKLA 43
[SURINDER SINGH NIJJAR, J.]
or nothing at all to it and/or for a period that was spent A
unproductively as a result whereof the employer would be
compelled to go back to a situation which prevailed many
years ago, namely, when the workman was retrenched.
No precise formula can be laid down as to under
8
what circumstances payment of entire back wages should
be allowed. Indisputably, it depends upon the facts and
circumstances of each case. It would, however, not be
correct to contend that it is automatic. It should not be
granted mechanically only because on technical grounds C
or otherwise an order of termination is found to be in
contravention of the provisions of Section 6-N of the U.P.
Industrial Disputes Act.
The changes brought about by the subsequent
decisions of this court, probably having regard to the D
changes in the policy decisions of the Government in the
wake of prevailing market economy, globalization,
privatization and outsourcing, is evident."
17. From the above observations it becomes apparent that E
payment of full back wages upon an order of termination being
declared illegal cannot be granted mechanically. It does not
automatically follow that reinstatement must be accompanied
, by payment of full back wages even for the period when the
workman remained out of service and contributed little or
nothing to the industry. F
18. Again in the case of Haryana State Electricity
Development Corporation Ltd. vs. Mamni (2006) 9 SCC 434
this court reiterated the principle. The principles laid down in
UP State Brassware Corp. Ltd. (supra). G
}-
19. Recently this Court again examined the issues with
regard to payment of full back wages in the case of P. V.K.
Distillery Ltd. vs. Mahendra Ram (2009) 5 SCC 705.
H
44 SUPREME COURT REPORTS [2009] 16 (ADDL.) S.C.R.
f.
A 20. After examining the relevant case law it has been held
as follows:
"Although direction to pay full back wages on a
declaration that the order of termination was invalid used
to be the usual result but now, with the passage of time, a
B
pragmatic view of the matter is being taken by the court
realizing that an industry may not be compelled to pay to
the workman for the period during which he apparently
~
contributed little or nothing at all to it and/or for a period
that was spent unproductively as a result whereof the
c employer would be compelled to go back to a situation
which prevailed many years ago, namely, when the
workman was retrenched.
In Haryana Urban Development Authority v. Om
D Pal it is stated that: (SCC p.745, para 7)
"7 .... It is now also well settled that despite a wide
,
discretionary power conferred upon the Industrial Courts
under Section 11-A of the 1947 Act, the relief of
reinstatement with full back wages should not be granted
E
automatically only because it would be lawful to do so.
Grant of relief would depend on the fact situation obtaining
in each case. It will depend upon several factors, one of
which would be as to whether the recruitment was effected
in terms of the statutory provisions operating in the field, if ...
F any.:·
In deciding the question, as to whether the employee
should be recompensed with full back wages and other
benefits until the date of reinstatement, the tribunals and
G the courts have to be realistic albeit the ordinary rule of full
back wages on reinstatement. (Western India Match Co.
Ltd. v. Industrial Tribuna~" {
21. Applying the aforesaid ratio of law we have examined
the factual situation in the present case. The services of the
H
'· .
REETU MARBLES v. PRABHAKANT SliUKLA 45
[SURINDER SINGH NIJJAR, J.]
,4
respondent were admittedly terminated on 11.6.87. The Labour A
Court gave its award on 27.'9.02. Therefore, there is a gap of
more than 15 years from the date of termination till the award
of reinstatement in service. Labour Court upon examination of
.. the entire issue concluded that the respondent would not be
entitled to any back wages for the period he did not work. A B
perusal of the award also shows that the resp,ondent did not
place on the record of the Labour Court any material or
evidence to show that he was not gainfully employed during the
long spell of 15 years when he was out of service of the
appellant. In the writ petition the respondent was mainly c
concerned with receiving wages in accordance with the
Minimum Wages Act and for inclusion of the period spent in
Conciliation Proceedings for the calculation of financial
benefits. The High Court without examining the factual situation,
and placing reliance on the judgment in Mis. Hindustan Tin
D
Works Pvt. Ltd. vs. The Employees of Mis. Hindustan Tin
~
Works Pvt. Ltd. and ors. held that the normal rule of full back
wages ought to be followed in this case. We are of the
considered opinion that such a conclusion could have been
reached by the High Court only after recording cogent reasons
E
in support thereof. Especially since the award of the Labour
....,. Court was being modified. The Labour Court exercising its
discretionary jurisdiction concluded that it was not a fit case for
the grant of back wages. In the case of P. V.K. Distillery· Ltd.
;_
(supra), it is observed as follows:
F
"The issue as raised in the matter of back wages
has been dealt with by the Labour Court in the manner as
above having regard to the facts and circumstances of the
matter in the issue, upon exercise of its discretion and
obviously in a manner which cannot but be judicious in G
nature. There exists an obligation on the part of the High
court to record in the judgment, the reasoning before
however denouncing a judgment of an inferior tribunal, in
the absence of which, the judgment in our view cannot
stand the scrutiny of otherwise being reasonable." H
46 SUPREME COURT REPORTS [2009) 16 (ADDL.) S.C.R.
.,
A 22. In our opinion the High Court was unjustified in
awarding full back wages. We are also of the opinion that the
Labour Court having found the termination to be illegal was
B
unjustified in not granting any back wages at all.
23. Keeping in view the facts and circumstances of this
case we direct that the respondent shall be paid 50 per cent
-
of the back wages from the date of termination of service till
reinstatement.
24. With the aforesaid observations the appeal is allowed.
c The respondent shall be paid 50 per cent of the back wages
as directed within a period of three months from today. There
shall be no order as to costs.
R.P. Appeal allowed
~
-
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