Case Note & Summary
The case involves an appeal by the Regional Director, International Airports Authority of India (employer) against a judgment of a single judge of the Bombay High Court in Writ Petition No.1306 of 2011. The single judge had allowed the writ petition filed by the employee, Gopalkrishan Parasnath Pandey, challenging an order of the Central Government Industrial Tribunal No.2, Mumbai, and directed the employer to pay back wages for the period from 29th April 1998 to 24th September 2008 along with interest at 9% per annum from 29th April 1988 till payment. The employee had been working with the employer since 1982, and his services were terminated with effect from 29th April 1988. He raised a grievance before the competent authority, and the matter was referred to the Industrial Tribunal. The Tribunal passed an order, which was challenged by the employee in the writ petition. The single judge allowed the writ petition and directed payment of back wages with interest. The employer appealed against the interest rate, arguing that 9% per annum was excessive. The Division Bench of the Bombay High Court, consisting of Justices B. R. Gavai and Riyaz I. Chagla, heard the appeal. The court noted that the employee had not worked during the period and had received subsistence allowance. The court held that the interest rate of 9% was on the higher side and reduced it to 6% per annum. The appeal was partly allowed, modifying the judgment of the single judge only to the extent of the interest rate. The court also disposed of the connected civil applications.
Headnote
A) Service Law - Back Wages - Interest Rate - Industrial Disputes Act, 1947, Section 11A - The court considered the rate of interest on back wages awarded to an employee whose termination was held illegal. The High Court held that the interest rate of 9% per annum was on the higher side and reduced it to 6% per annum, noting that the employee had not worked during the period and the employer had already paid subsistence allowance. (Paras 1-5)
B) Service Law - Back Wages - Period of Unemployment - Industrial Disputes Act, 1947, Section 17B - The court upheld the award of back wages for the period between 29th April 1998 to 24th September 2008, as the employee was willing to work but was prevented by the employer. (Paras 1-5)
Issue of Consideration
Whether the rate of interest of 9% per annum on back wages awarded to the employee is excessive and should be reduced.
Final Decision
Appeal partly allowed. The judgment of the single judge is modified only to the extent that the interest rate is reduced from 9% per annum to 6% per annum. The rest of the order remains unchanged. Connected civil applications disposed of.
Law Points
- Back wages
- Interest rate
- Industrial Disputes Act
- 1947
- Section 11A
- Section 17B
- Discretion of court
- Reasonable rate
Case Details
2018 LawText (BOM) (12) 95
Letters Patent Appeal No.245 of 2011 in Writ Petition No.1306 of 2011
B. R. Gavai, Riyaz I. Chagla
Ms. Kavita Anchan, Mr. Harsh Mishra, Mr. S.D. Shetty, Ms. Heena Shaikh i/b M.V. Kini & Co. for Appellant; Mr. Kiran S. Bapat, Mr. T.R. Yadav i/b Ms. Seema K. Chopda for Respondent
The Regional Director, International Airports Authority of India
Gopalkrishan Parasnath Pandey
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Nature of Litigation
Appeal against order of single judge directing payment of back wages with interest.
Remedy Sought
Appellant employer sought reduction of interest rate from 9% to a lower rate.
Filing Reason
Employer challenged the interest rate of 9% per annum on back wages awarded to employee.
Previous Decisions
Single judge allowed writ petition and directed payment of back wages with 9% interest.
Issues
Whether the interest rate of 9% per annum on back wages is excessive and should be reduced.
Submissions/Arguments
Appellant argued that 9% interest is on higher side as employee did not work and received subsistence allowance.
Respondent supported the single judge's order.
Ratio Decidendi
The rate of interest on back wages should be reasonable, considering that the employee did not work during the period and received subsistence allowance. 9% per annum was held to be on the higher side and reduced to 6% per annum.
Judgment Excerpts
Appellant challenges the Judgment and Order dated 11th July, 2011 in Writ Petition No.1306 of 2011, thereby allowing the Writ Petition filed by the Respondent/employee challenging the order of the learned Presiding Officer of the Central Government Industrial Tribunal No.2, Mumbai, and directing the present Appellant/employer to pay to the Respondent/employee backwages for the period between 29th April, 1998 to 24th September, 2008 alongwith interest @ Rs 9% from 29th April, 1988 till payment.
We find that the rate of interest of 9% is on the higher side. The employee had not worked during the said period. He had also received the subsistence allowance. As such, we are of the considered view that the interest at the rate of 6% would meet the ends of justice.
Procedural History
The employee's services were terminated on 29th April 1988. He raised a grievance before the competent authority. The matter was referred to the Central Government Industrial Tribunal No.2, Mumbai, which passed an order. The employee challenged that order in Writ Petition No.1306 of 2011 before the Bombay High Court. The single judge allowed the writ petition on 11th July 2011, directing payment of back wages with 9% interest. The employer appealed via Letters Patent Appeal No.245 of 2011. The Division Bench heard the appeal and delivered judgment on 10th December 2018, reducing the interest rate to 6%.
Acts & Sections
- Industrial Disputes Act, 1947: 11A, 17B
