Gujarat High Court Allows Full Back Wages in Employer Fault Case for Termination of Employment

Gujarat High Court Allows Full Back Wages in Employer Fault Case for Termination of Employment

The Gujarat High Court has explicitly stated that in cases of employment termination, the granting of back wages does not automatically accompany the reinstatement of the employee.

In the ruling, the division bench consisting of Chief Justice Sunita Agarwal and Justice N.V. Anjaria established that it is an established legal principle that in cases of employment termination, while the granting of back wages does not inherently accompany reinstatement if the employer is found at fault, full wages (100 per cent) can indeed be awarded. This principle is grounded in the fundamental concept that no one should benefit from their own wrongdoing.

The Court issued its verdict on a Letters Patent Appeal, which was filed in response to the judgment and order issued by a single Judge. The single Judge's decision had upheld the Labour Court's award for reinstatement along with full back wages.

The single Judge had previously unequivocally determined that the employer's internal investigation into allegations of misconduct against the worker was, in fact, an act of victimisation. The inquiry was deemed flawed because it failed to provide the worker with adequate opportunities to cross-examine the employer's witnesses and present his evidence.

Additionally, the Court took note of considerable delays in the proceedings of the case. The workman's reference was initiated in 2001, but it took a staggering 17 years for a resolution to be reached. The writ petition challenging the award was not filed until June 2018, which was five months after the award had been issued. Strikingly, the workman was only reinstated in August 2019, with no provided explanation for the extensive delay in this process. Furthermore, the appeal challenging the single Judge's decision was submitted in May 2019.

Throughout the proceedings, it came to light that there had been no interim order in the writ petition. Significantly, the Court determined that there was no objection raised against the award of the Labour Court except for the aspect of awarding 100 per cent back wages. Moreover, there was no provided justification for the delayed reinstatement.

The appellant's advocates aimed to contest the single Judge's ruling by referencing decisions from the Apex Court, specifically P.V.K. Distillery Limited vs. Mahendra Ram [(2009) 5 SCC 705] and Kanpur Electricity Supply Company Ltd. vs. Shamim Mirza [(2009) 1 SCC 20]. The argument put forth was that the automatic grant of 100 per cent back wages should not be assumed upon reinstatement. Instead, it was contended that the specific circumstances of each case should dictate the extent of back wages awarded, particularly when a termination is overturned.

Conversely, the respondent's counsel relied on the findings of both the Labour Court and the single Judge, highlighting that the workman had experienced unjust termination, and it was crucial not to reward the employer for their wrongful actions. The reference was made to the Apex Court's judgment in Deepali Gundu Surwase vs. Kranti Junior Adhyapak Mahavidyalaya [(2013) 10 SCC 324], wherein it was established that in cases of wrongful termination, the standard practice is reinstatement with continuity of service and the awarding of back wages.

The Court noted that based on the aforementioned legal principles, it had to acknowledge that in the specific context of this case, it was evident that the workman had been terminated unlawfully. The inquiry had been tainted due to the absence of a fair opportunity for the workman to present his side. Furthermore, the Labour Court took nearly 17 years to decide on the Reference, and it remained unclear whether this delay was attributable to the employer or if there were other factors involved.

“In absence of all these information and in view of the findings returned by the Labour Court, as noted by the learned single Judge in the order impugned, it is more than clear that it is a case of victimisation of workman,” the Bench observed.

The Court concluded that there were no significant reasons to dispute the findings made by the Labour Court, which were subsequently upheld by a single Judge. Consequently, the appeal was dismissed, and the Civil Application was resolved in accordance with these established findings.