Court’s Decision
The Patna High Court, presided by Justice Anil Kumar Sinha, allowed the writ petition filed by an employee of the Bihar Industrial Area Development Authority (BIADA), setting aside the orders dated 05.12.2014 and 27.02.2017 passed by the Managing Director, BIADA, and the Principal Secretary, Department of Industries, respectively.
The Court directed BIADA to pay 70% of back wages to the petitioner for the period between 01.12.2007 and 03.07.2014, during which he was compulsorily retired and later reinstated following a High Court order.
Justice Sinha observed:
“Once the order of compulsory retirement was quashed, the alleged misconduct could not form the basis to deny consequential benefits. An employee cannot be penalized for the employer’s own wrongful act.”
The Court held that the denial of back wages was arbitrary, unsupported by evidence, and contrary to settled principles of law established by the Supreme Court in Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya (2013) 10 SCC 324, Hindustan Tin Works Ltd. v. Employees of Hindustan Tin Works Ltd. (1979) 2 SCC 80, and Pradeep v. Manganese Ore (India) Ltd. (2022) 3 SCC 683.
Facts
The petitioner was appointed as a Peon on 7 May 1979 in the erstwhile North Bihar Industrial Area Development Authority. After the formation of BIADA in 2003, his services were transferred to the new authority.
On 27 September 2007, he was issued a charge memo alleging unauthorized absence, failure to attend calls from superior officers, and negligence of duty. In his reply, the petitioner stated that he was present at Ram Nagar, received his salary for that period, and did not own a mobile phone due to financial constraints, having instead provided his landline number.
Despite this explanation, BIADA’s Managing Director passed an order on 10 November 2007, compulsorily retiring him effective 30 November 2007.
The petitioner challenged the order in CWJC No. 9420 of 2008, which was allowed on 18 June 2014, setting aside the retirement order and directing the respondents to consider his back-wage claim per Novartis India Ltd. v. State of West Bengal (2009) 3 SCC 124.
He then submitted a representation on 3 November 2014, seeking back wages for the period of enforced retirement (01.12.2007 to 03.07.2014). However, his claim was rejected on 5 December 2014, with BIADA asserting that:
- he was a temporary employee,
- he was habitually absent and indisciplined,
- he had not proved lack of gainful employment, and
- BIADA had already paid others for work done in his absence.
An appeal to the Principal Secretary, Department of Industries (Appeal No. 1/2015) was dismissed on 27 February 2017, upholding BIADA’s reasoning.
Issues
- Whether the petitioner was entitled to back wages after his compulsory retirement was set aside.
- Whether BIADA’s reliance on prior allegations and temporary employment status was legally sustainable.
- Whether the denial of back wages violated principles of natural justice and settled law on reinstatement benefits.
Petitioner’s Arguments
The petitioner argued that since his compulsory retirement had been quashed, he was automatically entitled to all consequential benefits, including back wages.
He contended that no departmental enquiry had been conducted before imposing the penalty, rendering the charges of indiscipline and absenteeism unsubstantiated. The respondents could not revive those allegations to deny financial relief.
He further asserted that he was never gainfully employed during the period of enforced idleness, and BIADA’s rejection order was passed without granting a personal hearing, violating natural justice.
He also argued that describing him as a temporary employee after nearly 28 years of continuous service was baseless, since he had been granted pay revisions and time-bound promotions akin to permanent staff.
Respondent’s Arguments
BIADA maintained that the petitioner’s appointment was temporary and irregular, made without advertisement or selection, and terminable without notice. His service record showed repeated indiscipline, habitual absenteeism, and neglect of duty—including one instance where a theft occurred during his absence as a night guard.
It was argued that reinstatement following the High Court’s earlier order did not automatically entitle him to full back wages, especially since BIADA had already paid other workers for performing his duties during his absence.
BIADA also claimed the petitioner failed to provide proof that he was not gainfully employed, and that granting back wages would cause double financial liability. Nevertheless, he had been given all service and retirement benefits, including ACP/MACP, gratuity, and leave encashment.
Analysis of the Law
The Court analyzed the issue in light of Supreme Court precedents on reinstatement and back wages.
It referred to Hindustan Tin Works Ltd. v. Employees of Hindustan Tin Works Ltd. (1979) 2 SCC 80, which held that an employee whose termination is declared illegal is ordinarily entitled to full back wages, except to the extent of proven gainful employment.
The Court also relied on Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya (2013) 10 SCC 324, where the Supreme Court held that denial of back wages amounts to indirectly punishing the employee and rewarding the employer, unless the employer proves the employee’s gainful employment during the intervening period.
Finally, Pradeep v. Manganese Ore (India) Ltd. (2022) 3 SCC 683 and LPA No. 317 of 2024 (Patna High Court) reaffirmed that back wages are the normal consequence of wrongful termination unless specifically rebutted by the employer.
Applying these principles, Justice Sinha held that once the compulsory retirement was quashed, the presumption shifted in favor of full reinstatement with back wages, and the onus was on BIADA to prove that the petitioner was gainfully employed.
Precedent Analysis
- Hindustan Tin Works Ltd. (1979) – Established that reinstatement following wrongful termination ordinarily includes full back wages.
- Deepali Gundu Surwase (2013) – Clarified that denying back wages without proof of gainful employment penalizes the employee twice.
- Pradeep v. Manganese Ore (India) Ltd. (2022) – Reiterated that reinstatement with back wages is the natural consequence of wrongful dismissal.
- Novartis India Ltd. v. State of West Bengal (2009) – Applied earlier by the High Court; reinforced that termination without due process cannot deprive an employee of back wages.
- LPA No. 317 of 2024 (Patna HC) – Cited to affirm the principle of presumption in favor of reinstated employees when no evidence of alternate employment exists.
Court’s Reasoning
The Court found BIADA’s reasoning legally untenable on multiple grounds:
- The petitioner’s reinstatement order conclusively set aside his compulsory retirement. Therefore, relying on the same unproven allegations of misconduct to deny back wages was contrary to natural justice.
- The claim that he was a temporary employee after 28 years of continuous service and promotions was arbitrary and perverse.
- The petitioner had affirmed on affidavit before the appellate authority that he was not gainfully employed. BIADA failed to produce any evidence to the contrary, thus failing to discharge its burden.
- The plea of “double payment” was rejected, as an employee wrongfully kept out of service cannot be denied wages on the ground that someone else performed his duties.
“The employer cannot penalize the employee for the consequences of its own unlawful action. Denial of back wages under such circumstances is wholly unjustified.”
Conclusion
The Patna High Court allowed the writ petition, quashed BIADA’s orders dated 05.12.2014 and 27.02.2017, and directed the authority to pay 70% of back wages for the period 01.12.2007 to 03.07.2014 within four months, failing which the amount would attract interest.
Justice Sinha concluded:
“Ordinarily, a workman whose service has been illegally terminated is entitled to back wages for the period of enforced idleness. The burden to prove gainful employment lies on the employer, not the employee.”
The Court made no order as to costs.
Implications
This judgment reinforces that reinstatement after wrongful termination carries a presumption of entitlement to back wages unless the employer proves otherwise. It also underscores that employers cannot invoke old or unproven allegations to deny statutory and equitable relief.
By granting 70% back wages, the Court balanced fairness with administrative pragmatism, ensuring justice without imposing undue burden on the state exchequer.
FAQs
1. Does reinstatement automatically entitle an employee to back wages?
Generally, yes. When termination is found illegal, back wages follow unless the employer proves the employee was gainfully employed.
2. Can an employer cite past misconduct to deny back wages?
No. Once termination or compulsory retirement is quashed, unproven allegations cannot be revived to deny monetary benefits.
3. What if someone else performed the employee’s duties during wrongful removal?
That cannot justify denial of back wages; the employer bears responsibility for the consequences of its own wrongful act.
