Supreme Court: Reinstatement With Full Back Wages Is Not Automatic In Every Case Of Illegal Termination / Dismissal

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The Supreme Court reiterated that reinstatement with full back wages is not automatic in every case, where termination / dismissal is found to be not in accordance with procedure prescribed under law.

In this case, an employee appointed as Clerk-cum-Cashier was dismissed from service by the Allahabad Bank alleging his involvement in the incident relating to burning of bank records. The Industrial Tribunal found that though there was a strong suspicion, but there was no sufficient evidence to prove his misconduct to dismiss from service. The Tribunal found that the Bank has lost confidence on the respondent and ordered payment of monetary compensation of Rs.30,000/- in lieu of reinstatement. The High Court, while disposing an appeal against this award passed by the Tribunal, directed the employer to reinstate the workman with all consequential benefits.

During the pendency of appeal before the Apex Court, the employee attained age of superannuation.

“The reinstatement with full back wages is not automatic in every case, where termination / dismissal is found to be not in accordance with procedure prescribed under law. Considering that the respondent was in effective service of the Bank only for about six years and he is out of service since 1991, and in the meantime, respondent had attained age of superannuation, we deem it appropriate that ends of justice would be met by awarding lump sum monetary compensation.“, the bench of Justices R. Subhash Reddy and Sanjiv Khanna observed.

Thus, the bench directed payment of lump sum compensation of Rs.15 lakhs to him within a period of eight weeks.

In a judgment delivered in another case [Ram Manohar Lohia Joint Hospital vs. Munna Prasad Saini], the court set aside the direction for reinstatement and enhanced the compensation by awarding a lump sum amount. In the said case, the bench referred to following observations in Bharat Sanchar Nigam Limited v. Bhurumal (2014) 7 SCC 177:

The ordinary principle of grant of reinstatement with full back wages, when the termination is found to be illegal is not applied mechanically in all cases. While that may be a position where services of a regular/permanent workman are terminated illegally and/or mala fide and/or by way of victimisation, unfair labour practice, etc. However, when it comes to the case of termination of a daily-wage worker and where the termination is found illegal because of a procedural defect, namely, in violation of Section 25-F of the Industrial Disputes Act, this Court is consistent in taking the view that in such cases reinstatement with back wages is not automatic and instead the workman should be given monetary compensation which will meet the ends of justice. Rationale for shifting in this direction is obvious.

The reasons for denying the relief of reinstatement in such cases are obvious. It is trite law that when the termination is found to be illegal because of non-payment of retrenchment compensation and notice pay as mandatorily required under Section 25-F of the Industrial Disputes Act, even after reinstatement, it is always open to the management to terminate the services of that employee by paying him the retrenchment compensation. Since such a workman was working on daily-wage basis and even after he is reinstated, he has no right to seek regularisation [see State of Karnataka v. Umadevi (3)]. Thus when he cannot claim regularisation and he has no right to continue even as a daily-wage worker, no useful purpose is going to be served in reinstating such a workman and he can be given monetary compensation by the Court itself inasmuch as if he is terminated again after reinstatement, he would receive monetary compensation only in the form of retrenchment compensation and notice pay. In such a situation, giving the relief of reinstatement, that too after a long gap, would not serve any purpose.We would, however, like to add a caveat here.

here may be cases where termination of a daily-wage worker is found to be illegal on the ground that it was resorted to as unfair labour practice or in violation of the principle of lastcome-first-go viz. while retrenching such a worker daily wage juniors to him were retained. There may also be a situation that persons junior to him were regularised under some policy but the workman concerned terminated. In such circumstances, the terminated worker should not be denied reinstatement unless there are some other weighty reasons for adopting the course of grant of compensation instead of reinstatement. In such cases, reinstatement should be the rule and only in exceptional cases for the reasons stated to be in writing, such a relief can be denied.

Citation: LL 2021 SC 480

Case name: Allahabad Bank vs Krishan Pal Singh

Case no.| Date: SLP(C) 19648 of 2019 | 20 September 2021

Coram: Justices R. Subhash Reddy and Sanjiv Khanna

Counsel: Adv Rajesh Kumar Gautam for appellant, Adv Rakesh Taneja for respondent

Citation : LL 2021 SC 480A

Case name: Ram Manohar Lohia Joint Hospital vs. Munna Prasad Saini

Case no.| Date: CA 5810 OF 2021 | 20 September 2021

Coram: Justices R. Subhash Reddy and Sanjiv Khanna

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