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REPORTABLE   

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5167  OF 2009 (Arising out of SLP© No. 17185/2008)

Metropolitan Transport Corporation                      …Appellant

Versus

V.Venkatesan …Respondent

JUDGEMENT

R.M. Lodha, J.

Leave granted.

2. The question that falls  for determination in this appeal by  

special  leave is:  is  the respondent  entitled to claim full  back  

wages  for  the  period  from December  12,  1996  the  date  on  

which  he  was  removed  from  service  till  the  date  of  his  

reinstatement on June 15, 2004 although he was enrolled as an  

advocate  on  December  12,  2000  and  thereby  gainfully  

employed?

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3. Facts  are  these,  briefly  put.  V.  Venkatesan,  

respondent,  was initially  employed  as   conductor  on May 7,  

1980  by  Pallavan  Transport  Corporation.   On  formation  of  

Metropolitan  Transport  Corporation  (for  short,  “Corporation”),  

the  appellant,  became  its  employee.    The  respondent  was  

promoted as Junior Assistant and subsequently as an Assistant  

by the Corporation. The  respondent seems to have acquired  

Law degree and he was selected for the post of Superintendent  

(Legal)  as  trainee.   But  during   the  training  period  his  

performance was not found satisfactory and he was reverted  

back to the post  of  Assistant.     On January 31,  1995,   the  

respondent was transferred to Poonamallee Depot but  he did  

not join his duties there and  remained absent for about three  

months without any prior sanction of leave or intimation.  The  

case of the Corporation is that on March 28, 1995,  a memo of  

charge  was  issued  to  the  respondent  to  which  he  filed  his  

written response but as his reply was not found satisfactory and  

a domestic inquiry was instituted to inquire into his misconduct.  

The  respondent  did  not  attend  the  domestic  inquiry  despite  

repeated  letters  and  notices  including  a  notice  published  in

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local newspaper.  Ultimately,  by an order dated December 12,  

1986,  the  Corporation  removed   the  respondent  from  its  

service.

4. The  respondent  filed  a  complaint  before  the  

Industrial  Tribunal,   Chennai  under  Section  33(2)(b)  of  the  

Industrial  Disputes Act, 1947 (for short,  “ID Act”) alleging the  

contravention of the provisions of Section 33A of the ID Act in  

removing him from service although the Industrial Dispute No.  

62/82   concerning  the  entire  transport  workers  was  pending  

before the Industrial Tribunal,  Chennai.   The complaint was  

opposed by the  Corporation on diverse pleas.    The Industrial  

Tribunal  by its  order   dated July  11,  2003 held the order  of  

removal void and inoperative as the Corporation did not apply  

for  approval.   The  Industrial  Tribunal  also  declared  that  the  

complainant  is  deemed to  have continued in  service  and he  

was  entitled  to  all  benefits  available.   The  Corporation  

challenged  the  order  dated  July  11,  2003  passed  by  the  

Industrial Tribunal before the High Court.   By an interim order,  

initially,  the High Court granted stay of the order dated July 11,

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2003  subject  to  the  Corporation  depositing  the   entire  

backwages as awarded by Industrial Tribunal and compliance  

of  the  provisions  of  Section  17B  of  the  ID  Act.     The  

Corporation  instead  of  paying  last  drawn  wages  to  the  

respondent,  reinstated him on June 15, 2004 without prejudice  

to the pending writ  petition. The said writ petition came to be  

dismissed on August  30, 2006 and,  thus,  the order dated July  

11, 2003 passed by the Industrial Tribunal attained finality.

5. Since the backwages for the period from December  

12, 1996 until June 15, 2004 was not paid by the Corporation,  

the respondent approached the concerned Labour Court under  

Section 33C(2)  of the ID Act  claiming a sum of Rs. 8,08,698/-  

as  the  sum  due  and  payable  by  the  Corporation.   The  

Corporation  contested  the  application  under  Section  33C(2).  

After hearing the parties, the Labour Court allowed the claim of  

the respondent to the extent  of Rs. 6,54,766/- towards full back  

wages  vide  its  order  dated  December  22,  2006.   The  

Corporation challenged the said order by filing a writ  petition  

before the Madras High Court; the principal ground being that  

having been enrolled as an advocate on  December 12, 2000,  

the respondent was gainfully employed and not entitled to back

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wages.    The respondent also filed a writ petition before the  

High Court seeking enforcement of the order dated December  

22, 2006.    The Corporation failed  in its writ petition while in  

the  writ  petition  filed  by  the  respondent,   the  learned  single  

Judge directed  the Labour Department to take necessary steps  

in  recovering  the  due  sum  from  the  Corporation.  The  

Corporation  challenged the  order of the learned single Judge  

whereby its writ petition came to be dismissed, by filing a writ  

appeal which came to be dismissed on June 24, 2008 giving  

rise to the present appeal by special leave.

6. In the  backdrop  of the aforenoticed  facts, we now  

examine the question set out above.   

7. In  U.P.  State  Brassware  Corporation  vs.  Uday  

Narain  Pandey1,  this  Court  on  consideration  of  a  question  

whether  the   direction  to  pay back  wages consequent  upon  

declaration that a workman has been retrenched in violation of  

the provisions of Section 6N of the U.P. Industrial Disputes Act,  

1947  (equivalent to Section 25F of the ID Act, 1947)  as a rule  

was proper exercise made the following observations:

1 (2006)1 SCC 479

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“41. The Industrial  Courts  while  adjudicating  on  disputes between the management and the workmen,  therefore, must take such decisions which would be in  consonance  with  the  purpose  the  law  seeks  to  achieve. When justice is the buzzword in the matter of  adjudication  under  the  Industrial  Disputes  Act,  it  would be wholly improper on the part of the superior  courts  to  make  them  apply  the  cold  letter  of  the  statutes  to  act  mechanically.  Rendition  of  justice  would bring within its purview giving a person what is  due to him and not what can be given to him in law.

42. 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.

43. 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, globalisation,  privatisation and outsourcing, is evident.

44.  ……

45. The Court,  therefore,  emphasised  that  while  granting relief, application of mind on the part of the  Industrial  Court  is  imperative.  Payment  of  full  back  wages,  therefore,  cannot  be  the  natural  consequence.”

8. In the case of  J.K. Synthetics Ltd.  Vs. K.P. Agrawal  

and  Another2,   while   dealing  with  the  question  whether  an  

employee is entitled to back wages  from the date of  termination  

to the date of reinstatement when the  punishment of dismissal is  

substituted by a lesser  punishment  (stoppage of  increments  for  

two years), this Court held:

“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.  

2 (2007) 2 SCC 433

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We may refer to the latest of a series of decisions on  this question. In  U.P. State Brassware Corpn. Ltd. v.  Uday Narain Pandey   (2006)1 SCC 479,  this Court  following  Allahabad  Jal  Sansthan v.  Daya  Shankar  Rai  (2005)  5  SCC  124 and  Kendriya  Vidyalaya  Sangathan v. S.C. Sharma (2005) 2 SCC 363 held as  follows: (Uday Narain Pandey case, SCC p. 480d-g)

“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.

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  realising  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. The  changes 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, globalisation,  privatisation 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. While granting relief, application of mind  on  the  part  of  the  Industrial  Court  is  imperative.  Payment  of  full  back  wages  cannot  be  the  natural  consequence.”

In G.M., Haryana Roadways v. Rudhan Singh (2005)  5 SCC 591  this Court observed: (SCC p.596, para 8)

“8.  There is no rule of thumb that in every case  where the Industrial Tribunal gives a finding that the  termination of service was in violation of Section 25-F

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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 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.”

In  U.P.  State  Brassware  Corpn.  Ltd. this  Court  observed: (SCC p. 495, para 61)

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“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  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 visualised 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. SRTC v. S. Narsagoud  (2003)  2  SCC  212,  A.P.  SRTC v.  Abdul  Kareem  (2005)  6  SCC  36 and  Rajasthan  SRTC 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  and  Uday Narain Pandey. 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

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search for or secure alternative employment. Be that  as it may.”

9. In  J.K.  Synthetics  Ltd.2, the  Court  extensively  

considered U.P. State Brassware Corporation1  and G.M. Haryana  

Roadways vs.  Rudhan Singh3.   Pertinently,  it has been held that  

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  

several other factors.   

10. The learned Senior Counsel for the respondent although did  

not  dispute that the  respondent was enrolled  as an advocate on  

December 12, 2000 and continued to be so until  the date of his  

reinstatement   but  he  submitted  that  the  respondent  had  no  

earnings from the  profession and, therefore, no amount should be  

deducted from the back wages.     In this regard he relied on a  

decision  of  this  court  in  the  case  of    S.M.  Saiyad  vs.Baroda  

Municipal corporation, Baroda4 wherein  this Court observed:

 “6. Appellant enrolled himself as an advocate after  

taking requisite  educational  qualification  on January  20, 1972. It was pointed out to us that the appellant  admitted that he was earning Rs 150 p.m. since he  started his legal practice. It was therefore, urged that  

3 (2005) 5 SCC 591 4  1984 (Supp) SCC 378

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no back wages for  the  period  January  20,  1972 to  October  26,  1976  should  be  awarded.  We are  not  impressed.  Undoubtedly  the  respondent  will  be  entitled to deduct the amount which the appellant was  admittedly earning from the back wages payable to  him. The question is from what date deduction at the  rate of Rs 150 p.m. should be permitted.

7. Appellant contended and in our opinion rightly  that deduction at the rate of Rs 150 p.m. should not  commence from the very day he was enrolled as an  advocate  because it  is  common knowledge that  no  one  earns  from  the  first  day  and  therefore  a  reasonable period must  be set  apart  from finding a  footing  in  the  profession.  The  contention  deserves  consideration. The appellant himself has been rather  loose in his statement. It would be reasonable to hold  that he must have at least started earning at the rate  of Rs 150 p.m. as stated by him after the lapse of one  year from the date he was enrolled as an advocate.”

11. First,  it  may  be  noticed  that  in  seventees  and  

eighties,  direction for  reinstatement  and payment  of  full  back  

wages  on  dismissal  order  having  been  found   invalid  would  

ordinarily  follow as a matter of course.  But there is change in  

legal approach now. We recently observed  in  Jagbir Singh vs.  

Haryana  state  Agriculture  Marketing  Board  &  Anr.5  that  in  

recent past there has been  a shift in the legal position and in a  

long line of cases, this Court has consistently taken the view  

that the relief of reinstatement with back-wages is not automatic  

and may be wholly inappropriate in a given fact situation even  

5 JT 2009 (9) SC 396

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though  the  termination  of  an  employee  is  held  to  be   in  

contravention  to the prescribed procedure.

12. Secondly, and more importantly, in view of  the fact that  

respondent was enrolled as an advocate on December 12, 2000  

and continued to be  so until the date of his reinstatement (June 15,  

2004),  in  our  thoughtful  consideration,  he  cannot  be  held  to  be  

entitled  to  full  back  wages.  That  the  income  received  by  the  

respondent while  pursuing legal profession has to be treated as  

income from gainful employment does not admit of any doubt.   In  

the case of  North East Karnataka Road Transport Corporation vs.   

M. Nagangouda6,  this Court held, that “gainful employment” would  

also include self-employment. We respectfully agree.  

13. It  is  difficult  to accept the  submission of the learned  

senior  counsel   for  the  respondent  that  he  had  no  professional  

earnings as an advocate and except conducting his own case, the  

respondent  did not appear  in any other case.    The fact that he  

resigned  from  service  after  2-3  years  of  reinstatement  and  re-

engaged himself in legal profession leads us to assume that he had  

some practice in law after he took sanad  on December 12, 2000  

until  June 15, 2004,  otherwise he would not have resigned from  6 (2007) 10 SCC 765

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the settled job and resumed profession of glorious uncertainties.  In  

this view of the matter,  reasonable deduction needs to be made  

while  determining the  back wages to which respondent may be  

entitled. Taking overall facts and circumstances of the case and all  

other  aspects  including  the  aspect  that  he  was  enrolled  as  an  

advocate  from  December  12,  2000  to  June  15,  2004,  in  our  

considered view, demand of justice would be met if the respondent  

is awarded back wages in the sum of Rs.  4 lacs instead of Rs.  

6,54,766/-.  We order accordingly.

14. The  appeal  is,   therefore,  allowed  to  the  aforesaid  

extent.  The impugned judgments of the division bench as well as  

the learned single Judge stand  modified accordingly.  Time of eight  

weeks is granted to the Corporation to make payment of Rs. 4 lacs  

to  the  respondent,  if  not  paid  so  far,  failing  which  it  shall  carry  

simple interest @ 6 per cent per annum from June 15, 2004 until  

the date of payment.  The parties will bear their own costs.

 ……………………J         (Tarun Chatterjee)

                                                                         …………………..J

                               (R. M. Lodha)

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New Delhi August  7, 2009.