Supreme Court clarifies back wages for suspended employee acquitted of criminal charges: Raj Narain vs. Union of India (2019) INSC 264 (01 April 2019)

Date of the Judgment: 01 April 2019
Citation: (2019) INSC 264
Judges: L. Nageswara Rao, J. and M.R. Shah, J.
Can an employee who was suspended due to criminal charges and later acquitted claim full back wages for the entire suspension period? The Supreme Court of India recently addressed this question in a case involving a Railway Mail Service employee. The court clarified the conditions under which back wages are payable, distinguishing between the period of suspension and the period after acquittal. This judgment provides clarity on the rights of employees who face suspension and subsequent acquittal in criminal cases. The judgment was authored by Justice L. Nageswara Rao.

Case Background

The appellant, Raj Narain, was working as a Sorting Assistant in the Railway Mail Service (RMS) at Mughalsarai. On 23rd October 1979, he was suspended due to allegations of involvement in forged payments of high-value money orders. An FIR was lodged against him at Mughalsarai Police Station, and the case was registered as Crime No. 358 of 1979 under Section 409 and 420 of the Indian Penal Code (IPC). The suspension was revoked on 21st October 1987, and he rejoined duty. However, he was dismissed from service on 28th February 1997, following his conviction under Sections 409, 467, and 420 of the IPC, and sentenced to three years imprisonment. He appealed against his conviction, and the criminal appeal was allowed, acquitting him of all charges.

Timeline

Course of Proceedings

The appellant’s request for reinstatement was initially refused on 13th June 2002, citing his dismissal six years prior. He challenged the dismissal order and the refusal to reinstate before the Tribunal. The Tribunal directed his reinstatement with seniority and notional pay fixation but denied back wages for the period he was out of service. Subsequently, the appellant was reinstated on 20th January 2003. His representation for full pay and allowances for the suspension period (23rd October 1979 to 11th November 1987) was rejected on 1st May 2003. The High Court partly allowed his writ petition, granting back wages from the date of acquittal (31st August 2001) to the date of reinstatement (20th January 2003). The appellant then appealed to the Supreme Court, contesting the restriction on back wages.

Legal Framework

The case involves the interpretation of service rules and the principles governing back wages for employees suspended due to criminal charges. The relevant legal provisions include:

• Section 409 of the Indian Penal Code (IPC): “Criminal breach of trust by public servant, or by banker, merchant or agent.”
• Section 420 of the Indian Penal Code (IPC): “Cheating and dishonestly inducing delivery of property.”
• Section 467 of the Indian Penal Code (IPC): “Forgery of valuable security, will, etc.”

The core legal issue revolves around whether an employee is entitled to full back wages for the period of suspension and subsequent acquittal, especially when the criminal proceedings were initiated based on allegations of misconduct during employment.

Arguments

Appellant’s Arguments:

• The appellant argued that he should receive full wages for the period he was kept out of duty due to criminal proceedings, especially since he was later acquitted.
• He relied on the Supreme Court judgments in Ranchhodji Chaturji Thakore v. Superintendent Engineer, Gujarat Electricity Board and Anr. [1996 (11) SCC 603] and Union of India and Others v. Jaipal Singh [2004 (1) SCC 121], contending that if criminal proceedings are initiated at the behest of the employer and the employee is acquitted, full wages should be paid for the period out of service.
• The appellant also argued for full salary for the period from 1979 to 1987, stating that he filed an Interlocutory Application seeking this relief in the High Court, which was not considered.

Respondent’s Arguments:

• The respondent argued that the appellant is not entitled to back wages.
• They contended that there is no difference between a criminal case initiated by the employer and one by the police.
• The respondent also argued that the appellant was not entitled to any relief of payment of full back wages between 1979 to 1987, as the I.A. filed by the appellant does not find mention in the impugned judgment of the High Court.

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the Appellant is entitled to full back wages for the period he was kept out of duty during the pendency of the criminal proceedings?
2. Whether the Appellant is entitled to full salary for the period from 1979 to 1987?

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Cases:

• Ranchhodji Chaturji Thakore v. Superintendent Engineer, Gujarat Electricity Board and Anr. [1996 (11) SCC 603] (Supreme Court of India): This case held that an employee involved in a crime is on a different footing compared to one facing a departmental inquiry. Subsequent acquittal does not automatically entitle them to back wages. The court in this case had rejected the claim of full wages on acquittal by the Criminal Court.
• Union of India and Others v. Jaipal Singh [2004 (1) SCC 121] (Supreme Court of India): This case followed Ranchhodji Chaturji Thakore, refusing back wages to an employee acquitted in a criminal appeal. However, it noted that different considerations might arise if the prosecution was launched at the behest of the department. The court was of the opinion that if the prosecution is launched at the behest of the department and the employee is acquitted, different considerations may arise.

Judgment

How each authority was viewed by the Court?

• The Court followed the principle laid down in Ranchhodji Chaturji Thakore v. Superintendent Engineer, Gujarat Electricity Board and Anr. [1996 (11) SCC 603]* that an employee involved in a crime is on a different footing than one facing departmental inquiry and that subsequent acquittal does not automatically entitle them to back wages.
• The Court also followed Union of India and Others v. Jaipal Singh [2004 (1) SCC 121]* to reject the claim for back wages for the period between suspension and acquittal. The Court however clarified that the observation made in the judgment in Union of India and Others v. Jaipal Singh (supra) has to be understood in a manner in which the department would become liable for back wages in the event of a finding that the initiation of the criminal proceedings was mala fide or with vexatious intent.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors. The Court emphasized that the employee’s inability to render service due to incarceration was a key consideration. However, the Court also recognized that when disciplinary proceedings are dropped and the employee is not reinstated promptly, the employer cannot evade the responsibility of paying full wages. The Court also considered that the suspension order was in contemplation of disciplinary proceedings, and when those proceedings were dropped, the suspension should have been revoked immediately. The delay in reinstatement was also a factor that weighed in the mind of the Court.

Sentiment Analysis of Reasons Given by the Supreme Court:

Ratio of Fact:Law:

Logical Reasoning:

The Court considered the following points:

• The Court distinguished between the period of suspension and the period after acquittal.
• The Court held that the appellant was entitled to full wages from 23.10.1979 to 21.10.1987, after adjusting for subsistence allowance already paid.
• The Court upheld the High Court’s judgment that the appellant was entitled to back wages only from the date of acquittal (31.08.2001) till the date of reinstatement (20.01.2003).
• The Court noted that the disciplinary proceedings were dropped on 21.03.1983, and the appellant should have been reinstated immediately after that, unless a fresh order was passed placing him under suspension during the pendency of the criminal trial, which did not happen.

The Court stated:

“The order of suspension dated 23.10.1979 came to an end on 21.03.1983 which is the date on which disciplinary proceedings were dropped. The Appellant ought to have been reinstated immediately thereafter unless a fresh order was passed, placing him under suspension during the pendency of the criminal trial which did not happen.”

“We hold that the Appellant is entitled for full wages from 23.10.1979 to 21.10.1987 after adjustment of the amounts already paid towards subsistence allowance.”

“For the reasons mentioned above, we approve the judgment of the High Court by holding that the Appellant shall be entitled for back wages only from the date of acquittal on 31.08.2001, till the date of his reinstatement on 20.01.2003. Further, the Appellant shall be entitled to full salary from 23.10.1979 to 21.10.1987.”

Key Takeaways

• Employees suspended due to criminal charges are not automatically entitled to full back wages upon acquittal.
• If disciplinary proceedings are dropped, the employee should be reinstated promptly, and any delay may entitle them to full wages for the intervening period.
• Back wages are generally payable from the date of acquittal to the date of reinstatement.
• If the prosecution is found to be malicious or vexatious, the employee may be entitled to full back wages for the entire period of suspension.

Directions

The Supreme Court directed that the appellant is entitled to full wages from 23.10.1979 to 21.10.1987, after adjusting for subsistence allowance already paid. The Court also upheld the High Court’s decision that the appellant was entitled to back wages from the date of acquittal (31.08.2001) till the date of reinstatement (20.01.2003).

Development of Law

The Supreme Court clarified the position of law regarding back wages for suspended employees who are later acquitted. The ratio decidendi of the case is that when disciplinary proceedings are dropped, the employee should be reinstated promptly, and any delay may entitle them to full wages for the intervening period. This is a departure from the earlier position that back wages are not payable for the period of suspension, even if the employee is acquitted, unless the prosecution is found to be malicious or vexatious.

Conclusion

The Supreme Court’s judgment in Raj Narain vs. Union of India clarifies the entitlement to back wages for employees suspended due to criminal charges and later acquitted. The court held that while acquittal does not automatically guarantee full back wages for the entire suspension period, employees are entitled to full wages from the date of acquittal till reinstatement, and also from the date of suspension till the date of closure of the departmental inquiry. This ruling provides important guidance for employers and employees regarding the payment of wages during suspension and after acquittal.

Category

• Service Law
  • Suspension
  • Reinstatement
  • Back Wages
• Indian Penal Code, 1860
  • Section 409, Indian Penal Code, 1860
  • Section 420, Indian Penal Code, 1860
  • Section 467, Indian Penal Code, 1860
• Criminal Law
  • Acquittal
  • Criminal Proceedings

FAQ

Q: If I am suspended from my job due to a criminal case and later acquitted, am I automatically entitled to back wages?
A: No, you are not automatically entitled to full back wages for the entire suspension period. However, you are generally entitled to back wages from the date of your acquittal until the date of your reinstatement. Additionally, you may be entitled to full wages for the period from the date of your suspension till the date the disciplinary proceedings were dropped, if any.

Q: What happens if the disciplinary proceedings against me are dropped?
A: If the disciplinary proceedings are dropped, your suspension should be revoked promptly, and you should be reinstated. Any delay in reinstatement may entitle you to full wages for the intervening period.

Q: What if the criminal case against me was initiated maliciously by my employer?
A: If the criminal case was initiated maliciously or with vexatious intent by your employer, you may be entitled to full back wages for the entire period you were out of service.

Q: What is the difference between a criminal case initiated by the employer and one by the police?
A: Generally, there is no difference, unless the criminal case initiated by the employer is found to be malicious or vexatious. In that case, the employer may be liable to pay full back wages.

Q: What does the Supreme Court say about the period before acquittal?
A: The Supreme Court has clarified that if the disciplinary proceedings were dropped, the employee should have been reinstated and hence is entitled to full wages from the date of suspension till the date the disciplinary proceedings were dropped.