REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   7249       OF 2008 (Arising out of SLP (C) No. 13112 of 2007)

M.D., BALASAHEB DESAI  SAHAKARI S.K. LTD.      … APPELLANT

Versus

KASHINATH GANAPATI KAMBALE              … RESPONDENT

J U D G M E N T

S.B. SINHA, J.

1. Leave granted.

2. Appellant herein is  a Cooperative Society.  It runs a sugar factory.

Respondent was appointed as a peon in July 1974.  On or about 1.12.1983, a

show cause notice was issued seeking an explanation from him as regards

some alleged misconduct on his part.  He was placed under suspension. A

charge sheet dated 29.12.1983 was issued against him, inter alia, in respect

of the following charges:

“(i) Late  attendance  between  2.7.1983  to 20.12.1983 on 16 occasions.  

(ii) Absence  without  leave  between  6.10.1983 to 22.12.1983 for 20 days.

(iii) Leaving  the  place  of  work  without permission  and  without  seeking  leave  and attempt to obtain wages between 23rd to 30th November, 1983.

(iv) Leaving  premises  without  permission  and leave between 2.12.1983 to 20.12.1983 on 6 occasions.  

(v) Signing  the  muster  without  remaining present  and  attempting  to  seek  wages between 16.9.1983 to 16.11.1983 for 9 days.

(vi) Signing the muster for showing presence on 1.12.1983 on next day.

(vii) Disobeying order of Shri Mahadik regarding storage of water on 12.12.1983, refusing to deliver  letter  as  directed  by Shri   Chavan clerk on 19.12.1983 not attending the office on  14.12.1983  though  asked  to  attend  for the purpose of audit.”

3. A departmental proceeding was held in which he was found guilty of

the said charges.  He was dismissed from services by the appellant by an

order dated 5.7.1984.   

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Respondent filed an Application under Sections 78 of the Bombay

Industrial Relations Act, 1946 before the Labour Court, Sangli praying for

his reinstatement with continuity of service and full back wages, which was

registered as B.I.R. No. 16 of 1984.   

4. A  preliminary  issue  as  regards  validity  or  otherwise  of  the  said

disciplinary proceeding,  which  appears  to  have been decided against  the

respondent, had been framed.   

Apart from the said preliminary issue, the Labour Court framed the

following issues:

“1. Whether  the  applicant  proves  that  the opponent  terminated  him  from  service illegally and wrongfully?

2. Whether  the  enquiry  conducted  by  the opponent  against  the  applicant  is  legal proper and valid?

3. Whether the termination of the employment is a grossly disproportionate punishment?

4. Whether  the  applicant  is  entitled  to reinstatement, continuity of service and full back wages?

5. Appellant examined some witnesses to establish that the respondent

had  been  running  a  footwear  shop  under  the  name  and  style  of  Amol

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Footwear.  The Labour Court did not place any reliance thereupon holding

that the appellant had not produced any licence on record to show that the

respondent was running the said shop.   

The Labour Court, while holding that the respondent had been found

guilty of committing the misconduct, passed an award of reinstatement with

continuity  of  service  with  50%  back-wages  on  the  premise  that  the

punishment of termination from service was disproportionate to the charges

of misconduct leveled against him.  

6. An appeal preferred thereagainst by the appellant was dismissed.  On

the question as to whether the respondent was gainfully employed or not,

the  Appellate  Authority  while  holding  that  the  provisions  of  Shops  and

Establishments Act were not applicable at Patan where the said footwear

shop was being run, opined that the Labour Court was correct in denying

50% of back wages on the premise that the respondent had been carrying on

the said business to meet his both ends.  It was held:    

“Moreover,  the  Respondent  has  produced reasonable evidence to show special circumstances which may justify denial  of 50% of back wages. In these circumstances, I find no reason to allow full back wages to original petitioner in his appeal. Consequently,  I  hold  that  the  labour  court  was correct in awarding 50% back wages.”

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7. A writ  petition  filed  by  the  appellant  was  dismissed  by  a  learned

single judge of the Bombay High Court stating:

“…..The  Labour  Court,  in  exercise  of  its jurisdiction under this Section, has concluded that the  punishment  imposed  was  disproportionate. Both,  the  Labour  Court  and the  Industrial  Court were  of  the  opinion  that  a  lesser  punishment  of forfeiture  of  part  of  the  back  wages  was  the punishment which was adequate.  Both the courts below  have  exercised  their  discretion  fairly  and judiciously.  

9. In my view,  therefore,  there  is  no need to interfere with the orders of the Courts below.”

8. By reason of the impugned judgment, an intra court appeal preferred

by the appellant has been dismissed.   

Hence this Appeal by special leave.  

9. A  notice  was  issued  by  this  Court  only  on  the  quantum of  back

wages.  

10. Mr.  Shivaji  M. Jadhav,  learned counsel  appearing on behalf of the

appellant  would  submit  that  the  Industrial  Court  as  also  the  High Court

committed  a  serious  error  in  granting  reinstatement  with  continuity  of

service and half back wages in favour of the respondent by wrongly placing

the onus of proof on the appellant.  Leaned counsel would contend that it is

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now well settled that back wages ought not to be automatically granted and

keeping  in  view  of  the  fact  that  the  services  of  the  respondent  were

terminated in the year 1984 and the award of the labour court having been

rendered  in  the  year  1991,  the  grant  of  50%  back  wages  was  wholly

unjustified.   

11. Mr.  Vinay  Navare,  learned  counsel  appearing  on  behalf  of  the

respondent,  on  the  other  hand,  would  support  the  impugned  judgments

contending that  in  terms of  the provisions  of  the Industrial  Employment

Standing Orders Act, 1946 only a fine could be imposed on the respondent

for his alleged unauthorized absence.  Our attention was further drawn to

the fact that while passing the order of termination, records of past service

of the respondent had not been taken into consideration.   

12. Charges against the respondent as noticed hereinbefore were serious

in nature.  During the period between July 1983 and December 1983, he not

only absented himself from work without leave but also had been reporting

to  the  work  place  late  and  leaving  factory  premises  without  permission

early.  He was also found guilty of indiscipline.   

It  is  now well  settled  by  a  catena  of  decisions  of  this  Court  that

having  regard  to  the  principles  contained  in  Section  106  of  the  Indian

Evidence  Act  the  burden  of  proof  to  show  that  the  workman  was  not

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gainfully employed is not on the employer.  In this case, the burden of proof

had wrongly been placed upon the appellant.   

13. This  Court  in  U.P.  State  Brassware  Corpn.  Ltd.  vs.  Uday  Narain

Pandey [(2006) 1 SCC 479] held:

61. It is not in dispute that the Respondent did not raise any plea in his written statement that he was not gainfully employed during the said period. It is now well-settled by various decisions of this Court that although earlier this Court insisted that it was for the employer to raise the aforementioned plea but having regard to the provisions of Section 106 of  the  Indian  Evidence  Act  or  the  provisions analogous thereto, such a plea should be raised by the workman.

62. In  Kendriya  Vidyalaya Sangathan  v.  S.C. Sharma  [(2005)  2  SCC  363],  this  Court  held: (SCC p. 366, para 16)

"...When  the  question  of  determining  the entitlement  of  a  person  to  back  wages  is concerned, the employee has to show that he was not  gainfully employed.  The initial  burden is  on him. After and if he places materials in that regard, the  employer  can  bring  on  record  materials  to rebut the claim. In the instant case, the respondent had neither pleaded nor placed any material in that regard."

{See  also  Allahabad  Jal  Sansthan vs.  Daya Shankar Rai [(2005) 5 SCC 124], para 6}”

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14. Furthermore, some materials had been brought on record to show that

the respondent was gainfully employed.  The evidence adduced on behalf of

the appellant in that behalf, in our opinion, had not been considered on its

proper perspective.  The Industrial Court while holding that no licence is

necessary  to  run  a  footwear  shop  in  a  small  town  committed  a  serious

illegality in arriving at his finding that the respondent must have been doing

so, to meet his both ends.  It may be correct that a person cannot afford to

remain unemployed for a long time but for arriving at a conclusion that the

respondent  was gainfully employed or not,  a large number of  factors  are

required to be taken into consideration.   

15. Indisputably, the labour court while exercising its jurisdiction under

Section 11A of the Industrial  Disputes Act was entitled to consider as to

whether  the  punishment  awarded  is  wholly  disproportionate  to  the

delinquent employee or not but it is well known that the discretion vested in

it must be exercised in a judicious manner.  The Labour Court ordinarily

should not interfere with the discretion exercised by the employer unless the

same is found to be inconsistent with the provisions of a statute or otherwise

perverse or unjust.  It may be true that in terms of the Model Standing Order

framed  under  the  Industrial  Employment  Standing  Orders  Act,  1946,

ordinarily fine for wrongful absence was to be imposed but in this regard

the  number  of  occasions  on  which  the  workman  had  remained  on

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unauthorized absence was also required to be taken into consideration.  In

this  case,  apart  from remaining  unauthorizedly absent  without  leave,  the

respondent had been charged with indiscipline at the work place.  He not

only was found guilty of remaining unauthorizedly absent but also guilty of

misbehaviour  with  his  superiors,  leaving  place  of  work  early  without

permission  and  without  leave,  signing  the  muster  for  showing  presence

although he was absent.   

16. Forfeiture  of  50%  back  wages,  in  our  opinion,  thus,  was  not  an

adequate punishment.  In a case of this nature, he should have been awarded

some punishment  in  lieu  of  the  order  of  dismissal  and  furthermore  the

question as to whether the respondent was entitled to the full back wages or

not should have been considered on the basis of the materials brought on

record by the parties.   

17. We may notice that in  U.P. SRTC vs.  Mitthu Singh [(2006) 7 SCC

180], this Court has held:

“12. Since limited notice was issued with regard to payment of back wages, we do not enter into the larger question whether the action of terminating the  services  of  the  respondent  was  legal,  proper and  in  consonance  with  law.   But  we  are  fully satisfied that in the facts and circumstances of the case, back wages should not have been awarded to the  respondent  workman.   In  several  cases,  this Court  has held that  payment of  back wages  is  a

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discretionary power which has to be exercised by a court/tribunal  keeping  in  view  the  facts  in  their entirety  and  neither  straitjacket  formula  can  be evolved nor a rule of universal application can be laid down in such cases.”

18. We are,  therefore,  of  the opinion  that  in  this  case,  no  back-wages

should have been awarded in favour of the respondent.   

We  have  been,  however,  informed  by  the  Bar  that  a  sum  of

Rs.60,000/-  has  already  been  paid  to  the  respondent.   It  is,  therefore,

directed  that  any  amount  paid  to  the  respondent,  if  any,  shall  not  be

recovered.   

19. For the aforementioned reasons, the impugned judgment of the High

Court is modified to the aforementioned extent.  The appeal is allowed in

part.  There shall, however, be no order as to costs.  

……………….…..………….J. [S.B. Sinha]

..………………..……………J. [Cyriac Joseph]

New Delhi; December 12, 2008

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