Letters Patent Appeal No.403 v. Presiding Officer, Labour Court, Ambala & Ors.

Judgment

1. This appeal has been preferred by the workman against the order of learned Single Judge dated 15.11.2010 holding the workman to be entitled to reinstatement but without back wages.

2. The workman was employed as Salesman in the Haryana State Federation of Consumers Co-operative Wholesale Stores Ltd. respondent no.2 on 10.4.1981. A criminal case was registered against him for misappropriation in April, 1985. He was discharged from duties on

20.5.1986. He was acquitted on 6.6.1995. In 1996, he challenged the order of discharge from service by raising an industrial dispute which was referred for adjudication to the Labour Court. The Labour Court held that the workman was not entitled to any relief as he raised the industrial dispute after ten years of accrual of cause of action. Reliance was placed on judgment of Hon'ble Supreme Court in Nedungadi Bank Ltd. Vs. Letters Patent Appeal No.403 of 2011 -2- **** K.P.Madhavankutty 2000(1) S.C.T.1088. The workman challenged the said order before this Court and the learned Single Judge held that having regard to the fact that workman was acquitted only on 6.6.1995, the delay should be taken to be explained. He was held entitled to reinstatement but without back wages.

4. We have heard learned counsel for the appellant. Learned counsel for the appellant submits that workman should have been awarded back wages in view of the following judgments:- i) State of Haryana Vs. Ram Kumar and another 2004 (4) S.C.T. 474 wherein it was held that back wages should be granted only from the date of raising of demand and not from the date of termination in a case where there is delay in raising the dispute. ii) The Pepsu Road Transport Corpn., Patiala Vs. The Presiding Officer, Labour Court, Patiala and another 2004(4) S.C.T. 77 wherein it was held that the burden of proof is upon the management to plead and prove gainful employment of the workman. Iii) Tarsem Singh Vs. Presiding Officer, Labour Court, Amritsar and another 2009(1) SCT 489 wherein having regard to the facts and circumstances of the case, lump- sum payment of Rs.3 lacs was awarded in lieu of reinstatement and back wages.

5. Since we are only dealing with the appeal of the workman, we are not going into question of the correctness or otherwise of the view taken on the issue of justification for the delay in raising the dispute. We are only dealing with the question whether in the facts and circumstances of the case, learned Single Judge was justified in declining the back wages. Letters Patent Appeal No.403 of 2011 -3- ****

6. We are of the view that no interference is called for with the view taken by the learned Single Judge on the issue of denial of back wages. Undoubtedly, cause of action to the workman arose when alleged termination/discharge took place. Even if it is to be presumed that there is valid explanation for the delay in raising the dispute, it has now been settled that back wages do not automatically follow reinstatement, it is a matter of discretion and it is for the workman to lead evidence on the issue that workman was not gainfully employed. Reviewing the case law on the subject, it was observed in J.K.Synthetic Ltd. Vs. K.P.Aggarwal 2007(2) SCC 433. “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. v. Udai Narain Pandey, 2006(1) SCT 77 (SC) : [2006(1) SCC 479], this Court following Allahabad Jal Sansthan v. Daya Shankar Rai, 2005(2) SCT 699 (SC) : [2005(5) SCC 124], and Kendriya Vidyalaya Sangathan v. S.C. Sharma, 2005(1) SCT 569 (SC) : [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." "........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, Letters Patent Appeal No.403 of 2011 -4- **** 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........... 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.......... 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 v. Rudhan Singh, 2005(3) SCT 559 (SC) : [2005(5) SCC 591], this Court observed : Letters Patent Appeal No.403 of 2011 -5- **** "8. 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 Letters Patent Appeal No.403 of 2011 -6- **** 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 held : "......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 Letters Patent Appeal No.403 of 2011 -7- **** '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(4) SCT 785 (SC) : [2003(2) SCC 212], A.P.S.R.T.C. v. Abdul Kareem, 2007(1) R.A.J. 493 (SC) : [2005(6) SCC 36] and R.S.R.T.C. v. Shyam Bihari Lal Gupta, 2005(4) RCR(Civil) 217 : 2005(4) SCT 207 (SC) : [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 Letters Patent Appeal No.403 of 2011 -8- **** 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.”

7. Judgments relied upon on behalf of workman are in the facts and circumstances of the case and without consideration of principles of law laid down in J.K.Synthetic Ltd.

8. In this view of the matter, no ground to interfere with the impugned order is made out.

9. The appeal is dismissed. (Adarsh Kumar Goel) Acting Chief Justice May 04, 2011 Pka (Ajay Kumar Mittal) Judge