Supreme Court Denies Back Wages to Reinstated Employee: Karupaiah vs. Thruuvalluvar Transport Corporation (2017)

Date of the Judgment: 12 October 2017

Citation: (2017) INSC 884

Judges: R.K. Agrawal, J., Abhay Manohar Sapre, J.

Can an employee automatically claim back wages after being reinstated following an acquittal in a criminal case? The Supreme Court of India addressed this question in a case involving an employee who was dismissed for alleged involvement in a murder case but was later acquitted. The Court clarified that reinstatement does not automatically guarantee back wages. The bench comprised Justices R.K. Agrawal and Abhay Manohar Sapre, with the majority opinion authored by Justice Abhay Manohar Sapre.

Case Background

The appellant, P. Karupaiah, was employed as a driver with the Thruuvalluvar Transport Corporation Ltd. The corporation dismissed him from service after he was implicated in a murder case. He was initially convicted by the Sessions Court. However, the High Court later acquitted him of all charges. Following his acquittal, the appellant requested reinstatement, which the corporation granted. However, the corporation refused to pay him back wages for the period he was out of service, from 21 July 1994 to 31 August 1999.

Aggrieved by this decision, the appellant filed a writ petition in the High Court of Judicature at Madras, seeking back wages. The Single Judge dismissed his petition, and the Division Bench upheld the dismissal. The appellant then appealed to the Supreme Court.

Timeline

Course of Proceedings

The appellant initially filed a writ petition in the High Court of Judicature at Madras, seeking back wages for the period he was out of service. The Single Judge dismissed the writ petition, refusing to grant back wages. The appellant then filed an appeal before the Division Bench of the same High Court, which also upheld the decision of the Single Judge and dismissed the appeal. This led to the appellant filing a special leave petition before the Supreme Court.

Legal Framework

The Supreme Court referred to the legal position regarding back wages, stating that an employee is not automatically entitled to back wages upon reinstatement. The Court cited the case of M.P. State Electricity Board vs. Jarina Bee (Smt.), (2003) 6 SCC 141, which established that back wages are not a matter of right unless expressly directed in the reinstatement order. The Court also noted the relevance of Section 17-B of the Industrial Disputes Act, 1947, which requires an employee to prove that they were not gainfully employed during the period of dismissal to claim back wages.

The Court acknowledged the principle of “No work-No pay” and stated that the courts have discretionary powers to award back wages in full or part, or to decline them entirely, depending on the facts of each case. The Court emphasized that the employee must provide evidence to show that they were not gainfully employed during the relevant period.

Arguments

The appellant argued that since he was acquitted by the High Court, he should be entitled to back wages for the period he was out of service. He contended that his dismissal was wrongful and that he should be compensated for the loss of earnings during that period. The appellant appears to have argued that the order of reinstatement should automatically include back wages.

The respondent, Thruuvalluvar Transport Corporation Ltd., argued that the appellant was not entitled to back wages as he had not provided any evidence to show that he was not gainfully employed during the period of his dismissal. The respondent also argued that the reinstatement order did not specifically mention back wages. They relied on the principle that back wages are not automatic upon reinstatement and must be proven by the employee.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the appellant is entitled to claim back wages for the period from 21.07.1994 to 31.08.1999.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court relied on the following authorities:

Judgment

The Supreme Court upheld the decisions of the High Court, denying back wages to the appellant. The Court emphasized that the appellant failed to provide any evidence that he was not gainfully employed during the period of his dismissal. The Court also noted that the reinstatement order did not specifically direct payment of back wages.

How each authority was viewed by the Court?

The Court followed M.P. State Electricity Board vs. Jarina Bee (Smt.), (2003) 6 SCC 141* and held that the back wages are not a matter of right and the employee has to prove that he was not gainfully employed during the period of dismissal. The Court also referred to Section 17-B of the Industrial Disputes Act, 1947 to highlight that the burden of proof lies on the employee to show that he was not gainfully employed.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the lack of evidence presented by the appellant to prove that he was not gainfully employed during the dismissal period. The Court also emphasized that the reinstatement order did not explicitly mention back wages. The Court also considered the principle of “No work-No pay” and the discretionary powers of the courts in awarding back wages.

Logical Reasoning:

The Court considered the legal precedents, particularly the case of M.P. State Electricity Board vs. Jarina Bee (Smt.), (2003) 6 SCC 141, which clarified that back wages are not an automatic consequence of reinstatement. The Court also analyzed Section 17-B of the Industrial Disputes Act, 1947, which places the burden of proof on the employee to show that they were not gainfully employed during the dismissal period. The Court rejected the argument that acquittal automatically entitles an employee to back wages, emphasizing the need for explicit evidence and a specific direction in the reinstatement order. The Court also considered the principle of “No work-No pay” and the discretionary powers of the courts in awarding back wages.

The Court’s reasoning was based on the principle that back wages are not an automatic right upon reinstatement. The Court emphasized that the employee must prove they were not gainfully employed during the dismissal period. The Court also noted that the reinstatement order did not mention back wages, which is a crucial factor in determining entitlement to such relief. The Court’s decision was also influenced by the fact that the issue was raised in a writ petition and not before an Industrial or Labour Tribunal, where evidence could have been adduced.

The Court stated, “Indeed, the employee in order to claim the relief of back wages along with the relief of reinstatement is required to prove with the aid of evidence that from the date of his dismissal order till the date of his rejoining, he was not gainfully employed anywhere.”

The Court also observed, “The Courts have also applied in appropriate cases the principle of “No work-No pay” while declining to award back wages and confining the relief only to the extent of grant of reinstatement along with grant of some consequential reliefs by awarding some benefits notionally, if any, in exercise of discretionary powers depending upon the facts of each case.”

Further, the Court noted, “Having seen the record of the case, we are satisfied that there was no evidence brought on record by the appellant (employee) in his writ petition to claim the back wages for the period in question either in full or part.”

Key Takeaways

• Reinstatement after acquittal does not automatically guarantee back wages.
• Employees must provide evidence of not being gainfully employed during the dismissal period to claim back wages.
• Reinstatement orders should explicitly mention back wages if they are to be awarded.
• The principle of “No work-No pay” can be applied in cases where back wages are not explicitly directed.

This judgment clarifies that employees seeking back wages must actively prove their lack of gainful employment during the dismissal period. It also highlights the importance of specific directions in reinstatement orders regarding back wages. This decision may lead to a more cautious approach by employees seeking back wages and a more rigorous approach by courts in evaluating such claims.

Directions

The Supreme Court did not issue any specific directions in this case.

Development of Law

The ratio decidendi of this case is that reinstatement does not automatically entitle an employee to back wages; the employee must prove they were not gainfully employed during the dismissal period, and the reinstatement order must explicitly mention back wages. This case reaffirms the principle established in M.P. State Electricity Board vs. Jarina Bee (Smt.), (2003) 6 SCC 141, and clarifies the application of Section 17-B of the Industrial Disputes Act, 1947. There is no significant change in the previous position of law, but this judgment reinforces the existing principles.

Conclusion

The Supreme Court dismissed the appeal, holding that the appellant was not entitled to back wages because he failed to provide evidence of unemployment during his dismissal period and the reinstatement order did not explicitly mention back wages. The Court reiterated that back wages are not an automatic right upon reinstatement and must be proven by the employee.