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Judgment
S.J. Mukhopadhaya, J.—The present Writ Appeal has been preferred by the workmen of the first respondent/co-operative Bank as against
the order of the learned single Judge, dated 24.03.1998, passed in Writ Petition No. 5669 of 1989. By the said order, the learned Judge though
upheld the award passed by the Labour Court to the extent that the workmen are entitled to be reinstated with continuity of service, however, set
aside part of the award whereby the Labour Court directed the Bank to pay full backwages to the workmen.
The only question required to be determined in this Writ Appeal is as to whether the workmen/appellants are entitled for backwages.
As could be seen, pursuant to the reference made u/s 10(1)(c) of the Industrial Disputes Act, 1947, as per G.O. Ms. No. 3011, Labour
Department, dated 12th November, 1983, the Labour Court, Coimbatore, by Award dated 30th December, 1988, in I.D. No. 262 of 1983,
answered the issues in favour of the workmen. The domestic enquiry conducted was held to be illegal. Consequently, the order of dismissal was
set aside and it was held that the workmen are entitled to be reinstated in service with continuity of service, full backwages and other benefits. As
stated earlier, the learned Judge, while upholding the award of the Labour Court insofar as it relates to reinstatement, set aside part thereof,
whereby, the Bank was directed to pay backwages to the workmen. It is pertinent to quote below the observation made by the learned single
Judge,
Now I agree with the finding of the Presiding Officer, Labour Court, Coimbatore, in I.D. No. 262 of 1983 and I am of the clear view that the
order passed by the said officer is perfectly valid under law. The Presiding Officer, Labour Court, Coimbatore, directed the Management-
Petitioner to reinstate the respondents 2 to 4 with continuity of service full backwages and other benefits. Having gone through the entire contents
of the order passed by the Presiding Officer, Labour Court, I have to examine as to whether the rule of law laid down by the apex Court with
regard to payment of backwages as incorporated or not. The rule of law to get backwages is that the respondents 2 to 4 should not be gainfully
employed elsewhere during the period in question, that is from the date of dismissal till the date of reinstatement. On that aspect, there is no
material, before the Presiding Officer, Labour Court, Coimbatore, to the extent that the respondents 2 to 4 are gainfully employed elsewhere. It is
not the case of the respondents 2 to 4 that they are not gainfully employed elsewhere and that is not made out. When that is not made out and
invoking Article 226 of the Constitution of India with regard to the principles of backwages, I am of the clear view that the respondents 2 to 4 are
not entitled to get any backwages, but at the same time, they are entitled to get continuity of service.
Learned Counsel appearing on behalf of the appellants/workmen referred to the claim statement that was made before the Labour Court,
Coimbatore. The following averment in the claim statement is relevant to be noted here,
45...The petitioners are without employment from 29.09.1980 onwards and they have got large family and the petitioners are the only bread
winners in their family, and the petitioners have put into large years of continuous unblemished service.
It is seen that the Management, in the counter filed before the Labour Court, has not disputed the aforesaid stand taken by the workmen. Even
before the learned single Judge, in the counter filed, the workmen took similar plea, which reads as follows:
It is submitted that the respondents are without employment right from the date of suspension i.e. 19.9.1980. Even in spite of the Labour Court
award, the respondents are not reinstated. The backwages for the 2nd respondents comes to approximately Rs. 2,15,000/- from 29.9.1980 to
31.8.1989. The backwages for the 3rd Respondent comes to approximately Rs. 1,70,000/- from 29.9.80 to 31.8.89 and the backwages for the
4th respondent comes to approximately Rs. 1,23,000/- from 29.9.80 to 31.8.89.
The aforesaid specific statement/claim of the workmen was not denied by the Management by filing a rejoinder to the counter affidavit. From the
impugned judgment, we find that the learned single Judge failed to take note of the abovesaid specific statement made on behalf of the workmen
and therefore, the finding of the learned Judge that,
It is not the case of the respondents 2 to 4 that they are not gainfully employed elsewhere and that is not made out is an error on record.
Now, a question arises as to whether on reinstatement, the workmen would be entitled for full backwages for the period they were out of
service.
A. In Kendriya Vidyalaya Sangathan''s case 2005 (1) LLN 1047 the Supreme Court, in paragraph No. 16 at page 1050, ruled thus:
...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.
B. So far as payment of full backwages is concerned, in the case of U.P.S. Brassware Corporation Ltd. v. U.N. Pandey 2006 (1) L.L.N. 125 the
Supreme Court concluded that it is not automatic and 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.
C. With reference to backwages and gainful employment during termination, in a recent decision reported in 2007 (1) SCC 960 J.K. Synthetics
Limited v. K.P. Agarwal and Anr., the Supreme Court, after referring to U.N. Pandey''s case (referred supra) has held as follows:
Coming to back-wages, even if the court finds it necessary to award backwages, 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 General Manager, Haryana Roadways Vs. Rudhan Singh, 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
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.
19...Therefore, where reinstatement is a consequence of imposition of a lesser punishment, neither back-wages nor continuity of service nor
consequential benefits, follow as a natural or necessary consequence of such reinstatement. In cases where the misconduct is held to be proved,
and reinstatement is itself a consequential benefit arising from imposition of a lesser punishment, award of back wages for the period when the
employee has not worked, may amount to rewarding delinquent employee and punishing the employer for taking action for the misconduct
committed by the employee. That should be avoided. Similarly, in such cases, even where continuity of service is directed, it should only be for
purposes of pensionary/retirement benefits, and not for other benefits like increments, promotions etc.
But there are two exceptions. The first is where the court sets aside the termination as a consequence of employee being exonerated or being
found not guilty of the misconduct. Second is where the court reaches a conclusion that the inquiry was held in respect of a frivolous issue or petty
misconduct, as a camouflage to get rid of the employee or victimize him, and the disproportionately excessive punishment is a result of such scheme
or intention. In such cases, the principles relating to backwages etc. will be the same as those applied in the cases of an illegal termination.
So far as the domestic enquiry is concerned, on appreciation of evidence, the following observation was made by the Labour Court while
answering point No. 2, framed for consideration,
Point No. 2: The respondent-management has not sought for permission to adduce evidence in this Court to prove the charges against the
petitioners in case the Court holds that the domestic enquiry conducted by it is vitiated. Once the domestic enquiry is held to be vitiated, the
evidence recorded in the domestic enquiry cannot be considered at all. Thus there is no evidence to prove the charges levelled against the
petitioners. Hence, they are not liable for any punishment. Hence, the punishment of dismissal imposed on them has to be set aside. I, therefore,
find under point No. 2 that the punishment awarded to the petitioners is illegal and unjustified and it is liable to be set aside.
This apart, in the present case, the workmen have specifically pleaded that they were not in employment and admittedly, the Management had not
disputed the fact that they are entitled for the backwages. Further, if it would have been the case of the Management that the workmen were in
gainful employment, they could have very well refuted the claim of the workmen by placing appropriate evidence that the workmen were in gainful
employment during the intervening period. Considering the aspect that the matter remained pending adjudication before Labour court for which the
management cannot be faulted with, we are of the view that instead of 100%, the Bank should pay 75% of the backwages to the workmen. We
accordingly set aside part of the judgment dated 24.03.1998, passed by the learned single Judge, whereby, backwages was denied to the
workmen. The award dated 30.12.1988, passed by the Labour Court, Coimbatore, insofar as it relates to backwages is concerned, stands
modified to the extent that the the Management/Bank shall pay 75% of the backwages. The same shall be paid within a period of eight weeks from
the date of receipt of copy of this order, failing which, the Management shall pay interest thereon at the rate of 8% p.a. from the date of the
Award.
Writ Appeal is allowed with the above observations. There will be no order as to costs.