What SC said on malicious prosecution by the employer, read the judgment

April 03, 2019:

A two judges bench of Hon’ble Supreme Court has recently held if an employee is involved in embezzlement of funds or is found indulging in demand and acceptance of illegal gratification, the employer cannot be mulcted with full back wages on the acquittal of the person by a criminal Court, unless it is found that the prosecution is malicious.

Justice L. Nageswara Rao speaking for the two judges bench has pronounced the judgment titled as Raj Narain vs Union of India on 01.04.2019.

The Appellant Raj Narain was placed under suspension on 23.10.1979 while he was working as Sorting Assistant in Railway Mail Service (RMS) at Mughalsarai, in contemplation of disciplinary proceedings on the allegations of involvement in forged payments of high value money orders. An FIR was lodged against the Appellant at Mughalsarai Police Station and the case was registered as Crime No.358 of 1979 under Section 409/420 IPC. The order of suspension was revoked on 21.10.1987 pursuant to which he joined duty and worked till 28.02.1997, when he was dismissed from service in view of his conviction under Section 409, 467 and 420 IPC. He was sentenced to imprisonment for three years. The Appellant, thereafter, filed an appeal against his conviction. The Criminal Appeal filed by the Appellant was allowed and he was acquitted of the charges for offences under Section 409, 420 and 467 IPC. The request of the Appellant for reinstatement after acquittal was refused.

The Tribunal allowed the original application and directed the reinstatement of the Appellant by holding that he shall be entitled for seniority and notional fixation of pay with increments from the date of his dismissal till his reinstatement. However, the Tribunal held that the Appellant shall not be entitled for any back wages for the period during which he was not in service. The High Court held that the Appellant shall be entitled to full back wages from the date of the order of his acquittal i.e. 31.08.2001 till the date of his reinstatement. The Appellant approached the Supreme Court assailing the legality and validity of the judgment of the High Court by which the payment of back wages was restricted only to the period between the date of his acquittal and the date of his reinstatement.

Supreme Court discussed its earlier judgments in Ranchhodji Chaturji Thakore v. Superintendent Engineer, Gujarat Electricity Board and Anr and Union of India and Others v. Jaipal Singh  and specifically clarified the observation made in one of its earlier judgment on distinctive nature of prosecution initiated by employer and prosecution initiated otherwise.

The Court commented as “The observation made in the judgment in Union of India and Others v. Jaipal Singh (supra) has to be understood in a manner in which the department would become liable for back wages in the event of a finding that the initiation of the criminal proceedings was mala fide or with vexatious intent. In all other cases, we do not see any difference between initiation of the criminal proceedings by the department vis-a-vis a criminal case lodged by the police. For example, if an employee is involved in embezzlement of funds or is found indulging in demand and acceptance of illegal gratification, the employer cannot be mulcted with full back wages on the acquittal of the person by a criminal Court, unless it is found that the prosecution is malicious”.

Ultimately, the Court directed back wages and full salary for the appellant on the premise that after revocation of suspension, he should have been immediately reinstated.

Read the judgment here:

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