Supreme Court adjusts compensation in employment dispute, emphasizes on actual pay calculation

The Supreme Court modified the compensation awarded by the Division Bench, directing the respondent institution to pay Rs. 25 lakhs to Kailash Singh and Rs. 18 lakhs to Jeffry Jobard within two months, after adjusting the amount already paid. The appellants were required to vacate the premises within one month of receiving the payment. The appeals were allowed, with each party bearing their own costs. The Court emphasized that reinstatement was not appropriate, and compensation should be based on actual pay and allowances for the relevant period.

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Issues Involved:
1. Termination of employment of Kailash Singh and Jeffry Jobard.
2. Compliance with Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989.
3. Adequacy of compensation awarded to the appellants.
4. The right to reinstatement versus compensation for wrongful termination.

Issue-wise Detailed Analysis:

1. Termination of Employment of Kailash Singh and Jeffry Jobard:
The appellants, Kailash Singh and Jeffry Jobard, were terminated from their employment at Mayo College on 9.11.2000. Kailash Singh had been promoted to an LDC in the Library after starting as a Class IV employee in 1984. Jeffry Jobard began as an LDC in 1985. Their termination was due to their involvement in organizing protests and strikes under the banner of the 'Sangarsh Samiti Mayo College, Ajmer,' demanding bonus payments. The management alleged that their actions during the Annual Function on 23/24.10.2000 caused disturbances and embarrassment to the institution.

2. Compliance with Section 18 of the Rajasthan Non-Government Educational Institutions Act, 1989:
The appellants approached the Educational Tribunal, citing non-compliance with Section 18 of the said Act, which mandates obtaining the Director of Education's consent in writing before terminating an employee. The Tribunal and the High Court found that the management failed to comply with this requirement. The Division Bench acknowledged the unanimous decision of the Board of Governors but deemed the lack of consent a "technical defect." Consequently, the Tribunal's decision for reinstatement was upheld, but the Division Bench modified the relief to compensation equivalent to five years' salary, provident fund, and retiral benefits.

3. Adequacy of Compensation Awarded to the Appellants:
The appellants were dissatisfied with the compensation awarded and sought full back-wages and reinstatement. The Supreme Court examined whether the compensation granted by the Division Bench was justifiable. The Court noted that the management's failure to obtain the Director of Education's consent necessitated compensation. The principle of awarding adequate compensation, considering aggravating and mitigating circumstances, was emphasized. The Court concluded that the compensation should not be based on the last pay drawn but on the actual pay and allowances for the relevant period. The final compensation was enhanced to Rs. 25 lakhs for Kailash Singh and Rs. 18 lakhs for Jeffry Jobard, inclusive of provident fund and retiral dues, with deductions for electricity, water, and occupation charges.

4. The Right to Reinstatement versus Compensation for Wrongful Termination:
The Supreme Court held that reinstatement was not appropriate in this case, given the nature of the institution and the conduct of the appellants. The Court emphasized that the relationship between the parties was contractual, and the remedy for wrongful termination should be damages rather than reinstatement. The principles from T.M.A. Pai Foundation v. State of Karnataka were applied, highlighting the autonomy of private unaided educational institutions in managing their staff. The Court rejected the plea for future salary and allowances, stating that it would amount to a bonanza rather than fair compensation.

Conclusion:
The Supreme Court modified the compensation awarded by the Division Bench, directing the respondent institution to pay Rs. 25 lakhs to Kailash Singh and Rs. 18 lakhs to Jeffry Jobard within two months, after adjusting the amount already paid. The appellants were required to vacate the premises within one month of receiving the payment. The appeals were allowed, with each party bearing their own costs.

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