Supreme Court’s Ruling on Continuity of Service and Back Wages

In a recent landmark case before the Supreme Court, the issue of continuity of service and back wages was deliberated upon. The case involved a dispute between an employee and the Assembly department of the organization. The appellant, who was dismissed from service following a departmental enquiry, sought reinstatement with proper compensation. The Supreme Court’s ruling sheds light on the importance of fair treatment and rightful compensation for employees, ensuring justice and protection of their rights.


  • The appellant was dismissed from service on 26 November 1997 following a departmental enquiry.
  • The appellant was employed in the Assembly department of the respondent.
  • A charge-sheet was served to the appellant on 26 June 1992.
  • The charge against the appellant was causing disruption of work between 1050 am and 12 noon on 17 June 1992.
  • Notice was issued in the proceedings on 16 October 2015.
  • The Single Judge of the High Court partly allowed the Special Civil Application in a case where the findings in the disciplinary inquiry were deemed as perverse.
  • The Labour Court’s order awarded reinstatement but set aside the payment of 25% back wages.
  • The employer appealed the Labour Court’s decision in the High Court of Gujarat, where the appeal was dismissed on grounds of maintainability.
  • The Single Judge observed that the punishment imposed on the employee was harsh and that the Labour Court rightly reinstated the employee without continuity of service.
  • The award of the Labour Court granted reinstatement with 25% back wages for the surplus days, and although the appellant was entitled to continuity of service, the payment of back wages was not automatic upon reinstatement.

Also Read: Court’s Jurisdiction in Re-appraising Arbitrator’s Findings


  • The learned counsel for the appellant argued that the High Court misinterpreted the Labour Court’s award as not granting continuity of service.
  • This interpretation was deemed erroneous by the counsel representing the appellant.
  • The contention was that the Labour Court’s decision did not deny continuity of service as perceived by the High Court.

Also Read: Contrary Directions in Issuance of Letter of Intent


  • High Court had no justification to set aside the award of 25% back wages given by the Labour Court, which was deemed fair and proper.
  • The direction of the High Court to delete back wages was deemed unsustainable and set aside.
  • The appellant is allowed to maintain the award of reinstatement along with notional continuity of service and payment of 25% back wages.
  • Since the appellant has retired during the proceedings, retiral dues along with 25% back wages for the relevant period are to be computed and paid within three months.
  • The observation of the High Court that the Labour Court denied continuity of service was deemed erroneous and corrected.

Also Read: Application for Stay in Civil Suit Rejected: Court’s Legal Analysis


Case Number: C.A. No.-000201-000202 / 2020

Click here to read/download original judgement

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