Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.6409 of 2017
KAILASH SINGH ….APPELLANT
Versus
THE MANAGING COMMITTEE,
MAYO COLLEGE, AJMER & ORS. ….RESPONDENTS
With
Civil Appeal No.6410/2017
J U D G M E N T
SANJAY KISHAN KAUL, J.
1. The Mayo College, Ajmer is an educational institution founded in 1875 by
Sir Richard Southwell Bourke, the 6th Earl of Mayo, who was also the Viceroy of
India from 1868 to 1872. It is one of the oldest educational institutions which was
set up as a public boarding school, offering admission to the then elite. This
character of the institution changed in the post-independence era, but it continued
to be a prestigious centre of learning. The Mayo College is an unaided, nongovernmental
educational institution receiving no grant either from the State or the
Central Government and is affiliated to the Central Board of Secondary Education,
New Delhi, for purposes of students taking that examination to pass the 12th
standard.
1
2. The present unfortunate dispute involves the Managing Committee of the
School (respondent No.1), with the Principal arrayed as the 2nd respondent. The
dispute in the two Civil Appeals before us concerns two employees of this
institution, who have served for a number of years, but apparently irreconcilable
differences had arisen on account of the alleged conduct of the employees. The
two employees are Kailash Singh (Civil Appeal No.6409/2017) and Jeffry Jobard
(Civil Appeal No.6410/2017).
3. Kailash Singh began his employment as a Class IV employee on 4.1.1984
and was promoted after a decade’s service as an LDC from 1.2.1994 and posted in
the Library. Jeffry Jobard began his career as an LDC itself, from 1.7.1985. The
services of both Kailash Singh and Jeffry Jobard were terminated simultaneously
on 9.11.2000, on account of conducts attributed to them, which created an
extremely undesirable situation in the respondent school.
4. It may be appropriate to refer to the ground reality which resulted in the
termination of the appellants, though it is not of great importance now in view of
subsequent developments. Both the appellants, in different capacities, were
associated with the activities of Mayo College Employees Union and are stated to
have been instrumental in setting up the ‘Sangarsh Samiti Mayo College, Ajmer’,
under the banner of which they demanded bonus. The stand of Respondent No. 1
was that such bonus was payable only as per the orders of the Government and the
Board of Governors was willing to consider the same, subject to such orders being
passed. The Sangarsh Samiti organised protest meetings at the gate of the Mayo
2
College on 19.10.2000 and resolved to hold a general meeting and dharna on
22.10.2000, on the issue of non-grant of bonus. Additionally, a threat was held out
to go on a general strike from 23.10.2000, if their demands were not met. The
Samiti, steered by the appellants, started with their movement on 20.10.2000, and
on 22.10.2000, a general notice was issued to all employees, reiterating the stand
of the establishment that the Board of Governors was awaiting the decision of the
Government. The employees were warned that any such “movement” was totally
illegal because no employees’ union had given any legal notice in that behalf, and a
warning to not tolerate absenteeism on 23.10.2000 and 24.10.2000 was held out.
Since the Board was awaiting the announcement by the Government, it was
informed to the workers that the management would take a call on the issue on
23.10.2000, and that the workers should not indulge in any disruptive activity.
5. The appellants, despite the same, are stated to have gone ahead with their
threat, and at the time when the Annual Function of the Mayo College was being
held on 23/24.10.2000, instigated other staff members not to go to work and
created disturbances, causing grave embarrassment to the Institution. It appears
that loudspeakers were used and inappropriate adjectives were used for the
management, so much so that the traditional dinner scheduled for 24.10.2000 had
to be cancelled, resulting in a loss of face for the management.
6. It is the aforesaid incidents which led to the show cause notice being issued
to both the appellants on 3.11.2000 to which they replied on 6.11.2000. The
appellants defended their actions by claiming that they had a right to organise
3
dharnas and protests, as a constitutional right, and that strike and sloganeering
should not be stopped. The adjectives used of Murdabad, etc. are adjectives of
common parlance in such agitations and cannot be said to be derogatory, and that a
proper inquiry should be held qua their conduct. The non-payment of bonus was
claimed to be an “administrative fanaticism”.
7. A unanimous resolution was passed by the Board of Governors on
7/8.11.2000 to terminate the services of the appellants, and they were so dismissed
on 9.11.2000 by issuance of letters of the even date. It may be noted that in a
subsequent communication, Jeffry Jobard, vide letter dated 14.11.2000 sought to
slightly back-track from the issue by claiming that he was not part of the Samiti,
and that at the relevant time was, in fact, a mere spectator of the meetings.
8. The termination of the services of the appellants resulted in their
approaching the Educational Tribunal, set up under the Rajasthan Non-Government
Educational Institutions Act, 1989 (hereinafter referred to as the ‘said Act’). The
crucial aspect on which the Management erred was the non-compliance of Section
18, which reads as under:
“18. Removal, dismissal or reduction in rank of employees.-
Subject to any rules that may be made in this behalf, no employee of a
recognised institution shall removed, dismissed or reduced in rank
unless he has been given by the management a reasonable opportunity
of being heard against the action proposed to be taken:
Provided that no final order in this regard shall be passed unless prior
approval of the Director of Education or an officer authorised by him
in this behalf has been obtained:
Provided further that this section shall not apply, -
(i) to a person who is dismissed or removed on the ground of conduct
4
which led to his conviction on a criminal charge, or
(ii) where it is not practicable or expedient to give that employee an
opportunity of showing cause, the consent of Director of Education
has been obtained in writing before the action is taken, or
(iii) Where the managing committee is of unanimous opinion that the
services of an employee cannot be continued without prejudice to the
interest of the institution, the services of such employee are
terminated after giving him six months’ notice or salary in lieu thereof
and the consent of the Director of Education is obtained in writing.”
9. When we say that the Management erred, it is so, as, in any eventuality, the
consent of the Director of Education had to be obtained in writing, which was not
so obtained, which proved fatal to the Management. We may add that insofar as the
first proviso to Section 18 of the said Act is concerned, a Full Bench of the
Rajasthan High Court, in Central Academy Society v. Rajasthan NonGovernment
Educational Institutions Tribunal, Jaipur & Ors.1
opined that for an
unaided institution the said proviso would not apply in view of the law enunciated
in the case of T.M.A. Pai Foundation & Ors. v. State of Karnataka & Ors.2
.
However, even in case of institutions like Mayo College (unaided institution), the
second proviso clause (iii) stared the management in the face; that while in case of
a unanimous opinion of the Managing Committee (Board of Governors in the
present case), the services of employees could be terminated when such services
were prejudicial to the interest of the institution, they were required to be given six
(6) months’ notice or salary in lieu thereof and the consent of the Director of
1
2010 (3) ILR (Raj) 450.
2
(2002) 8 SCC 481.
5
Education had to be obtained in writing. The appellants were paid three (3)
months’ salary initially and subsequently the rest of the amount was deposited in
their bank accounts, but the consent of the Director of Education was not obtained.
10. The aforesaid position led to an adverse order by the Tribunal on 10.1.2002.
The Management approached the High Court and the learned Single Judge, vide
judgment dated 16.7.2002, referring to Section 18 of the said Act held that the
same was not complied with and even otherwise the relationship between the
parties could not be said to have been strained beyond the point of no return. Thus,
the direction of the Tribunal for reinstatement was upheld.
11. The aforesaid took the battle to the Division Bench, with the Management
preferring an appeal, where it was opined that this was a case where the
Management had lost confidence in the appellants, that there had been a
unanimous decision of the Board, but the consent of the Director of Education had
not been obtained and, thus, there was only a technical defect. In terms of this
judgment dated 3.10.2013, the relief was modified to compensation equalling five
(5) years’ salary on the basis of last pay and allowances drawn by them on the date
of termination of their services, together with provident fund and all retiral benefits
by construing them to be otherwise in service till they attained the age of
superannuation. It may also be noted here that by that date Jeffry Jobard had
superannuated on 30.9.2013. These two persons have apparently continued to
occupy the premises, and have used the civic facilities without paying charges.
Thus, the Division Bench also opined that they must vacate the premises within a
6
period of one (1) month of such payment being made.
12. The Management of Mayo College reconciled itself to this verdict and did
not prefer any appeal. However, the appellants were aggrieved by the
quantification of compensation, in both the cases, while in case of Kailash Singh,
even in respect of non-restoration of his employment.
13. We have heard learned senior counsel/counsel appearing for the parties.
14. On behalf of the appellants, an impassioned plea was made that they have
been unjustly deprived of their employment and must be re-employed and fully
compensated for the same. By claiming full compensation, it was pleaded that
whatever be the total benefits payable right till the age of superannuation must be
paid, in the case of Jeffry Jobard, while in the case of Kailash Singh, he should be
paid till date and should be re-employed, as his services would continue till 2026.
The monetary compensation to the fullest extent was claimed on the basis of
judicial pronouncements that full back-wages should be the rule. On the other
hand, learned senior counsel for the Management pleaded that in a prestigious
educational institution, the environment cannot be permitted to be vitiated in this
fashion by the appellants, who behaved irresponsibly causing grave damage to the
reputation of the institution. It was pleaded that the principles applicable to a
factory or an industrial establishment cannot be made applicable to an educational
institution, insofar as the extent of discipline is concerned, and the mode and
manner of protests cannot be identically based. The effect of the conduct of the
appellants would have a direct impact on the young students, who are studying in
7
the institution, and the embarrassment was aggravated by the presence of the
parents on the special day. It was further pleaded that a technical non-compliance
with the provision of the said Act cannot be extended to this extent, and that it is
because of such technical non-compliance that the Management had, in principle,
agreed to accept the verdict of the Division Bench, by not agitating the matter
further. He also submitted that the compensation awarded by the Division Bench
was adequate, and that in any case, an amount of Rs.5 lakhs each, towards the
award amount had already been paid in pursuance to interim orders passed by this
Court on 1.5.2017.
15. Both sides cited certain judicial precedents in support of their case, which
we shall proceed to discuss hereafter.
16. On having delved into the submissions of both sides, as well as perusing the
judgments which are before us, we cannot lose sight of the fact that we are dealing
with an educational institution of great eminence. Persons employed in
educational institutions right from Class IV staff to the highest level have a far
greater responsibility on account of the nature of activity which takes place in these
institutions – Education. There are students of all ages, starting from younger ones
to older teenagers, who are studying and living in these campuses. It is a different
kind of ‘Gurukul’. Thus, anything which is done, as would cause an adverse
impact on the mind of these young people, is something which we find difficult to
approve, even if it is claimed as a right to make certain demands. The mode and
methodology of making demands in these educational institutions cannot be at par
8
with an industrial establishment, where workmen agitate for their rights. This is
also in the background of the Management apparently claiming that they were not
averse to the principal demand of bonus, but that they were waiting for the
necessary Government decision, in that behalf.
17. On the threats being held out by the so-called Sangarsh Samiti, the
Management had warned and cautioned the employees against creating a scene,
especially when there were important functions on the anvil, where the parents of
the wards would be participating. We may add that an annual day is always an
important day in an educational institution, with active participation of parents. It
is of great significance even to the passing out batch of students, and the sensitivity
of the parents and children should have been kept in mind while asserting such
rights, by the employees. This appears not to have been done.
18. We may hasten to add that, of course, in the given situation no inquiry
appears to have been done, but the response of the appellants to the show cause
notice issued by the Board of Governors, itself shows as to what transpired and
reveals the stand of the appellants. All this led to a complete lack of confidence in
the employees, by the Board of Governors. The decision by the Board of
Governors, which is really the Managing Committee as defined under Section 18
of the said Act, was a unanimous one as provided in sub-clause (iii) of the second
proviso to Section 18 of the said Act, and even the required salary was paid, albeit
in two instalments. However, the Management did commit a legal default in not
obtaining the consent of the Director of Education in writing, which has caused
9
this long drawn legal battle. At the cost of repetition, we may re-emphasise that
the Mayo College is a recognised institution but is not financially aided in any
manner by the Central or the State Government, and the first proviso to Section 18
of the said Act has already been read down, and in our opinion, rightly so, in view
of the 11 Judges Bench decision in T.M.A. Pai Foundation & Ors. v. State of
Karnataka & Ors.,3
dealing exclusively with educational institutions, and a portion
thereof, separately dealing with unaided educational institutions, as pointed out by
learned senior counsel for the Management, Mr. K.N. Bhatt, under the heading of
“Private Unaided Non-Minority Educational Institutions”. We have no hesitation in
concluding that there can be no question of reinstatement in such a case, but the
only remedy is by determining the compensation to be paid to the appellants, in
view of the Management not having complied with the legal requirement of
obtaining the consent of the Director of Education in writing.
19. We seek to buttress our conclusion with the following judicial
pronouncements. In a seminal judgment in T.M.A. Pai Foundation & Ors. v.
State of Karnataka & Ors.,4
an essential distinction is sought to be made in the
case of private unaided educational institutions, opining that its essence is in the
autonomy that the institution must enjoy in its management and administration.
Thus, while in a government-aided institution, the Government may have a greater
say in the administration, while in the case of unaided institutions, maximum
autonomy in day-to-day administration is to be with the private unaided institution.
3 Supra.
4 Supra.
10
This was held to be equally applicable to the teaching faculty and the members of
staff, for maintaining excellence in education. In para 63 of the said judgment, the
Bench took note of the grievance that wherever cases of misconduct are committed
by teachers and members of the staff, for which disciplinary action is taken, the
rules framed by the Government are against the Management, which inter alia
require prior permission from a governmental authority, before initiation of
disciplinary proceedings. The most relevant observation in para 64 is “In the case
of a private institution, the relationship between the management and the
employees is contractual in nature.” We may, however, add that thereafter the
importance of a domestic inquiry, in accordance with the principles of natural
justice, has also been emphasised. But then, in the present case, the show cause
notice and the response to it, themselves seem to lend credence to the allegation of
inappropriate behaviour of the appellants. The subsequent endeavour of Jeffry
Jobard, through a communication to back-out, cannot really aid him to a large
extent.
20. We may also note that were the appellants to file a civil suit, the evidence
would have been recorded, and the matter gone into a greater detail in a factual
context. This is relevant from both aspects of seeking restoration of services and
quantification of damages. The significant aspect is that there should not be
specific performance of a master-servant contract of service, and damages should
be the appropriate remedy. We may refer to Vidya Ram Misra v. Managing
Committee, Shri Jai Narain College,5
where in para 4, it was observed as under:
5
(1972) 1 SCC 623.
11
“4. It is well settled that, when there is a purported termination of a
contract of service, a declaration that the contract of service still
subsisted would not be made in the absence of special circumstances,
because of the principle that courts do not ordinarily enforce specific
performance of contracts of service (see Executive Committee of U.P.
State Warehousing Corporation Ltd. v. Chandra Kiran Tyagi [AIR
1970 SC 1244 : (1970) 2 SCR 250 : (1970) 1 SCJ 790] and Indian
Airlines Corporation v. Sukhdeo Rai [AIR 1971 SC 1828] ). If the
master rightfully ends the contract, there can be no complaint. If the
master wrongfully ends the contract, then the servant can pursue a
claim for damages. So even if the master wrongfully dismisses the
servant in breach of the contract, the employment is effectively
terminated. In Ridge v. Baldwin [(1965) 2 WLR 935 (HL)] Lord Reid
said in his speech:
“The law regarding master and servant is not in doubt. There
cannot be specific performance of a contract of service, and the
master can terminate the contract with his servant at any time
and for any reason or for none. But if he does so in a manner not
warranted by the contract he must pay damages for breach of
contract. So the question in a pure case of master and servant
does not at all depend on whether the master has heard the
servant in his own defence; it depends on whether the facts
emerging at the trial prove breach of contract. But this kind of
case can resemble dismissal from an office where the body
employing the man is under some statutory or other restriction as
to the kind of contract which it can make with its servants, or the
grounds on which it can dismiss them.”
21. The aforesaid view is also adopted by the Constitution Bench in Sirsi
Municipality v. Cecelia Kom Francis Tellis6
. We may usefully extract the
observations in the following paragraphs:
“15. The cases of dismissal of a servant fall under three broad heads.
The first head relates to relationship of master and servant governed
purely by contract of employment. Any breach of contract in such a
case is enforced by a suit for wrongful dismissal and damages. Just as
a contract of employment is not capable of specific performance
similarly breach of contract of employment is not capable of finding a
declaratory judgment of subsistence of employment. A declaration of
unlawful termination and restoration to service in such a case of
contract of employment would be indirectly an instance of specific
6
(1973) 1 SCC 409.
12
performance of contract for personal services. Such a declaration is
not permissible under the Law of Specific Relief Act.
16. The second type of cases of master and servant arises under
Industrial Law. Under that branch of law a servant who is wrongfully
dismissed may be reinstated. This is a special provision under
Industrial Law. This relief is a departure from the reliefs available
under the Indian Contract Act and the Specific Relief Act which do
not provide for reinstatement of a servant.
17. The third category of cases of master and servant arises in regard
to the servant in the employment of the State or of other public or
local authorities or bodies created under statute.
18. Termination or dismissal of what is described as a pure contract of
master and servant is not declared to be a nullity however wrongful or
illegal it may be. The reason is that dismissal in breach of contract is
remedied by damages. It (sic.)
7
the case of servant of the State or of
local authorities or statutory bodies, courts have declared in
appropriate cases the dismissal to be invalid if the dismissal is
contrary to rules of natural justice or if the dismissal is in violation of
the provisions of the statute. Apart from the intervention of statute
there would not be a declaration of nullity in the case of termination or
dismissal of a servant of the State or of other local authorities or
statutory bodies.
19. The courts keep the State and the public authorities within the
limits of their statutory powers. Where a State or a public authority
dismisses an employee in violation of the mandatory procedural
requirements or on grounds which are not sanctioned or supported by
statute the courts may exercise jurisdiction to declare the act of
dismissal to be a nullity. Such implication of public employment is
thus distinguished from private employment in pure cases of master
and servant.”
22. The facts of the present case are covered by the master-servant relationship,
i.e., the first category. There is no adjudication by invocation of a reference to the
Industrial Disputes Act, 1947. Thus, the remedy would only be in damages.
23. Now, turning to the aspect of quantification of damages, which is the real
7 To be read as ‘In’.
13
bone of contention. What we have to examine is whether the approach adopted by
the Division Bench and its conclusion, would give rise to a finding that justifiable
compensation has been arrived at, or otherwise.
24. Mr. Colin Gonsalves, learned senior counsel appearing for Jeffry Jobard and
Mr. Prashant Bhushan, counsel for Kailash Singh, have both sought to canvass that
the only adequate compensation can be full back-wages, till the date of retirement.
In this behalf, they referred to the following judicial pronouncements:
(i) O.P. Bhandari v. Indian Tourism Development Corporation Ltd.8
The
factual matrix is dealing with the employer-employee relationship in a public
sector undertaking to which Article 12 of the Constitution of India is attracted.
It was observed that reinstatement may not invariably follow as a consequence
of holding that an order of termination of service of an employee is void. In
that context, it was observed that reinstatement should be the rule for the ‘blue
collar’ workmen and ‘white collar’ employees, other than those belonging to the
managerial or to a similar high level cadre, and compensation in lieu thereof, is
an exception. However, this judgement also notes that the relationship between
the parties, having been strained beyond a point of no return, granting the salary
and allowances which would accrue to the employee till the future date of
superannuation was held to be too high a compensation. The object, it was
observed, would not be for the Court to confer a bonanza on the employee, but
to compensate him by adopting the appropriate formula.
(ii) Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya
8
(1986) 4 SCC 337.
14
(D.ED.) & Ors.9
: Full back-wages along with reinstatement and continuity of
service were held applicable in cases where the employee or workman was not
at all guilty of any misconduct, especially where it had been clearly averred that
the employee was not gainfully employed. The matter pertains to a teacher with
regards to her contractual appointment where principles of Industrial Disputes
Act were imported in the award of damages.
The attention of the Court was also drawn to para 38.7, where it recorded
the observations made in J.K. Synthetics Ltd. V. K.P. Agrawal & Anr.10 that
on reinstatement the employee/workman cannot claim continuity of service,
as a right, is contrary to the ratio of the judgments of three Judge Benches in
Hindustan Tin Works Private Limited v. Employees of Hindustan Tin Works
Private Limited11 and Surendra Kumar Verma v. Central Government
Industrial Tribunal-cum-Labour Court, New Delhi12, and thus, cannot be
treated as good law.
The judgment emphasises on the restoration of an employee to the
position held before dismissal, removal or termination from services, once the
employer’s action has been found to be illegal. Since the employee is
deprived of sustenance for himself and his family, it has been observed that
the employee should get full back-wages unless it can be proved that the
employee was gainfully employed during that period. In order to support this
proposition, various judicial pronouncements have been referred to, but which
9
(2013) 10 SCC 324.
10 (2007) 2 SCC 433.
11 (1979) 2 SCC 80.
12 (1980) 4 SCC 443.
15
are in the context of adjudication under the Industrial Disputes Act, 1947.
The proposition laid out, thus, is that where there is a wrongful termination of
service, reinstatement with continuity of service and back-wages is the normal
rule. A litigant ought not to be penalised, it was so observed, for the delays of
the system. However, mitigating and aggravating aspects, such as length of
service and nature of misconduct can be taken into account while determining
so.
25. We may now turn to the cases relied upon by the learned senior counsel for
the respondents:
i. S.S. Shetty v. Bharat Nidhi Ltd.13: The position obtaining in the ordinary
law of master-servant was clarified as one of established practice that where a
master wrongfully dismisses his servant, he is bound to pay him such
damages as would compensate him for the wrong that he has sustained. In
case the employment is for a specific term, the servant would, in that event be
entitled to damages, the amount of which would be measured prima facie and
subject to the rule of mitigation in the salary of which the master had deprived
him.
ii. Sirsi Municipality v. Cecelia Kom Francis Tellis:14 The judgment has
already been discussed as aforesaid in respect of dismissal in contractual
matters.
iii. Raju Chand v. Zonal Director Nehru Yuva Kendra Sangathan,
13 1958 SCR 442.
14 Supra.
16
Chandigarh & Ors.:15 One of us (Kurian, J.) has been a party to this
judgment, where in case of a driver on daily wages (or temporary basis), the
management lost confidence in him, and monetary compensation was held to
be appropriate remedy.
26. In the conspectus of the aforesaid discussion, we now turn to the crucial
issue of adequacy of compensation to be awarded to the appellants.
27. We have already noticed that by the very nature of the respondentInstitution,
which is completely unaided, and keeping in mind the principle
enunciated in T.M.A. Pai Foundation v. State of Karnataka,16 the only conclusion
is that the relationship between the parties is one of contract. The present case is
one where the conduct of the appellants cannot be said to be such that would not
result in loss of confidence. The factual matrix in the context of the show cause
notice and the replies to it itself clarified the position. However, the issue remains
that the respondent-Institution failed in the legal compliance of the second proviso
to Section 18 of the said Act and must bear the consequences of the same.
28. It is also true that the direction of attack, on behalf of the appellants, in the
proceedings in the courts below was qua restoration of their services. No clarity
has emerged on the issue, in the absence of any evidence led, on the employment,
if any, of these appellants. But no affidavit has also really been filed stating that
they were not gainfully employed. We may note that both the appellants have been
residing in the accommodation provided by the respondent-Institution, practically
15 (2016) 14 SCC 534.
16 Supra.
17
free of charge.
29. We cannot lose sight of the fact that the present case is not one under the
Industrial Disputes Act, 1947. This in turn would have required factual matrix to
be established in different aspects, which is not what has happened. Thus, the
principles of the Industrial Disputes Act, 1947 cannot be, ipso facto, imported into
a factual matrix of the present nature, for, as a consequence of the illegality in the
termination of the services of the appellants, compensation has to be granted. The
methodology of calculation would be based on the principle of wrongful
termination of an employee, under the master-servant relationship. This, in turn,
would import into it the requirement of the appellants endeavouring to mitigate
their losses. In fact, in this context, we may observe that the claim for back-wages
has apparently been raised for the first time only in the present proceedings, arising
from the manner in which the High Court dealt with the matter, where it granted
some compensation.
30. The principle of awarding adequate compensation in the form of backwages,
keeping in mind aggravating and mitigating circumstances would, thus,
have to be observed. The amount cannot be measly, nor can it be a bonanza. The
High Court, in its wisdom, awarded the compensation of five (5) years’ backwages
on the last pay drawn. Not only that, an additional benefit was conferred by
providing for provident fund and retiral dues, to be calculated on the premise as if
the services would be continued till the appellants attained the age of
superannuation.
18
31. We have no reason to find that such an aforesaid principle can be said to be
fallacious or wrong, so as to call for our interference, except to the extent discussed
hereafter.
32. We are firstly of the view that it would not be appropriate to determine the
amount on the basis of the last pay and allowances drawn. The calculation should
be based on the actual pay and allowances liable to be drawn for the years in
question, dependent on the period for which this amount is to be calculated.
33. In order to better understand, and come to an appropriate figure, we had
asked both the parties to give their calculations. The Management has given its
calculations based on the impugned judgment, which includes the salary
calculations for five (5) years on the last pay and allowances drawn, while gratuity
and provident fund benefits are taken till the date of retirement. There are
deductions made on account of electricity dues, house rent and certain other
smaller accounts. On the other hand, the appellants have given their broad
calculations, taking the monthly emoluments payable in different years, right up to
date, and even beyond that if the employment was to continue, as in the case of
Kailash Singh.
34. We are not going into the exactitude of the calculations, but, broadly
speaking, the final amount payable to Jeffry Jobard, as per the impugned order,
would be approximately Rs.7.75 lakhs. If the emoluments, as opined by us as
aforesaid, are taken into account, for five (5) years, it would be approximately
19
Rs.9.75 lakhs. In the case of Kailash Singh, the amount as per the calculations of
the Management would be approximately Rs.21 lakhs, while calculated as
aforesaid would be approximately in the same range.
35. On having carefully examined the aforesaid issue and the calculations before
us, we are inclined to enhance it a little more, and grant damages in the form of
salary and allowances payable for a period of eight (8) years, of the actual
amounts, in both the cases, after adding the respective provident fund amounts and
other retiral dues while simultaneously deducting electricity, water and occupation
charges, etc., as calculated by the management, as per the impugned order of the
Division Bench. To put a quietus to this long-drawn dispute, we have quantified
and fixed the amounts. The net impact is an all-inclusive compensation of Rs. 25
lakhs, in the case of Kailash Singh and Rs. 18 lakhs in the case of Jeffry Jobard.
Needless to say, the amount of Rs.5 lakhs, already paid to the appellants, in
pursuance to the directions of this Court, is liable to be adjusted from the said
amounts payable.
36. We are not inclined to grant future salary and allowances to Kailash Singh,
merely because he has not been granted reinstatement, with further years of his
service still remaining. In fact, in O.P. Bhandari v. Indian Tourism Development
Corporation Ltd.,17 this plea of paying future salary and allowances, in cases of
such non-reinstatement of an employee, was rejected as it would amount to
conferring a bonanza on an employee, and would not lead to compensation per an
acceptable formula.
17 Supra.
20
37. We are, thus, inclined to modify the impugned order to the aforesaid extent,
and direct the respondent-Institution to pay the aforementioned amounts within a
maximum period of two (2) months from today, after adjusting the amount already
paid.
38. The appellants are required to vacate the premises within a maximum period
of one (1) month of the amount being so paid.
39. The appeals are accordingly allowed, leaving the parties to bear their own
costs.
..….….…………………….J.
[Kurian Joseph]
...……………………………J.
[Sanjay Kishan Kaul]
New Delhi.
August 31, 2018.
21
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.6409 of 2017
KAILASH SINGH ….APPELLANT
Versus
THE MANAGING COMMITTEE,
MAYO COLLEGE, AJMER & ORS. ….RESPONDENTS
With
Civil Appeal No.6410/2017
J U D G M E N T
SANJAY KISHAN KAUL, J.
1. The Mayo College, Ajmer is an educational institution founded in 1875 by
Sir Richard Southwell Bourke, the 6th Earl of Mayo, who was also the Viceroy of
India from 1868 to 1872. It is one of the oldest educational institutions which was
set up as a public boarding school, offering admission to the then elite. This
character of the institution changed in the post-independence era, but it continued
to be a prestigious centre of learning. The Mayo College is an unaided, nongovernmental
educational institution receiving no grant either from the State or the
Central Government and is affiliated to the Central Board of Secondary Education,
New Delhi, for purposes of students taking that examination to pass the 12th
standard.
1
2. The present unfortunate dispute involves the Managing Committee of the
School (respondent No.1), with the Principal arrayed as the 2nd respondent. The
dispute in the two Civil Appeals before us concerns two employees of this
institution, who have served for a number of years, but apparently irreconcilable
differences had arisen on account of the alleged conduct of the employees. The
two employees are Kailash Singh (Civil Appeal No.6409/2017) and Jeffry Jobard
(Civil Appeal No.6410/2017).
3. Kailash Singh began his employment as a Class IV employee on 4.1.1984
and was promoted after a decade’s service as an LDC from 1.2.1994 and posted in
the Library. Jeffry Jobard began his career as an LDC itself, from 1.7.1985. The
services of both Kailash Singh and Jeffry Jobard were terminated simultaneously
on 9.11.2000, on account of conducts attributed to them, which created an
extremely undesirable situation in the respondent school.
4. It may be appropriate to refer to the ground reality which resulted in the
termination of the appellants, though it is not of great importance now in view of
subsequent developments. Both the appellants, in different capacities, were
associated with the activities of Mayo College Employees Union and are stated to
have been instrumental in setting up the ‘Sangarsh Samiti Mayo College, Ajmer’,
under the banner of which they demanded bonus. The stand of Respondent No. 1
was that such bonus was payable only as per the orders of the Government and the
Board of Governors was willing to consider the same, subject to such orders being
passed. The Sangarsh Samiti organised protest meetings at the gate of the Mayo
2
College on 19.10.2000 and resolved to hold a general meeting and dharna on
22.10.2000, on the issue of non-grant of bonus. Additionally, a threat was held out
to go on a general strike from 23.10.2000, if their demands were not met. The
Samiti, steered by the appellants, started with their movement on 20.10.2000, and
on 22.10.2000, a general notice was issued to all employees, reiterating the stand
of the establishment that the Board of Governors was awaiting the decision of the
Government. The employees were warned that any such “movement” was totally
illegal because no employees’ union had given any legal notice in that behalf, and a
warning to not tolerate absenteeism on 23.10.2000 and 24.10.2000 was held out.
Since the Board was awaiting the announcement by the Government, it was
informed to the workers that the management would take a call on the issue on
23.10.2000, and that the workers should not indulge in any disruptive activity.
5. The appellants, despite the same, are stated to have gone ahead with their
threat, and at the time when the Annual Function of the Mayo College was being
held on 23/24.10.2000, instigated other staff members not to go to work and
created disturbances, causing grave embarrassment to the Institution. It appears
that loudspeakers were used and inappropriate adjectives were used for the
management, so much so that the traditional dinner scheduled for 24.10.2000 had
to be cancelled, resulting in a loss of face for the management.
6. It is the aforesaid incidents which led to the show cause notice being issued
to both the appellants on 3.11.2000 to which they replied on 6.11.2000. The
appellants defended their actions by claiming that they had a right to organise
3
dharnas and protests, as a constitutional right, and that strike and sloganeering
should not be stopped. The adjectives used of Murdabad, etc. are adjectives of
common parlance in such agitations and cannot be said to be derogatory, and that a
proper inquiry should be held qua their conduct. The non-payment of bonus was
claimed to be an “administrative fanaticism”.
7. A unanimous resolution was passed by the Board of Governors on
7/8.11.2000 to terminate the services of the appellants, and they were so dismissed
on 9.11.2000 by issuance of letters of the even date. It may be noted that in a
subsequent communication, Jeffry Jobard, vide letter dated 14.11.2000 sought to
slightly back-track from the issue by claiming that he was not part of the Samiti,
and that at the relevant time was, in fact, a mere spectator of the meetings.
8. The termination of the services of the appellants resulted in their
approaching the Educational Tribunal, set up under the Rajasthan Non-Government
Educational Institutions Act, 1989 (hereinafter referred to as the ‘said Act’). The
crucial aspect on which the Management erred was the non-compliance of Section
18, which reads as under:
“18. Removal, dismissal or reduction in rank of employees.-
Subject to any rules that may be made in this behalf, no employee of a
recognised institution shall removed, dismissed or reduced in rank
unless he has been given by the management a reasonable opportunity
of being heard against the action proposed to be taken:
Provided that no final order in this regard shall be passed unless prior
approval of the Director of Education or an officer authorised by him
in this behalf has been obtained:
Provided further that this section shall not apply, -
(i) to a person who is dismissed or removed on the ground of conduct
4
which led to his conviction on a criminal charge, or
(ii) where it is not practicable or expedient to give that employee an
opportunity of showing cause, the consent of Director of Education
has been obtained in writing before the action is taken, or
(iii) Where the managing committee is of unanimous opinion that the
services of an employee cannot be continued without prejudice to the
interest of the institution, the services of such employee are
terminated after giving him six months’ notice or salary in lieu thereof
and the consent of the Director of Education is obtained in writing.”
9. When we say that the Management erred, it is so, as, in any eventuality, the
consent of the Director of Education had to be obtained in writing, which was not
so obtained, which proved fatal to the Management. We may add that insofar as the
first proviso to Section 18 of the said Act is concerned, a Full Bench of the
Rajasthan High Court, in Central Academy Society v. Rajasthan NonGovernment
Educational Institutions Tribunal, Jaipur & Ors.1
opined that for an
unaided institution the said proviso would not apply in view of the law enunciated
in the case of T.M.A. Pai Foundation & Ors. v. State of Karnataka & Ors.2
.
However, even in case of institutions like Mayo College (unaided institution), the
second proviso clause (iii) stared the management in the face; that while in case of
a unanimous opinion of the Managing Committee (Board of Governors in the
present case), the services of employees could be terminated when such services
were prejudicial to the interest of the institution, they were required to be given six
(6) months’ notice or salary in lieu thereof and the consent of the Director of
1
2010 (3) ILR (Raj) 450.
2
(2002) 8 SCC 481.
5
Education had to be obtained in writing. The appellants were paid three (3)
months’ salary initially and subsequently the rest of the amount was deposited in
their bank accounts, but the consent of the Director of Education was not obtained.
10. The aforesaid position led to an adverse order by the Tribunal on 10.1.2002.
The Management approached the High Court and the learned Single Judge, vide
judgment dated 16.7.2002, referring to Section 18 of the said Act held that the
same was not complied with and even otherwise the relationship between the
parties could not be said to have been strained beyond the point of no return. Thus,
the direction of the Tribunal for reinstatement was upheld.
11. The aforesaid took the battle to the Division Bench, with the Management
preferring an appeal, where it was opined that this was a case where the
Management had lost confidence in the appellants, that there had been a
unanimous decision of the Board, but the consent of the Director of Education had
not been obtained and, thus, there was only a technical defect. In terms of this
judgment dated 3.10.2013, the relief was modified to compensation equalling five
(5) years’ salary on the basis of last pay and allowances drawn by them on the date
of termination of their services, together with provident fund and all retiral benefits
by construing them to be otherwise in service till they attained the age of
superannuation. It may also be noted here that by that date Jeffry Jobard had
superannuated on 30.9.2013. These two persons have apparently continued to
occupy the premises, and have used the civic facilities without paying charges.
Thus, the Division Bench also opined that they must vacate the premises within a
6
period of one (1) month of such payment being made.
12. The Management of Mayo College reconciled itself to this verdict and did
not prefer any appeal. However, the appellants were aggrieved by the
quantification of compensation, in both the cases, while in case of Kailash Singh,
even in respect of non-restoration of his employment.
13. We have heard learned senior counsel/counsel appearing for the parties.
14. On behalf of the appellants, an impassioned plea was made that they have
been unjustly deprived of their employment and must be re-employed and fully
compensated for the same. By claiming full compensation, it was pleaded that
whatever be the total benefits payable right till the age of superannuation must be
paid, in the case of Jeffry Jobard, while in the case of Kailash Singh, he should be
paid till date and should be re-employed, as his services would continue till 2026.
The monetary compensation to the fullest extent was claimed on the basis of
judicial pronouncements that full back-wages should be the rule. On the other
hand, learned senior counsel for the Management pleaded that in a prestigious
educational institution, the environment cannot be permitted to be vitiated in this
fashion by the appellants, who behaved irresponsibly causing grave damage to the
reputation of the institution. It was pleaded that the principles applicable to a
factory or an industrial establishment cannot be made applicable to an educational
institution, insofar as the extent of discipline is concerned, and the mode and
manner of protests cannot be identically based. The effect of the conduct of the
appellants would have a direct impact on the young students, who are studying in
7
the institution, and the embarrassment was aggravated by the presence of the
parents on the special day. It was further pleaded that a technical non-compliance
with the provision of the said Act cannot be extended to this extent, and that it is
because of such technical non-compliance that the Management had, in principle,
agreed to accept the verdict of the Division Bench, by not agitating the matter
further. He also submitted that the compensation awarded by the Division Bench
was adequate, and that in any case, an amount of Rs.5 lakhs each, towards the
award amount had already been paid in pursuance to interim orders passed by this
Court on 1.5.2017.
15. Both sides cited certain judicial precedents in support of their case, which
we shall proceed to discuss hereafter.
16. On having delved into the submissions of both sides, as well as perusing the
judgments which are before us, we cannot lose sight of the fact that we are dealing
with an educational institution of great eminence. Persons employed in
educational institutions right from Class IV staff to the highest level have a far
greater responsibility on account of the nature of activity which takes place in these
institutions – Education. There are students of all ages, starting from younger ones
to older teenagers, who are studying and living in these campuses. It is a different
kind of ‘Gurukul’. Thus, anything which is done, as would cause an adverse
impact on the mind of these young people, is something which we find difficult to
approve, even if it is claimed as a right to make certain demands. The mode and
methodology of making demands in these educational institutions cannot be at par
8
with an industrial establishment, where workmen agitate for their rights. This is
also in the background of the Management apparently claiming that they were not
averse to the principal demand of bonus, but that they were waiting for the
necessary Government decision, in that behalf.
17. On the threats being held out by the so-called Sangarsh Samiti, the
Management had warned and cautioned the employees against creating a scene,
especially when there were important functions on the anvil, where the parents of
the wards would be participating. We may add that an annual day is always an
important day in an educational institution, with active participation of parents. It
is of great significance even to the passing out batch of students, and the sensitivity
of the parents and children should have been kept in mind while asserting such
rights, by the employees. This appears not to have been done.
18. We may hasten to add that, of course, in the given situation no inquiry
appears to have been done, but the response of the appellants to the show cause
notice issued by the Board of Governors, itself shows as to what transpired and
reveals the stand of the appellants. All this led to a complete lack of confidence in
the employees, by the Board of Governors. The decision by the Board of
Governors, which is really the Managing Committee as defined under Section 18
of the said Act, was a unanimous one as provided in sub-clause (iii) of the second
proviso to Section 18 of the said Act, and even the required salary was paid, albeit
in two instalments. However, the Management did commit a legal default in not
obtaining the consent of the Director of Education in writing, which has caused
9
this long drawn legal battle. At the cost of repetition, we may re-emphasise that
the Mayo College is a recognised institution but is not financially aided in any
manner by the Central or the State Government, and the first proviso to Section 18
of the said Act has already been read down, and in our opinion, rightly so, in view
of the 11 Judges Bench decision in T.M.A. Pai Foundation & Ors. v. State of
Karnataka & Ors.,3
dealing exclusively with educational institutions, and a portion
thereof, separately dealing with unaided educational institutions, as pointed out by
learned senior counsel for the Management, Mr. K.N. Bhatt, under the heading of
“Private Unaided Non-Minority Educational Institutions”. We have no hesitation in
concluding that there can be no question of reinstatement in such a case, but the
only remedy is by determining the compensation to be paid to the appellants, in
view of the Management not having complied with the legal requirement of
obtaining the consent of the Director of Education in writing.
19. We seek to buttress our conclusion with the following judicial
pronouncements. In a seminal judgment in T.M.A. Pai Foundation & Ors. v.
State of Karnataka & Ors.,4
an essential distinction is sought to be made in the
case of private unaided educational institutions, opining that its essence is in the
autonomy that the institution must enjoy in its management and administration.
Thus, while in a government-aided institution, the Government may have a greater
say in the administration, while in the case of unaided institutions, maximum
autonomy in day-to-day administration is to be with the private unaided institution.
3 Supra.
4 Supra.
10
This was held to be equally applicable to the teaching faculty and the members of
staff, for maintaining excellence in education. In para 63 of the said judgment, the
Bench took note of the grievance that wherever cases of misconduct are committed
by teachers and members of the staff, for which disciplinary action is taken, the
rules framed by the Government are against the Management, which inter alia
require prior permission from a governmental authority, before initiation of
disciplinary proceedings. The most relevant observation in para 64 is “In the case
of a private institution, the relationship between the management and the
employees is contractual in nature.” We may, however, add that thereafter the
importance of a domestic inquiry, in accordance with the principles of natural
justice, has also been emphasised. But then, in the present case, the show cause
notice and the response to it, themselves seem to lend credence to the allegation of
inappropriate behaviour of the appellants. The subsequent endeavour of Jeffry
Jobard, through a communication to back-out, cannot really aid him to a large
extent.
20. We may also note that were the appellants to file a civil suit, the evidence
would have been recorded, and the matter gone into a greater detail in a factual
context. This is relevant from both aspects of seeking restoration of services and
quantification of damages. The significant aspect is that there should not be
specific performance of a master-servant contract of service, and damages should
be the appropriate remedy. We may refer to Vidya Ram Misra v. Managing
Committee, Shri Jai Narain College,5
where in para 4, it was observed as under:
5
(1972) 1 SCC 623.
11
“4. It is well settled that, when there is a purported termination of a
contract of service, a declaration that the contract of service still
subsisted would not be made in the absence of special circumstances,
because of the principle that courts do not ordinarily enforce specific
performance of contracts of service (see Executive Committee of U.P.
State Warehousing Corporation Ltd. v. Chandra Kiran Tyagi [AIR
1970 SC 1244 : (1970) 2 SCR 250 : (1970) 1 SCJ 790] and Indian
Airlines Corporation v. Sukhdeo Rai [AIR 1971 SC 1828] ). If the
master rightfully ends the contract, there can be no complaint. If the
master wrongfully ends the contract, then the servant can pursue a
claim for damages. So even if the master wrongfully dismisses the
servant in breach of the contract, the employment is effectively
terminated. In Ridge v. Baldwin [(1965) 2 WLR 935 (HL)] Lord Reid
said in his speech:
“The law regarding master and servant is not in doubt. There
cannot be specific performance of a contract of service, and the
master can terminate the contract with his servant at any time
and for any reason or for none. But if he does so in a manner not
warranted by the contract he must pay damages for breach of
contract. So the question in a pure case of master and servant
does not at all depend on whether the master has heard the
servant in his own defence; it depends on whether the facts
emerging at the trial prove breach of contract. But this kind of
case can resemble dismissal from an office where the body
employing the man is under some statutory or other restriction as
to the kind of contract which it can make with its servants, or the
grounds on which it can dismiss them.”
21. The aforesaid view is also adopted by the Constitution Bench in Sirsi
Municipality v. Cecelia Kom Francis Tellis6
. We may usefully extract the
observations in the following paragraphs:
“15. The cases of dismissal of a servant fall under three broad heads.
The first head relates to relationship of master and servant governed
purely by contract of employment. Any breach of contract in such a
case is enforced by a suit for wrongful dismissal and damages. Just as
a contract of employment is not capable of specific performance
similarly breach of contract of employment is not capable of finding a
declaratory judgment of subsistence of employment. A declaration of
unlawful termination and restoration to service in such a case of
contract of employment would be indirectly an instance of specific
6
(1973) 1 SCC 409.
12
performance of contract for personal services. Such a declaration is
not permissible under the Law of Specific Relief Act.
16. The second type of cases of master and servant arises under
Industrial Law. Under that branch of law a servant who is wrongfully
dismissed may be reinstated. This is a special provision under
Industrial Law. This relief is a departure from the reliefs available
under the Indian Contract Act and the Specific Relief Act which do
not provide for reinstatement of a servant.
17. The third category of cases of master and servant arises in regard
to the servant in the employment of the State or of other public or
local authorities or bodies created under statute.
18. Termination or dismissal of what is described as a pure contract of
master and servant is not declared to be a nullity however wrongful or
illegal it may be. The reason is that dismissal in breach of contract is
remedied by damages. It (sic.)
7
the case of servant of the State or of
local authorities or statutory bodies, courts have declared in
appropriate cases the dismissal to be invalid if the dismissal is
contrary to rules of natural justice or if the dismissal is in violation of
the provisions of the statute. Apart from the intervention of statute
there would not be a declaration of nullity in the case of termination or
dismissal of a servant of the State or of other local authorities or
statutory bodies.
19. The courts keep the State and the public authorities within the
limits of their statutory powers. Where a State or a public authority
dismisses an employee in violation of the mandatory procedural
requirements or on grounds which are not sanctioned or supported by
statute the courts may exercise jurisdiction to declare the act of
dismissal to be a nullity. Such implication of public employment is
thus distinguished from private employment in pure cases of master
and servant.”
22. The facts of the present case are covered by the master-servant relationship,
i.e., the first category. There is no adjudication by invocation of a reference to the
Industrial Disputes Act, 1947. Thus, the remedy would only be in damages.
23. Now, turning to the aspect of quantification of damages, which is the real
7 To be read as ‘In’.
13
bone of contention. What we have to examine is whether the approach adopted by
the Division Bench and its conclusion, would give rise to a finding that justifiable
compensation has been arrived at, or otherwise.
24. Mr. Colin Gonsalves, learned senior counsel appearing for Jeffry Jobard and
Mr. Prashant Bhushan, counsel for Kailash Singh, have both sought to canvass that
the only adequate compensation can be full back-wages, till the date of retirement.
In this behalf, they referred to the following judicial pronouncements:
(i) O.P. Bhandari v. Indian Tourism Development Corporation Ltd.8
The
factual matrix is dealing with the employer-employee relationship in a public
sector undertaking to which Article 12 of the Constitution of India is attracted.
It was observed that reinstatement may not invariably follow as a consequence
of holding that an order of termination of service of an employee is void. In
that context, it was observed that reinstatement should be the rule for the ‘blue
collar’ workmen and ‘white collar’ employees, other than those belonging to the
managerial or to a similar high level cadre, and compensation in lieu thereof, is
an exception. However, this judgement also notes that the relationship between
the parties, having been strained beyond a point of no return, granting the salary
and allowances which would accrue to the employee till the future date of
superannuation was held to be too high a compensation. The object, it was
observed, would not be for the Court to confer a bonanza on the employee, but
to compensate him by adopting the appropriate formula.
(ii) Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya
8
(1986) 4 SCC 337.
14
(D.ED.) & Ors.9
: Full back-wages along with reinstatement and continuity of
service were held applicable in cases where the employee or workman was not
at all guilty of any misconduct, especially where it had been clearly averred that
the employee was not gainfully employed. The matter pertains to a teacher with
regards to her contractual appointment where principles of Industrial Disputes
Act were imported in the award of damages.
The attention of the Court was also drawn to para 38.7, where it recorded
the observations made in J.K. Synthetics Ltd. V. K.P. Agrawal & Anr.10 that
on reinstatement the employee/workman cannot claim continuity of service,
as a right, is contrary to the ratio of the judgments of three Judge Benches in
Hindustan Tin Works Private Limited v. Employees of Hindustan Tin Works
Private Limited11 and Surendra Kumar Verma v. Central Government
Industrial Tribunal-cum-Labour Court, New Delhi12, and thus, cannot be
treated as good law.
The judgment emphasises on the restoration of an employee to the
position held before dismissal, removal or termination from services, once the
employer’s action has been found to be illegal. Since the employee is
deprived of sustenance for himself and his family, it has been observed that
the employee should get full back-wages unless it can be proved that the
employee was gainfully employed during that period. In order to support this
proposition, various judicial pronouncements have been referred to, but which
9
(2013) 10 SCC 324.
10 (2007) 2 SCC 433.
11 (1979) 2 SCC 80.
12 (1980) 4 SCC 443.
15
are in the context of adjudication under the Industrial Disputes Act, 1947.
The proposition laid out, thus, is that where there is a wrongful termination of
service, reinstatement with continuity of service and back-wages is the normal
rule. A litigant ought not to be penalised, it was so observed, for the delays of
the system. However, mitigating and aggravating aspects, such as length of
service and nature of misconduct can be taken into account while determining
so.
25. We may now turn to the cases relied upon by the learned senior counsel for
the respondents:
i. S.S. Shetty v. Bharat Nidhi Ltd.13: The position obtaining in the ordinary
law of master-servant was clarified as one of established practice that where a
master wrongfully dismisses his servant, he is bound to pay him such
damages as would compensate him for the wrong that he has sustained. In
case the employment is for a specific term, the servant would, in that event be
entitled to damages, the amount of which would be measured prima facie and
subject to the rule of mitigation in the salary of which the master had deprived
him.
ii. Sirsi Municipality v. Cecelia Kom Francis Tellis:14 The judgment has
already been discussed as aforesaid in respect of dismissal in contractual
matters.
iii. Raju Chand v. Zonal Director Nehru Yuva Kendra Sangathan,
13 1958 SCR 442.
14 Supra.
16
Chandigarh & Ors.:15 One of us (Kurian, J.) has been a party to this
judgment, where in case of a driver on daily wages (or temporary basis), the
management lost confidence in him, and monetary compensation was held to
be appropriate remedy.
26. In the conspectus of the aforesaid discussion, we now turn to the crucial
issue of adequacy of compensation to be awarded to the appellants.
27. We have already noticed that by the very nature of the respondentInstitution,
which is completely unaided, and keeping in mind the principle
enunciated in T.M.A. Pai Foundation v. State of Karnataka,16 the only conclusion
is that the relationship between the parties is one of contract. The present case is
one where the conduct of the appellants cannot be said to be such that would not
result in loss of confidence. The factual matrix in the context of the show cause
notice and the replies to it itself clarified the position. However, the issue remains
that the respondent-Institution failed in the legal compliance of the second proviso
to Section 18 of the said Act and must bear the consequences of the same.
28. It is also true that the direction of attack, on behalf of the appellants, in the
proceedings in the courts below was qua restoration of their services. No clarity
has emerged on the issue, in the absence of any evidence led, on the employment,
if any, of these appellants. But no affidavit has also really been filed stating that
they were not gainfully employed. We may note that both the appellants have been
residing in the accommodation provided by the respondent-Institution, practically
15 (2016) 14 SCC 534.
16 Supra.
17
free of charge.
29. We cannot lose sight of the fact that the present case is not one under the
Industrial Disputes Act, 1947. This in turn would have required factual matrix to
be established in different aspects, which is not what has happened. Thus, the
principles of the Industrial Disputes Act, 1947 cannot be, ipso facto, imported into
a factual matrix of the present nature, for, as a consequence of the illegality in the
termination of the services of the appellants, compensation has to be granted. The
methodology of calculation would be based on the principle of wrongful
termination of an employee, under the master-servant relationship. This, in turn,
would import into it the requirement of the appellants endeavouring to mitigate
their losses. In fact, in this context, we may observe that the claim for back-wages
has apparently been raised for the first time only in the present proceedings, arising
from the manner in which the High Court dealt with the matter, where it granted
some compensation.
30. The principle of awarding adequate compensation in the form of backwages,
keeping in mind aggravating and mitigating circumstances would, thus,
have to be observed. The amount cannot be measly, nor can it be a bonanza. The
High Court, in its wisdom, awarded the compensation of five (5) years’ backwages
on the last pay drawn. Not only that, an additional benefit was conferred by
providing for provident fund and retiral dues, to be calculated on the premise as if
the services would be continued till the appellants attained the age of
superannuation.
18
31. We have no reason to find that such an aforesaid principle can be said to be
fallacious or wrong, so as to call for our interference, except to the extent discussed
hereafter.
32. We are firstly of the view that it would not be appropriate to determine the
amount on the basis of the last pay and allowances drawn. The calculation should
be based on the actual pay and allowances liable to be drawn for the years in
question, dependent on the period for which this amount is to be calculated.
33. In order to better understand, and come to an appropriate figure, we had
asked both the parties to give their calculations. The Management has given its
calculations based on the impugned judgment, which includes the salary
calculations for five (5) years on the last pay and allowances drawn, while gratuity
and provident fund benefits are taken till the date of retirement. There are
deductions made on account of electricity dues, house rent and certain other
smaller accounts. On the other hand, the appellants have given their broad
calculations, taking the monthly emoluments payable in different years, right up to
date, and even beyond that if the employment was to continue, as in the case of
Kailash Singh.
34. We are not going into the exactitude of the calculations, but, broadly
speaking, the final amount payable to Jeffry Jobard, as per the impugned order,
would be approximately Rs.7.75 lakhs. If the emoluments, as opined by us as
aforesaid, are taken into account, for five (5) years, it would be approximately
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Rs.9.75 lakhs. In the case of Kailash Singh, the amount as per the calculations of
the Management would be approximately Rs.21 lakhs, while calculated as
aforesaid would be approximately in the same range.
35. On having carefully examined the aforesaid issue and the calculations before
us, we are inclined to enhance it a little more, and grant damages in the form of
salary and allowances payable for a period of eight (8) years, of the actual
amounts, in both the cases, after adding the respective provident fund amounts and
other retiral dues while simultaneously deducting electricity, water and occupation
charges, etc., as calculated by the management, as per the impugned order of the
Division Bench. To put a quietus to this long-drawn dispute, we have quantified
and fixed the amounts. The net impact is an all-inclusive compensation of Rs. 25
lakhs, in the case of Kailash Singh and Rs. 18 lakhs in the case of Jeffry Jobard.
Needless to say, the amount of Rs.5 lakhs, already paid to the appellants, in
pursuance to the directions of this Court, is liable to be adjusted from the said
amounts payable.
36. We are not inclined to grant future salary and allowances to Kailash Singh,
merely because he has not been granted reinstatement, with further years of his
service still remaining. In fact, in O.P. Bhandari v. Indian Tourism Development
Corporation Ltd.,17 this plea of paying future salary and allowances, in cases of
such non-reinstatement of an employee, was rejected as it would amount to
conferring a bonanza on an employee, and would not lead to compensation per an
acceptable formula.
17 Supra.
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37. We are, thus, inclined to modify the impugned order to the aforesaid extent,
and direct the respondent-Institution to pay the aforementioned amounts within a
maximum period of two (2) months from today, after adjusting the amount already
paid.
38. The appellants are required to vacate the premises within a maximum period
of one (1) month of the amount being so paid.
39. The appeals are accordingly allowed, leaving the parties to bear their own
costs.
..….….…………………….J.
[Kurian Joseph]
...……………………………J.
[Sanjay Kishan Kaul]
New Delhi.
August 31, 2018.
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