Supreme Court rules on illegal inquiry, emphasizes reinstatement with full back wages

The Supreme Court held that the second inquiry conducted without recorded reasons was illegal, leading to the appellant's wrongful removal. While the High Court denied back-wages, the Supreme Court emphasized the norm of reinstatement with full back wages unless exceptional circumstances exist. The Court highlighted the employer's burden to prove gainful employment during the termination period. Ultimately, the Supreme Court awarded a lump sum compensation of Rs. 5 lakhs to the appellant in addition to retiral benefits, settling the back-wages claim due to prolonged litigation and the appellant's superannuation in 2005.

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Issues Involved: Legality of the second inquiry, entitlement to back-wages, and principles governing the grant of back-wages.

1. Legality of the Second Inquiry:
The appellant was initially appointed as Headmaster on 1 July 1986. On 5 February 1994, he was accused of misappropriating Rs. 5,000. After submitting a reply, an inquiry officer, Shri Marathe, was appointed, who found the appellant not guilty. Despite this, the first respondent appointed another inquiry officer, Shri Sontakke, without recording reasons for discarding the first report. The new inquiry officer found the appellant guilty, leading to his removal on 29 June 1996. The High Court quashed this removal, deeming the second inquiry illegal due to the lack of recorded reasons for the fresh inquiry. The Supreme Court upheld this view, citing the necessity of recording reasons when disagreeing with an inquiry report, as established in CSHA University v BD Goyal (2010) 15 SCC 776.

2. Entitlement to Back-Wages:
The appellant argued that back-wages should follow the wrongful termination, supported by precedents like Hindustan Tin Works (P) Ltd v Employees (1979) 2 SCC 80 and Deepali Gundu Surwase v Kranti Junior Adhyapak Mahavidyalaya (2013) 10 SCC 324. The High Court denied back-wages but granted retiral benefits based on continuity of service. The Supreme Court noted that the general rule is reinstatement with full back wages unless exceptional circumstances justify otherwise. The Court highlighted that the burden of proving gainful employment during the period of wrongful termination lies with the employer.

3. Principles Governing the Grant of Back-Wages:
The Supreme Court referred to several judgments, including Hindustan Tin Works and Deepali Surwase, which emphasize that reinstatement with back wages is the norm unless the employer proves the employee was gainfully employed during the termination period. The Court underscored that denying back-wages would unjustly penalize the employee and reward the employer for wrongful termination.

Conclusion:
The Supreme Court concluded that the High Court erred in denying back-wages entirely. Considering the prolonged litigation and the appellant's superannuation in 2005, the Court found it impractical to reopen proceedings. Instead, it directed a lump sum compensation of Rs. 5 lakhs to the appellant, in addition to the retiral benefits, to settle the back-wages claim. This amount was to be paid within two months from the receipt of the order. The appeal was disposed of with no order as to costs.

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