Case Note & Summary
The case arose from a service termination dispute between a management body and an employee. The employee's service was terminated, and the termination order was ultimately set aside. That order merged with the dismissal of a special leave petition by the Supreme Court on July 31, 1989, making the setting aside final. The Supreme Court had observed that the Management could move the Government for reimbursement of salary and that the Government would decide according to law. In subsequent contempt proceedings, a Division Bench held that normally arrears of salary accrue when termination is set aside, but payment depends on other factors; absent clear direction for payment, refusal to pay arrears would not be contempt. After the termination order was set aside, the respondent moved an execution application in the District Court to give effect to the order of the Tribunal. The executing court rejected the claim. The respondent then filed a revision under Section 115 of the Code of Civil Procedure before the Karnataka High Court. The High Court dismissed the revision on April 5, 1993 in CRP/CMP No. 3565/91, confirming the Civil Judge's order dated October 29, 1991. During the pendency of the special leave petition before the Supreme Court, an enquiry was conducted and it was found that the respondent was gainfully employed. The core question was whether the respondent was entitled to back-wages for the period between termination and reinstatement, given that the termination order was set aside but no direction for payment of salary for the intervening period was given, and the respondent was found gainfully employed. A related issue was the effect of the dismissal of the special leave petition and the scope of reinstatement. The respondent's counsel contended that the appeal had become infructuous because the respondent was gainfully employed, implying no back-wages claim remained. The appellant's counsel did not contest reinstatement, as the order of dismissal was set aside and had become final, but opposed back-wages. The Supreme Court observed that it could not conclude the appeal infructuous solely on the respondent's premise, because the respondent was claiming back-wages. The court relied on the principle from Managing Director, U.P. Warehousing Corporation & Ors. v. Vijay Narayan Vajpayee, AIR 1980 SC 840, that setting aside an order of dismissal creates a cause of action for claiming arrears of salary, but where no direction was given for the intervening period, payment of salary need not be ordered. The court also noted that an inquiry found the respondent gainfully employed, which barred back-wages. Regarding reinstatement, since it was not contested and the dismissal order was set aside and became final, the respondent was entitled to reinstatement and to admitted salary from the date of reinstatement. The court declined to express any opinion on other consequential benefits, which were to be worked out in light of the Tribunal's judgment upheld by the Supreme Court. The Supreme Court held that the respondent was not entitled to back-wages. The respondent was entitled to reinstatement and to admitted salary from the date of reinstatement. If the admitted salary was not paid, it was directed to be paid within six months from the date of receipt of the order. The appeal was disposed of with no order as to costs.
Headnote
A) Service Law - Back Wages - Entitlement to Back Wages Upon Setting Aside Termination - Code of Civil Procedure, 1908, Section 115 - The termination of service was set aside, and the order reached finality after dismissal of SLP by Supreme Court. The court reiterated that setting aside a dismissal creates a cause of action for claiming arrears of salary, but where no direction was given for payment during the intervening period, payment need not be ordered. During pendency, an enquiry found the respondent gainfully employed. Held that respondent was not entitled to back-wages. (Paras Not mentioned) B) Service Law - Reinstatement - Finality of Order Setting Aside Termination - Code of Civil Procedure, 1908, Section 115 - The appellant did not canvass that the respondent was not entitled to reinstatement because the order of dismissal was set aside and had become final. The court held the respondent entitled to reinstatement and to admitted salary from the date of reinstatement; if not paid, the same was directed to be paid within six months from receipt of the order. (Paras Not mentioned)
Issue of Consideration
Whether the respondent employee was entitled to back-wages upon setting aside of termination order when no direction was given for payment during the intervening period and the employee was gainfully employed; and whether reinstatement and admitted salary from date of reinstatement were payable.
Final Decision
The Supreme Court held that respondent is not entitled to back-wages due to gainful employment; reinstatement stands; respondent entitled to payment of admitted salary from date of reinstatement; if not paid, to be paid within six months from date of receipt of order; appeal disposed of, no costs.
Law Points
- Setting aside dismissal creates cause of action for arrears of salary
- In absence of clear direction for intervening period payment need not be ordered
- Gainful employment bars back-wages
- Reinstatement upon finality of order setting aside termination
- Admitted salary from date of reinstatement payable within six months
