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CASE NO.: Appeal (civil)  7657 of 2004

PETITIONER: J.K.Synthetics Ltd.                                             \005 Appellant

RESPONDENT: K.P.Agrawal & Anr.                                              \005 Respondents

DATE OF JUDGMENT: 01/02/2007

BENCH: B. P. Singh & R. V. Raveendran

JUDGMENT: J U D G M E N T

RAVEENDRAN, J.

       This appeal by special leave is against the judgment dated 28.7.2003   of the Allahabad High Court rejecting Civil Misc. W.P. No.10713/83 filed  by the appellant challenging the award dated 8.3.1983 and subsequent  modification order dated 29.6.1983 of Labour Court II, Kanpur.

2.      Brief facts necessary for disposal of this appeal are as under :

2.1)    The first respondent was working as an Assistant in the appellant  company. He was issued three charge-sheets dated 5.2.1977, 17.2.1977 and  24.2.1977 (amended on 1.3.1977). First respondent filed his  objections/explanation in respect of each charge-sheet.  An inquiry was held  into the charges.  Accepting the report of the Inquiry Officer, which held that  the charges were proved, the employer imposed the punishment of dismissal  on the first respondent, by order dated 6.4.1977.

2.2)    Conciliation proceedidngs initiated in respect of such dismissal,  failed.  Consequently, the State Government referred the following dispute  to the Labour Court for adjudication :

"Whether the termination of the services of its workman Shri Kashi Prasad  (s/o Shri Lala Shyam Lal), Assistant, Accounts Department by the  Employers from 6.4.1977 is proper, and/or legal ? If not, for what  benefits/compensation the workman is entitled to and any other, with  details."

2.3)    By order dated 20.12.1980, the Labour Court held that the inquiry was  not fair and proper, and permitted parties to adduce evidence. The Labour  Court made its award dated 8.3.1983. The Labour Court held that the charge  of insubordination and disorderly behaviour in the first charge-sheet, was not  proved. The charge under the second charge-sheet, that the first respondent  made false (indecent) allegations against his superior officer, and thereby  violated office discipline, was held to be proved. In regard to the charge  under the third charge-sheet, the Labour Court found that the employee had  admitted that he had not prepared the annual accounts correctly, but gave the  employee the ’benefit of doubt’ by holding that the mistakes in the accounts  might not have been committed knowingly or deliberately, and therefore,  may not amount to habitual negligence or carelessness. Thus in effect, the  findings in regard to three charges were (i) not proved, (ii) proved, and (iii)   entitled to benefit of doubt. On the said findings, it made an award dated  8.3.1983, the operative part of which reads thus :

"The concerned workman has been working in the company for four years

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and there was no such complaint against him in the past, hence instead of  the punishment of termination of service as a result of Ex. E-2 (dated  17.2.1977) being proved against him, I deem it proper that the increments  of two years of the concerned workman should be stopped as  punishment."

        The said award was published on 27.4.1983 and became enforceable from  27.5.1983.

2.4)    On 4.5.1983, first respondent filed an application under section 6(6)  of the U.P. Industrial Disputes Act, 1947 (’Act’ for short) seeking  corrections of the award, stating that the workman was entitled to  reinstatement with continuity of service and full back-wages from 6.4.1977.  The appellant resisted the said application contending inter alia that (i) the  Labour Court became functus officio after publication of the award on  27.4.1983 and therefore, it could not amend the award; (ii) the prayer  amounted to seeking review of the award, and there was no jurisdiction or  power to grant such relief; and (iii) the first respondent was not entitled to  the relief of back-wages, as the Labour Court had held that a misconduct  was proved.

2.5)    The Labour Court by order dated 29.6.1983 allowed the application  under section 6(6) and added the following paragraph at the end of the  Award, on the ground that it had been omitted due to an accidental slip :

"Hence, it is my decision in this case that the termination of services of  Mr. Kashi Prasad Agarwal, Assistant, Accounts Department from 6.4.77  by his employer will not be justified but instead, his two annual  increments which were admissible to him after the date of his termination,  i.e. 6.4.77, be stopped. In view of the punishment of stoppage of two  annual increments, the employer shall pay the full wages of the period  under unemployment i.e. 6.4.77 to the date of reinstatement in which the  amount which was paid to the workman as interim relief or any other  mode, shall be adjusted."

[emphasis supplied]

2.6)    Appellant challenged the said award and the amendment thereto in  C.M.W.P. No.10714/83. A learned Single Judge of the High Court vide  order dated 28.7.2003 dismissed the petition holding as follows :

"From a perusal of the award of the labour court, it is apparent that the  tenor of the order is that the workman could not be punished by resorting  to termination. The spirit of the order also shows that in fact the labour  court had in mind to grant back-wages to the workman, but by omission,  the aforesaid mistake has crept in. The contention of the learned counsel  for the petitioner cannot be accepted and in my opinion, there was an  omission which could be corrected under section 6(6). Though a plea has  been made that the court becomes functus officio after tendering the  award, in my view, this argument has only to be stated to be rejected.  Section 6(6) gives power to the labour court for making corrections in an  award."

Referring to the submission of learned counsel for the employee that he had  not been reinstated in spite of refusal of stay, the learned Single Judge  observed thus :  

"Learned counsel for the respondent workman has submitted that in spite  of the aforesaid fact till date the petitioner has not reinstated the workman  and, therefore, even equity is against him. A petitioner, who willfully  violates lawful orders is not entitled to equitable discretion under Article  226 of the Constitution of India."

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3.      The said order of the learned Single Judge, is challenged in this appeal  by special leave. On the contentions urged, the following questions arise for  consideration :              

(i)     Whether a provision enabling a court to correct any clerical or  arithmetical mistake, or error in the order arising from any accidental  slip or omission, empowers the Labour Court to grant a relief of back- wages, which was not granted in the original award.  

(ii)    When the punishment of dismissal is substituted by a lesser  punishment (stoppage of increments for two years), and consequently,  the employee is directed to be reinstated, whether the employee is  entitled to back-wages from the date of termination to date of  reinstatement.

(iii)   Whether on the facts and circumstances, the Labour Court was  justified in interfering with the punishment of dismissal.  

(iv)    If the employer was otherwise entitled to relief, whether it could be  denied on the ground that it had failed to reinstate the employee, in  spite of the non-stay of the direction for reinstatement.

Re : Question (i)  

4.      Section 6(6) of the Act provides that a Labour Court may either on its  own motion or on the application of any party to the dispute, correct any  clerical or arithmetic mistakes in the award or errors arising therein from any  accidental slip or omission. The question is whether in exercise of such  power, the Labour Court could have awarded back-wages, even though the  original award was silent on that issue.  

5.      While considering the scope of a similar provision (Rule 83 of the  Orissa Sales Tax Rules), this Court in Master Construction Co. (P) Ltd., vs.  State of Orissa [1966 (3) SCR 99], observed thus :  

"An arithmetical mistake is a mistake of calculation; a clerical mistake is a  mistake in writing or typing. An error arising out of or occurring from an  accidental slip or omission is an error due to a careless mistake or  omission unintentionally made. \005\005\005\005\005The accidental slip or  omission is an accidental slip or omission made by the court. The obvious  instance is a slip or omission to embody in the order something which the  court in fact ordered to be done. This is sometimes described as a decretal  order not being in accordance with the judgment. But the slip or omission  may be attributed to the Judge himself. He may say something or omit to  say something which he did not intend to say or omit. This is described as  a slip or omission in the judgment itself. The cause for such a slip or  omission may be the Judge’s inadvertence or the advocate’s mistake. But,  however wide the said expressions are construed, they cannot countenance  a re-argument on merits on questions of fact or law, or permit a party to  raise new arguments which he has not advanced at the first instance."  

6.      Section 6(6) itself was considered in Tulsipur Sugar Company Ltd.,  vs. State of U.P. [1970 (1) SCR 35]. In that case, two questions were referred  to Labour Court : (i) fitment of certain workmen in a new grade; and (ii) the  date from which such fitment should have effect. The Labour Court made an  award holding that the workmen should be fitted into certain grades and  directed the employer to do so within one month after the award became  enforceable. But it omitted to fix the date from which such fitment should be  effected. The employer fitted the workmen in the new grades prospectively.  The employees-Union applied under section 6(6) of the Act to amend the  award on the ground that it had omitted to answer the second question  referred to it. The Labour Court allowed the application and  amended the  award and directed the employer to place the workmen in their respective  grades from 1.1.1960. The said amendment to the award was challenged on  the ground that it was not a consequence of any clerical or arithmetic error

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or accidental slip/omission. It was also contended that power under section  6(6) can only be exercised before the date on which the award became  enforceable and not thereafter. This Court negatived the said contentions.  This Court held that the reference comprised two questions, the first relating  to fitment, and the second relating to the date from which such fitment was  to have effect; that the award as originally made answered the first question  but did not decide the second question; that as the reference was in respect  of two questions, the Labour Court was bound to answer the second question  also; and  the failure to do so was an error in the award due to an accidental  slip or omission and that could be corrected under section 6(6). This Court  also held that section 6(6) does not lay down expressly any time limit within  which the correctional jurisdiction could be exercised and, therefore, was not  barred by limitation.  

7.      Section 6(6) again came up for consideration in U.P. SRTC vs. Imtiaz  Hussain [2006 (1) SCC 380] which related to the removal of a conductor  after he had been found guilty of a charge in domestic inquiry. An industrial  dispute was raised questioning the legality of the order of removal. The  Labour Court held that the inquiry was not fair and proper and therefore, the  removal was bad. The Labour Court ordered reinstatement but held that the  employee was not entitled to any back wages, as his name was not found in  the list of permanent conductors. An application was filed under section 6(6)  of the Act contending that the conclusion of the labour court that he was not  in the permanent list was not correct. The Labour Court allowed the  application and modified the award. It issued certain directions about  payment of salary, allowances etc., from the date of termination till  reinstatement with continuity of service, though his name was not in the  waiting list. This Court held that such amendment or modification of the  award was impermissible in exercise of power under section 6(6). This  Court observed :  

"Section 6(6) of the U.P. Industrial Disputes Act, 1947 is similar to  section 152 CPC. The settled position of law is that after the passing of the  judgment, decree or order, the same becomes final subject to any further  avenues of remedies provided in respect of the same and the very Court or  the tribunal cannot, on mere change of view, is not entitled to vary the  terms of the judgments, decrees and orders earlier passed except by means  of review, if statutorily provided specifically therefor and subject to the  conditions or limitations provided therein. The powers under Section 152  CPC are neither to be equated with the power of review nor can be said to  be akin to review or even said to clothe the Court concerned under the  guise of invoking after the result of the judgment earlier rendered, in its  entirety or any portion or part of it."  

8.      A careful reading of section 6(6) and the two decisions shows that the   two decisions considered two different situations. In Tulsipur Sugar  Company, this Court found that the reference to the Labour Court consisted  of two parts. The award answered only the first part and had omitted to  answer the second (consequential) part. While modifying the award on an  application under section 6(6), the Labour Court neither upset nor altered  any of the findings recorded in its original award, but only answered the  second part of the reference, which had earlier been omitted. Therefore, this  Court held that such correction was permissible. On the other hand in Imtiaz  Hussain, the Labour Court, in its award had specifically refused back-wages  to the employee on the ground that his name was not in the list of permanent  employees. But on an application under section 6(6), it re-examined the  issue and held that though his name was not in the list of permanent  employees, he was entitled to payment of salary and allowances from the  date of termination till the date of reinstatement with continuity of service.  In Tulsipur Sugar Company,  there was a correction of an omission which  fell within section 6(6). In Imtiaz Hussain, there was a review of the original  order which of course, was impermissible. We may now summarize the  scope of section 6(6) of the Act thus :  

a)      If there is an arithmetical or clerical or typographical error in the

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order, it can be corrected.  

b)      Where the court had said something which it did not intend to say or  omitted something which it intended to say, by reason of any  accidental slip/omission on the part of the court, such inadvertent  mistake can be corrected.  

c)      The power cannot be exercised where the matter involves rehearing  on merits, or reconsideration of questions of  fact or law, or  consideration of fresh material, or new arguments which were not  advanced when the original order was made. Nor can the power  be  exercised to change the reasoning and conclusions.  

9.      In this case, the reference to Labour Court consisted of two parts -  whether the termination of the workmen was proper and legal, and if the  answer was in the negative, then the benefits or compensation to which the  workmen was entitled. The award originally made, answered the first part in  the negative, but did not answer the consequential second part of the  reference. In fact the award ended rather abruptly. On an application being  made under section 6(6), the Labour Court recorded that it had accidentally  omitted to answer the second part of the reference and rectified the omission  by adding a paragraph. This case, therefore, squarely falls under Tulsipur  Sugar (supra). We are of the view that the Labour Court had the power to  amend the award.  

10.     But whether such modification was warranted, is a different question.  The next question, therefore, is whether the facts and circumstances warrant  grant of back-wages, assuming that the punishment imposed was excessive.  

Re : Question (ii)  

11.     Learned counsel for the employee relied on several decisions of this  Court to contend that where the order of dismissal or removal is set aside  and the employee is directed to be reinstated, full back-wages should follow  as a matter of course. Reliance is placed on the decisions of this Court in  Hindustan Tin Works Pvt. Ltd., vs. Employees of Hindustan Tin Works Pvt.  Ltd. [1979 (2) SCC 80], Surendra Kumar Verma vs. Central Government  Industrial Tribunal-cum-Labour Court, New Delhi [1981 (1) SCR 789], and  Mohan Lal vs. Bharat Electronics Ltd., [1981 (3) SCC 225].   

12.     Hindustan Tin Works Pvt. Ltd (supra), related to retrenchment of some  workmen on the ground that the employer was suffering mounting losses.  The labour court held that the real reason for retrenchment was the  annoyance felt by the management when the employees refused to agree to  its terms. Consequently, it directed the reinstatement with full back wages.  That was challenged by the employer. This Court granted leave to appeal,  only in regard to the question of back-wages, as it did not consider it  necessary to interfere with the direction for reinstatement. Ultimately, while  reducing the back-wages to 75%, this Court observed as follows :  

"If thus the employer is found to be in the wrong as a result of which  the workman is directed to be reinstated, the employer could not shirk  his responsibility of paying the wages which the workman has been  deprived of by the illegal or invalid action of the employer. Speaking  realistically, where termination of service is questioned as invalid or  illegal and the workman has to go through the gamut of litigation, his  capacity to sustain himself throughout the protracted litigation is itself  such an awesome factor that he may not survive to see the day when relief  is granted. More so in our system where the law’s proverbial delay has  become stupefying. If after such a protracted time and energy consuming  litigation during which period the workman just sustains himself,  ultimately he is to be told that though he will be reinstated, he will be  denied the back wages which would be due to him, the workman would be  subjected to a sort of penalty for no fault of his and it is wholly  undeserved. Ordinarily, therefore, a workman whose service has been

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illegally terminated would be entitled to full back wages except to the  extent he was gainfully employed during the enforced idleness. That is the  normal rule. Any other view would be a premium on the unwarranted  litigative activity of the employer. If the employer terminates the  service illegally and the termination is motivated as in this case, viz.,  to resist the workman’s demand for revision of wages the termination  may well amount to unfair labour practice. In such circumstances  reinstatement being the normal rule, it should be followed with full  back wages.

In the very nature of things there cannot be a straight jacket formula for  awarding relief of back wages. All relevant considerations will enter the  verdict. More or less, 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 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 something is to be done according to the  rules of reason and justice, according to law and not humour."

[emphasis supplied]

13.     Surendra Kumar Verma (supra) related to retrenchment of several  workmen in violation of section 25-F of the Industrial Disputes Act, 1947  (’ID Act’ for short). This Court held that when the order of termination is set  aside as being invalid and inoperative, it must ordinarily lead to  reinstatement as if the order of termination was never made and that would  necessarily lead to back-wages too. This Court, however, observed that there  may be exceptional circumstances which may make it impossible or wholly  inequitable  vis-‘-vis employer and workmen to direct reinstatement with  full back-wages as for example, when the industry might have closed down  or might be in severe financial doldrums or where the concerned employee  might have secured other employment elsewhere and in such situations, the  court has the discretion to deny full back-wages. In the concurring judgment  Pathak J. (as he then was), held as follows :  

"Ordinarily, a workman who has been retrenched in contravention of the  law is entitled to reinstatement with full back wages and that principle   yields only where the justice of the case in the light of the particular facts  indicates the desirability of a different relief. It has not been shown to us  on behalf of the respondent why the ordinary rule should not be applied."  14.     Mohan Lal (supra) also related to retrenchment not in consonance  with section 25-F of ID Act. This Court held :  "As pre-condition for a valid retrenchment has not been satisfied the  termination of service is ab initio void, invalid and inoperative. He must,  therefore, be deemed to be in continuous service\005\005\005.. If the  termination of service is ab initio void and inoperative, there is no  question of granting reinstatement because there is no cessation of service  and a mere declaration follows that he continues to be in service with all  consequential benefits. Undoubtedly, in some decisions of this Court such  as Ruby General Insurance Co. Ltd., vs. Chopra (P.P) [1969 (3) SCC 653]  and Hindustan Steels Ltd., vs. A. K. Roy [1969 (3) SCC 513], it was held  that the court before granting reinstatement must weigh all the facts and  exercise discretion properly whether to grant reinstatement or to award  compensation. But there is a catena of decisions which rule that where the  termination is illegal especially where there is an ineffective order of  retrenchment, there is neither termination nor cessation of service and a  declaration follows that the workman concerned continues to be in service  with all consequential benefits. No case is made out for departure from  this normally accepted approach of the courts in the field of social justice  and we do not propose to depart in this case."

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15.     But the manner in which ’back-wages’ is viewed, has undergone a  significant change in the last two decades. They are no longer considered to  be an automatic or natural consequence of reinstatement. We may refer to  the latest of a series of decisions on this question. In U.P. State Brassware  Corpn. Ltd. vs Udai Narain Pandey [2006 (1) SCC 479], this Court  following Allahabad Jal Sansthan vs. Daya Shankar Rai [2005 (5) SCC  124], and Kendriya Vidyalaya Sangathan vs. S. C. Sharma [2005 (2) SCC  363] held as follows :  

"A person is not entitled to get something only because it would be lawful  to do so. If that principle is applied, the functions of an Industrial Court  shall lose much of their significance."  

"\005\005although 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  courts 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 employer would be compelled to go back to a situation  which prevailed many years ago, namely, when the workman was  retrenched\005\005... The changes (were) brought about by the subsequent  decisions of the Supreme Court, probably having regard to the changes in  the policy decisions of the Government in the wake of prevailing market  economy, globalization, privatization and outsourcing, is evident.  

No precise formula can be laid down as to under 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 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\005\005.. While granting relief,  application of mind on the part of the Industrial Court is imperative.  Payment of full back wages cannot therefore be the natural consequence.  

In General Manager, Haryana Roadways vs. Rudhan Singh [2005 (5) SCC  591], this Court observed :          "There is no rule of thumb that in every case where the Industrial Tribuanl  gives a finding that the termination of service was in violation of Section  25-F of the Act, entire back wages should be awarded. A host of factors  like the manner and method of selection and appointment i.e. whether  after proper advertisement of the vacancy or inviting applications from the  employment exchange, nature of appointment, namely, whether ad hoc,  short term, daily wage, temporary or permanent in character, any special  qualification required for the job and the like should be weighed and  balanced in taking a decision regarding award of back wages. One of the  important factors, which has to be taken into consideration, is the length of  service, which the workman had rendered with the employer. If the  workman has rendered a considerable period of service and his services  are wrongfully terminated, he may be awarded full or partial back wages  keeping in view the fact that at his age and the qualification possessed by  him he may not be in a position to get another employment. However,  where the total length of service rendered by a workman is very small, the  award of back wages for the complete period i.e. from the date of  termination till the date of the award, which our experience shows is often  quite large, would be wholly inappropriate. Another important factor,  which requires to be taken into consideration is the nature of employment.  A regular service of permanent character cannot be compared to short or  intermittent daily-wage employment though it may be for 240 days in a  calendar year."   

16.     There has also been a noticeable shift in placing the burden of proof in  regard to back wages. In Kendriya Vidyalaya Sangathan (supra), this Court

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held :  

"\005..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."  

In U.P. State Brassware Corpn. Ltd. (supra), this Court observed :

"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 Evidence  Act or the provisions analogous thereto, such a plea should be raised by  the workman."  

17.     There is also a misconception that whenever reinstatement is directed,  ’continuity of service’ and ’consequential benefits’ should follow, as a  matter of course. The disastrous effect of granting several promotions as a  ’consequential benefit’ to a person who has not worked for 10 to 15 years  and who does not have the benefit of necessary experience for discharging  the higher duties and functions of promotional posts, is seldom visualized  while granting consequential benefits automatically. Whenever courts or  Tribunals direct reinstatement, they should apply their judicial mind to the  facts and circumstances to decide whether ’continuity of service’ and/or  ’consequential benefits’ should also be directed. We may in this behalf refer  to the decisions of this Court in A.P.S.R.T.C. v. S. Narasa Goud [2003 (2)  SCC 212], A.P.S.R.T.C. v. Abdul Kareem [2005 (6) SCC 36] and R.S.R.T.C.  v. Shyam Bihari Lal Gupta [2005 (7) SCC 406].   

18.     Coming back to back-wages, even if the court finds it necessary to  award back-wages, the question will be whether back-wages should be  awarded fully or only partially (and if so the percentage).  That depends  upon the facts and circumstances of each case. Any income received by the  employee during the relevant period on account of alternative employment  or business is a relevant factor to be taken note of while awarding back- wages, in addition to the several factors mentioned in Rudhan Singh (supra)  and Udai Narain Pandey (supra). Therefore, it is necessary for the employee  to plead that he was not gainfully employed from the date of his termination.  While an employee cannot be asked to prove the negative, he has to at least  assert on oath that he was neither employed nor engaged in any gainful  business or venture and that he did not have any income. Then the burden  will shift to the employer. But there is, however, no obligation on the  terminated employee to search for or secure alternative employment. Be that  as it may.   19.     But the cases referred to above, where back-wages were awarded,  related to termination/retrenchment which were held to be illegal and invalid  for non-compliance with statutory requirements or related to cases where the  court found that the termination was motivated or amounted to victimization.    The decisions relating to back wages payable on illegal retrenchment or  termination may have no application to the case like the present one, where   the termination (dismissal or removal or compulsory retirement) is by way  of punishment for misconduct in a departmental inquiry, and the court  confirms the finding regarding misconduct, but only interferes with the  punishment being of the view that it is excessive, and awards a lesser  punishment, resulting in the reinstatement of employee. Where the power  under Article 226 or section 11A of the Industrial Disputes Act (or any other  similar provision) is exercised by any Court to interfere with the punishment  on the ground that it is excessive and the employee deserves a lesser  punishment, and a consequential direction is issued for reinstatement, the  court is not holding that the employer was in the wrong or that the dismissal

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was illegal and invalid. The court is merely exercising its discretion to award  a lesser punishment. Till such power is exercised, the dismissal is valid and  in force. When the punishment is  reduced by a court as being excessive,  there can be either a direction for reinstatement or a direction for a nominal  lump sum compensation. And if reinstatement is directed, it can be effective  either prospectively from the date of such substitution of punishment (in  which event, there is no continuity of service) or retrospectively, from the  date on which the penalty of termination was imposed (in which event, there  can be a consequential direction relating to continuity of service). What  requires to be noted in cases where finding of misconduct is affirmed and  only the punishment is interfered with (as contrasted from cases where  termination is held to be illegal or void) is that there is no automatic  reinstatement; and if reinstatement is directed, it is not automatically with  retrospective effect from the date of termination. Therefore, where   reinstatement is a consequence of imposition of a lesser punishment, neither  back-wages nor continuity of service nor consequential benefits, follow as a  natural or necessary consequence of such reinstatement. In cases where the  misconduct is held to be proved, and reinstatement is itself a consequential  benefit arising from imposition of a lesser punishment,  award of back wages  for the period when the employee has not worked,  may amount to  rewarding the delinquent employee and punishing the employer for taking  action for the misconduct committed by the employee. That should be  avoided. Similarly, in such cases, even where continuity of service is  directed, it should only be for purposes of pensionary/retirement benefits,  and not for other benefits like increments, promotions etc.  

20.     But there are two exceptions. The first is where the court sets aside the  termination as a consequence of employee being exonerated or being found  not guilty of the misconduct. Second is where the court reaches a conclusion  that the inquiry was held in respect of a frivolous issue or petty misconduct,  as a camouflage to get rid of the employee or victimize him, and the  disproportionately excessive punishment is a result of such scheme or  intention. In such cases, the principles relating to back-wages etc. will be the  same as those applied in the cases of an illegal termination.  

21.     In this case, the Labour Court found that a charge against the  employee in respect of a serious misconduct was proved. It, however, felt  that the punishment of dismissal was not warranted and therefore, imposed a  lesser punishment of withholding the two annual increments. In such  circumstances, award of back wages was neither automatic nor  consequential. In fact, back wages was not warranted at all.  

Re : Question (iii) 22.     This takes us to the next question as to whether the Labour Court was  justified at all in interfering with the punishment of dismissal. The Labour  Court held that one serious charge was proved, another charge was not  proved and in regard to the third charge gave ’benefit of doubt’ to the  employee. The Labour Court also relied on the decisions of this Court in  Rama Kant Misra vs. State of U.P. [AIR 1982 SC 952], wherein it was held  that the punishment of dismissal was excessive where the employee was  found to have uttered indecent words and used abusive language and  substituted it by the lesser punishment of stoppage of two annual increments.  The said decision depended on its special facts and may not apply to this  case. The recent trend in regard to scope of interference with punishment in  matters involving discipline at the workplace has been different. We may  refer to some of the recent decisions. 23.     In Hombe Gowda Educational Trust v. State of Karnataka [2006 (1)  SCC 430], this Court stressed the need to give importance to discipline at the  workplace. This Court observed :         "This Court has come a long way from its earlier viewpoints. The  recent trend in the decisions of this Court seek to strike a balance between  the earlier approach to the industrial relation wherein only the interest of  the workmen was sought to be protected with the avowed object of fast  industrial growth of the country. In several decisions of this Court it has  been noticed how discipline at the workplace/industrial undertakings

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received a setback. In view of the change in economic policy of the  country, it may not now be proper to allow the employees to break the  discipline with impunity."   

24.     In Mahindra and Mahindra Ltd. vs. N. B. Narawade [2005 (3) SCC  134], this Court considered a case where a workman used abusive and filthy  language against his superior officer, in the presence of his subordinates. He  was terminated after conducting an inquiry. Labour Court found the  punishment to be excessive and in exercise of power under section 11A of  the ID Act, imposed a lesser punishment. This Court held that the  misconduct cannot be termed to be an indiscipline calling for lesser  punishment than termination. A similar view was taken in Orissa Cement vs.  Adikand Sahu [1960 (1) LLJ 518] and New Shorrock Mills vs. Mahesh Bhai  T Rao [1996 (6) SCC 590].  

25.     In U.P. SRTC vs. Subhash Chandra Sharma  [2000 (3) SCC 324], this  Court held that the punishment of removal, for abusing and threatening  another employee, was not shockingly disproportionate to the gravity of the  offence. In that case also, only one among three charges was established and  the Labour Court had interfered with the punishment, which was upheld by  the High Court. Reversing such decision, this Court held :  

"The Labour Court, while upholding the third charge against the  respondent nevertheless interfered with the order of the appellant  removing the respondent, from the service. The charge against the  respondent was that he, in drunken state, along with a conductor went to  the Assistant Cashier in the cash room of the appellant and demanded  money from the Assistant Cashier. When the Assistant Cashier refused,  the respondent abused him and threatened to assault him. It was certainly a  serious charge of misconduct against the respondent. In such  circumstances, the Labour Court was not justified in interfering with the  order of removal of respondent from the service when the charge against  him stood proved. Rather we find that the discretion exercised by the  Labour Court in the circumstances of the present case was capricious and  arbitrary and certainly not justified. It could not be said that the  punishment awarded to the respondent was in any way "shockingly  disproportionate" to the nature of the charge found proved against him. In  our opinion, the High Court failed to exercise its jurisdiction under Article  226 of the Constitution and did not correct the erroneous order of the  Labour Court which, if allowed to stand, would certainly result in  miscarriage of justice."

26.     In Bharat Forge Co. Ltd., vs. Uttam Manohar Nakate [2005 (2) SCC  489], M.P. Electricity Board vs. Jagdish Chandra Sharma [2005 (3) SCC  401], and Regional Manager, Rajasthan State Road Corporation vs.  Ghanshayam Sharma [2002 (1) LLJ 234], this Court held that power under  section 11A of ID Act (or under similar provisions) cannot be used to  interfere with the quantum of punishment, on irrational or extraneous  factors, or on compassionate grounds. This Court also observed that though  section 11A gives the jurisdiction and power to the labour court to interfere  with the quantum of punishment, the discretion has to be used judiciously  and not capriciously. This Court observed that harsh punishment wholly  disproportionate the charge should be the criterion for interference.  

27.     In this case, we have already found that the charge established against  the employee was a serious one. The Labour Court did not record a finding  that the punishment was harsh or disproportionately excessive. It interfered  with the punishment only on the ground that the employee had worked for  four years without giving room for any such complaint. It ignored the  seriousness of the misconduct. That was not warranted. The consistent view  of this Court is that in the absence of a finding that the punishment was  shockingly disproportionate to the gravity of the charge established, the  Labour Court should not interfere with the punishment. We, therefore, hold  that the punishment of dismissal did not call for interference.

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Re : Question (iv)  

28.     It is true that when the employer challenged the award of the labour  court and sought stay of the award, the High Court only stayed the order  dated 29.6.1983 in regard to the back-wages but did not stay the award dated  08.3.1983 directing reinstatement; and that if he had been reinstated in 1983,  he would have served till 31.3.1991 when he attained the age of  superannuation. The learned counsel for the employee made a submission  before the High Court at the final hearing that in spite of the award directing  reinstatement not being stayed, he was not reinstated. On the said  submission, the High Court held that the employer had wilfully violated the  lawful order and was not entitled to exercise of equitable discretion under  Article 226/227. Firstly, the assumption that there was a lawful order or that  there was wilful violation thereof is not sound. Further, the employer was  not given an opportunity to explain why the employee was not reinstated. In  fact, the contention of employer is that the first respondent did not report  back to service, even though it was ready to reinstate him subject to final  decision. Be that as it may. The mere fact that the first respondent was not  reinstated in pursuance of the award of the Labour Court cannot result in  dismissal of the writ petition challenging the award.

Conclusion :  

29.     In view of the above, we allow this appeal, set aside the order dated  28.7.2003 of the High Court as also the award dated 08.3.1983 (as modified   on 29.6.1983) of the Labour Court and uphold the punishment of dismissal  imposed upon the first Respondent. Parties to bear their respective costs.