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CASE NO.: Appeal (civil)  1816 of 2007

PETITIONER: Secretary, Akola Taluka Education Society & Anr

RESPONDENT: Shivaji and Ors

DATE OF JUDGMENT: 05/04/2007

BENCH: S.B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO.    1816                OF 2007 [Arising out of SLP (Civil) No.13907 of 2006]

S.B. SINHA, J :

Leave granted.

The State of Maharashtra enacted ’The Maharashtra Employees of  Private Schools (Conditions of Service) Regulation Act, 1977 (for short, ’the  Act’) to regulate recruitment and conditions of service of employees in  certain private schools.  It came into force with effect from 20.03.1978.   ’Private School’ has been defined in Section 2(20) of the Act to mean :

"Private School", means a recognized school established  or administered by a Management other than the  Government or a local authority."

The terms ’recognized’ and ’school’ have been defined in Section  2(21) and  2(24) respectively in the following terms :

"2(21).-"Recognized" means recognized by the Director,  the Divisional Board or the State Board, or by any officer  authorized by him or by any of such Boards;"

"2(24).- "School", means a primary school, secondary  school, higher secondary school, junior college of  education or any other institution by whatever name  called including technical, vocational or art institution  or part of any such school, college or institution, which  imparts general, technical, vocational, art or, as the case  may be, special education or training in any faculty or  discipline or subject below the degree level;"     

Appellant No.1 herein runs a training institute.  It imparts vocational  training to the students admitted therein in different disciplines e.g.   Draftsman Civil, Electrician, Wireman, Welder and Fitter etc. The strength  of the students in the aforementioned disciplines allegedly began to go down  from year to year.  So much so, no student took admission in the courses of  ’Draftsman Civil’ or ’Welder’.  The relevant portion of the chart showing  details of admissions in the aforementioned disciplines reads as under : " Sr.  No. Academic Year

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  Draftsman Civil       Electrician        Wireman       Welder        Fitter    

Sanctioned  strength Actual admission Sanctioned  strength Actual admission Sanctioned  strength Actual admission Sanction ed  strength Actual admission Sanction ed  strength Actual Admission 14 August 1998 16 08 16 18 16 18 16 18 24 26 15 August 1999 16 09 16 18 16 09 16 18 24 19 16 August 2000 16 07 16 17 16 07 16

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12 24 14 17 August  2001 16 00 16 09 16 06 16 05 24 11 18 August  2002 16 00 16 01 16 05 16 00 24 02

Similarly, in the certificate courses of six months and one year also,  there had been a steady decline, as would appear from the following charts :

"Details of Admission for Certificate Courses of six months

Sr.  No. Academic  Year Electric Motor & Armetcher              Winding Electronic Assembly &              Trouble shooting

Sanctioned Strength  Actual Admission Sanctioned Strength Actual  Admission 1. Jan. 1999       20       13        25        10 2. Jul. 1999       20       16        25   

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      05 3. Jan. 2000       20       05        25        06 4. Jul. 2000       20       15        25        07 5. Jan. 2001       20        08        25         -- 6. Jul. 2001       20       06        25        -- 7. Jan. 2002       20       --        25         -- 8. Jul. 2002       20       --        25        --

Details of Admission for Certificate Courses of one year Sr.  No. Academic  Year Tailoring &  Cutting Lathe Machine  Operator Computer Operation     (Part-time)  

Sanctioned Strength  Actual Admission Sanctioned Strength Actual  Admission Sanctioned Strength Actual  Admission 1.

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Jul. 1998       40       34        25     17     20      -- 2. Jul. 1999       40       24        25        09     20      -- 3. Jul. 2000       40       26        25     05     20      -- 4. Jul. 2001       40        32        25      06     20      -- 5. Jul. 2002       40       --        25     --     20      --                                                                                           "  

Respondent No. 1 herein was appointed on a temporary basis.  The  services of the private respondents were purported to have been temporarily  terminated as allegedly a decision had been taken to close down the institute  with effect from 12.08.2002, contending that the said purported orders of  termination were violative of the Act and the Rules framed thereunder.   

Appeals thereagainst were filed by the aggrieved employees/teachers  before the School Tribunal, Pune Region.  The jurisdiction of the Tribunal to  entertain the said appeals was questioned on the ground that the institute in  question was not a school within the meaning of the provisions of the said  Act.  The Tribunal, however, in its judgment held : (i) As the appellant was  duly recognized by the Central Government permanently without grant-in- aid, it was a school within the meaning of the provisions of the said Act; (ii)  Inter alia, on the premise that the services of all the staff and teachers were  not terminated, the plea of  the appellant that the institute had to be closed  down being incorrect, the orders of termination were mala fide;  

The Tribunal furthermore took note of the fact that during pendency  of the said appeals, some new teachers had been appointed.   

The writ petition preferred by the appellant thereagainst has been  dismissed by reason of the impugned judgment.  

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Mr. Shekhar Naphade, the learned Senior Counsel appearing on  behalf of the appellants, would urge :

(i)     The institute is not covered by the definition of the ’private school’  within the meaning of the provisions of the said Act, as it was not  recognized by the authorities under the said Act.        

(ii)    The Tribunal in its judgment merely proceeded on the basis that the  school, in fact, was not closed down, but having failed to take into  consideration the charts filed before it; from which, it would appear that the  number of students had gone down in different disciplines, and thus, the  impugned judgment cannot be sustained.

(iii)   The Tribunal wrongly allowed full back wages to the teachers without  taking into consideration the financial condition of the appellant.

       Our attention, in this behalf,  has also been drawn to the following  statements made in the Rejoinder to the Counter Affidavit of Respondent  Nos. 1 to 3  before  this Court          :

       "I say that the details of the number of students currently  studying in the Institute and the fees collected from them are as  follows :

Students studying in 2nd  year of ITI 47 x Rs.6,000 (Fees  collected from every  student) Rs.2,82,000/- Students studying in 1st  year of ITI 72 x Rs.8,000/- (Fees  collected from every  student) Rs. 5,76,000/- Students studying in  certificate course 7 x 2,000 (Fees  collected from every  student) Rs.14,000/-

                        Total   Rs.8,72,000/-

       I say that the details regarding the expenses incurred by  the Petitioner on the salary and other miscellaneous expenses  are as follows :

1. Towards salary of  staff at current rate of  consolidated pay Rs. 65,200/- per month x  12 months Rs.7,80,400/- per  annum 2. Expenses for raw  material per student  per year (Rs.2400) Rs.2,400 x 126 (No. of

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students)   Rs.3,02,400/- 3. Misc. Expenses  (Telephone bill,  electricity bill,  stationery, travel  expenses, repairs, etc.

Rs.2,00,000/-

                 Total Rs.12,82,800/-    

       Considering the above mentioned two tables, it becomes  clear that the Petitioner is facing a deficit of Rs.4,10,800/- in  the current academic year.  The Petitioner if is directed to pay  100% back wages to the Respondents employees, it would  create a burden of more than Rs. 40 lacs.  The Petitioner is not  in a position to pay back wages and the said direction would  affect the poor students, who are studying in the Institute and  the efforts of the Management to re-establish the Institute  would be thwarted.  It is respectfully submitted that the institute  is being run by reducing the tuition fees so as to attract the  higher number of students.  As stated earlier the fees charged  from the students have dwindled from Rs.20,000/- per annum in  the year 1998 to Rs.6,000/- to 8,000/- at present."

       It was furthermore submitted that the institute having been set up in a  tribal area, it is unlikely that many  students would take admission in the said  institute in future.

       Mr. Vinayak Dixit, the learned Senior Counsel appearing on behalf of  the respondents, on the other hand, supported the impugned judgment  contending  that the plea taken by the appellant that the school was required  to be closed down was an act of mala fide on the part of the appellants.  The  learned counsel would contend that in terms of Rule 26 of the Maharashtra  Employees of Private Schools (Conditions of Service) Rules, 1981, as the  appellant was bound to give three months’ notice and was furthermore  required to obtain prior approval of the competent authority specified  therein; and as the mandatory conditions for retrenching the services of the  respondents had not been complied with, the orders of termination were void  ab initio.

       It was submitted that the appellant had not paid any salary to the  teachers for the last 23 months, although they had been reinstated in terms of  this Court’s order dated 19.08.2006.    It was also submitted that even after  their reinstatement, they are being paid salary only on a consolidated basis.

       The question as to whether the provisions of the said Act were  applicable in the case of Appellant school although raised a question of  jurisdiction, in our opinion, it was necessary for the appellant to plead the  jurisdictional fact in relation thereto.   

       It is true that in the light of the interpretation clause contained in the  said Act, a ’private school’ was required to be recognized by the authorities  specified therein.  The Tribunal had found that it was recognized by the  Central Government.  The State also in its counter affidavit contended that it  is recognized by the State.  Appellant herein did not raise a contention  before the Tribunal that the institute in question was not recognized by the  authorities specified under sub-section (21) of Section 2 of the Act.  The said  contention was required to be specifically raised so as to enable the

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respondents herein to meet the same.  As the jurisdictional fact required for  determining the jurisdiction of the Tribunal had not been stated by the  appellants, we are of the opinion that such a contention cannot be allowed to  be raised before us for the first time.   

       There cannot be any doubt whatsoever that if the ’institute’ comes  within the description of ’school’ in terms of the provisions of the said Act,  before terminating the services of the respondents, it was obligatory on their  part to satisfy the conditions precedent therefor.

       Rule 26 of the Rules provides that a permanent employee may be  retrenched by the management after giving him three months’ notice on one  or  more grounds specified therein.  Stoppage of imparting coaching in  respect of some courses of studies was one of them.  Admittedly, the  respondents had not been given three months’ notice.  The order of  termination was, therefore,  bad in law.   

       We may, however, state that in view of the provisions contained in  sub-clause (ii) of clause (2) of Rule 26, it was not necessary to obtain prior  approval of the Education Officer, as a technical or a vocational school does  not come within the purview thereof.  There cannot furthermore be any  doubt whatsoever that the contention raised by the appellants before the  Tribunal that the institute was required to be closed down was found to be  factually incorrect and on that ground the decision of the Tribunal to the  effect that the termination of services of the respondents were bad in law  cannot be said to be suffering from any error of law apparent on the face of  the records.   

       The Tribunal, however, in our opinion ought not to have granted full  back wages.  Full back wages, as is well-known, should not be directed to be  granted only because it would be lawful to do so.  Before such an order is  passed, a judicial or a quasi-judicial authority must consider all aspects of  the matter.  Appellant herein has produced facts to show decline in strength  of the students in different disciplines.  The same has not been disputed.  We  have noticed hereinbefore that in some disciplines the strength of the  students has considerably gone down.  The school is an unaided one.  It,  therefore, must meet its financial need from the fees realized from the  students.  It was a relevant consideration.  The Tribunal, in our opinion,  failed to take the said fact into consideration.  The financial condition of the  school, as noticed supra, has also not been denied or disputed.   

       It is now well-settled by a large number of decisions of this Court that  back wages should not granted automatically.  In U.P. State Brassware  Corporation Ltd. and Anr. v. Uday Narain Pandey [(2006) 1 SCC 479], this  Court observed :

"22. 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."

[See also Banshi Dhar v. State of Rajasthan & Another \026 2006 (11) SCALE  199 \026 Para 11]

       In U.P. SRTC  v. Mutthu Singh [(2006) 7 SCC 180], this Court  opined : "\005But 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

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

[See also A.P. SRTC and Another v. B.S. David Paul  - (2006) 2 SCC 282]

       We, therefore, are of the opinion that in the peculiar facts and  circumstances of this case,  interest of justice shall be met if grant of back  wages is confined to 25% only from the date of termination of the  respondents  till their reinstatement.  It is, however, made clear that the  respondents shall be entitled to receive entire salary for the period they had  worked prior to their termination as also post reinstatement.   

       The appeal is allowed to the aforementioned extent with the  aforementioned directions.  However, in the facts and circumstances of the  case, there shall be no order as to costs.