Suppression of Evidence: Supreme Court awards 75% back wages to MSRTC Driver in wrongful termination case (2025)

Introduction

Date of the Judgment: 14th February 2025

Citation: 2025 INSC 218

Judges: Dipankar Datta J., Sandeep Mehta J.

Can an employer suppress crucial evidence to justify the termination of an employee? The Supreme Court of India recently addressed this critical question in the case of Maharashtra State Road Transport Corporation (MSRTC) vs. Mahadeo Krishna Naik, where the transport corporation was found guilty of suppressing evidence to wrongly terminate a bus driver. The Supreme Court, in its judgment, penalized MSRTC by awarding 75% back wages to the driver, emphasizing the importance of transparency and fairness in disciplinary proceedings. Justices Dipankar Datta and Sandeep Mehta delivered the judgment.

Case Background

Mahadeo Krishna Naik was employed as a bus driver by the Maharashtra State Road Transport Corporation (MSRTC) on April 19, 1988. On May 10, 1996, a severe accident occurred involving a bus driven by Mahadeo and a lorry coming from the opposite direction. The collision, which took place around 22:45 hours, resulted in the deaths of two passengers and injuries to about ten others. The accident also caused a monetary loss of approximately Rs. 45,000 to the corporation.

Following the accident, disciplinary action was initiated against Mahadeo. An inquiry was conducted, and subsequently, the Divisional Traffic Officer dismissed Mahadeo from his service on May 27, 1997. Aggrieved by this dismissal, Mahadeo filed a departmental appeal, which was unsuccessful. The union representing Mahadeo then raised an industrial dispute, leading to a reference by the Deputy Commissioner of Labour to the Labour Court.

The Labour Court, after reviewing the evidence and hearing both parties, concluded that the inquiry was conducted fairly, the findings of the inquiry officer were not perverse, and the punishment was proportionate to the misconduct. Consequently, the Labour Court ruled that Mahadeo was not entitled to reinstatement. Dissatisfied with this outcome, Mahadeo then petitioned the High Court under Article 226 of the Constitution of India. The single judge dismissed the petition, noting that there was sufficient material to support the findings of the Inquiry Officer and that no interference was warranted.

While the reference and writ petition were pending, separate compensation proceedings were initiated by the family members of the deceased and injured victims under the Motor Vehicles Act, 1988, before the Motor Accidents Claims Tribunal (MACT) in Mumbai. Mahadeo later discovered that the MSRTC had taken a contradictory stance in these proceedings, placing the entire blame for the accident on the lorry driver. Additionally, the MACT awarded compensation on July 9, 2004, without affixing any liability on MSRTC. Upon learning this, Mahadeo applied for a review before the High Court, which ultimately led to the appeal before the Supreme Court.

Timeline

Course of Proceedings

The legal battle began when Mahadeo’s services were terminated following a road accident. After an unsuccessful departmental appeal, the matter was taken to the Labour Court, which ruled against Mahadeo, upholding the fairness of the inquiry and the proportionality of the punishment. Subsequently, Mahadeo filed a writ petition in the High Court, which was initially dismissed by a single judge. The turning point came when Mahadeo discovered contradictory statements made by MSRTC in a separate proceeding before the Motor Accidents Claims Tribunal (MACT). This new evidence led Mahadeo to file a review petition in the High Court. The single judge, upon reviewing the case, overturned the previous decision, set aside the Labour Court’s award, and ordered MSRTC to reinstate Mahadeo with full back wages. MSRTC then appealed this decision to the Supreme Court.

Legal Framework

The case involves several key legal provisions:

• Article 226 of the Constitution of India: This article grants the High Courts the power to issue writs, including certiorari, to correct errors of law or procedure by lower courts or tribunals. Mahadeo invoked this article to challenge the Labour Court’s decision.
• Section 166 of the Motor Vehicles Act, 1988: This section allows the victims of road accidents or their families to claim compensation from the responsible parties. The proceedings before the MACT were initiated under this section.
• Order XLVII, CPC read with Section 114: This provision of law, allows the court to review its judgment if there is discovery of new and important matter or evidence which, after the exercise of due diligence, was not within the knowledge of the person seeking review or could not be produced by him at the time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the record, or for any other sufficient reason.

Arguments

Arguments by MSRTC:

• MSRTC contended that Mahadeo, as a trained driver, was responsible for the safety of passengers, and the severity of the accident indicated negligent driving. They cited T.N. State Transport Corpn. (Coimbatore) Ltd. v. M. Chandrasekaran [(2016) 16 SCC 16] to support their claim that the impact and injuries suggested negligence on the driver’s part.
• They argued that the MACT proceedings and disciplinary proceedings serve different purposes, with the former determining negligence and the latter examining Mahadeo’s role in the collision.
• MSRTC claimed that judicial review is limited to the decision-making process and that the High Court should not have assessed the correctness of the decision itself.
• The single judge has substituted its view in the place of the competent authority and erred in not remanding the matter to the Labour Court.
• MSRTC contended that full back wages should not have been awarded without evidence that Mahadeo was not gainfully employed during his termination period. They referenced Rajasthan State Road Transport Corporation, Jaipur v. Phool Chand [(2018) 18 SCC 229], arguing that back wages are not automatic even if termination is overturned.

Arguments by Mahadeo Krishna Naik:

• Mahadeo argued that MSRTC committed fraud by not disclosing the MACT proceedings and pleadings, which would have shown their contradictory stance.
• He stated that he had been fighting the legal battle since 1997 and had been unable to find permanent employment due to his dismissal.
• Mahadeo supported the High Court’s order, citing Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyala [(2013) 10 SCC 324], which held that full back wages are justified if an employee is terminated on frivolous allegations and in violation of natural justice.

Issues Framed by the Supreme Court

The Supreme Court identified the following key issues to be addressed:

1. Whether the Corporation is guilty of suggestio falsi by not disclosing what it had pleaded before the MACT and suppresio veri by suppressing the said award.
2. Whether, on facts and in the circumstances, the single judge was justified in exercising review jurisdiction.
3. Whether any interference with the direction for payment of full back wages is called for or not.
4. What would be the appropriate relief for Mahadeo needs to be considered.

Treatment of the Issue by the Court

Authorities

The court relied on the following authorities:

Judgment

The Supreme Court, after considering the arguments and evidence, delivered the following judgment:

How each authority was viewed by the Court:

• Associate Builders v. Delhi Development Authority [2015 (3) SCC 49]: The Supreme Court of India relied on this case to emphasize that disregard of a vital piece of evidence is one of the factors to be considered while examining whether an order is perverse.
• T.N. State Transport Corpn. (Coimbatore) Ltd. v. M. Chandrasekaran [(2016) 16 SCC 16]: The Supreme Court of India distinguished this case, stating that the facts were different and it did not apply to the present situation.
• Rajasthan State Road Transport Corporation, Jaipur v. Phool Chand [(2018) 18 SCC 229]: The Supreme Court of India discussed this case but did not fully accept its proposition, modifying the back wages to 75% instead of denying them altogether.
• Union of India v. N. Murugesan [(2022) 2 SCC 25]: The Supreme Court of India relied on this case to emphasize that no party can be allowed to accept and reject the same thing, and thus one cannot blow hot and cold.
• Hindustan Tin Works (P) Ltd. v. Employees [(1979) 2 SCC 80]: The Supreme Court of India relied on this case to emphasize that in cases of wrongful termination of service, reinstatement with continuity of service and back wages is the normal rule.
• Surendra Kumar Verma v. Central Govt. Industrial Tribunal -cum-Labour Court [(1980) 4 SCC 443]: The Supreme Court of India relied on this case to emphasize that the removal of an order terminating the services of workmen must ordinarily lead to the reinstatement of the services of the workmen.
• Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyala [(2013) 10 SCC 324]: The Supreme Court of India relied on this case to emphasize that the very idea of restoring an employee to the position which he held before dismissal or removal or termination of service implies that the employee will be put in the same position in which he would have been but for the illegal action taken by the employer.
• State of M.P. v. Narmada Bachao Andolan [(2011) 7 SCC 639]: The Supreme Court of India relied on this case to emphasize that a false statement made in the court or in the pleadings, intentionally to mislead the court and obtain a favourable order, amounts to criminal contempt, as it tends to impede the administration of justice.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

Logical Reasoning

The court’s logical reasoning can be summarized as follows:

Issue 1: Whether MSRTC is guilty of suggestio falsi and suppresio veri

MSRTC took contradictory stands in different forums -> MSRTC suppressed MACT award -> MSRTC is guilty of suggestio falsi and suppresio veri

Issue 2: Whether the single judge was justified in exercising review jurisdiction

MSRTC is guilty of suggestio falsi and suppresio veri -> MACT award is relevant evidence -> Single judge was justified in exercising review jurisdiction

Issue 3: Whether any interference with the direction for payment of full back wages is called for or not.

Mahadeo admitted to being engaged in badli work -> Mahadeo faced hardship due to wrongful termination -> Award 75% back wages

Issue 4: What would be the appropriate relief for Mahadeo needs to be considered.

Award 75% back wages + Full terminal benefits

Key Takeaways

The key takeaways from this judgment are:

• Employers must maintain transparency and fairness in disciplinary proceedings.
• Suppression of evidence can lead to severe penalties, including significant back wage awards.
• Courts will scrutinize contradictory stances taken by parties in different legal forums.
• Wrongfully terminated employees are entitled to fair compensation, even if they have been partially employed during the termination period.

Directions

The Supreme Court directed MSRTC to:

• Pay Mahadeo 75% of the back wages from the date of his termination until the date of his superannuation.
• Provide Mahadeo with full terminal benefits, along with interest at 6% per annum, as if he had never been dismissed from service.
• Release the amounts due to Mahadeo within three months from the date of communication of the order, with a further interest of 2% in case of default.

Development of Law

The ratio decidendi of this case is that suppression of evidence and taking contradictory stances in different legal forums can lead to severe penalties for employers, including significant back wage awards. This judgment reinforces the principles of transparency and fairness in disciplinary proceedings and clarifies the rights of wrongfully terminated employees.

Conclusion

In conclusion, the Supreme Court’s judgment in MSRTC vs. Mahadeo Krishna Naik penalizes MSRTC for suppressing evidence and taking contradictory stances, awarding 75% back wages and full terminal benefits to the wrongfully terminated driver. This case underscores the importance of transparency, fairness, and ethical conduct in legal proceedings and employment matters.