Date of the Judgment: July 5, 2023
Citation: 2023 INSC 601
Judges: Abhay S. Oka, J. and Rajesh Bindal, J.
Can an employee who has been reinstated after being wrongfully terminated claim full back wages? The Supreme Court of India addressed this question in a recent case, clarifying the burden of proof on the employee to demonstrate a lack of gainful employment during the period of termination. This judgment emphasizes that while reinstatement is a right, full back wages are not automatic and depend on the specific facts of each case. The bench consisted of Justice Abhay S. Oka and Justice Rajesh Bindal, with the judgment authored by Justice Abhay S. Oka.
Case Background
The appellant, Ramesh Chand, 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 them tickets. Following an inquiry, he was removed from service effective June 14, 1996. The Labour Court, upon reviewing the case, found the inquiry to be illegal and allowed the DTC to present evidence. Subsequently, on March 17, 2009, the Labour Court concluded that the charge against Ramesh Chand was not proven and ordered his reinstatement. However, the Labour Court denied back wages, stating that Ramesh Chand had not proven he was not gainfully employed during his termination period.
Timeline
| Date | Event |
|---|---|
| June 22, 1985 | Ramesh Chand employed as a conductor by Delhi Transport Corporation (DTC). |
| September 8, 1992 | Ramesh Chand issued a charge sheet for allegedly collecting money from passengers without issuing tickets. |
| June 14, 1996 | Ramesh Chand removed from service by DTC. |
| August 8, 1997 | Ramesh Chand filed a statement of claim before the Labour Court asserting he was unemployed. |
| July 18, 2008 | Ramesh Chand filed an affidavit before the Labour Court stating he was unemployed, which was later withdrawn. |
| September 4, 2008 | Ramesh Chand filed a fresh affidavit, omitting the assertion of unemployment. |
| March 17, 2009 | Labour Court orders reinstatement of Ramesh Chand but denies back wages. |
| July 23, 2009 | Ramesh Chand reinstated in service. |
| December 11, 2015 | Delhi High Court Division Bench upholds denial of back wages. |
| March 18, 2016 | Supreme Court issues notice in the appeal. |
| March 31, 2020 | Ramesh Chand superannuated. |
| July 5, 2023 | Supreme Court modifies the High Court order and directs payment of Rs. 3 lakhs as back wages. |
Course of Proceedings
Ramesh Chand, aggrieved by the denial of back wages, filed a writ petition before a single judge of the Delhi High Court, which was dismissed. He then appealed to the Division Bench of the Delhi High Court, which also upheld the denial of back wages on December 11, 2015. The Supreme Court issued a notice on March 18, 2016, after which the appellant was reinstated on July 23, 2009, and superannuated on March 31, 2020.
Legal Framework
The Supreme Court considered Section 106 of the Indian Evidence Act, 1872, which deals with the burden of proving facts especially within one’s knowledge. The Court noted that the question of whether an employee was gainfully employed after dismissal is within their special knowledge. The court observed that the initial burden is on the employee to show that he was not gainfully employed after the termination order. The court further observed that the manner in which the employee can discharge the said burden will depend on the facts and circumstances of each case.
Arguments
Appellant’s Submissions:
- The appellant’s counsel argued that Ramesh Chand had specifically stated in his claim before the Labour Court that he was unemployed since his removal.
- It was submitted that the appellant was cross-examined on this aspect, and he maintained that he was unemployed.
- The appellant contended that he had discharged his burden of proving unemployment and was therefore entitled to full back wages.
Respondent’s Submissions:
- The respondent’s counsel pointed out that while Ramesh Chand initially filed an affidavit asserting unemployment, he later withdrew it and filed a fresh affidavit without such an assertion.
- The respondent argued that Ramesh Chand had failed to prove he was unemployed and thus was not entitled to back wages.
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| Burden of Proving Unemployment | Appellant specifically pleaded unemployment in the initial claim. | Appellant |
| Appellant was cross-examined and denied having a sufficient source of income. | Appellant | |
| Failure to Prove Unemployment | Appellant withdrew the initial affidavit asserting unemployment. | Respondent |
| Fresh affidavit did not contain a specific assertion of unemployment. | Respondent |
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- 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 how the Court decided the issue:
| Issue | Court’s Decision |
|---|---|
| Whether the Labour Court was justified in denying the relief of back wages to the appellant. | The Supreme Court modified the Labour Court’s order, holding that while full back wages were not warranted, the appellant was entitled to partial back wages. The Court noted that the initial burden was on the employee to show that he was not gainfully employed after the termination order. The Court concluded that the appellant had discharged the burden by asserting unemployment in his initial claim and during cross-examination. However, the Court also considered the appellant’s conduct of withdrawing the initial affidavit and not raising the contention of unemployment in the fresh affidavit. Therefore, the Court awarded a sum of Rs. 3 lakhs in lieu of back wages. |
Authorities
The Supreme Court relied on the following authority:
- National Gandhi Museum v. Sudhir Sharma, [(2021) 12 SCC 439]: The Supreme Court referred to this case to reiterate that the burden of proving lack of gainful employment lies on the employee. The Court stated that whether an employee was gainfully employed after dismissal is within his special knowledge, and therefore, the initial burden is on the employee to show that he was not gainfully employed.
The Supreme Court also considered the following legal provision:
- Section 106 of the Indian Evidence Act, 1872: This provision deals with the burden of proving facts especially within one’s knowledge. The Court used this to support its view that the initial burden to prove a lack of gainful employment lies on the employee.
| Authority | How it was Considered | Court |
|---|---|---|
| National Gandhi Museum v. Sudhir Sharma [(2021) 12 SCC 439] | Followed to establish that the burden of proving unemployment lies on the employee. | Supreme Court of India |
| Section 106 of the Indian Evidence Act, 1872 | Applied to determine that the initial burden to prove a lack of gainful employment lies on the employee. | Statute |
Judgment
| Submission by the Parties | How it was Treated by the Court |
|---|---|
| Appellant’s claim of unemployment since removal in the initial claim. | Accepted as evidence that the appellant was unemployed at least until August 1997. |
| Appellant’s cross-examination denying sufficient income. | Accepted as further evidence of unemployment. |
| Respondent’s argument that the appellant withdrew the affidavit asserting unemployment. | Acknowledged, and considered as a reason to not grant full back wages for the entire period. |
| Respondent’s argument that the fresh affidavit did not assert unemployment. | Acknowledged, and considered as a reason to not grant full back wages for the entire period. |
| Authority | How it was viewed by the Court |
|---|---|
| National Gandhi Museum v. Sudhir Sharma [(2021) 12 SCC 439] | The Court reiterated the principle that the burden of proving lack of gainful employment lies on the employee. |
| Section 106 of the Indian Evidence Act, 1872 | The Court applied this section to support its view that the initial burden to prove a lack of gainful employment lies on the employee. |
What weighed in the mind of the Court?
The Court’s decision was primarily influenced by the fact that while the appellant initially claimed unemployment, his subsequent actions of withdrawing the affidavit and not reiterating the claim in a fresh affidavit created doubt about his continuous unemployment. The Court also considered that the respondent had not presented any evidence to show that the appellant had another source of income. The Court balanced these factors to arrive at a decision that was fair to both parties.
| Sentiment | Percentage |
|---|---|
| Appellant’s initial claim of unemployment | 30% |
| Appellant’s cross-examination denying sufficient income | 25% |
| Appellant’s withdrawal of affidavit asserting unemployment | 25% |
| Respondent’s failure to prove alternative income source | 20% |
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
Logical Reasoning:
Employee terminated and later reinstated
Employee claims back wages
Initial burden on employee to prove lack of gainful employment
Employee asserts unemployment in initial claim and cross-examination
Employee withdraws initial affidavit of unemployment
Court concludes full back wages not warranted due to employee’s conduct
Court awards partial back wages of Rs. 3 lakhs
The court considered the initial assertion of the appellant that he was unemployed till August 1997 and also the fact that the respondent could not prove that the appellant had an alternative source of income to conclude that the Labour Court was not justified in denying the back wages. However, the court also considered the conduct of the appellant in withdrawing the affidavit filed earlier to conclude that the appellant was not entitled to full back wages.
The Supreme Court noted that while reinstatement is a right, back wages are not automatic. The court observed:
“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.”
The Court further observed:
“Considering the principle incorporated in Section 106 of the Indian Evidence Act, 1872, the initial burden is on the employee to come out with the case that he was not gainfully employed after the order of termination. It is a negative burden.”
The Court also noted:
“Since, it is a negative burden, in a given case, an assertion on oath by the employee that he was unemployed, may be sufficient compliance in the absence of any positive material brought on record by the employer.”
The Court, therefore, modified the orders of the Labour Court and High Court and directed the respondent to pay Rs. 3 lakhs as back wages to the appellant.
Key Takeaways
- An employee seeking back wages after reinstatement must initially demonstrate they were not gainfully employed during the termination period.
- The burden of proof is on the employee, but a simple assertion of unemployment can be sufficient if the employer does not provide contrary evidence.
- Courts may not grant full back wages if there are inconsistencies in the employee’s claims or conduct.
- Reinstatement does not automatically guarantee full back wages; each case is decided based on its specific facts.
Directions
The Supreme Court directed the respondent to pay a sum of Rs. 3 lakhs to the appellant as back wages within two months. The appellant was instructed to provide his bank account details and a canceled cheque to the respondent’s advocate. If the appellant failed to furnish these details within one month, the respondent was allowed to deposit the amount with the Labour Court. If the respondent failed to pay or deposit the amount within two months, the amount would carry interest at 9% per annum from the date of reinstatement.
Development of Law
The ratio decidendi of this case is that while the initial burden to prove a lack of gainful employment lies on the employee seeking back wages, a simple assertion of unemployment may be sufficient if the employer does not provide contrary evidence. However, the court also stated that the conduct of the employee in withdrawing the affidavit asserting unemployment is a relevant factor in deciding the quantum of back wages. There is no change in the previous position of law, but the court clarified the manner in which the burden of proof can be discharged by the employee.
Conclusion
The Supreme Court’s judgment in Ramesh Chand vs. Delhi Transport Corporation clarifies the principles governing back wages in reinstatement cases. While the employee bears the initial burden of proving unemployment, the court also considers the employer’s evidence and the employee’s conduct. This case highlights that back wages are not automatic upon reinstatement and depend on the specific facts and circumstances of each case. The Supreme Court modified the orders of the Labour Court and High Court and directed the respondent to pay Rs. 3 lakhs as back wages to the appellant, balancing the interests of both parties.