IMPORTANT POINTS
1. Whenever courts or Tribunals direct reinstatement, they should apply their judicial mind to the facts and circumstances to decide whether ‘continuity of service’ and/or ‘consequential benefits’ should also be directed.
2. In cases where the misconduct is held to be proved, and reinstatement is itself a consequential benefit arising from imposition of a lesser punishment, award of back wages for the period when the employee has not worked, payment of back wages should be avoided.
3. In the absence of a finding that the punishment was shockingly disproportionate to the gravity of the charge established, the Labour Court should not interfere with the punishment.

Headnote:LABOUR LAW—U.P. Industrial Disputes Act, 1947—Section 6(6)—Correction of Award passed by Labour Court—Powers of Labour Court to award back wages, even though original award was silent on that issue—Respondent working as an Assistant was dismissed from service by order dated 6-4-1977—On challenge, Labour Court held that charge of making false allegation against his superior officer was proved—Award passed by Labour Court holding that instead of punishment of termination of service, increments of two years of the concerned workman should be stopped as punishment—Award was published on 27-4-1983 and became enforceable from 27-5-1983—Respondent filed an application u/s 6(6) of the Act seeking entitlement to reinstatement by correction of award—Claim of full back wages from 6-4-1977—Application allowed by adding in the award that the employer shall pay full back wages of the period under employment i.e. 6-4-1977 to the date of reinstatement—Whether Labour had the power to amend the award—(Yes)—Whether award of back wages was automatic when the Labour found that charge against employee was proved—(No).
       Held : Section 6(6) of the Act provides that a Labour Court may either on its own motion or on the application of any party to the dispute, correct any clerical or arithmetic mistakes in the award or errors arising therein from any accidental slip or omission. The question is whether in exercise of such power, the Labour Court could have awarded back-wages, even though the original award was silent on that issue. (Para 4)
       In this case, the reference to Labour Court consisted of two parts - whether the termination of the workmen was proper and legal, and if the answer was in the negative, then the benefits or compensation to which the workmen was entitled. The award originally made, answered the first part in the negative, but did not answer the consequential second part of the reference. In fact the award ended rather abruptly. On an application being made under section 6(6), the Labour Court recorded that it had accidentally omitted to answer the second part of the reference and rectified the omission by adding a paragraph. This case, therefore, squarely falls under Tulsipur Sugar (supra). We are of the view that the Labour Court had the power to amend the award. (Para 9)
       Where reinstatement is a consequence of imposition of a lesser punishment, neither back-wages nor continuity of service nor consequential benefits, follow as a natural or necessary consequence of such reinstatement. In cases where the misconduct is held to be proved, and reinstatement is itself a consequential benefit arising from imposition of a lesser punishment, award of back wages for the period when the employee has not worked, may amount to rewarding the delinquent employee and punishing the employer for taking action for the misconduct committed by the employee. That should be avoided. Similarly, in such cases, even where continuity of service is directed, it should only be for purposes of pensionary/retirement benefits, and not for other benefits like increments, promotions etc.(Para 19)
       But there are two exceptions. The first is where the court sets aside the termination as a consequence of employee being exonerated or being found not guilty of the misconduct. Second is where the court reaches a conclusion that the inquiry was held in respect of a frivolous issue or petty misconduct, as a camouflage to get rid of the employee or victimize him, and the disproportionately excessive punishment is a result of such scheme or intention. In such cases, the principles relating to back-wages etc. will be the same as those applied in the cases of an illegal termination.(Para 20)
       In this case, the Labour Court found that a charge against the employee in respect of a serious misconduct was proved. It, however, felt that the punishment of dismissal was not warranted and therefore, imposed a lesser punishment of withholding the two annual increments. In such circumstances, award of back wages was neither automatic nor consequential. In fact, back wages was not warranted at all.(Para 21)
       (ii) LABOUR LAW—U.P. Industrial Disputes Act, 1947—Section 6(6)—Dismissal from service—Reinstatement as a consequence of imposition of a lesser punishment—Misconduct is held to be proved—Claim of back wages—Maintainability—In such cases, award of back wages was neither automatic nor consequential.
       Held : Where the power under Article 226 or section 11A of the Industrial Disputes Act (or any other similar provision) is exercised by any Court to interfere with the punishment on the ground that it is excessive and the employee deserves a lesser punishment, and a consequential direction is issued for reinstatement, the court is not holding that the employer was in the wrong or that the dismissal was illegal and invalid. The court is merely exercising its discretion to award a lesser punishment. Till such power is exercised, the dismissal is valid and in force. When the punishment is reduced by a court as being excessive, there can be either a direction for reinstatement or a direction for a nominal lump sum compensation. And if reinstatement is directed, it can be effective either prospectively from the date of such substitution of punishment (in which event, there is no continuity of service) or retrospectively, from the date on which the penalty of termination was imposed (in which event, there can be a consequential direction relating to continuity of service). What requires to be noted in cases where finding of misconduct is affirmed and only the punishment is interfered with (as contrasted from cases where termination is held to be illegal or void) is that there is no automatic reinstatement; and if reinstatement is directed, it is not automatically with retrospective effect from the date of termination.(Para 19)
       (iii) LABOUR LAW—U.P. Industrial Disputes Act, 1947—Sections 6(6), 11A—Dismissal from service—Powers of Labour Court to interfere with the punishment while holding that one serious charge was proved—Labour Court did not record a finding that the punishment was harsh or disproportionately excessive—Whether High Court was justified in reducing the punishment only on ground that the employee had worked for four years while ignoring seriousness of the misconduct—(No).
       Held : In this case, we have already found that the charge established against the employee was a serious one. The Labour Court did not record a finding that the punishment was harsh or disproportionately excessive. It interfered with the punishment only on the ground that the employee had worked for four years without giving room for any such complaint. It ignored the seriousness of the misconduct. That was not warranted. The consistent view of this Court is that in the absence of a finding that the punishment was shockingly disproportionate to the gravity of the charge established, the Labour Court should not interfere with the punishment. We, therefore, hold that the punishment of dismissal did not call for interference. (Para 27)
       (iv) LABOUR LAW—Dismissal—Reinstatement order passed by Labour Court—Employer challenged award of Labour Court and sought stay of the award—High Court only stayed the order in regard to back-wages but did not stay the award directing reinstatement—Whether by mere fact that the employee was not reinstated in pursuance of award of Labour Court can result in dismissal of the writ petition challenging the award—(No).
       Held : It is true that when the employer challenged the award of the labour court and sought stay of the award, the High Court only stayed the order dated 29.6.1983 in regard to the back-wages but did not stay the award dated 08.3.1983 directing reinstatement; and that if he had been reinstated in 1983, he would have served till 31.3.1991 when he attained the age of superannuation. The learned counsel for the employee made a submission before the High Court at the final hearing that in spite of the award directing reinstatement not being stayed, he was not reinstated. On the said submission, the High Court held that the employer had wilfully violated the lawful order and was not entitled to exercise of equitable discretion under Article 226/227. Firstly, the assumption that there was a lawful order or that there was wilful violation thereof is not sound. Further, the employer was not given an opportunity to explain why the employee was not reinstated. In fact, the contention of employer is that the first respondent did not report back to service, even though it was ready to reinstate him subject to final decision. Be that as it may. The mere fact that the first respondent was not reinstated in pursuance of the award of the Labour Court cannot result in dismissal of the writ petition challenging the award.(Para 28)

JUDGMENT

Raveendran, J.—This appeal by special leave is against the judgment dated 28.7.2003 of the Allahabad High Court rejecting Civil Misc. W.P. No.10713/83 filed by the appellant challenging the award dated 8.3.1983 and subsequent modification order dated 29.6.1983 of Labour Court II, Kanpur.

2. Brief facts necessary for disposal of this appeal are as under :

2.1) The first respondent was working as an Assistant in the appellant company. He was issued three charge-sheets dated 5.2.1977, 17.2.1977 and 24.2.1977 (amended on 1.3.1977). First respondent filed his objections/explanation in respect of each charge-sheet. An inquiry was held into the charges. Accepting the report of the Inquiry Officer, which held that the charges were proved, the employer imposed the punishment of dismissal on the first respondent, by order dated 6.4.1977.

2.2) Conciliation proceedings initiated in respect of such dismissal, failed. Consequently, the State Government referred the following dispute to the Labour Court for adjudication :

“Whether the termination of the services of its workman Shri Kashi Prasad (s/o Shri Lala Shyam Lal), Assistant, Accounts Department by the Employers from 6.4.1977 is proper, and/or legal ? If not, for what benefits/compensation the workman is entitled to and any other, with details.”

2.3) By order dated 20.12.1980, the Labour Court held that the inquiry was not fair and proper, and permitted parties to adduce evidence. The Labour Court made its award dated 8.3.1983. The Labour Court held that the charge of insubordination and disorderly behaviour in the first charge-sheet, was not proved. The charge under the second charge-sheet, that the first respondent made false (indecent) allegations against his superior officer, and thereby violated office discipline, was held to be proved. In regard to the charge under the third charge-sheet, the Labour Court found that the employee had admitted that he had not prepared the annual accounts correctly, but gave the employee the ‘benefit of doubt’ by holding that the mistakes in the accounts might not have been committed knowingly or deliberately, and therefore, may not amount to habitual negligence or carelessness. Thus in effect, the findings in regard to three charges were (i) not proved, (ii) proved, and (iii) entitled to benefit of doubt. On the said findings, it made an award dated 8.3.1983, the operative part of which reads thus :

“The concerned workman has been working in the company for four years and there was no such complaint against him in the past, hence instead of the punishment of termination of service as a result of Ex. E-2 (dated 17.2.1977) being proved against him, I deem it proper that the increments of two years of the concerned workman should be stopped as punishment.”

The said award was published on 27.4.1983 and became enforceable from 27.5.1983.

2.4) On 4.5.1983, first respondent filed an application under section 6(6) of the U.P. Industrial Disputes Act, 1947 (‘Act’ for short) seeking corrections of the award, stating that the workman was entitled to reinstatement with continuity of service and full back-wages from 6.4.1977. The appellant resisted the said application contending inter alia that (i) the Labour Court became functus officio after publication of the award on 27.4.1983 and therefore, it could not amend the award; (ii) the prayer amounted to seeking review of the award, and there was no jurisdiction or power to grant such relief; and (iii) the first respondent was not entitled to the relief of back-wages, as the Labour Court had held that a misconduct was proved.

2.5) The Labour Court by order dated 29.6.1983 allowed the application under section 6(6) and added the following paragraph at the end of the Award, on the ground that it had been omitted due to an accidental slip :

“Hence, it is my decision in this case that the termination of services of Mr. Kashi Prasad Agarwal, Assistant, Accounts Department from 6.4.77 by his employer will not be ju

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2007 Supreme(SC) 110

Cases Referred (21)