Kishor S. Kasare vs S. Kumars Group Of Companies And ...
2002 Latest Caselaw 705 Bom

JUDGMENT

R.J. Kochar, J.

1. Before I deal with the issue of backwages it is relevant to note the facts which have given rise to this petition. According to the petitioner, he was employed in December, 1985 as a Peon with M/s S. Kumar Research and Development (P) Ltd. On and from 1-5-1988 he was transferred with continuity of service to M/s S. Kumars Textiles Ltd. On 1-6-1989 he was again transferred with continuity of service to M/s S. Kumars Ltd. It is the case of the petitioner that on 13-3-1989 the said M/s S. Kumars Ltd. terminated his employment orally. The petitioner was aggrieved by the Order of oral termination, and therefore, he filed a complaint of unfair labour practice under Section 28 read with Section 30 and Item 1 of Schedule IV of the MRTU and PULP Act, 1971. The said complaint was initially dismissed by the Labour Court on the ground that it was barred under Section 59 of the MRTU and PULP Act. The petitioner filed a Revision Application before the Industrial Court against the said Order which was finally reversed by the Industrial Court. It appears that the Writ Petition was filed before this Court against the said Order and this Court by its Order dated 22-6-2000 allowed the petition and remanded the matter back to the Labour Court for afresh decision. By an order dated 19-1-2000 the Labour Court passed an Order holding and declaring that the respondent-employer had committed an unfair labour practice and directed them to reinstate the petitioner with continuity of service but without backwages. The petitioner was aggrieved by the said Order of denial of backwages and he, therefore, preferred a Revision Application before the Industrial Court. The Industrial Court dismissed the Revision Application filed by the petitioner. The petitioner has finally landed in this Court for his relief of backwages for the total period of about 12 years.

2. Since I am concerned in this petition only with the question of grant or denial of backwages and since the Order of reinstatement with continuity of service is not challenged before me I am exclusively dealing with the question of backwages only. The Labour Court has denied full backwages to the petitioner on a wholly misconceived assumption that the entire burden was on the petitioner employee to say that he remained unemployed and that he was not gainfully employed anywhere during the interval. The Industrial Court has also come to this same conclusion on the same misconception of the burden to prove gainful employment was on the petitioner and that it was not shifted on the respondents.

3. Paragraph 21 of the Order passed by the Labour Court sets out the process of the reasoning in the mental current of the Labour Court to deny the relief of backwages to the petitioner. The paragraph 21 is reproduced herein below:

"21. In view of my findings on the above issues it goes without saying that the complainant is entitled for the declaration sought and also relief claimed i.e. relief of reinstatement in service with continuity. I have already pointed out that the complainant has led his oral evidence on record at Exh.U-12 on 8-5-1996 and thereafter also after the remand on 6-11-2000. At 2 occasions the complainant has led his oral evidence on record, however, the complainant is totally silent on the aspect of the gainful employment. It is for the complainant to disclose before the Court whether he is gainfully employed after his termination, it is for the complainant to state before the Court what efforts he had made to

minimize the loss suffered because of his termination. The complainant has not stated anything about his gainful employment in this Court and also not stated anything through his deposition in the Court about his gainful employment. Under these circumstances I hold that the complainant is not entitled for any backwages in this matter. Hence, I answer issue No. 4 in affirmative and issue No. 5 as partly yes."

In paragraphs 16 and 17 of the Order of the Industrial Court the same misconception is reflected, and therefore, it is necessary to reproduce the relevant portion of paragraph 16 and para 17 :

16.....After going through the facts of the above said case law and the ratio laid down in the above cited case law, it is crystal clear that it is sufficient, if the workman asserts that he could not secure any employment during the intervening period of forced unemployment, it is not necessary that the workman should adduce evidence to show that what efforts he has made to secure the employment. Since the workman made such assertion and states that he has remained unemployed, then the burden shifted on the employer to prove that the workman was gainfully employed. In the instant case, the employee has failed to make such assertion in the pleading and has also failed to state that he has remained unemployed. The initial burden has not been discharged by the employee and therefore the burden to prove gainful employment had not been shifted on the respondents.

17. After going through the issues framed by the Labour Court, I find that the issue regarding backwages has been framed, it is clear that the workman was totally silent about the relief of backwages. He has not assigned any reason why he claims backwages. Hence I hold that it is not at all necessary to interfere with the findings of the Labour Court. The Labour Court has rightly denied the backwages, and I answer Point Nos. 1 and 2 accordingly and pass following Order."

4. To be precise, both the Courts have followed the principle of civil litigation in respect of mitigation of damages. This spectre of doctrine of mitigation of damages was buried deep not only by the Supreme Court in the Judgment of M/s Hindustan Tin Works Pvt. Ltd. vs. The Employees of the M/s Hindustan Tin Works Pvt. Ltd. and Ors. reported in 7979 SCC (L and S) 53 or 1978 II LLJ 474 SC. This Judgment has held the field for more than two decades. During the passage of time and with the generation of new practitioners it appears that they lost trace or track of the said judgment and the members of the Labour Judiciary did not get benefit of assistance from the bar on this issue. If this judgment of the Supreme Court is cited, the question of backwages would be correctly and properly decided by the Courts.

5. As far back as in the year 1965 the Division Bench of the Punjab High Court in the case reported in 1965 1 LLJ 875, Daljeet and Co. (Pvt.) Ltd. v. State of Punjab and Ors. had held that the normal relief after setting aside the order of termination is reinstatement with full backwages and if the employer wants any departure from the said normal relief it is for the employer to adduce sufficient and cogent material to enable the adjudicatory authority to depart from the

normal relief of grant of backwages. The following paragraph in the said judgment is instructive on the point:--

"In my opinion, this decision has little or no bearing on the question raised by the learned counsel for the appellant in the present case. In the first place, it only deals with damages for dismissal and not with reinstatement and it seems to me that the normal order when a dismissal is set aside, and the dismissed employee is reinstated with continuity of service, is for the payment of full wages from the date of the dismissal held to be wrongful to the date of reinstatement. This is so whether the dismissed employee is a Government servant or employed in a private industry, and in the present case the Labour Court has actually only allowed wages for the period in question at the rate of two-thirds. It seems to me that if an employer in an enquiry of this kind wishes the normal order to be departed from, and the only ground I can think of which would justify such a course would be that during the period in question the dismissed employee had obtained employment and been paid wages by another employer, it is for the employer to raise this matter in the course of the enquiry and prove that the employee has been earning wages for the whole or any part of the period in question, but no such allegation appears to have been made at any stage in the present case, I am therefore of the opinion that there is no force in the appeal of the company."

6. From Punjab High Court we travel to our High Court. A Division Bench of our High Court in the case of Lalit Gopal Berry vs. M. V. Hirway, 1973 Mh.LJ. 322 - 1973 (27) F.L.R. 256 had for the first time put the whole burden to prove gainful employment of the concerned workman during the interregnums on the employer in the labour proceedings. The law laid down by the Division Bench on the point is succinctly summarized in paragraph 6 of the said Judgment which reads as under:

"6. On the question of backwages, one cannot forget that having regard to the facts in the present case the contract of employment of respondent No. 1 has been rightly held to be wrongfully attempted to be broken by the appellant. The breach attempted to be committed by the appellant was liable to be completely set off and remedied, so that respondent No. 1 would not suffer any monetary damages in consequence of the breach attempted to be committed by the appellant. The consequence of the above discussion is that respondent No. 1 was entitled to payment of all and singular amounts of his arrears of salary on the footing that the contract of employment had continued in existence. Now, it is true that even in such situations the employee cannot be permitted to have double advantage and to make excessive gains by relying upon wrongful conduct of his employer. Whatever he earned during the period for which he was effectively not maintained in service must be accounted for by him and to that extent the liability of the employer must diminish. This is the direct result of the provisions in labour legislation entitling an Industrial Tribunal and/or Labour Court to grant relief of reinstatement

with backwages. The question whether an employee had been gainfully employed during the relevant period must ordinarily be raised and agitated not by the employee but by the employer in the proceedings before the Industrial Tribunal and/or the Lobour Court. It cannot be expected of an unlearned and a simple workman that he should remember to lead evidence to prove before such Tribunals about the facts of efforts made by him during the relevant period for procuring employment."

The learned Judges have very clearly stated that the question whether the terminated workman had been gainfully employed during the relevant period must ordinarily be raised and agitated not by the workman but by the employer in the proceedings before the Industrial Tribunal and/or the Labour Court.

7. The Supreme Court in the of Surendra Kumar Verma v. The Central Government Industrial Tribunal-cum-Labour Court has observed on the issue with which we are concerned as under:

"Plain common sense dictates that the removal of an order terminating the services of workmen must ordinarily lead to the reinstatement of the services of the workmen. It is as if the order has never been and so it must ordinarily lead to backwages too. But there may be exceptional circumstances which make it impossible or wholly inequitable vis-a-vis the employer and workmen to direct reinstatement with full backwages. For instance, the industry might have closed down or might be in severe financial doldrums; the workmen concerned might have secured better or other employment elsewhere and so on. In such situations, there is a vestige of discretion left in the Court to make appropriate consequential orders. The Court may deny the relief of reinstatement where reinstatement is impossible because the industry has closed down. The Court may deny the relief of award of full backwages where that would place an impossible burden on the employer. In such and other exceptional cases the Court may mould the relief must ordinarily the relief to be awarded must be reinstatement with full backwages. That relief must be awarded where no special impediment in the way of awarding the relief is clearly shown. True, occasional hardship may be caused to an employer but we must remember that, more often than not, comparatively far greater hardship is certain to be caused to the workmen if the relief is denied than to the employer if the relief is granted."

8. In the case of Hindustan Tin Works Pvt. Ltd. (supra) the Supreme Court has finally and extensively laid down the law on the question of backwages. The Supreme Court has very clearly observed that when it was held that the termination of service was neither proper nor justified, it would not only show that the workmen were always willing to serve but if they rendered service they would legitimately be entitled to the wages for the same and that there was no justification for not awarding them full backwages which were very legitimately due to them. After holding the order of dismissal or termination illegal and unjustified a workman cannot be told that he will not get the normal relief of

backwages though he was illegally terminated from employment by the employer. Grant of reinstatement with full backwages and continuity of service is a normal relief which must follow the order of setting aside the order of the dismissal or termination of any nature. The Labour Courts/the Tribunals/the Industrial Courts are recently not granting the normal relief of full backwages following the principle of mitigation of damages putting the whole burden on the workman to prove what efforts he made to get other gainful employment during the interval of the litigation. It was not brought to the notice of the Courts what the Supreme Court has observed that full backwages would be the normal rule and the party objecting to it must establish the circumstances necessitating the departure. I can do no better than to reproduce the paragraphs from the said judgment viz. paragraphs 7, 9,11, 12, 13 and 14.

7. The question in controversy which fairly often is raised in this Court is whether even where reinstatement is found to be an appropriate relief, what should be the guiding considerations for awarding full or partial backwages. This question is neither new nor raised for the first time. It crops up every time when the workman questions the validity and legality of termination of his service howsoever brought about, to wit, by dismissal, removal, discharge or retrenchment, and the relief of reinstatement is granted. As a necessary corollary the question immediately is raised as to whether the workman should be awarded full backwages or some sacrifice is expected of him.

9. It is no more open to debate that in the field of industrial jurisprudence a declaration can be given that the termination of service is bad and the workman continues to be in service. The spectre of common law doctrine that contract of personal service cannot be specifically enforced or the doctrine of mitigation of damages does not haunt in this branch of law. The relief of reinstatement with continuity of service can be granted where termination of service is found to be invalid. It would mean that the employer has taken away illegally the right to work of the workman contrary to the relevant law or in breach of contract and simultaneously deprived the workman of his earnings. If thus the employer is found to be in the wrong as a result of which the workman is directed to be reinstated, the employer could not shirk his responsibility of paying the wages which the workman has been deprived of by the illegal or invalid action of the employer. Speaking realistically, where termination of service is questioned as invalid or illegal and the workman has to go through the gamut of litigation, his capacity to sustain himself throughout the protracted litigation is itself such an awesome factor that he may not survive to see the day when relief is granted. More so in our system where the law's proverbial delay has become stupefying. If after such a protracted time and energy consuming litigation during which period the workman just sustains himself, ultimately he is to be told that though he will be reinstated, he will be denied the backwages which would be due to him, the workman would be subjected to a sort of penalty for no fault of his and it is wholly undeserved. Ordinarily, therefore, a workman whose service has been illegally terminated would

be entitled to full backwages except to the extent he was gainfully employed during the enforced idleness. That is the normal rule. Any other view would be a premium on the unwarranted litigative activity of the employer. If the employer terminates the service illegally and the termination is motivated as in this case, viz., to resist the workmen's demand for revision of wages, the termination may well amount to unfair labour practice. In such circumstances reinstatement being the normal rule, it should be followed with full backwages. Articles 41 and 43 of the Constitution would assist us in reaching just conclusion in this respect. By a suitable legislation, to wit, the U.P. Industrial Disputes Act, 1947, the State has endeavoured to secure work to the workmen. In breach of the statutory obligation the services were terminated and the termination is found to be invalid; the workmen though willing to do the assigned work and earn their livelihood, were kept away therefrom. On top of it they were forced to litigation upto the Apex Court now they are being told that something less than full backwages should be awarded to them. If the services were not terminated the workmen ordinarily would have continued to work and would have earned their wages. When it was held that the termination of services was neither proper nor justified, it would not only show that the workmen were always willing to serve but if they rendered service they would legitimately be entitled to the wages for the same. If the workmen were always ready to work but they were kept away therefrom on account of an invalid act of the employer, there is no justification for not awarding them full backwages which were very legitimately due to them....

11. In the very nature of things there cannot be a strait-jacket formula for awarding relief of backwages. All relevant considerations will enter the verdict. More or less, it would be a motion addressed to the discretion of the Tribunal. Fullbackwages would be the normal rule and the party objecting to it must establish the circumstances necessitating departure. At the stage the Tribunal will exercise its discretion keeping in view all the relevant circumstances. But the discretion must be exercised in a judicial and judicious manner. The reason for exercising discretion must be cogent and convincing and must appear on the face of the record. When it is said that something is to be done within the discretion of the authority, that something is to be done according to the rules of reason and justice, according to law and not humour. It is not to be arbitrary, vague and fanciful but legal and regular (see Susannah Sharp vs. Wakefield).

12..... If the normal rule in a case like this is to award full backwages, the burden will be on the appellant-employer to establish circumstances which would permit a departure from the normal rule to substantiate the contention that this is an exceptional case for departing from the normal rule it was stated that loss is mounting up and if the appellant is called upon to pay full backwages in the aggregate amount of Rs. 2,80,000, it would shake the financial viability of the company and the burden would be unbearable. More often when some monetary claim by the workmen

is being examined, this financial inability of the company consequent upon the demand being granted is voiced. Now, undoubtedly an industry is a common venture, the participants being the capital and the labour. Gone are the days when labour was considered a factor of production. Article 43A of the Constitution requires the State to take steps to secure the participation of workmen in the management of the undertaking, establishments or other organisations engaged in any industry. Thus, from being a factor of production the labour has become a partner in industry. It is a common venture in the pursuit of a desired goal.

13. Now, if a sacrifice is necessary in the overall interest of the industry or a particular undertaking, it would be both unfair and inequitous to except only one partner of the industry, to make the sacrifice. Pragmatism compels common sacrifice on the part of both. The sacrifice must come from both the partners and we need not state the obvious that the labour is a weaker partner who is more often called upon to make the sacrifice. Sacrifice for the survival of an industrial undertaking cannot be an unilateral action, it must be a two-way traffic. The management need not have merry time to itself making the workmen the sacrificial goat. If sacrifice is necessary, those who can afford and have the cushion and the capacity must bear the greater brunt making the shock of sacrifice as less poignant as possible for those who keep body and soul together with utmost difficulty.

14. The appellant wants us to give something less than full backwages in this case which the Labour Court has awarded. There is nothing to show whether the Managing Director has made any sacrifice; whether his salary and perks have been adversely affected; whether the managerial coterie has reduced some expenses on itself. If there is no such material on record, how do we expect the workmen the less affording or the weaker segment of the society, to make the sacrifice, because sacrifice on their part is denial of the very means of livelihood."

In the flood light of the aforesaid (case law the observations made by the Courts below in this matter cannot stand even for a minute. The Union representative who represented the case of the petitioner before the Labour Court and the Industrial Court was not a legally trained person or a legal practitioner but I am told that he was a co-workman who was dismissed by his employer and who started representing the cases of the workmen to the best of his ability with a view to help the undefended and unprotected labour. Shri Chavan for the respondents also points out that he appeared as a Union representative. In view of the aforesaid assistance received by the Courts no wonder such a result had occurred. Both the Courts have cast burden on the workman to prove why he should be paid backwages. The observations made by both the Courts below which I have reproduced hereinbefore are totally contrary to the law laid down by the Supreme Court which I have extensively reproduced for the benefit of all. The Supreme Court has categorically held that after the order of dismissal/retrenchment/discharge or termination of any nature is quashed and set aside by the Labour Court/Industrial Court/Industrial Tribunal in any proceedings before them the normal rule which must follow is that of reinstatement with full

backwages and continuity of service. If the employer wants departure from this rule then the whole burden is on the employer to plead and prove by cogent material to enable the adjudication forum to depart from the normal rule of reinstatement with full backwages and continuity of service. It is for the employer to plead and prove that the concerned workman was gainfully employed and had earned wages during that period. No doubt the workman cannot get double benefit of the period of litigation. If the employer succeeds to prove that the workman was gainfully employed during that period that amount will have to be adjusted from the relief of full backwages. Therefore, the burden is on the employer to prove gainful employment of the workman during the period of litigation. In my opinion if the workman is not gainfully employed any where and if a statement is made by him in his pleading that he is not gainfully employed and he wants reinstatement that would be enough of the pleading to be rebutted by the employer by adducing sufficient and cogent material to enable the Courts to depart from the normal rule of reinstatement with full backwages and continuity of service. Even the normal rule of reinstatement can be departed from in a peculiar case as discussed by the Supreme Court in the case of S. K. Verma (supra). The Supreme Court has observed that reinstatement need not be granted, where it was impossible for the employer to reinstate the workman, where the department of the company where the workman was working was permanently closed. In such matters reinstatement need not be granted as it is impossible to reinstate a workman when the department and factory is closed. And relief should be suitably moulded, obviously in monetary terms.

9. Having reiterated summarily the law on the question of backwages we have to see the facts in the present case. It is a fact that the petitioner has averred in his affidavit in support of the interim relief application that he was unemployed. In my opinion that statement was enough to shift the burden on the employer to prove that the petitioner workman was wrong and to prove that the petitioner workman was gainfully employed during that period. The respondent-employer has not discharged its burden by pleading and by proving by adducing sufficient and cogent material that the petitioner was gainfully employed during the period of litigation. As rightly pointed out by Shri Chavan that the said statement was made by the petitioner long back in the year 1989 and thereafter there is no such statement that he was unemployed. In any case that would not be material as it is for the employer to adduce sufficient material before the Court to show that the petitioner was gainfully employed. It is certainly not for the workman to mitigate the damages for the benefit of the employer who has sufficiently caused injury and damage to the workman by his wrongful act of dismissal or termination. The doctrine of mitigation of damages if it is employed in the labour jurisprudence it would be giving premium on the wrongful and illegal actions of the employers. By such wrongful and illegal actions in fact the workmen's lives are ruined and they are thrown in the street along with their families. The suffering and miseries of unemployment cannot be described but they are to be experienced or realised. After litigation for decades if a workman is to be finally told that he will get only reinstatement but he will not get backwages is to ridicule him and it will amount to travesty and mockery of justice. Having suffered untold miseries caused on account of wrongful dismissal

he cannot be told that he will not get his backwages during the said period of untold miseries of unemployment suffered by the whole family. The normal rule of reinstatement with full backwages and continuity of service is to be followed unless the employer satisfies the Court on proper material to depart from the normal rule. It is not for the workman to mitigate the damages by showing how he tried to get gainful employment during the period. It is the employer to establish by proper pleading and by proper proof why the burden of full backwages should be reduced or should not be placed on him at all. Small and sundry labour jobs done by the dismissed workman for livelihood to keep his body and soul together cannot be said to be an alternative gainful employment to be counted for adjustment in the claim of backwages. It is needless to mention that one has to do some work to feed himself and his family and the law does not expect him to starve during the hard period of litigation. Such petty earning has to be ignored as a solatium but if he is fully gainful employment earning a handsome or equal remuneration, the law expects him to be truthful to disclose to the Court while fighting for justice. The end of justice must be achieved with the truthful means. We also cannot be oblivion of the fact that the employer or the industry cannot be killed under an unbearable burden of backwages under certain circumstances. The Courts must try to strike a just balance between the two points.

10. Considering the facts in the present case Shri Nerlekar the learned Advocate for the petitioner has left the question of proportion of backwages to the Court. It is a fact that the petitioner was terminated in the year 1989. It is also a fact that his termination has been held to be illegal and the respondent employer has shown the fair sense by accepting the order of the Labour Court by reinstating the petitioner. The employer has not acted vindictively or maliciously in prolonging the relief of reinstatement. In the case of Hindustan Tin Works (supra) the Supreme Court had granted 75% of backwages after laying down the law of full backwages but they had considered the facts in the said case that the employer was financially in doldrums and was under the heavy burden of accumulated losses. The Supreme Court thought it fit to grant some relief to the employer as he was in a very bad shape. Considering all the peculiar facts in the present case and to strike proper balance and not to cast undue heavy burden on the employer award of 60% of backwages would meet the ends of justice. The respondents shall compute and pay the 60% of backwages to the petitioner from the date of illegal termination till the date of his reinstatement. The respondent shall compute the amount of backwages considering the benefit of continuity of service.

11. Rule is made absolute as above. Writ Petition is disposed of with no orders as to costs.