Landmark Judgment: Back-Wages Awarded in Disputed Termination Case

In a groundbreaking ruling, the Supreme Court of India has addressed the issue of back-wages in a disputed termination case, setting a precedent for future legal battles. The judgment brings clarity and relief to individuals facing wrongful termination and highlights the importance of upholding employee rights in the workplace.


  • On 5 February 1994, a notice to show cause was issued to the appellant for misappropriation of Rs 5,000.
  • A former Deputy Education Officer, Shri Marathe, was appointed as an inquiry officer after the appellant submitted a reply on 6 February 1994.
  • The inquiry officer submitted a report on 25 July 1994, finding the appellant not guilty of the alleged misconduct.
  • The appellant objected to the appointment of a new inquiry officer who issued a notice to show cause on 26 September 1994.
  • On 8 November 1994, the first respondent proceeded with the inquiry under a new officer, Shri Sontakke.
  • The appellant challenged his removal through a writ petition before the High Court.
  • The first respondent argued against granting back-wages to the appellant due to limited municipal funds.
  • The appeal filed by the appellant before the Regional Director was dismissed on 31 August 1996.
  • A second inquiry by Shri Sontakke found the appellant guilty of misappropriation and defalcation.
  • The appellant is currently receiving a pension of Rs 31,500 per month and has reached superannuation.
  • The High Court directed the disbursement of retiral benefits to the appellant, treating him to be in service with continuity of service until the date of superannuation.
  • The High Court quashed the order of removal dated 12 August 2014.
  • The appellant objected to the appointment of Shri Sontakke as an inquiry officer due to his previous association with the Municipal Council.
  • High Court questioned the need for a fresh enquiry as no reason was provided for discarding the initial inquiry report.
  • Back-wages were denied by the High Court for the period between dismissal and superannuation age.
  • The Municipal Council’s decision to proceed with a de novo inquiry without recording reasons was deemed flawed by the High Court.
  • The High Court ruling on the illegal removal remained unchallenged by the Municipal Council.
  • Retiral dues were granted to the appellant based on continuity of service.
  • The termination was deemed illegal by the High Court, but the back wages directive was set aside.
  • High Court held that no back-wages should be paid for the period of non-service.
  • A two-judge Bench of the Court laid down principles in the appeal case.
  • The High Court concluded that the removal was illegal.
  • The School Tribunal overturned the termination and ordered full back wages for the appellant.

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  • Appellant relied on Hindustan Tin Works v Employees and Deepali Gundu Surwase v Kranti Junior Adhyapak Mahavidyalaya.
  • Appellant argues that once High Court found wrongful termination, back-wages should follow as a general principle.

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  • Reopening the proceedings after such a long lapse of time is not expedient, especially given the appellant’s age of superannuation in 2005
  • Appellant was removed from service on 29 June 1996, leading to a prolonged legal process
  • The first inquiry concluded that the misconduct charge was not substantiated
  • The writ petition filed by the appellant in 1996 remained pending for almost eighteen years
  • High Court’s stance on the need for recording reasons before appointing a new inquiry officer is deemed correct
  • High Court, in usual circumstances, would have allowed the Municipal Council to take a fresh decision after addressing the procedural lapse
  • The Labour Court held the retrenchment of employees by the appellant was not bona fide and awarded full back wages to the employees.
  • Several judgments of the Court have established principles regarding the grant of back wages.
  • In Hindustan Tin Works case, the criterion for granting back wages in case of illegal termination was discussed.
  • In Deepali Surwase case, the appellant was employed as a teacher in a primary school run by a trust.
  • Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-Labour Court involved termination of appellants’ services held in contravention of the Industrial Disputes Act, with denial of back wages.
  • Principles governing the payment of back wages were laid down by the Court.
  • Departure from the normal rule of full back wages can be made in necessary circumstances, as clarified by the Court.
  • Compensation of 75% of back wages was granted considering the financial problems of the appellant company.
  • The decision in CSHA University v BD Goyal was cited by the Court.
  • Relegating the appellant to a protracted course of action by restoring the proceedings before the disciplinary authority would not be fair after nearly fourteen years since his retirement.
  • Considering the principles in Deepali Surwase, the High Court was not justified in denying back-wages to the appellant.

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  • Appellant to be paid Rs 5 lakhs in full and final settlement of back-wages claim.
  • Lumpsum compensation directed to be paid within two months.
  • Payment to be made in addition to retiral benefits as per High Court order.
  • The appeal has been disposed of with no order as to costs.


Case Number: C.A. No.-006188-006188 / 2019

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