Labour law – Back wages – Illegal termination and delayed regularisation Paras 3, 4, 7 The Court held that where termination of an employee is found to be illegal and the employee is entitled to reinstatement with continuity of service, denial of back wages for the period during which he was unjustly kept out of service is unsustainable. In the present case, the employee having completed the requisite 180 days of service and having been illegally terminated, was held entitled to back wages from the date of such eligibility till the date of actual regularisation.

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A) Labour law – Back wages – Illegal termination and delayed regularisation

Paras 3, 4, 7

The Court held that where termination of an employee is found to be illegal and the employee is entitled to reinstatement with continuity of service, denial of back wages for the period during which he was unjustly kept out of service is unsustainable. In the present case, the employee having completed the requisite 180 days of service and having been illegally terminated, was held entitled to back wages from the date of such eligibility till the date of actual regularisation.

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(B) Finality of judicial orders – Binding effect

Para 6

The Court emphasised that findings of the Industrial Court directing regularisation from the date of completion of 180 days, having not been challenged, had attained finality and were binding. The High Court erred in ignoring such finality while setting aside the award of back wages.

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(C) Estoppel – Inapplicability against employee rights

Para 5

The Court rejected the contention that the employee, having accepted regular appointment from a later date, was estopped from claiming benefits from an earlier date. It held that the doctrine of estoppel cannot be invoked to deny lawful dues, particularly where the employee has been continuously litigating to secure his rights and has rendered service pursuant to judicial orders.

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(D) Unequal bargaining power – Employment context

Para 6

The Court held that conditions imposed by the employer at the time of regularisation, contrary to prior judicial directions, reflected misuse of unequal bargaining power. An employee cannot be compelled to accept terms inconsistent with binding judicial orders, particularly in circumstances where the employer wields dominant power.

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(E) Continuity of service – Effect

Paras 3, 5

The Court recognised that the employee had rendered continuous service following reinstatement and had consistently pursued legal remedies. Such continuity reinforced his entitlement to benefits from the date of eligibility rather than from the date of formal regularisation.

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(F) Interest on back wages – Judicial discretion

Para 7

While affirming entitlement to back wages, the Court exercised discretion to reduce the rate of interest from 12% to 8%, considering financial implications, with a stipulation that failure to pay within the prescribed time would revive the higher rate.

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(G) Relief – Compensation and costs

Paras 7, 9

The Court restored the award of back wages quantified by the Industrial Court and awarded litigation costs to the employee, recognising prolonged denial of rightful dues.

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FINAL DISPOSITION

Paras 7–9

The appeal was allowed. The High Court judgment was set aside and the order of the Industrial Court granting back wages was restored, subject to modification of the interest rate. Costs were awarded to the appellant.