Supreme Court clarifies back wages entitlement in unauthorized absence case: Chief Regional Manager vs. Siraj Uddin Khan (2019)

Date of the Judgment: 11 July 2019
Citation: (2019) INSC 693
Judges: Ashok Bhushan, J., Navin Sinha, J.

Can an employee claim full back wages simply because a termination order was later overturned, even if they were absent from work for an extended period? The Supreme Court of India addressed this critical question in a recent service law case. This judgment clarifies that the mere quashing of a termination order does not automatically entitle an employee to back wages, especially if the absence from duty was unauthorized. The bench comprised Justices Ashok Bhushan and Navin Sinha, with Justice Ashok Bhushan authoring the judgment.

Case Background

The respondent, Siraj Uddin Khan, was employed as an assistant/typist by the United India Insurance Company Limited. He was transferred from Allahabad to Jaunpur on 18 August 2006, and was relieved from Allahabad on 1 February 2007. However, he did not join at Jaunpur and was absent without authorization from 2 February 2007. This led to a charge sheet on 7 June 2007, and disciplinary proceedings were initiated.

The respondent filed a writ petition in 2008 seeking speedy disposal of the inquiry and payment of salary from 23 July 2007. The High Court directed the company to decide on his representation for salary. Subsequently, on 14 May 2009, the disciplinary authority found him guilty of unauthorized absence and reduced his basic pay by two steps.

A second charge sheet was issued for 663 days of unauthorized absence, but it was not served on the respondent. The inquiry was conducted ex-parte, and the respondent retired on 20 June 2012. The company terminated his services on 26 June 2012. The respondent’s appeal was dismissed on 18 July 2014.

The respondent then filed a writ petition challenging the orders of 14 May 2009, 26 June 2012, and 18 July 2014. The High Court set aside the termination order of 26 June 2012, citing lack of service of the charge sheet and the fact that the respondent had already retired. However, the challenge to the order of 14 May 2009 was dismissed.

The company’s appeal against this order was dismissed by the Supreme Court. The respondent’s appeal against the dismissal of the challenge to the 14 May 2009 order was allowed by the Division Bench, which quashed the order and granted consequential benefits.

Following this, the respondent filed a contempt application and another writ petition seeking salary from January 2007 to June 2012. The High Court partly allowed this petition, directing payment of salary from 2 February 2007 to 14 May 2009, and from 14 May 2009 to 20 June 2012. The insurance company appealed to the Supreme Court against the order for payment of salary from 14 May 2009 to 20 June 2012.

Timeline

Course of Proceedings

The respondent initially filed a writ petition in 2008 seeking the expeditious disposal of the departmental inquiry and payment of salary. The Single Judge of the High Court directed the authorities to consider the respondent’s representation for salary. The disciplinary proceedings resulted in a penalty of reduction of basic pay, which was later challenged by the respondent.

The respondent challenged the termination order and the order of reduction of pay. The Single Judge of the High Court set aside the termination order, but dismissed the challenge to the reduction of pay. The company’s appeal against setting aside the termination order was dismissed by the Supreme Court. The Division Bench of the High Court then set aside the order of reduction of pay.

The respondent filed a contempt application and another writ petition seeking salary for the entire period of absence. The High Court partly allowed this writ petition, which led to the present appeal before the Supreme Court.

Legal Framework

The case primarily involves the interpretation of service rules and the principle of “No Work No Pay” in the context of disciplinary proceedings and subsequent orders. The relevant rule mentioned is Rule 23(a) of the General Insurance (Conduct, Discipline & Appeal) Rules, 1975, under which the punishment of reduction of basic pay was awarded.

The court also considered the implications of setting aside a termination order and whether it automatically entitles an employee to back wages. The court examined various precedents to determine the applicability of the “No Work No Pay” principle.

Arguments

Appellant’s Submissions:

• The appellant argued that the High Court erred in directing the payment of salary from 14 May 2009 to 20 June 2012, as the respondent was absent from work and not entitled to salary based on the principle of “No Work No Pay.”
• The appellant contended that this was not a case where the respondent was prevented from working due to a termination order.
• The appellant submitted that setting aside the termination order does not automatically lead to a direction for payment of salary, and no such direction was given in the High Court’s earlier judgment.
• The appellant emphasized that the company’s funds are public funds and cannot be used to pay salary when the respondent was absent from work.

Respondent’s Submissions:

• The respondent argued that he was entitled to salary as the termination order of 26 June 2012 was set aside by the High Court, and the company’s appeal was dismissed by the Supreme Court.
• The respondent claimed that he went to join the Allahabad branch on 23 July 2007, but was not allowed to take charge.
• The respondent contended that the principle of “No Work No Pay” does not apply in his case, and the High Court rightly directed payment of salary from 14 May 2009 to 20 June 2012.
• The respondent relied on the judgment of the Supreme Court in Shobha Ram Raturi Vs. Haryana Vidyut Prasaran Nigam Limited and Others, (2016) 16 SCC 663.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether the respondent was automatically entitled to back wages by the setting aside of the order dated 26.06.2012.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Deepali Gundu Surwase Vs. Kranti Junior Adhyapak Mhavidyalaya (D.Ed.) And Others, (2013) 10 SCC 324: The Supreme Court distinguished this case, noting that in the present case, the respondent was not kept away from work due to an illegal dismissal.
• Airports Authority of India and Others Vs. Shambhu Nath Das alias S.N. Das, (2008) 11 SCC 498: The Supreme Court applied the principle of “no work no pay” as enunciated in this case.
• Shobha Ram Raturi Vs. Haryana Vidyut Prasaran Nigam Limited and Others, (2016) 16 SCC 663: The Supreme Court distinguished this case, as the employee was restrained from working due to an order of retirement, whereas in the present case the respondent was not so restrained.

What weighed in the mind of the Court?

The court’s decision was primarily influenced by the fact that the respondent’s absence from work was unauthorized, and the termination order was issued after his retirement. The court emphasized that the principle of “No Work No Pay” applies when an employee is absent without any justification. The court also noted that the respondent was not prevented from working by any order of the appellant, and the termination order was passed after his retirement.

Fact:Law

The court’s reasoning was based on the factual aspects of the case, such as the respondent’s unauthorized absence and the timing of the termination order, as well as the legal principles such as the “No Work No Pay” principle and the interpretation of service rules.

The court considered the argument that setting aside the termination order automatically entitles the respondent to back wages. However, it rejected this argument, stating that the respondent was not prevented from working due to the termination order, which was passed after his retirement. The court emphasized that the respondent’s absence was unauthorized, which made the principle of “No Work No Pay” applicable.

The court’s final decision was based on the principle that an employee is not entitled to back wages if they have not worked, especially when the absence is unauthorized. The court did not find any legal basis to award back wages to the respondent for the period of unauthorized absence.

The court quoted from the judgment: “The present is not a case where the respondent was dismissed from the service and consequent to dismissal, he could not work and when dismissal was set aside, he will be automatically entitled for back wages.”

The court also stated: “There is no adjudication regarding claim of salary or back wages to the respondent in the impugned judgment of learned Single Judge for the period 15.05.2009 to 20.06.2012.”

The court further clarified: “Learned Single Judge was of the opinion that in view of the setting aside of the order dated 26.06.2012, payment of salary is automatic, which view of the Single Judge is not correct.”

Key Takeaways

• Setting aside a termination order does not automatically entitle an employee to back wages.
• The principle of “No Work No Pay” applies when an employee is absent without authorization.
• Employers are not obligated to pay salary for periods when an employee has not worked, especially if the absence was unauthorized.
• Courts will not automatically award back wages simply because a termination order is later overturned.

Directions

The Supreme Court directed the appellant to consider the respondent’s claim for back wages from 14 May 2009 to 20 June 2012 and pass appropriate orders with reasons within three months. The respondent was given one month to submit a representation with relevant materials regarding his entitlement for salary for the specified period.

Development of Law

The ratio decidendi of this case is that the setting aside of a termination order does not automatically entitle an employee to back wages, especially when the employee was absent without authorization. This judgment reinforces the principle of “No Work No Pay” and clarifies that back wages are not automatically granted upon the quashing of a termination order. This judgment does not change the previous position of law, but reinforces the existing principles.

Conclusion

The Supreme Court partly allowed the appeal, setting aside the High Court’s direction for payment of salary from 14 May 2009 to 20 June 2012. The court directed the appellant to reconsider the respondent’s claim for back wages, emphasizing that the principle of “No Work No Pay” applies in cases of unauthorized absence. This judgment clarifies that the mere setting aside of a termination order does not automatically entitle an employee to back wages, especially when the employee was absent from duty.