REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.635 OF 2007

M/S. REETU MARBLES   .....APPELLANT(S)

VERSUS

PRABHAKANT SHUKLA       ……RESPONDENT(S)

J U D G M E N T

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 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  

Kanpur.  The respondent was engaged by the appellant as an

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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  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  

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.

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  

retrenchment  compensation,  which  is  clearly  improper  and  

illegal. Therefore, the respondent was entitled to reinstatement

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w.e.f. 12.6.87.  With regard to back wages, the Labour Court  

observed as follows:  

    “It is to mention that plaintiff has not  undertaken  any  work  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.   

Plaintiff  is not entitled to get the pay  and  allowances  for  the  period  he  did  not  perform any work.  But from the date of this  Judgment, plaintiff will be entitled to get the  pay and admissible allowances at the rate of  Rs.1200/- per 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.

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 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.

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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  

respondent shall be entitled to full back wages from the date 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  

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  

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  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

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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 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  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 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  

learned counsel the High Court has granted the relief of full

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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  

back wages is not a natural  consequence when an order of  

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  

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  

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 earn his  

livelihood.   

13. The only limited issue to be determined by us,  in this  

appeal, is whether the High court was justified in granting full

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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 Court merely  

stated  that  it  was  not  the  case  of  the  employer  that  the  

workman had been gainfully employed elsewhere.  Although it  

noticed the 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.

14.    In the case of M/s. Hindustan Tin Works Pvt. Ltd. vs.  

The Employees of  M/s.  Hindustan Tin Works Pvt.  Ltd.  and  

Ors. AIR 1979 SC 75, it has been held as follows:

“Ordinarily,  therefore,  a  workman  whose service has 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 the  

case  of  Hindustan  Motors  Ltd. vs.  Tapan  Kumar

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Bhattacharya  and  Anr. (2002)  6  SCC  41 and  it  was  

observed as follows:

“Under  Section  11-A  as  amended  in  1971,  the  Industrial  Tribunal  is  statutorily  mandated,  while  setting  aside  the  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  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 proper punishment and also in  the  matter  of  the  terms  and  conditions  on  which reinstatement of the workman should  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  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  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.  

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In  Hindustan  Tin  Works  (P)  Ltd.  v.   Employees a three-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, 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.  It is not to  be arbitrary, vague and fanciful but legal and  regular.   

As  already  noted,  there  was  no  application of mind to the question of back  wages  by  the  Labour  Court.  There  was  no  pleading  or  evidence  whatsoever  on  t  he  aspect whether the respondent was employed  elsewhere during this long interregnum.”     

16. The aforesaid judgment was subsequently considered in  

the case of UP State Brassware Corpn. Ltd. vs. Uday

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Narain Pandey  (2006) 1 SCC 479 it was observed as follows:  

   “Before adverting to the decisions relied  upon by the learned counsel for the parties,  we may observe that 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 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.  

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.

The  changes  brought  about  by  the  subsequent  decisions  of  this  court,  probably  having  regard  to  the  changes  in  the  policy  decisions  of  the  Government  in  the  wake  of  prevailing  market  economy,

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globalization, privatization and outsourcing,  is evident.”  

17. From the above observations it  becomes apparent that  

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.   

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  )  .    

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.

20.     After examining the relevant case law it has been held  

as follows:

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“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  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.  

In  Haryana  Urban  Development  Authority  v. Om 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  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 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  the  courts  have  to  be  realistic  albeit  the  ordinary  rule  of  full  back  wages  on

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reinstatement. (Western India Match Co. Ltd. v.   Industrial Tribunal)”

21. Applying the aforesaid ratio of law we have examined the  

factual  situation  in  the  present  case.   The  services  of  the  

respondent  were  admittedly  terminated  on  11.6.87.   The  

Labour 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  perusal  of  the  award  also  shows  that  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 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,  and  placing  reliance  on  the  judgment  in  M/s.

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Hindustan Tin Works Pvt. Ltd. vs. The Employees of M/s.  

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 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:  

“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 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.”

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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  

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.  

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.   

..……….……………………….J (TARUN CHATTERJEE)

      ..……………………………… …J

  (SURINDER SINGH NIJJAR)

NEW DELHI DECEMBER 03, 2009