Supreme Court Partially Allows Back Wages in Reinstatement Case: Ramesh Chand vs. Delhi Transport Corporation (2023)

Introduction

Date of the Judgment: July 5, 2023

Citation: Civil Appeal No. 4208 of 2023 (Arising out of SLP (Civil) No. 7137/2016)

Judges: Abhay S. Oka, J., Rajesh Bindal, J.

When an employee is terminated from service and later reinstated, is the employer automatically liable to pay back wages? The Supreme Court of India recently addressed this question in a case concerning a conductor of the Delhi Transport Corporation, who was removed from service but later reinstated by the Labour Court. The core issue was whether the employee had sufficiently proven his unemployment during the period he was out of work to be entitled to back wages. This judgment clarifies the burden of proof on employees seeking back wages and the extent to which they must demonstrate their lack of employment. The judgment was delivered by a bench comprising Justice Abhay S. Oka and Justice Rajesh Bindal.

Case Background

Ramesh Chand, the appellant, was employed as a conductor by the Delhi Transport Corporation (DTC) on June 22, 1985. On September 8, 1992, he was issued a charge sheet alleging that he had collected Rs. 4 from two passengers without issuing tickets. Following an inquiry, DTC ordered his removal from service, effective June 14, 1996.

Chand then raised an industrial dispute before the Labour Court, challenging both the inquiry and the removal order. The Labour Court found the inquiry to be illegal and allowed DTC to present evidence. On March 17, 2009, the Labour Court concluded that the charge against Chand was not proven and ordered his reinstatement. However, the Labour Court denied back wages, stating that Chand had not proven he was unemployed during the period of his removal.

Aggrieved by the denial of back wages, Chand filed a writ petition before the Delhi High Court, which was dismissed. An appeal to the Division Bench of the Delhi High Court also failed, with the High Court upholding the denial of back wages in its judgment dated December 11, 2015. Chand then appealed to the Supreme Court of India.

Timeline

Course of Proceedings

The Labour Court initially found the inquiry against the appellant to be illegal. Consequently, the Labour Court allowed the respondent, DTC, to present evidence to substantiate the charges against the appellant. After considering the evidence, the Labour Court ruled that the charges were not proven and ordered the reinstatement of the appellant. However, the Labour Court denied back wages on the ground that the appellant had failed to prove that he was not gainfully employed during the period of his removal.

The appellant challenged the denial of back wages by filing a writ petition before a Single Judge of the Delhi High Court, which was dismissed. The appellant then filed an appeal before the Division Bench of the Delhi High Court, which also upheld the denial of back wages. The Supreme Court then heard the matter in appeal.

Legal Framework

The Supreme Court referred to Section 106 of the Indian Evidence Act, 1872, which deals with the burden of proving facts especially within one’s knowledge.

Section 106 of the Indian Evidence Act, 1872 states:
“When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.”

The Court noted that the fact of whether an employee was gainfully employed after dismissal is within the employee’s special knowledge. Therefore, the initial burden is on the employee to show that they were not gainfully employed after termination.

Arguments

Appellant’s Submissions:

• The appellant argued that he had specifically stated in his claim before the Labour Court that he was unemployed since his removal.
• He contended that he was cross-examined on this issue by the respondent’s advocate, during which he maintained his unemployment status.
• The appellant asserted that he had discharged his burden of proving unemployment, and there was no evidence to the contrary.

Respondent’s Submissions:

• The respondent pointed out that the appellant had initially filed an affidavit asserting unemployment, but later withdrew it.
• The respondent argued that the subsequent affidavit did not contain a similar assertion, indicating the appellant had not discharged his burden of proof.
• The respondent submitted documents showing the retiral dues paid to the appellant and a statement of the salary he could have drawn from the date of termination to reinstatement.

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the Labour Court was justified in denying the relief of back wages to the appellant.

Treatment of the Issue by the Court

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

Authorities

Cases Relied Upon:

• National Gandhi Museum v. Sudhir Sharma [2021] 12 SCC 439, Supreme Court of India: The Court relied on this case to reiterate that the burden of proving unemployment lies on the employee, as it is a fact within their special knowledge.

Legal Provisions Considered:

• Section 106 of the Indian Evidence Act, 1872: This provision was considered to determine where the burden of proof lies in establishing whether an employee was gainfully employed after termination.

Judgment

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

How each authority was viewed by the Court?

• The Supreme Court followed the ratio in National Gandhi Museum v. Sudhir Sharma [2021] 12 SCC 439* to emphasize that the burden of proving unemployment lies on the employee.

The Court considered Section 106 of the Indian Evidence Act, 1872 to determine that the initial burden to prove unemployment lies on the employee.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by a combination of factual and legal considerations. The court acknowledged the initial burden on the employee to prove unemployment, as per Section 106 of the Indian Evidence Act, 1872 and the precedent set in National Gandhi Museum v. Sudhir Sharma [2021] 12 SCC 439. However, the court also considered the specific facts of the case, including the appellant’s initial assertion of unemployment in his statement of claim and his denial of sufficient income during cross-examination. The Court noted that while the appellant withdrew his initial affidavit, the court did not find it fatal to the appellant’s case, and the court was not convinced that the appellant had a source of income for the entire period of termination.

Fact:Law Ratio

The court’s reasoning was a mix of factual analysis and legal principles. The court considered the factual evidence of the appellant’s initial claim of unemployment and his testimony during cross-examination. The court also considered the legal principle that the burden of proving unemployment lies on the employee as per Section 106 of the Indian Evidence Act, 1872 and the precedent set in National Gandhi Museum v. Sudhir Sharma [2021] 12 SCC 439.

The Court noted that while the initial burden was on the employee to prove unemployment, the appellant had sufficiently demonstrated his unemployment until August 1997. The court also considered the fact that the respondent had not provided any evidence to show that the appellant had an alternative source of income. The Court, therefore, did not grant full back wages but awarded a lump sum of Rs. 3 lakhs.

The Court reasoned that while a reinstatement order is passed, an order of payment of back wages is not automatic. It depends on the facts and circumstances of each case. The court considered the conduct of the appellant in withdrawing the affidavit and not raising the contention of unemployment in the fresh affidavit. However, the court also noted that the appellant had specifically asserted unemployment in his statement of claim and had denied having a sufficient source of income during cross-examination.

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

• The appellant’s initial assertion of unemployment in the statement of claim.
• The appellant’s denial of sufficient income during cross-examination.
• The withdrawal of the initial affidavit by the appellant.
• The lack of evidence from the respondent showing alternative income for the appellant.

The Court concluded that the appellant had discharged the burden of proving unemployment at least until August 1997. However, the court did not grant full back wages for the entire period from the date of termination to reinstatement, considering the conduct of the appellant in withdrawing the initial affidavit.

The court quoted from the judgment:
“Even if Court passes an order of reinstatement in service, an order of payment of back wages is not automatic. It all depends on the facts and circumstances of the case.”

“In the statement of claim, it is specifically asserted that till August 1997 when the statement of claim was filed, the appellant found it difficult to get employment and in fact he was unemployed.”

“Thus, the appellant discharged the burden on him by establishing that he was unemployed at least till August 1997.”

Key Takeaways

• Burden of Proof: An employee seeking back wages after reinstatement must initially prove they were not gainfully employed during the period of termination.
• How to Prove Unemployment: An assertion on oath by the employee that they were unemployed may be sufficient if the employer does not provide any evidence to the contrary.
• Back Wages Not Automatic: Reinstatement does not automatically guarantee back wages; it depends on the facts of each case.
• Partial Back Wages: The court may grant partial back wages if the employee proves unemployment for a portion of the termination period.
• Lump Sum Payment: Courts may award a lump sum payment in lieu of back wages, considering the specific circumstances of the case.

Directions

The Supreme Court directed the respondent, Delhi Transport Corporation, to pay a sum of Rs. 3 lakhs to the appellant as back wages within two months from the date of the judgment. The court also specified that if the payment was not made within two months, the amount would carry an interest of 9% per annum from the date of reinstatement.

The Court also directed the appellant to provide his bank account details and a copy of a cancelled cheque to the advocate for the respondent within one month from the date of the judgment. If the appellant failed to do so, the respondent was permitted to deposit the amount with the Labour Court, which would then permit the appellant to withdraw the same.

Development of Law

The ratio decidendi of this case is that while the initial burden of proving unemployment lies on the employee, as per Section 106 of the Indian Evidence Act, 1872 and the precedent set in National Gandhi Museum v. Sudhir Sharma [2021] 12 SCC 439, this burden can be discharged by the employee by asserting unemployment in the statement of claim and denying sufficient income during cross-examination. The court also clarified that an order of reinstatement does not automatically guarantee back wages and the court may grant partial back wages if the employee proves unemployment for a portion of the termination period.

Conclusion

In the case of Ramesh Chand vs. Management of Delhi Transport Corporation, the Supreme Court partially allowed the appeal, modifying the judgments of the Labour Court and the High Court. The court held that while the initial burden of proof lies on the employee to demonstrate unemployment, the appellant had sufficiently proven his unemployment until August 1997. The court awarded a lump sum of Rs. 3 lakhs as back wages, clarifying that reinstatement does not automatically guarantee full back wages. This judgment underscores the need for employees to provide evidence of their unemployment while also highlighting that courts will consider the specific facts and circumstances of each case.