Whose Burden To Prove That Employee Was Not Gainfully Employed After Dismissal?Conflicting Decisions Need Settlement

Whether an employee was gainfully employed elsewhere after dismissal from a workplace is a relevant fact to determine the right of such employee to seek reinstatement and back-wages under the Industrial Disputes Act for wrongful termination of services.

Whose burden is it to prove that the employee/workman was not gainfully employed after retrenchment? Whether the employer or the employee?There are conflicting judgments on this point.

There are several Supreme Court judgments which hold that employer should discharge the burden of proving that the employee was not gainfully employed after retrenchment. On the other hand, another bunch of Supreme Court judgments hold otherwise to place the burden on the employee.

In a recent judgment delivered last week in the case National Gandhi Museum v.Sudhir Sharma and others, the Supreme Court observed that it is the burden of the employee to discharge such burden.

Referring to the precedent in Talwara Cooperative Credit and Service Society Ltd v. Sushil Kumar (2008) 9 SCC 486, a bench of Justices Ajay Rastogi and Abhay S Oka observed:

"...the fact whether an employee after dismissal was gainfully employed is within his special knowledge and therefore, considering the principles laid down in Section 106 of the Indian Evidence Act, 1872, the burden is on the employee to come out with a case that he was not gainfully employed during the relevant period."

Talwara Cooperative Society Ltd was also a decision delivered by a 2-judge bench(Justices SB Sinha & Cyriac Joseph).

A contrary judgment is the 2-judge bench decision in the case Deepali Kundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya (2013) 10 SCC 324. In that case, a two-judge bench comprising Justices GS Singhvi and V Gopala Gowda held that the employer should prove that the dismissed employee was not gainfully employed after his dismissal. The reasoning of the bench was that a person can't be called to prove a 'negative' fact. 

The bench observed in Deepali Kundu as follows :

"Ordinarily, an employee or workman whose services are terminated and who is desirous of getting back wages is required to either plead or at least make a statement before the adjudicating authority or the Court of first instance that he/she was not gainfully employed or was employed on lesser wages. If the employer wants to avoid payment of full back wages, then it has to plead and also lead cogent evidence to prove that the employee/workman was gainfully employed and was getting wages equal to the wages he/she was drawing prior to the termination of service. This is so because it is settled law that the burden of proof of the existence of a particular fact lies on the person who makes a positive averments about its existence. It is always easier to prove a positive fact than to prove a negative fact. Therefore, once the employee shows that he was not employed, the onus lies on the employer to specifically plead and prove that the employee was gainfully employed and was getting the same or substantially similar emoluments".

Closer examination of judgments placing the burden on the employer

The judgment in Talwara Cooperative Society Ltd(supra) makes this following observation :

"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 S.106 of the Indian Evidence Act, the burden would be on the workman"

To buttress this statement, the judgment refers to the precedents in Municipal Council, Sujanpur v. Surinder Kumar 2006 (5) SCC 173, U.P. State Brassware Corporation and Others v. Udit Narain Pandey 2006 (1) SCC 479 , State of M.P. v. Arjan Lal Rajak 2006 (2) SCC 610 and Manager, Reserve Bank of India, Bangalore v. S. Mani and Others 2005 (5) SCC 100.

It is interesting to note that gainful employment after retrenchment was not an issue in Surinder Kumar,  the first one of the above cited decisions. This case was considering the issue whether the workman had completed 240 days of work within a period of twelve months preceding his termination. It was while addressing this issue that the bench said that the burden of proof is the employee.

"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", the judgment in Surinder Kumar observed. The decision in Arjunlal Rajak(supra) also considered the issue of burden to prove completion of 240 days of work. Same was the issue in the case Reserve Bank of India, Bangalore v. S. Mani and Others(supra). These decisions did not consider the issue of gainful employment elsewhere after termination of services.

In the case UP State Brassware Corporation(supra), the workman had omitted to raise a plea in his written statement that he was not gainfully employed after his retrenchment. In that context, the judgment observed :

"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 S.106 of the Evidence Act or the provisions analogous thereto, such a plea should be raised by the workman".

At the same time, there are other two-judge bench decisions which has placed the burden of proof on the employee in the context of gainful employment after retrenchement.

One such example is the decision in Kendriya Vidyalaya Sangathan (2005 (2) SCC 363), in which a two-judge bench of the Supreme Court had 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."

Closer examination of judgments placing the burden on the employee

Now let us come back to the decision in Deepali Gundu Surwase(supra),  which placed the burden of proof on the employer

It is interesting to note that this decision actually referred to a  series of judgments which had stated that the burden of proof was on the part of the employee. The judgment has a reference to precedents such as Kendriya Vidyalaya Sangathan, Novartis India Ltd. v. State of West Bengal and Others, 2009 (3) SCC 124, which had observed that the fact relating to gainful employment after retrenchment was within the special knowledge of the employee and hence he had the burden to disprove the same as per Section 106 of the Evidence Act.

However, without any attempt to distinguish those precedents, the 2-judge bench in Deepali directly arrived at the conclusion that the burden is on the employer.

"If the employer wants to deny back wages to the employee or contest his entitlement to get consequential benefits, then it is for him/her to specifically plead and prove that during the intervening period the employee was gainfully employed and was getting the same emoluments", the bench observed.

This judgment has been followed in the subsequent two-judge bench decisions in Bhuvnesh Kumar Dwivedi v Hindalco (2014) 11 SCC 85 , Rajukumar v Director of Education - (2016) 6 SCC 541.

The situation now is that there are several two-judge bench decisions expressing diametrically opposite views. Undoubtedly, this leads to uncertainty in labour litigation. So it is imperative that a larger bench settles the issue with an authoritative pronouncement.

(Manu Sebastian is the Magaging Editor of LiveLaw. He may be contacted at manu@livelaw.in. He tweets @manuvichar)