To Claim Backwages, Dismissed Employees Must Plead That They Were Not Gainfully Employed; Only Then Burden Shifts To Employer : Supreme Court

A Bench comprising Justices Indira Banerjee and V. Ramasubramanian dismissed appeals assailing the order of the Allahabad High Court, which had set aside the penalty order passed by the disciplinary authority of Allahabad Bank and directed reinstatement of its delinquent officer with 50% back wages and all consequential benefits.

Factual Background

The respondent officer was appointed at the Allahabad Bank as a clerk in 1974 and later, in 1982 was promoted to the post of Junior Manager Grade-II. In 1998, three articles of charges were framed against him under Regulation 24 of the Allahabad Bank Officer Employees'(Conduct) Regulations for violating Regulation 3(1) and making indiscriminate advances and for his failure to conduct appraisal and verify identity of customers. A departmental enquiry was instituted, which came to an end on 09.01.1989. The enquiry report was sent to the disciplinary authority on 13.03.1989. Though the said authority agreed with the conclusion reached by the enquiry officer, it thought the same lacked cogent reasoning. In view of the same, it analysed the evidence independently and passed an order of penalty of dismissal from service on 31.03.1989. The officer filed a departmental appeal under Regulation 17 of the Allahabad Bank Officer Employees (Discipline and Appeal) Regulations, 1976. The appellate authority dismissed the appeal, but recorded a finding that the copy of the enquiry report was not enclosed to the final order of penalty. A review was also filed, which met with the same fate. Subsequently, the officer approached the Allahabad High Court by filing a Writ Petition. Relying on Regulation 9 of the Allahabad Bank Officer Employees (Discipline and Appeal) Regulations, 1976, which stipulates supply of a copy of the enquiry report, the High Court allowed the petition asking the officer to file a fresh appeal and directed the Management of the Bank to supply a copy of the enquiry report. The order of the High Court was challenged by the Bank before the Supreme Court, but in vain. The review petition filed before the High Court was also rejected. On 08.05.2012, the Bank sent a letter to the officer informing him that the copy of the enquiry report was not traceable. Consequently, a Contempt petition was filed. The High Court refused to admit the same, but granted liberty to the officer to re-agitate the issue on subsequent developments. Thereafter, a Writ Petition was filed and the High Court set aside the order of penalty, directing reinstatement with 50% backwages and all consequential benefits he would have been entitled to had he not been dismissed from service. The Bank challenged the same before the Apex Court. The officer also filed a Special Leave Petition seeking full back wages.

Analysis by the Supreme Court

Given the limited notice issued in the SLP filed by the Bank, the Court delineated the contour of the issue involved as under -

"...whether the Officer ­employee is not entitled to back wages at all or whether he is entitled only to 50% of the back wages as held by the High Court or whether he is entitled to full back wages."

It observed that apart from the fact that the Management had failed to supply the copy of the enquiry report in violation of Regulation 9, the High Court had also noted that bad motive of the officer was not established in the departmental proceedings. The High Court had granted 50% back wage considering the fact that he was out of service for 24 years, as he was dismissed from service in the year 1989 and his date of superannuation was 28.02.2013. The officer had relied on the judgment of the Apex Court in Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya (D. ED.) And Ors. (2013) 10 SCC 324 to argue that grant of full back wages is a normal rule in cases of wrongful termination of service. The Court noted that the case cited pertained to workmen category of employees, whereas the officer in the instance case was working in a managerial position. It stated-

"Courts should always keep in mind the different yardsticks to be applied in the cases of workman category employees and managerial category employees. In appropriate cases, the distinction between labour law and service law may also have to be kept in mind. Many times, Courts wrongly apply, in matters arising under service law, the principles laid down in matters arising under labour laws."

In Deepalu Gundu (supra), the Apex Court had opined -

"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."

Following the principle laid down in the said judgment, the Court observed that the officer had not placed anything on record to show he was not employed after his dismissal. Therefore, the Court was of the opinion that the contention raised relying on Deepalu Gundu's judgment would not hold water in the present case. It noted -

"It is needless to point out that in the first instance, there is an obligation on the part of the employee to plead that he is not gainfully employed. It is only then that the burden would shift upon the employer to make an assertion and establish the same."

Also Read : Onus To Prove That Employee Was Not Gainfully Employed During Period Of Dismissal Is On Employer : Supreme Court

Case Name: Allahabad Bank And Ors. v. Avtar Bhushan Bhartiya

Citation: 2022 LiveLaw (SC) 405

Case No. and Date: SLP (Civil) No. 32554 of 2018 | 22 April 2022

Corum: Justices Indira Banerjee and V. Ramasubramanian

Appearances:  Mr. Rajesh Kumar Gautam, AOR Mr. Anant Gautam, Adv. Mr. Nipun Sharma, Adv. Mr. Sachin Singh, Adv for appellants; Mr. Rahul Shyam Bhandari, AOR G. Priyadharshni, Adv, Mr. Konark Tyagi, Adv - for respondents.

Headnotes

Labour Law - 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 [Paragraph 31] - it is needless to point out that in the first instance, there is an obligation on the part of the employee to plead that he is not gainfully employed. It is only then that the burden would shift upon the employer to make an assertion and establish the same. [Paragraph 33]