* THE HON’BLE SRI JUSTICE B. PRAKASH RAO AND *THE HON’BLE SRI JUSTICE RAMESH RANANATHAN + W.A.NOS. 2581 AND 2618 OF 2005 W.A.No. 2581 of 2005: % 11.07.2006 # The Cotton Corporation of India Limited, resp.,by its Branch Manager, Arundalpet, Guntur District. ….. Petitioner Vs. 1. $ The Presiding Officer, Labour Court, Guntur. ….Respondents. ! Counsel for the Petitioner: Sri A.K. Jayaprakash Rao ^ Counsel for the Respondents: Sri G. Vidyasagar < Gist: >Head Note ? Citations: [1] (2005) 3 SCC 134 2 (2006) 1 SCC 430 3 (2005)3 SCC 331 4 (2005) 2 SCC 489 5 (2002) 10 SCC 330 6 2000(3) SCC 324 7 AIR 1987 SC 37 8 (2005) 2 SCC 481 9 (2003) 12 SCC 1 10 (2005) 3 SCC 401 11 (2002) 6 SCC 41 12 (2006) 1 SCC 479 13 (2005) 2 SCC 363 14 (2005) 5 SCC 124 15 (2005) 5 SCC 591 16 (2001) 2 SCC 54 17 (2003) 6 SCC 141 18 (2006)4 SCC 733 19 (2006)3 SCC 790 20 (2005)10 SCC 84 21 (2004) 8 SCC 218 22 (2006) 2 SCC 255 23 (2005) 7 SCC 338 THE HON’BLE SRI JUSTICE B. PRAKASH RAO AND THE HON’BLE SRI JUSTICE RAMESH RANANATHAN W.A.NOS. 2581 AND 2618 OF 2005 ORDER: (per Hon’ble Sri Justice Ramesh Ranganathan) Aggrieved by the order in W.P.No. 8088 of 1999 and 7722 of 1999 dated 11.07.2005 whereby the punishment awarded by the labour Court, Guntur in I.D.No. 73 of 1988 dated 25.01.1999, was modified, the present appeals are filed by Cotton Corporation of India, the Employer. Questioning the award in I.D.No.73 of 1988, the appellant herein had filed W.P.No. 7722 of 1999, and the respondent workman had filed W.P.No. 8088 of 1999. The respondent–workman, a Cotton purchase officer, was issued a charge sheet on 28.12.1984 and the charges levelled against him therein read thus: i. That Shri U. Chinnappa while functioning as Cotton Purchase Officer and posted as Center Incharge at Gudhihattanur center during the cotton season 1983-84 did not work with full devotion to duty and acted in a manner prejudicial to the interests of the Corporation by not conducting/taking experimental outturns as per the guidelines issued, and he has based his purchases with unrealistic outturns resulting in wide difference between budgeted and actual paid hard by Rs.243/- per candy. ii. That Shri U. Chinnappa while functioning as Cotton Purchase Officer and posted as Center Incharge at Gudihattanur Center during the cotton season 1983-84 did not work with full devotion to duty and acted in a manner prejudicial to the interests of the Corporation by not maintaining heap-wise results. He was instructed to maintain heap-wise for guidance for future purchase, but contrary to it he willfully neglected the instructions and continued purchases without maintaining heap-wise results resulting into abnormal shortages, and high padthar thereby resulting huge loss to the Corporation. iii. That Shri U. Chinnappa while functioning as Cotton Purchase Officer and posted as Center Incharge at Gudihattanur center during the cotton season 1983-84 did not work with full devotion to duty and acted in a manner prejudicial to the interests of the Corporation and did not work without responsibility, which resulted into high percentage of processing shortages by way of gins to process, and wide difference between the budgeted and actual podha to the extent of Rs243/- per candy in case of H-4 variety. An enquiry was conducted into these charges and, on being found guilty thereof, the respondent-workman was imposed the punishment of removal from service. The appeal preferred by him was dismissed vide proceedings dated 08.12.1987. His mercy petition was also rejected on 05.01.1988. Aggrieved thereby the respondent-workman approached the labour Court, Guntur under Section 2-A(2) of the Industrial Disputes Act. No oral evidence was adduced both on behalf of the appellant and the respondent herein. Exs.M-1 to M-5 were, however, marked as exhibits by the Appellant herein. Before the labour Court, the respondent-workman contended that the punishment imposed was discriminatory and while 15 others, whom he specifically named as having been charged of the same misconduct, were continued in service he was imposed the punishment of dismissal from service. The appellant herein contended that the provisions of the Industrial Disputes Act was inapplicable, that they had lost confidence in the respondent- workman on account of his continuous misconduct and dereliction of duty and that his negligence had resulted in heavy financial loss to the corporation. The labour Court examined the contents of the enquiry report and took note of the findings of the enquiry officer that he was not convinced that the respondent-workman had taken all necessary precautions to protect the stocks from calamity of nature and while he had taken some steps such as addressing letters, these steps were not sufficient. The labour Court held that, by taking all necessary precautions, the difference in actual and budgeted padthar could have been reduced to some extent. After perusal of the enquiry report, the labour Court held that none of the charges framed against the respondent-workman related to misappropriation and all the charges, which were inter-connected, only disclosed that the respondent-workman did not work with full devotion to duty, that he was negligent in the discharge of his duties and that the punishment imposed was shockingly disproportionate to the charges leveled against him. The labour Court held that other employees i.e., G.S. Dhiman, Syed Rasheed and V. Veeraiah, who were also charged of similar misconduct, were admittedly let off with a lenient punishment of deferment of increments or their pay was reduced.. While holding that the petitioner did not act diligently in discharge of his duties and there had been some negligence on his part, the labour Court held that it did not warrant his removal from service. The labour Court held that, after filing of the petition, the respondent-workman had attained the age of superannuation, that he had not worked for the entire period and that several other persons who had committed mistakes of the same nature, which the respondent-workman had committed, were punished with deferment of increments or reduction of pay. The labour Court held that the respondent- workman was entitled only for full back wages from the date of termination till he attained superannuation without other attendant benefits and that he was only entitled to the last pay drawn by him, from the date he was removed from service till he attained the age of superannuation, without any further benefits. The learned single judge, by order in W.P.No. 8088 of 1999 and W.P.No. 7722 of 1999 dated 11.07.2005, held that the labour Court had considered each and every aspect of the evidence including the punishment imposed in respect of others involved in the same misconduct and had come to the conclusion that, in the nature of misconduct alleged, the punishment of removal from service was disproportionate and as such, while exercising its powers under Section 11-A of the Industrial Disputes Act, had set aside the removal order and had passed the award. The learned single judge took note of the fact that the labour Court had held that it was not a case of misappropriation and had found that, though the charges were framed against others also, an enquiry was conducted separately by the appellants and some of them were let of with deferment of increments or reduction in pay as they had admitted their guilt, while the respondent-workman, since he had protested the charges thinking that he was innocent, was removed from service. The learned single judge held that it was a clear case of discrimination and therefore the punishment imposed upon the workman was shockingly disproportionate to the misconduct alleged and proved, and as the respondent-workman had attained the age of superannuation on 07.01.1995 and, therefore, to meet the ends of justice on the peculiar facts of the case, the labour Court had directed full back wages from the date of termination till the date of superannuation. The learned single judge held that the labour Court had rightly come to the conclusion that all the charges were inter-connected and disclosed that the workman did not work with full devotion to duty and had acted in a manner prejudicial to the interests of the Corporation. The learned judge held that since it was not a case of misappropriation or embezzlement of the property of the Corporation, and also in view of the fact that identical and similar charges framed against many others resulted in their being let off with a simple punishment of deferment of increment or reduction of pay, the labour Court had not committed any error in coming to such a conclusion calling for interference of this Court under Article 226 of the Constitution of India. The learned Single Judge, however, held that the labour Court, while holding that others were let off with deferment of increments, had imposed a severe punishment of entitlement to the last drawn pay by the petitioner as on the date when he was removed from service till he attained the age of superannuation without any further benefits. The learned judge took note of the fact that during the period, the petitioner was out of service, there was a revision in the pay scales and that the workman was denied the benefits of pay revision. Keeping this in mind the learned single judge modified the award passed by the labour Court and directed the appellant herein to pay the respondent-workman full back wages from the date of termination till the date he attained superannuation without any further increments and other attendant benefits and that the workman was entitled for fixation of his pay in the appropriate scale from the date of giving effect to the revised pay scales and that he would draw the last drawn pay from the date of removal till the date of effecting the revised pay scales and thereafter, the pay fixed under the revised pay scales till the date of superannuation. The learned single Judge held that the respondent-workman was also entitled for gratuity and other terminal benefits as per his eligibility. It is necessary to note that both the appeals are preferred by the appellant herein, against the orders passed in W.P.No. 8088 of 1999 and W.P.No. 7722 of 1999, and that the respondent- workman has not chosen to question the order of the learned single judge. Since both the labour Court and the learned single judge have held the charges of misconduct leveled against the respondent-workman had been established and as the respondent- workman has not chosen to challenge these findings before us, the only question which is required to be considered is as to the nature and extent of punishment imposed on the respondent- workman for proved misconduct. Sri A.K. Jayaprakash Rao, learned Counsel for the appellant, would submit that the labour Court erred in granting back wages from the date of termination till the date of the award on the basis of the last pay drawn, and that this Court ought not to have granted him the further benefit of revised pay scales and other terminal benefits. Learned Counsel would submit that back wages cannot be awarded as a matter of course and that the labour Court ought to have considered several factors, such as whether the workman was employed elsewhere, whether the delay in pendency of proceedings before the labour Court was on account of the workman or the management, whether the conduct of the workman justified grant of back wages etc, before awarding him full back wages. Learned Counsel would submit that since the labour Court mechanically directed payment of back wages without examining these factors, the award of the labour Court was required to be set aside. Learned Counsel would submit that the jurisdiction of this Court, under Article 226 of the Constitution of India, is supervisory and not appellate and that, except in exceptional circumstances, this Court would not interfere with the quantum of punishment imposed by the employer. According to the learned Counsel the nature and extent of punishment to be imposed is for the employer to decide and neither the labour Court under Section 11-A of the Industrial Disputes Act nor this Court under Article 226 of the Constitution of India, except where the punishment imposed is found grossly disproportionate or shocks it conscience, would be justified in interfering with the punishment imposed by the employer. Sri G. Vidyasagar, learned Counsel for the respondent- workman, on the other hand, would seek to sustain the order of the learned single judge. Learned Counsel would submit that unlike in cases where the punishment imposed, pursuant to the departmental enquiry, is challenged straight away before this Court, where the award of the labour Court is under challenge this Court, under Article 226 of the Constitution of India, would have wider jurisdiction to interfere with the quantum of punishment. Learned Counsel would submit that since the power to interfere with the quantum of punishment has been specifically conferred on Industrial Tribunals/Labour Courts, under Section 11-A of the Industrial Disputes Act, this Court would also have the power to do so under Article 226 of the Constitution of India. Learned Counsel would submit that since the punishment, as modified by the labour Court, was considered to be unduly harsh, more so when other employees, who were charged of the same/similar offences were imposed a lesser punishment, the learned single judge was justified in modifying the punishment imposed by the labour Court. Learned Counsel would submit that the learned single judge, in effect, has not even modified the punishment imposed by the labour Court, has merely clarified the award recognizing the fact that subsequent to the termination of the workman the pay scales of employees of the appellant Corporation had been revised and had, therefore, merely directed that these revised pay scales be extended to the respondent-workman also. Learned Counsel would submit that the respondent workman has been waging a relentless battle for the last two decades and the multiplicity of proceedings instituted by the appellant is only to harass the respondent-workman and to deny him payment of the amounts legitimately due to him. QUANTUM OF PUNISHMENT: SCOPE OF INTERFERENCE UNDER SECTIN 11-A OF THE INDUSTRIAL DISPUTES ACT: After introduction of Section 11-A, in the Industrial Disputes Act, a certain amount of discretion is vested with the Labour Court/Industrial Tribunal in interfering with the quantum of punishment awarded by the management where the workman concerned is found guilty of misconduct. The area of discretion is well defined and is not unlimited. The discretion which can be exercised under Section 11-A is available only on the existence of certain factors like punishment being disproportionate to the gravity of misconduct so as to disturb the conscience of the court, or the existence of any mitigating circumstances which require the reduction of the sentence, or the past conduct of the workman which may persuade the Labour Court to reduce the punishment. In the absence of any such factor existing, the Labour Court cannot by way of sympathy alone exercise the power under Section 11-A of the Act and reduce the punishment. (Mahindra and Mahindra Ltd. v. N.B. Narawade[1]) While exercising its discretionary jurisdiction under Section 11-A of the Industrial Disputes Act it is no doubt open to the Tribunal to substitute one punishment by another but the Tribunal exercises limited jurisdiction in this regard. The jurisdiction to interfere with the quantum of punishment could be exercised only when it is found to be grossly disproportionate and on arriving at a finding that no reasonable person could inflict such a punishment. The Tribunal may furthermore exercise its jurisdiction when relevant facts are not taken into consideration by the management which would have a direct bearing on the quantum of punishment. (Hombe Gowda Educational Trust v. State of Karnataka[2]) If the Tribunal decides to interfere with the punishment it should bear in mind the principle of proportionality between the gravity of the offence and the stringency of the punishment. (Muriadiah Colliery of Bharat Coking Coal Ltd. Vs. Bihar Colliery Kamgar Union through workmen[3]). The Labour Court and the Industrial Tribunal must act within the four corners and in terms of the provisions of the Industrial Disputes Act. Industrial Courts would not sit in appeal over the decision of the employer unless there exists a statutory provision in this regard. The jurisdiction, though wide, must be exercised in terms of the provisions of the statute and no other. If the punishment is harsh, albeit a lesser punishment may be imposed, but such an order cannot be passed on irrational or extraneous factors and certainly not on compassionate grounds. (Bharat Forge Co. Ltd. v. Uttam Manohar Nakate[4]). The discretion under Section 11-A has to be used judiciously. (Regional Manager, RSRTC v. Ghanshyam Sharma[5]). The jurisdiction vested with the Labour Court to interfere with the punishment is not to be exercised capriciously and arbitrarily. (U.P.S.R.T.C. Corpn. Vs. Subhash Chandra Sharma[6]; C.M.C. Hospital Employees Union Vs. C.M.C, Vellore[7]). The power of the Labour Court, under Section 11-A, is not without limitation. There is no such thing as unlimited jurisdiction vested with any judicial or quasi-judicial forum. An unfettered discretion is a sworn enemy of the constitutional guarantee against discrimination. An unlimited jurisdiction leads to unreasonableness. No authority, be it administrative or judicial, has the power to exercise the discretion vested in it unless the same is based on justifiable grounds supported by acceptable materials and reasons therefor. The question the Labour Court ought to ask itself, while exercising its discretion under Section 11-A, should be whether there are sufficient reasons for it to come to a reasonable conclusion that the punishment imposed is grossly disproportionate. (Bharat Heavy Electricals Ltd. v. M. Chandrasekhar Reddy[8]). Only in a case where the satisfaction is reached by the Labour Court or the Tribunal, as the case may be, that these are sufficient reasons to do so, would interference with the order of punishment be justified. (Engg. Laghu Udyog Employees' Union v. Judge, Labour Court and Industrial Tribunal[9]). Similarly, the High Court gets jurisdiction to interfere with the punishment in exercise of its jurisdiction under Article 226 of the Constitution only when it finds that the punishment imposed, is shockingly disproportionate to the charges proved. (M.P. Electricity Board v. Jagdish Chandra Sharma[10]). As is clear from the award in I.D.No.73 of 1988, the labour Court held that the charge of misconduct held proved against the respondent-workman, did not relate to misappropriation and was merely a case of negligence in discharge of duties. The labour Court also took note of the fact that other employees Sri G.S. Dhiman, Syed Rasheed and V. Veeraiah, who were charged of similar misconduct, were let off with a lenient punishment of deferment of increments or reduction in pay. It is in such circumstances that the labour Court, on coming to the conclusion that the punishment of removal from service was shockingly disproportionate to the charges, more so when others charged of similar offences were let off with comparatively lesser punishments, exercised its discretion and interfered with the quantum of punishment imposed by the appellant herein on the respondent-workman. The Labour Court, took note of the fact that the respondent-workman had attained the age of superannuation during the pendency of proceedings in I.D.No.73 of 1988 and since a person who has reached the age of superannuation cannot be reinstated into service, modified the punishment imposed by the appellant and directed payment of compensation in the form of full back wages from the date of termination till the respondent-workman attained the age of superannuation without other attendant benefits and held that he was only entitled to the last pay drawn by him on the date when he was removed from service till he attained the age of superannuation without any further benefits. The labour Court, being the final Court of facts, its conclusions in holding that the punishment imposed on the respondent-workman was shockingly disproportionate, cannot be characterized as perverse or not in accordance with law. Since the labour Court has the discretion, under Section 11-A of the Industrial Disputes Act, and as the discretion exercised cannot be characterized as either arbitrary or perverse, no interference is called for by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India. AWARD OF BACK WAGES : FACTORS TO BE TAKEN INTO CONSIDERATION BY THE LABOUR COURT: Sri A.K. Jayaprakash, learned Counsel for the appellant, would however contend that the labour Court ought not to have awarded back wages since it is well settled that even if the order of punishment imposed by the employer is liable to be set aside, while the Tribunal could direct reinstatement, payment of back wages cannot be awarded as a matter of course. Under Section 11-A of the Industrial Disputes Act, as amended in 1971, the Industrial Tribunal is statutorily mandated, while setting aside the order of discharge or dismissal and directing reinstatement of the workman, to consider the terms and conditions, subject to which relief should be granted or to give such other relief to the workman including the award of any other punishment in lieu of discharge or dismissal, as the circumstances of the case may require. The section is couched in wide and comprehensive terms. It vests a wide discretion in the Tribunal in the matter of awarding proper punishment and also in the matter of the terms and conditions on which reinstatement of the workman should be ordered. It necessarily follows that the Tribunal is duty- bound to consider whether in the circumstances of the case, back wages have to be awarded and if so, to what extent. (Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya[11]) Although earlier Courts insisted that it was for the employer to raise the plea, that the workman was gainfully employed elsewhere during the period he was not in the service of the employer, having regard to the provisions of Section 106 of the Evidence Act and provisions analogous thereto, a plea to the contrary must be raised by the workman. (U.P. State Brassware Corpn. Ltd. v. Uday Narain Pandey[12]). When the question, of determining the entitlement of a person to back wages, arises for consideration the employee has to show that he was not gainfully employed. The initial burden is on him. After, and if, he places materials in that regard, the employer can bring on record materials to rebut the claim. (Kendriya Vidyalaya Sangathan v. S.C. Sharma[13]) Earlier, in the event of an order of dismissal being set aside, reinstatement with full back wages was the usual result. But with passage of time, it came to be realised that industry was being compelled to pay the workman for a period during which he apparently contributed little or nothing at all and for a period that was spent unproductively, while the workman was being compelled to go back to a situation which prevailed many years ago when his services were terminated. It was considered necessary to develop a pragmatic approach to problems dogging industrial relations, and though no just solution could be offered, a golden mean could be arrived at. (Allahabad Jal Sansthan v. Daya Shankar Rai[14]) There is no rule of thumb that in every case where the Industrial Tribunal gives a finding that the termination of service is in violation of Section 25-F of the Act, entire back wages should be awarded. A host of factors like the manner and method of selection and appointment i.e. whether after proper advertisement of the vacancy or inviting applications from the employment exchange, nature of appointment, namely, whether ad hoc, short term, daily wage, temporary or permanent in character, any special qualification required for the job and the like should be weighed and balanced in taking a decision regarding award of back wages. One of the important factors, which has to be taken into consideration, is the length of service, which the workman had rendered with the employer. If the workman has rendered a considerable period of