2019 (8) TMI 1727 - SC - Indian Laws

Seeking disbursement of retiral benefits to the appellant - entitlement to Back wages - allegation of Misappropriation of funds and defalcation against the appellant/headmaster, during his tenure of service - submission of appellant in support of the appeal is that once the High Court found that the appellant had wrongfully been removed from service, the general principle that back-wages must follow a determination in regard to the illegality of termination should be applied - HELD THAT - The High Court has held that the action of the Municipal Council in proceeding with a de novo inquiry was vitiated since no reasons were recorded by the Municipal Council. The High Court held that even if a de novo inquiry was permissible under the rules, no reason was furnished for discarding the report of the first inquiry officer and convening a fresh enquiry. Moreover, the appellant had objected to the appointment of Shri Sontakke as an inquiry officer since he was an ex-officer of the Municipal Council who was occupying quarters allotted to him at the material time. Hence, the High Court held that the removal was illegal. However, the High Court denied back-wages for the period between the date of dismissal and the date on which the appellant attained the age of superannuation. The appellant has been granted his retiral dues on the basis of continuity of service. In the present case the first inquiry resulted in a report which came to the conclusion that the charge of misconduct was not substantiated. Upon finding that the convening of a fresh inquiry without recording reasons was contrary to law, the High Court would have ordinarily granted liberty to the Municipal Council to take a fresh decision after due notice to the appellant. Such a course of action was, however, rendered impracticable by supervening events. The writ petition instituted by the appellant before the High Court in 1996 remained pending for nearly eighteen years - High Court was not justified in denying the back-wages to the appellant altogether. Bearing in mind the circumstances which have been noted above, a lumpsum compensation should be directed to be paid. The ends of justice would be met by directing that the appellant be paid an amount quantified at ₹ 5 lakhs in full and final settlement of his claim for backwages for the period between the date of the order of removal and the date on which he attained the age of superannuation - appeal is accordingly disposed of.

Summary

Issues Involved: Legality of the second inquiry, entitlement to back-wages, and principles governing the grant of back-wages.

1. Legality of the Second Inquiry:
The appellant was initially appointed as Headmaster on 1 July 1986. On 5 February 1994, he was accused of misappropriating ?5,000. After submitting a reply, an inquiry officer, Shri Marathe, was appointed, who found the appellant not guilty. Despite this, the first respondent appointed another inquiry officer, Shri Sontakke, without recording reasons for discarding the first report. The new inquiry officer found the appellant guilty, leading to his removal on 29 June 1996. The High Court quashed this removal, deeming the second inquiry illegal due to the lack of recorded reasons for the fresh inquiry. The Supreme Court upheld this view, citing the necessity of recording reasons when disagreeing with an inquiry report, as established in CSHA University v BD Goyal (2010) 15 SCC 776.

2. Entitlement to Back-Wages:
The appellant argued that back-wages should follow the wrongful termination, supported by precedents like Hindustan Tin Works (P) Ltd v Employees (1979) 2 SCC 80 and Deepali Gundu Surwase v Kranti Junior Adhyapak Mahavidyalaya (2013) 10 SCC 324. The High Court denied back-wages but granted retiral benefits based on continuity of service. The Supreme Court noted that the general rule is reinstatement with full back wages unless exceptional circumstances justify otherwise. The Court highlighted that the burden of proving gainful employment during the period of wrongful termination lies with the employer.

3. Principles Governing the Grant of Back-Wages:
The Supreme Court referred to several judgments, including Hindustan Tin Works and Deepali Surwase, which emphasize that reinstatement with back wages is the norm unless the employer proves the employee was gainfully employed during the termination period. The Court underscored that denying back-wages would unjustly penalize the employee and reward the employer for wrongful termination.

Conclusion:
The Supreme Court concluded that the High Court erred in denying back-wages entirely. Considering the prolonged litigation and the appellant's superannuation in 2005, the Court found it impractical to reopen proceedings. Instead, it directed a lump sum compensation of ?5 lakhs to the appellant, in addition to the retiral benefits, to settle the back-wages claim. This amount was to be paid within two months from the receipt of the order. The appeal was disposed of with no order as to costs.