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Ram Ashrey Singh And Another v. Ram Bux Singh And Others
Factual and Procedural Background
Respondent 1 was appointed as a Laboratory Assistant (Class IV) on 1 February 1973. A show-cause notice dated 8 November 1977 levelled eight charges against him, and his services were terminated on 11 February 1978 after the Principal found the charges proved. An internal appeal to the Committee of Management failed.
After approximately six years, the employee invoked Regulation 21 of Chapter III under the U.P. Intermediate Education Act, 1921; the District Inspector of Schools rejected his representation. He then filed Civil Misc. Writ Petition No. 13159 of 1984 in the Allahabad High Court. On 18 September 1991 the High Court, noting a perceived lack of aptitude and possible disruption to the institution, ordered a lump-sum payment of ₹30,000 in lieu of reinstatement, to be paid within three months.
The employee’s review petition was dismissed on 3 February 1993, but interest at 12 % “per month” was added; this was later corrected on 15 May 1996 to 12 % per annum. Confusion between the State authorities and the institution over liability for payment led to further High Court directions and a contempt petition. The employee superannuated on 26 January 1995. Payments were eventually made in stages: ₹30,000 plus ₹2,450 interest on 20 September 1995, and ₹9,870 balance interest on 3 June 1996.
The employee’s special leave petition (SLP (C) No. 24287 of 1996) to the Supreme Court, limited to enhancement of compensation, was dismissed because his special appeal was still pending before the High Court. The Division Bench of the High Court thereafter allowed the special appeal and directed reinstatement.
In the present proceedings the Supreme Court, by order dated 26 September 2000, granted leave limited to the question of back wages. An interim order directed an additional ₹35,000 payment and release of arrears of pension and retiral benefits. All retiral dues have since been worked out; only back-wage liability remained for determination.
Legal Issues Presented
- Whether, and to what extent, the employee was entitled to back wages for the period from 4 January 1978 to 31 January 1995 following his reinstatement order.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Hindustan Tin Works (P) Ltd. v. Employees, (1979) 2 SCC 80 | Full back wages are the normal rule on reinstatement, but discretion permits departure when circumstances warrant; discretion must be exercised judicially. | Formed the primary basis for holding that back wages are not automatic and may be moderated on equitable considerations. |
| P.G.I. of Medical Education and Research v. Raj Kumar, (2001) 2 SCC 54 | High Courts should not interfere with a fact-finding body’s discretion on back wages unless the finding is perverse. | Reinforced that determining the quantum of back wages is a discretionary exercise dependent on case-specific facts. |
| Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya, (2002) 6 SCC 41 | No straitjacket formula exists for back wages; statutory sanction allows full back wages, but discretion remains. | Used to underline the flexible, discretionary nature of back-wage awards. |
| Susannah Sharp v. Wakefield, 1891 AC 173 | Discretion must be exercised according to reason and justice, not arbitrarily. | Cited (through Hindustan Tin Works) to emphasise the need for reasoned discretion. |
Court's Reasoning and Analysis
The Supreme Court began by noting the settled law that reinstatement does not carry an automatic right to full back wages. Drawing on Hindustan Tin Works and subsequent precedents, the Court stated that back-pay awards depend on multiple equitable factors and must not follow a rigid formula.
Key considerations identified were:
- The employee had not challenged the termination for six years, causing considerable delay.
- There was administrative confusion between the State authorities and the institution regarding liability for payment, which contributed to further delay but was not entirely the employer’s fault.
- The High Court’s 1991 order, passed on consent, had expressly recorded doubts about the employee’s aptitude and the potential adverse effect of reinstatement on the institution’s atmosphere.
Balancing these factors, the Court concluded that a further lump-sum payment, rather than full salary for the entire period, would meet the ends of justice. It therefore directed the appellants to pay an additional ₹35,000 over and above the amounts already disbursed. Failure to comply within four weeks would attract interest at 18 % per annum from the date of judgment, payable no later than four months hence.
Holding and Implications
The appeal was allowed to the limited extent of modifying the back-wage award. The appellants must pay an additional ₹35,000 within four weeks, with 18 % annual interest if delayed.
Implications are confined to the parties: the employee receives a calibrated monetary remedy in lieu of full back wages, and the institution’s liability is capped at a fixed sum. The judgment reiterates, but does not expand, the established principle that back-wage relief is discretionary and fact-specific; no new legal precedent is created.
Arijit Pasayat, J.— In this appeal challenge is to judgment of the Division Bench of the Allahabad High Court. The dispute relates to entitlement of service and retiral benefits of Respondent 1 (hereinafter referred to as “the employee”).
2. Factual background in a nutshell is as follows:
Respondent 1 employee was employed as Lab Assistant, a Class IV post, on 1-2-1973. On 8-11-1977 a show-cause notice was served on him detailing eight charges. By an order dated 11-2-1978, his services were terminated by the then Principal holding that the charges were fully proved. Against the order of termination an appeal was preferred which was dismissed by the Committee of Management. After about 6 years the employee filed a representation before the prescribed authority under Regulation 21 of Chapter III framed under the U.P Intermediate Education Act, 1921. The same was dismissed by the District Inspector of Schools. A writ petition was filed by the employee which was registered as Civil Misc. Writ Petition No. 13159 of 1984. By an order dated 18-9-1991, the writ petition was disposed of directing payment of lump sum amount of Rs 30,000. While making order the High Court, inter alia, noted that the employee had no aptitude for service, and if reinstated after such a long time, the peaceful atmosphere of the institution may be spoiled. The amount was directed to be paid within three months.
3. The employee filed a review petition in the High Court with a prayer to review the aforesaid order, on several grounds and also pointing out that the amount was not paid. Against the judgment of the High Court, an appeal was filed before the Division Bench by the employee. The High Court dismissed the review petition filed by the employee holding that the case for review was not made out. While dismissing the application for review it was noted that since the payment had not been made as directed, the employee was entitled to receive interest @ 12% per month till payment was made. It appears that there was a difference in perception of the authorities as to who was required to make the payment. The employee filed an application bringing it to the notice of the High Court that its orders have not been complied with. Application was filed by the management of the present Appellant 1 Principal of the institution, for a direction to the State and the District Inspector of Schools to make the payment. The High Court disposed of both the applications directing the District Inspector of Schools and the State to make the payment within a period of three months in the light of the order dated 18-9-1991 modified by the order in the review application dated 3-2-1993. A contempt petition was filed by the employee alleging non-compliance with the order. The employee superannuated on 26-1-1995. On 20-9-1995 a sum of Rs 30,000 along with Rs 2450 towards interest, was paid. It is to be noted in the order dated 3-2-1993 the rate of interest was indicated to be @ 12% per month, which was later on corrected by order dated 15-5-1996 to read as “per annum”. Direction was also given to pay the correct amount within a month. On 3-6-1996 a further sum of Rs 9870 was paid as the balance amount of interest. Against the order passed by the High Court, the employee filed special leave petition before this Court [SLP (C) No. 24287 of 1996]. On 6-12-1996 a notice was issued in the special leave petition on the limited question as to why the amount of compensation should not be enhanced. However, the special leave petition was dismissed as the special appeal before the High Court was pending. The Division Bench allowed the special appeal filed by the employee by directing reinstatement by the impugned judgment. It was noted that after five years also payment of the sum of Rs 30,000 was not made even though that was passed on consent. The said judgment of the Division Bench is under challenge.
4. At this juncture it would be appropriate to note that by an order dated 26-9-2000, the special leave petition was admitted only on the question of back wages. As an interim measure direction was given to pay a sum of Rs 35,000 in addition to the amount of Rs 30,000 as fixed originally by the High Court. Direction was also given to grant arrears of pension and retiral benefits.
5. It is not in dispute that said benefits have been worked out and necessary payments are being made. The only question, therefore, which survives consideration, relates to claim of back wages in view of the limited notice issued. According to the appellant the back wages from 4-1-1978 to 31-1-1995 would be Rs 1,79,484 and interest @ 12% would be Rs 24,993. Out of the said amount Rs 65,000 (Rs 30,000 + Rs 35,000) along with interest of Rs 12,320 has been paid.
6. When fixing the back wages several factors need to be noted. It is a well-settled position in law that on reinstatement there is no automatic entitlement to full back wages. In Hindustan Tin Works (P) Ltd. v. Employees (1979) 2 SCC 80 a three-Judge Bench of this Court laid down:
“11. In the very nature of things there cannot be a straitjacket formula for awarding relief of back wages. All relevant considerations will enter the verdict. More or less, it would be a motion addressed to the discretion of the Tribunal. Full back wages would be the normal rule and the party objecting to it must establish the circumstances necessitating departure. At that stage the Tribunal will exercise its discretion keeping in view all the relevant circumstances. But the discretion must be exercised in a judicial and judicious manner. The reason for exercising discretion must be cogent and convincing and must appear on the face of the record. When it is said that something is to be done within the discretion of the authority, that something is to be done according to the rules of reason and justice, according to law and not humour. It is not to be arbitrary, vague and fanciful but legal and regular (see Susannah Sharp v. Wakefield 1891 AC 173, (1886-90) All ER Rep 651, AC at p. 179).”
7. In P.G.I of Medical Education and Research v. Raj Kumar (2001) 2 SCC 54 this Court found fault with the High Court in setting aside the award of the Labour Court which restricted the back wages to 60% and directing payment of full back wages. It was observed thus:
“9. The Labour Court being the final court of facts came to a conclusion that payment of 60% wages would comply with the requirement of law. The finding of perversity or being erroneous or not in accordance with law shall have to be recorded with reasons in order to assail the finding of the Tribunal or the Labour Court. It is not for the High Court to go into the factual aspects of the matter and there is an existing limitation on the High Court to that effect.”
Again at para 12, this Court observed:
“12. Payment of back wages having a discretionary element involved in it has to be dealt with, in the facts and circumstances of each case and no straitjacket formula can be evolved, though, however, there is statutory sanction to direct payment of back wages in its entirety.” (See Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya (2002) 6 SCC 41, 2002 AIR SCW 3008.)
8. In the case at hand, there was no challenge to the order of termination for six years, as indicated above. Some time was lost because the State and its functionaries on the one hand and the appellant on the other differed on the issue as to who was liable to make the payment in terms of the first direction of the High Court. It cannot also be lost sight of that the High Court while fixing a sum of Rs 30,000 to be paid in terms of its order dated 18-9-1991 recorded a finding about lack of aptitude of the employee and the likelihood of absence in sincerity of work. Taking all these aspects into consideration, ends of justice would be best served if the appellants are directed to pay a sum of Rs 35,000 in addition to what has already been paid, within a period of four weeks from today. In case the payment is not made within the stipulated time, it shall carry interest @ 18% per annum from today till the amount is actually paid which shall, in any event, be not later than four months from today.
9. The appeal is allowed to the extent indicated.
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