REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  5951    OF 2008 [Arising out of SLP (Civil) No. 336 of 2005]

Talwara Coop. Credit & Service Society Ltd. …Appellant

Versus

Sushil Kumar …Respondent

J U D G M E N T  

S.B. SINHA, J :

1. Leave granted.

2. This  appeal  is  directed  against  a  judgment  and  order  dated

17.08.2004 passed by the Punjab and Haryana High Court in C.W.P. No.

9147  of  2002  whereby  and  whereunder  the  writ  petition  filed  by  the

appellant questioning the validity of an award dated 14.03.2002 directing

it  to  reinstate  the  respondent  –  workman  with  full  back  wages  was

dismissed.

3. Appellant is a cooperative society.  It appointed the respondent on

1.07.1987 on the post of clerk.  His services were terminated in the year

1990.  Questioning the said order of  termination,  an industrial  dispute

was raised.  An award was made on 3.11.1995 directing the appellant to

reinstate the respondent – workman.  Appellant – Society, however, had

been suffering losses.  Till  1996,  it  suffered a loss of Rs. 18.95 lakhs.

The  Board  of  Directors  held  a  meeting  on  21.02.1997  wherein  a

resolution  was  passed  to  the  effect  that  the  services  of  some  of  the

employees should be dispensed with.  Pursuant thereto or in furtherance

thereof,  the  services  of  the  respondent  amongst  others  were  dispensed

with on payment of one month’s salary.   

Yet  again,  an industrial  dispute  was raised.   By an award dated

14.03.2002, the Industrial Tribunal – cum – Labour Court directed:

“21. Sequal  to  the  findings  on  above  issues, this  reference  is  hereby  answered  accordingly against the respondents Society and in favour of the workman, to  the  effect  that  termination of services of Sushil Kumar was neither in order, nor  justified.   He  is  entitled  to  reinstatement with full back wages, with continuity and with all other consequential service benefits.”

4. A writ petition preferred thereagainst has been dismissed by reason

of the impugned judgment.

5. Mr. Dinesh Kumar Garg, learned counsel appearing on behalf of

the appellant, at the outset drew our attention to an interim order passed

by the High Court on 22.10.2002 which is to the following effect:

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“In the meantime, execution of the award shall remain  stayed  subject  to  the  provisions  of Section 17-B of the Industrial Disputes Act.”

6. The  learned  counsel  pointed  out  that  the  said  order  has  been

complied  with.   The  contention  of  the  learned  counsel  is  that  having

regard to the financial position of the cooperative society which was on

the  verge  of  closure  and  furthermore  in  view  of  the  fact  that  the

respondent – workman was in the services of the cooperative society only

for  the  period  1987-1990  and  again  from  1995-1997,  award  of

reinstatement with full back wages should not have been passed.

It was contended that even if there was a technical violation of the

provisions  of  Section 25F of the Industrial  Disputes Act,  1947,  as has

been held by the High Court,  the Industrial  Tribunal  as  also the High

Court ought not to have directed reinstatement of the respondent with full

back wages.

8. Ms. Shikha Roy Pabbi, learned counsel appearing on behalf of the

respondent, on the other hand, submitted that the cooperative society has

merged with apex body and the latter has earned a huge profit and in that

view  of  the  matter  this  Court  may  not  exercise  its  discretionary

jurisdiction.  It was submitted that even after the termination of services

of the respondent – workman, some other workmen had been appointed

who were in fact junior to him.   

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9. The fact that the respondent was employed for a very short time is

not in dispute.  He admittedly was appointed in 1987 and was in service

till 1990.  Only on or about 3.11.1995, the award directing reinstatement

was passed.  The said award has been implemented.   

10. Neither the learned Industrial Court nor the High Court arrived at a

finding that the resolution passed on 21.02.1997, wherein a total loss of

Rs. 18.95 lakhs was shown to have suffered by the cooperative society,

was incorrect.  It is furthermore not in dispute that rightly or wrongly a

decision was taken to terminate the services of some of the employees,

pursuant  whereto  only  the  services  of  the  respondent  had  been

terminated.   The  fact  that  the appellant  society was  financially  in  bad

shape is also not in dispute.   

11. Grant of a relief of reinstatement, it is trite, is not automatic.  Grant

of  back  wages  is  also  not  automatic.   The  Industrial  Courts  while

exercising their power under Section 11A of the Industrial Disputes Act,

1947 are required to strike a balance in a situation of this nature.  For the

said purpose, certain relevant factors, as for example, nature of service,

the mode and manner of recruitment, viz., whether the appointment had

been made in accordance with the statutory rules so far as a public sector

undertaking is concerned etc., should be taken into consideration.

For the purpose of grant of back wages; one of the relevant factors

would  indisputably  be  as  to  whether  the  workman  had  been  able  to

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discharge  his  burden  that  he  had  not  been  gainfully  employed  after

termination of his service.   

Some of the other relevant factors in this behalf have been noticed

by this Court in  G.M. Haryana Roadways  v.  Rudhan Singh, [(2005) 5

SCC 591], stating:

“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 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

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short  or  intermittent  daily-wage  employment though  it  may be  for  240  days  in  a  calendar year.”

[See  also  Correspondent,  St.  Michael’s  T.T.I. v.  V.N.  Karpaga

Mary and Ors. 2008 (6) SCALE 621]

In U.P.S.R.T.C. Ltd. v. Sarada Prasad Misra and another, [(2006) 4

SCC 733], this Court held :

“16. From the above cases,  it  is  clear  that  no precise  formula  can  be  adopted  nor  “cast-iron rule” can be laid down as to when payment of full back wages should be allowed by the court or  tribunal.  It  depends  upon  the  facts  and circumstances of each case. The approach of the court/tribunal should not be rigid or mechanical but flexible and realistic. The court or tribunal dealing  with  cases  of  industrial  disputes  may find force in the contention of the employee as to  illegal  termination  of  his  services  and  may come to the conclusion that the action has been taken otherwise than in accordance with law. In such  cases  obviously,  the  workman  would  be entitled  to  reinstatement  but  the  question regarding  payment  of  back  wages  would  be independent  of  the  first  question  as  to entitlement  of  reinstatement  in  service.  While considering  and  determining  the  second question,  the  court  or  tribunal  would  consider all relevant circumstances referred to above and keeping in view the principles of justice, equity and  good  conscience,  should  pass  an appropriate order.”

In Municipal Council, Sujanpur v. Surinder Kumar [(2006) 5 SCC

173], this Court observed:

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“Apart  from the aforementioned error of law,  in  our  considered  opinion,  the  Labour Court  and  consequently  the  High  Court completely  misdirected  themselves  insofar  as they failed to take into consideration that relief to be granted in terms of Section 11A of the said Act  being  discretionary  in  nature,  a  Labour Court was required to consider the facts of each case  therefor.  Only  because  relief  by  way  of reinstatement  with  full  back  wages  would  be lawful, it would not mean that the same would be granted automatically.   

For  the  said  purpose,  the  nature  of  the appointment,  the  purpose  for  which  such appointment had been made, the duration/tenure of  work,  the  question  whether  the  post  was  a sanctioned  one,  being  relevant  facts,  must  be taken into consideration.”   

12. In the instant case, the Industrial Court failed and/ or neglected to

take the aforementioned factors into consideration.  The High Court also

fell into the same error.  In fact the Industrial Court has placed the burden

of proof on the management to show that the workman was not gainfully

employed after his termination of service.   

13. This Court in a large number of cases noticed the paradigm shift in

the matter of burden of proof as regards gainful employment on the part

of the employer holding that having regard to the provisions contained in

Section  106  of  the  Indian  Evidence  Act,  the  burden  would  be  on  the

workman.  The burden, however, is a negative one.   

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If only the same is discharged by the workman, the onus of proof

would shift on to the employer to show that the concerned employee was

in fact gainfully employed.

In Surinder Kumar (supra), this Court held:

“The  Labour  Court  and  the  High  Court also proceeded wrongly on the premise that the burden of proof to establish non-completion of 240  days  of  work  within  a  period  of  twelve months  preceding  the  termination,  was  on  the management.  The burden was on the workman. [See  U.P. State Brassware Corporation  & Ors. v.  Udit  Narain  Pandey,  JT  2005  (10)  SC 344 and State of M.P. v.  Arjan Lal Rajak, (2006) 2 SCC 610].   

Equally well  settled is  the principle that the  burden  of  proof,  having  regard  to  the principles  analogus  to  Section  106  of  the Evidence  Act  that  he  was  not  gainfully employed, was on the workman.  [See Manager, Reserve Bank of India, Bangalore v. S. Mani & Ors., (2005) 5 SCC 100]  

It  is  also  a  trite  law  that  only  because some documents have not been produced by the management, an adverse inference would not be drawn against  the management.   [See  S. Mani (supra)]”  

14. When the question arises as to how and in what manner balance

should be struck, it is necessary for the Industrial Courts also to consider

as to whether the industry has been sick or not.  If it  is found that the

industry is not in a position to bear the financial burden, an appropriate

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award,  as  a  result  whereof  the  equities  between  the  parties  can  be

adjusted, should be passed.   

15. We have noticed hereinbefore that  the respondent was employed

for a short period and that too in two different spells, viz., from 1987 to

1990  and  from  1995  to  1997.   Having  regard  to  the  fact  that  the

respondent has not worked for a long period and the appellant does not

have any capacity to pay as it is a sick unit, interest of justice would be

subserved if  in  stead and place of an award of reinstatement  with  full

back wages,  a  compensation  for  a  sum of Rs.  2,00,000/-  (Rupees  two

lakhs only) is directed to be paid.  The said sum would be over and above

the amount which the appellant has deposited in terms of the order of the

High Court under Section 17-B of the Industrial Disputes Act.

16. The  appeal  is  allowed  with  the  aforementioned  directions.   No

costs.

………………………….J. [S.B. Sinha]

..…………………………J. [Cyriac Joseph]

New Delhi; October 01, 2008  

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