Supreme Court Limits Back-Wages Award to 50% Where Employee Did Not Work for Nearly a Decade

A bench of Justice B.V. Nagarathna and Justice Satish Chandra Sharma heard an appeal by the Chief Manager of the Rajasthan State Road Transport Corporation challenging a Division Bench order on review that had upgraded an earlier award of half back wages to full back wages in favour of an employee. The appeal arose from proceedings connected with D.B. Special Appeal Writ Nos. 310/2018 and 819/2018 and Special Leave Petitions (C) Nos. 24258-24259/2019.

The Court allowed the appeals in part, set aside the Division Bench order dated 11.07.2022 which had granted full back wages, and restored the Division Bench judgment dated 12.02.2019 that awarded 50% of back wages along with continuity of service for the intervening period. The Court found that granting full back wages in review was "not just and proper" given the factual matrix, observing that an employee who "for nearly ten years ... without performing any of his duties, cannot at the same time seek full back wages." The Court, in its reasoning, observed: "In our view, the High Court was justified in granting only 50% of the back wages by its initial order dated 12.02.2019. However, in the Review Petition the said order has been modified to grant full back wages which we find is not just and proper having regard to the facts and circumstances of this case and particularly having regard to the fact that for nearly ten years the respondent herein, without performing any of his duties, cannot at the same time seek full back wages." The Court further directed that, as the respondent had in the interregnum attained superannuation, "the appellant-Corporation shall comply with the directions of the High Court in D.B. Special Appeal Writ No.310/2018 dated 12.02.2019 and grant all monetary benefits that the respondent is entitled to owing to his superannuation, if any, within a period of one month from today."

Background The dispute originated from the termination of service of the respondent, Haneef Khan, on 04.10.2001. The Labour Court refused permission under Section 33(2)(b) of the Industrial Disputes Act, 1947, which resulted in deemed continuation of employment for the intervening period claimed by the respondent (04.10.2001 to 30.11.2010). A Division Bench of the Rajasthan High Court, by its judgment dated 12.02.2019, accepted continuity of service but awarded only 50% of back wages as monetary benefit, with interest at 9% per annum and a compliance timeframe of three months. The appellant sought review; in D.B. Civil Review Petition No. 263/2019 the Division Bench modified its earlier order and directed payment of full back wages for the period. The Corporation then approached this Court by way of special leave, seeking to challenge (i) the Labour Court's rejection under Section 33(2)(b), (ii) the High Court's treatment of back wages, and alternatively to restore the original 50% award if interference on merits was not warranted.

This Court allowed amendment of the petition and granted leave to appeal. After hearing counsel for both sides, the Court held that the High Court's initial approach in awarding 50% back wages was justified, but the subsequent review to award full back wages was not. The Court therefore set aside the review order dated 11.07.2022, restored the Division Bench order dated 12.02.2019, and directed compliance with the monetary directions relating to any superannuation benefits within one month. The appeals were allowed in part; pending applications stood disposed of.

Case No.: Civil Appeal Nos. 2025 (Special Leave Petition (C) Nos. 24258-24259/2019) Case Title: Chief Manager of Rajasthan State Road Transport Corporation v. Haneef Khan Appearances: For the Petitioner(s): Mr. Ritu Bhardwaj, Advocate; Mr. Anil Kumar Gautam, AOR For the Respondent(s): Mr. M. M. Kashyap, AOR; Mr. M. M. Kashyap, Advocate; Ms. Poonam Seth, Advocate; Mr. Ilin Saraswat, Advocate; Ms. Mona, Advocate; Ms. Ilma Saifi, Advocate