The acquittal of an employee who is kept away from service during the pendency of criminal proceedings would not entitle him to back wages unless it is found that the prosecution was malicious, the Supreme Court has held.
Such an employee would be entitled to back wages only for the period from the date of his acquittal to the date of his reinstatement in service. In such cases, it is also important to consider whether the suspension of the employee was on the basis of a departmental proceeding or if he was released from employment owing to a pending criminal case.
The Supreme Court Bench of Justices L Nageswara Rao and MR Shah had occasion to reiterate the law on this topic in a judgment passed yesterday. To this end, the Court made note of the law laid down in the cases of Ranchhodji Chaturji Thakore v. Superintendent Engineer Gujarat Electricity Board and Anr and Union of India and Others v. Jaipal Singh.
In the Ranchhodji Chaturji Thakore case, the Court noted that the suspension of an employee based on departmental inquiry/disciplinary proceedings stands on a different footing compared to when an employee is kept out of work owing to the initiation of criminal proceedings.
The case laws appear to indicate that if the departmental inquiry is dropped, the employee would be entitled to full back wages for the period that he was unlawfully kept away from employment. However, the Court opined, different consequences follow if the employee is involved in criminal proceedings. As indicated in the Ranchhodji Chaturji Thakore case,
“The employee involved in a crime has disabled himself from rendering his services on account of his incarceration in jail. Subsequent acquittal by an Appellate Court would not entitle him to claim back wages.“
The present Bench observed that this principle was also followed in the Jaipal Singh case to refuse back wages to an employee who was initially convicted for culpable homicide but later acquitted. The Bench noted,
“While refusing to grant relief to the Petitioner therein [in the Jaipal Singh case], this Court held that subsequent acquittal would not entitle an employee to seek back wages. However, this Court was of the opinion that if the prosecution is launched at the behest of the department and the employee is acquitted, different considerations may arise.“
Importantly, the Court went on to observe that the only exemption to this general principle was if criminal proceedings were launched against an employee maliciously. As noted in Monday’s judgment,
“The observation made in the judgment in Union of India and Others v. Jaipal Singh (supra) has to be understood in a manner in which the department would become liable for back wages in the event of a finding that the initiation of the criminal proceedings was mala fide or with vexatious intent.
In all other cases, we do not see any difference between initiation of the criminal proceedings by the department vis-a-vis a criminal case lodged by the police. For example, if an employee is involved in embezzlement of funds or is found indulging in demand and acceptance of illegal gratification, the employer cannot be mulcted with full back wages on the acquittal of the person by a criminal Court, unless it is found that the prosecution is malicious.“
The present case concerned an employee of the Railway Mail Service. Raj Narain had been suspended from duty in October 1979 by his employer in contemplation of disciplinary proceedings. The departmental proceeding followed allegations that he was involved in forced payments of high-value money orders. This suspension order was revoked in October 1987, following which he was allowed to rejoin service.
Meanwhile, an FIR was also registered against him under Sections 409 and 420 of the Indian Penal Code (IPC). In February 1997, he was convicted in this criminal case, owing to which he was dismissed from service in 1997. However, he was acquitted of all charges on appeal in 2001. All the same, a request for his reinstatement back to service was refused in June 2002, citing that he had been dismissed from service over six years ago.
This refusal to reinstate him back to service was successfully challenged by Narain before a Tribunal in 2002. The Tribunal, however, held that Narain would not be entitled to back wages for the period he was not in service.
It may be noted that the years during which Narain was cut off from work included the period between 1979 and 1987 (suspension on account of contemplation of disciplinary proceedings) and the period between 1997 and 2001 (dismissal from service owing to criminal conviction).
Following the Tribunal’s order, Narain was reinstated back to service in January 2003. However, the refusal of the authorities to accede to his request for back wages during the initial period of suspension between 1979 and 1987 brought the case back for further adjudication.
A writ petition filed challenging the Tribunal order in this respect was partly allowed by the Allahabad High Court. The High Court held that the appellant was entitled to full back wages for the period between the date of his acquittal from the criminal case and the date of his reinstatement i.e. between August 2001 and January 2003.
Unsatisfied, the appellant moved the Supreme Court for the payment of back wages during the period of suspension as well i.e. between 1979 and 1987. In turn, the Supreme Court allowed the appeal, particularly given that the departmental proceedings that prompted the suspension in the first place were dropped in 1983. Despite this, the authorities had erred in revoking the suspension officially only four years thereafter in 1987. The Court pointed out,
“The order of suspension dated 23.10.1979 came to an end on 21.03.1983 which is the date on which disciplinary proceedings were dropped. The Appellant ought to have been reinstated immediately thereafter unless a fresh order was passed, placing him under suspension during the pendency of the criminal trial which did not happen.”
Therefore, the Court held that the appellant would be entitled to full salary for the period between 1979 and 1987.
“We hold that the Appellant is entitled for full wages from 23.10.1979 to 21.10.1987 after adjustment of the amounts already paid towards subsistence allowance.”
In view of these facts, and given the legal position recounted by the Court, the Bench proceeded to hold that the appellant would be entitled to back wages from the date of acquittal (31.08.2001) till the date of his reinstatement (20.01.2003).
Read the Judgment:

From India, Pune
Labour Law & Hr Consultant
Insolvency N Gst Professional


A very useful citation. When employers come across the situation of anyone of their employees facing criminal prosecution for their out of employment zone acts, this judgment throws more light on the probable action to be taken by the employers.
From India, Salem

Many such queries come up from members and this judgment will help clarify.
People only have to use search button to get clarifications on most common problems which are featured here in the forum,instead of posting fresh query.

From India, Pune
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