Supreme Court Condemns Employer for Suppression of Evidence as “Fraud on Court,” Upholds Reinstatement of Wrongfully Dismissed Bus Driver, Awards 75% Back Wages and Full Terminal Benefits

Court’s Decision:

The Supreme Court upheld the reinstatement of the dismissed employee (a bus driver) with 75% of back wages from the date of termination until superannuation. It also directed that full terminal benefits along with 6% interest per annum be provided. The Court condemned the Maharashtra State Road Transport Corporation (Corporation) for deliberately suppressing critical evidence before the Labour Court and described this as an act of “fraud on court.”

The Court modified the High Court’s order, which had granted 100% back wages, reasoning that the employee had admitted to some temporary employment in the interim, making full back wages unnecessary.

The Corporation was ordered to release the payments within three months. Failure to comply would attract an additional 2% interest.

Facts of the Case:

1. The Incident and Its Aftermath:
   • The employee, a bus driver for the Corporation since 1988, was involved in a fatal accident in 1996 when a lorry collided with the bus he was driving. The accident led to the deaths of two passengers, injuries to several others, and a financial loss of ₹45,000 for the Corporation.
   • Disciplinary proceedings were initiated, and the driver was dismissed in 1997 on the grounds of negligence. His departmental appeal was unsuccessful.
2. Labour Court’s Decision:
   • The Labour Court upheld the dismissal, finding the inquiry fair and the evidence sufficient to prove the driver’s negligence.
3. MACT Proceedings:
   • Meanwhile, in a separate case before the Motor Accidents Claims Tribunal (MACT), the Corporation, in its defense, explicitly stated that the accident was solely caused by the negligence of the lorry driver, not the bus driver.
   • The MACT awarded compensation to the victims and held the lorry driver entirely responsible, absolving the bus driver and the Corporation of any liability.
4. High Court’s Review:
   • The employee later discovered the Corporation’s contradictory stance before the MACT. In a review petition, he presented the MACT’s findings and the Corporation’s pleadings.
   • The High Court, in review, found that the suppression of this evidence had prejudiced the employee’s case. It reinstated the employee with full back wages, which triggered the Corporation’s appeal to the Supreme Court.

Issues:

1. Was the Corporation guilty of misrepresentation (“suggestio falsi”) and suppression of evidence (“suppressio veri”) before the Labour Court?
2. Did the High Court correctly exercise its review jurisdiction?
3. Was the award of full back wages appropriate?
4. What was the appropriate relief for the employee?

Petitioner’s Arguments (Employee):

1. The Corporation’s suppression of evidence before the Labour Court constituted fraud, which misled the court into upholding the dismissal.
2. The employee suffered severe financial and emotional distress as he could not secure permanent employment following the dismissal.
3. The award of back wages was justified based on principles of natural justice and established precedents like Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyala.

Respondent’s Arguments (Corporation):

1. The disciplinary proceedings and the MACT proceedings served different purposes; findings in one could not bind the other.
2. The High Court exceeded its jurisdiction by reconsidering the Labour Court’s findings on negligence.
3. The award of full back wages was unjustified as there was no proof of the employee’s unemployment during the intervening period.

Analysis of the Law:

1. Suppression of Evidence:
   • The Corporation’s failure to disclose its own pleadings before the MACT to the Labour Court was deemed a serious ethical and legal violation. The Supreme Court held that the Corporation’s contradictory positions amounted to “suggestio falsi” (false representation) and “suppressio veri” (suppression of truth).
   • The Court emphasized that such conduct undermined the principles of natural justice and fairness.
2. Review Jurisdiction:
   • The Court upheld the High Court’s exercise of review jurisdiction, observing that the suppressed evidence (the MACT findings) was crucial and would have materially affected the Labour Court’s decision.
   • It reaffirmed that review jurisdiction could be invoked where new, clinching evidence is discovered that alters the outcome of the case.
3. Award of Back Wages:
   • The Court referred to key precedents, including Hindustan Tin Works v. Employees (1979) and Deepali Gundu Surwase (2013), which established that back wages are a normal remedy in cases of wrongful termination unless the employer can prove gainful employment by the employee during the intervening period.
   • While acknowledging that the employee had engaged in temporary daily-wage work, the Court noted that the Corporation’s egregious conduct warranted substantial compensation. It reduced the award from 100% to 75% of back wages.

Precedent Analysis:

1. Hindustan Tin Works (1979): The Court held that reinstatement with full back wages is the normal rule in cases of wrongful termination, unless the employer proves otherwise.
2. Deepali Gundu Surwase (2013): It emphasized that back wages should be awarded when termination violates principles of natural justice or is motivated by malice.
3. Union of India v. N. Murugesan (2022): This case highlighted the doctrine of “approbate and reprobate,” where a party cannot take contradictory stances to suit its interests.

Court’s Reasoning:

1. The Corporation’s suppression of its MACT pleadings, which absolved the bus driver of negligence, deprived the Labour Court of crucial evidence. This was a clear act of fraud on the court.
2. The High Court rightly exercised review jurisdiction to correct this injustice.
3. The employee’s long legal battle and financial hardship justified a significant award of back wages, though the admission of temporary employment warranted a reduction to 75%.

Conclusion:

The Supreme Court ordered:

1. Payment of 75% back wages from the date of termination until superannuation.
2. Full terminal benefits with 6% interest per annum.
3. Payment to be made within three months, failing which an additional 2% interest would apply.
   The appeal was disposed of with the Corporation being strongly reprimanded for its unethical conduct.

Implications:

This judgment underscores:

1. The courts’ intolerance for suppression of evidence and misrepresentation by employers.
2. The principle that back wages are a key remedy in wrongful termination cases, contingent on the facts and the employee’s employment status during litigation.
3. The reaffirmation of natural justice and fairness as central pillars in labor law disputes.

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