Employee Can't Be Denied Back Wages On Reinstatement When Rules Don't Provide 'No Pay' Punishment For Time Spent Out Of Service: Telangana HC

Reiterating that a punishment which is not provided in rules can't be imposed, the Telangana High Court set aside punishment of 'dies-non and no salary/ remuneration' resulting in non payment of back wages imposed on a physically handicapped co-operative bank employee for the period of time he was out of service. 

The court said this after noting that the relevant rules didn't provide for such a punishment. 

For context, 'dies non' refers to a period of time that is treated as not having occurred for certain legal purposes.

The high court further observed that since the Bank had violated its own rules, the employee–who had been demoted and thereafter been denied back wages–cannot be made a 'scapegoat' for the same. 

Justice Namavarapu Rajeshwar Rao in his order observed:

"It is the contention of the petitioner that Rule 19(ii) of the 'The service rules and regulations of the Karimnagar Cooperative Urban Bank Ltd., Karimnagar' does not provide for imposing of punishment of "dies-non and no salary/ remuneration." A perusal of the said Rule reveals that the competent authority may impose the following penalties/punishment on employees found guilty of misconduct".

The high court noted that the rule states that the major penalties would be either dismissal from the service of the Bank, reduction in rank to a lower grade in service or post on lower time scale and compulsory retirement. The minor penalties  includes censure, fine, withholding promotion and withholding of increment with or without cumulative effect and suspension.

Referring to Rule 19 the court said, "In the above said Rule, nowhere mentioned with regard to non-payment of back wages and also taking of any undertaking from the employee. Therefore, in the absence of any provision, the imposition of punishment of 'dies-non and no salary/remuneration' is contrary to the said Rule 19(ii)".

The court further referred to Supreme Court's in Vijay Singh v State of Uttar Pradesh where it was held that "in a civilized society governed by the Rule of Law, the punishment not prescribed under the statutory rules cannot be imposed…”

Justice Rao thereafter said, "As such, the respondent authorities have violated their own rules; for that, the petitioner cannot be made scapegoat". 

Background

The order was passed in a writ petition filed, challenging the double punishment imposition of demotion and no pay imposed on a man by Karimnagar Cooperative Urban Bank. The petitioner had also challenged his undertaking that was taken by the bank, wherein it was stated the petitioner had forgone the salary for the years he was out of service. 

The case of the petitioner was that he was employed in the respondent bank and in 1999 a series of complaints were initiated against him. The bank conducted an internal enquiry and 12 out of 16 charges that were laid against the petitioner stood proved. Thus, the bank decided to remove the petitioner from service. 

The petitioner challenge the same before the High Court and the high court had held that the punishment of removal from work was extreme and required reconsideration. 

Following this the Bank  reduced the rank of the petitioner to a lower grade in service and was reinstated as Accountant/B.M.. The bank treated the petitioner's period of dismissal from the Service from 13.06.2011 to the date of joining as the Accountant/B.M. (i.e. till 02.02.2024) as “Dies-non” and no salary/remuneration for that period shall be paid.

While reinstating the petitioner into service, bank asked the petitioner to give an undertaking in writing that he would not claim any salary of service benefits for the said.  period.

It was the claim of the petitioner was that since he was physically handicapped, was out of service since 2011 and had no other option but to sign the undertaking. 

The petitioner's counsel said that getting an undertaking signed and prohibiting the petitioner from approaching the Court was illegal and against the Constitution. 

That since the petitioner was already awarded the punishment of demotion he couldn't now be awarded a second punishment of no back wages for the same offence. It was argued that if the petitioner was awarded two punishments it would amount to double jeopardy. That the petitioner would not have faced such great difficulty, if the Corporation at the inception would have awarded an adequate punishment. 

The bank on the other hand argued that the Supreme Court on multiple occasions had upheld the 'no work- no pay' rule. That it would be unfair to award the petitioner back wages despite the charges against him having been proved. It argued that the petitioner himself have willingly given the undertaking and could not turn back on his word now.

Findings

Undertaking given under duress

With respect to the petitioner's claim that he had given undertaking in duress that he would not claim any salary or service benefits from 13.06.2011 to the date of joining as the Accountant/B.M and the State's contention that the undertaking was given with free will and consent the court said: 

"Here, it is pertinent to mention that no prudent person can give such an undertaking unless he is made to give the same, and any undertaking restraining the party from initiating legal proceedings is void as per Section 28 of the Indian Contract Act, 1872 as held by the Hon'ble Supreme Court in Maharashtra Chess Association (1st supra). “ It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the 4 Indian Contract Act 18722. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action.”

Removal from service disproportionate to allegations

The court said that the punishment of removal from service is disproportionate to the alleged allegations as along with the petitioner, some other persons are also involved in the allegations; however only the petitioner "targeted".

"The criminal case was also ended in acquittal against the petitioner. In those circumstances, the respondent authorities ought to have awarded a lesser punishment than removal from service. Had the respondent authorities imposed lesser punishment at the threshold, the petitioner would not have suffered a lot. Therefore, the contention of the learned counsel for respondents that the petitioner is not entitled to any back wages is rejected," the court observed

Noting that the petitioner is entitled to full back wages the court allowed the plea in part and directed the respondents to pay back wages to the petitioner @ 50% of the net salary in the present post i.e. Accountant/B.M. from 13.06.2011 to 01.02.2024 within 2 months.

Case title : A. Rajaram Reddy vs. Additional Collector/ PIC Chairman Karimnagar Cooperative Urban Bank and Others

Counsel for petitioner: Baglekar Akash Kumar

Counsel for respondent: Vasudeva Reddy.

Click Here To Read/Download Order